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Item 8. Financial Statements and Supplementary Data

2024-03-29 compared with 2023-03-31 · 484 added, 728 removed, 610 unchanged (67% of the section changed)

Financial Statements and Supplementary Data.

of Independent Registered Public Accounting Firm (PCAOB Firm ID:

Report of Independent Registered Public Accounting Firm (PCAOB Firm ID:

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Members’ Capital (Deficit) for the years ended December 31, 2022 and 2021

Consolidated Statements of Changes in Members’ Capital for the years ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

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on the Financial Statements

We have audited the accompanying

consolidated balance sheets of Belpointe PREP, LLC (the “Company”) as of December 31, 2022 and 2021, and the related consolidated

statements of operations, changes in members’ capital (deficit) and cash flows for each of the years in the two-year period ended

December 31, 2022, and the related notes to the consolidated financial statements (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years

in the two-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Belpointe

PREP, LLC (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes

in members’ capital and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively

referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and

its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally

accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

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have served as the Company’s auditor since 2020.

York, New York

Belpointe PREP, LLC

Balance Sheets

thousands, except unit and per unit data)

December 31, 2022

December 31, 2021

Building and improvements

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Cash and cash equivalents

Loans receivable from third parties

Subscriptions receivable

Short-term loan from affiliate

Due to affiliates

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Members’ Capital

Class A units, unlimited units authorized, 3,523,449 and 3,382,149 units issued and outstanding at December 31, 2022 and 2021, respectively

Class A units, unlimited

units authorized, 3,622,399 and 3,523,449 units issued and outstanding at December 31, 2023 and 2022, respectively

Class B units, 100,000 units authorized, 100,000 units issued and outstanding at December 31, 2023 and 2022, respectively

Class M unit, one unit authorized, one unit issued and outstanding at December 31, 2023 and 2022, respectively

Total members’ capital excluding noncontrolling interest

Noncontrolling interest

Total members’ capital excluding noncontrolling interests

Noncontrolling interests

Total members’ capital

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thousands, except unit and per unit data)

Year Ended December 31,

Years 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 loss attributable to noncontrolling interests

Net loss attributable to Belpointe PREP, LLC

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accompanying notes to consolidated financial statements.

Statements of Changes in Members’ (Deficit) Capital

Statements of Changes in Members’ Capital

thousands, except unit and per unit data)

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Class B units

Total Members’ (Deficit) Capital Excluding

Noncontrolling

Total Members’ (Deficit)

Noncontrolling

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Issuance of units

Contribution from noncontrolling interest

Exchange of Belpointe REIT, Inc.

shares to Belpointe PREP, LLC Class A Units ( Note 2 )

Contribution from noncontrolling interests

Acquisition of ownership in CMC Storrs SPV, LLC ( Note 5 )

Offering Costs

Balance at December 31, 2022

Beginning Balance

Issuance of units

Contribution from noncontrolling interest

Acquisition of ownership in CMC Storrs SPV, LLC ( Note 6 )

Contribution from noncontrolling interests

Return of capital

Acquisition of noncontrolling interests ( Note 5 )

Offering costs

Balance at December 31, 2023

Ending Balance

accompanying notes to consolidated financial statements.

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Adjustments to net loss:

Amortization of rent-related intangibles and straight-line rent adjustments

Depreciation and amortization

Amortization of rent-related intangibles and deferred rental revenue

Gain on redemption of equity investment

Impairment of real estate

Unrealized loss on interest rate derivative, net

Changes in operating assets and liabilities:

Increase in due to affiliates

Decrease (increase) in other assets

Decrease in accounts payable

Increase in accrued expenses and other liabilities

(Increase) decrease in other assets

Increase (decrease) in accounts payable

Decrease in accrued expenses and other liabilities

Net cash used in operating activities

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Development of real estate

Acquisitions of real estate

Purchase of interest rate cap

Other investing activity

Repayment of loans receivable

Funding of loans receivable

Acquisitions of real estate

Cash acquired from CMC ( Note 5 )

Other investing activity

Cash acquired from Belpointe REIT, Inc.

Proceeds from redemption of preferred equity interest ( Note 2 )

Cash acquired from BPOZ 1991 Main, LLC ( Note 6 )

Net cash used in investing activities

Cash flows from financing activities

Proceeds from subscriptions receivable

Proceeds from issuance of debt

Proceeds from units issued

Repayment of debt

Short-term loan from affiliate

Payment of debt issuance costs

Repayment of short-term loan from affiliate

Payment of offering costs

Payment of financing deposits

Contributions from noncontrolling interests

Other financing activities, net

Short-term loan from affiliate

Return of capital from noncontrolling interests

Proceeds from subscriptions receivable

Repayment of debt

Net cash provided by financing activities

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

Net decrease in cash cash equivalents and restricted cash

Cash and cash equivalents and restricted cash, beginning of year

Cash and cash equivalents and restricted cash, end of year

Cash paid during the year for interest, net of amount capitalized

accompanying notes to consolidated financial statements.

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and Business Purpose

PREP, LLC (together with its subsidiaries, the “Company,” “we,” “us,” or “our”) was formed

on January 24, 2020 as a Delaware limited liability company.

We operate in a manner that allows us to qualify as a partnership for U.S.

PREP, LLC (together with its subsidiaries, the “Company,” “we,” “us,” or “our”) is focused

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

zones.” We were formed on January 24, 2020 as a Delaware limited liability company and qualify as a partnership and qualified opportunity

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

which enables us to be classified as a “qualified opportunity fund” as defined in the U.S.

Internal Revenue Code of 1986,

as amended (the “Code”).

We qualified as a qualified opportunity fund beginning with our taxable year ended December 31,

commenced principal operations on October 28, 2020.

All of our assets are held by, and all of our operations are conducted through, one

or more operating companies (each an “Operating Company” and together, our “Operating Companies”), either directly

or indirectly through their subsidiaries.

We are externally managed by Belpointe PREP Manager, LLC (our “Manager”), an affiliate

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

Subject to the oversight of our board of directors (our “Board”),

our Manager is responsible for managing our affairs on a day-to-day basis and for identifying and making acquisitions and investments

on our behalf.

least 90% of our assets consist of qualified opportunity zone property, and all of our assets are held by, and all of our operations

are conducted through, one or more operating companies (each an “Operating Company” and collectively, our “Operating

Companies”), either directly or indirectly through their subsidiaries.

We are externally managed by Belpointe PREP Manager, LLC

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

Subject to the oversight of our

board of directors (our “Board”), our Manager is responsible for managing our affairs on a day-to-day basis and for identifying

and making acquisitions and investments on our behalf.

Capitalization

were capitalized with a $ 10,000 investment by our Sponsor.

We are offering our Class A units in our ongoing initial public offering (our

“Primary Offering”) directly to investors.

Our Primary Offering is a “best efforts” offering and we undertake

closings on a rolling basis.

set our Primary Offering price at $ 100.00 per Class A unit.

No later than the first quarter following the December 31, 2022 year end,

and every quarter thereafter, we plan to calculate our net asset value (“NAV”) within approximately 60 days of the last day

of each quarter (the “Determination Date”).

If our NAV increases above or decreases below the price per Class A unit as stated

in our prospectus, we will adjust the Primary Offering price, effective as of the first business day following its public announcement.

The adjusted Primary Offering price will be equal to our adjusted NAV as of the Determination Date (rounded to the nearest dollar) divided

by the number of Class A units outstanding on the Determination Date.

2 – Exchange Offer, Conversion and Merger

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

“Exchange Date”).

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 a rate of 0.14 %, due and payable on December 31, 2021, and secured by all of our

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.

See “ Note 5 – Related Party Arrangements ” for additional details regarding the Secured Notes.

following table summarizes the carrying value of Belpointe REIT’s net assets on the Exchange Date (amounts in thousands).

of Carrying Value Net Assets

Real estate under

construction (1)

Cash and cash equivalents

Loan receivable to affiliate

Investment in real estate

Due to affiliates (1)

Accounts payable (1)

expenses and other liabilities (1)

Total liabilities

net assets (4)

non-cash investing activity during the year ended December 31, 2021.

Secured Notes, as further discussed in “ Note 5 – Related Party Arrangements, ” and respective accrued interest were

eliminated upon the Exchange Date.

from the redemption of Belpointe REIT’s preferred equity interests, as further discussed in “ Note 8 – Loans Receivable, ”

were received on October 1, 2021.

our noncontrolling interest in Belpointe REIT as of the Exchange Date relating to the shares of Belpointe REIT Common Stock that

were not tendered.

Upon consummation of the Merger, on October 12, 2021, the noncontrolling interest carrying value was reclassed

to the Class A unitholders members’ equity.

obtained a controlling financial interest in Belpointe REIT on the Exchange Date and consolidated Belpointe REIT and its subsidiaries

as of December 31, 2021.

We accounted for the Transaction as an asset reorganization of entities under common control due to the fact

that all of the voting ownership interests of Belpointe REIT were exchanged for voting ownership interests in the Company through the

issuance of Class A units.

Accordingly, the Transaction was accounted for at carrying value prospectively on the Exchange Date.

following table summarizes the components of the Common Stock exchanged as of December 31, 2021:

of Components of the Common Stock Exchange

Belpointe REIT Common Stock exchanged (1)

Exchange ratio

Belpointe PREP Class A units issued

Additional Belpointe PREP Class A units issued in lieu of fractional Class A units (2)

Total Belpointe PREP Class A units exchanged

Belpointe PREP Class A unit price (3)

Total Class A units issued in connection with the Transaction (4)

$ 125,001,000

Belpointe REIT’s outstanding Common Stock exchanged in connection with the Transaction.

fractional Class A units issued in the Transaction were rounded up to the nearest whole unit.

PREP Class A unit Primary Offering price.

non-cash financing activity during the year ended December 31, 2021.

May 9, 2023, the U.S.

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

$ 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”).

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.

As of December 31, 2023, we have not sold any Class A units in connection with the Follow-on

addition, the Follow-on Registration Statement constitutes a post-effective amendment to the registration statement on Form S-11, as

amended (File No.

333-255424), registering the offer and sale of our ongoing initial public offering of up to $ 750,000,000 of our Class

A units, declared effective by the SEC on September 30, 2021, of which $ 514,724,350 remained unsold as of December 31, 2023 (our

“Primary Offering” and, together with our Follow-on Offering, our “Public Offerings”).

purchase price for Class A units in the Public Offerings will be the lesser of (i) the current net asset value (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 (the “NYSE”)

during regular trading hours on the last trading day immediately preceding the investment date on which the NYSE 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.

On February 29, 2024, we announced that

our NAV as of December 31, 2023 was equal to $ 100.88 per Class A unit.

2 – Summary of Significant Accounting Policies

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All significant intercompany accounts and transactions have been eliminated.

have evaluated our economic interest in entities to determine if they are deemed to be variable interest entities (“VIEs”)

have evaluated our economic interests in entities to determine if they are deemed to be variable interest entities (“VIEs”)

and whether the entities should be consolidated.

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2023 and 2022, respectively (amounts in thousands):

of Variable Interest Entities

Schedule of Carrying Value Net Assets

Building and improvements

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preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions

that affect the amounts reported in our consolidated financial statements and the accompanying notes to the financial statements.

Actual results could

materially differ from those estimates.

GAAP requires management to make estimates and assumptions that

affect the amounts reported in our consolidated financial statements and the accompanying notes to the consolidated financial statements.

Actual results could materially differ from those estimates.

operate in a single reportable segment which includes the development, redevelopment and managing of commercial real estate properties

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Such resulting premium or discount

is amortized over the remaining term of the obligation and is included in Other income (expense) in our consolidated statements of operations.

is amortized over the remaining term of the obligation and is included in Other expense in our consolidated statements of operations.

We also consider the value of the underlying collateral taking into account the quality of the collateral, the credit quality of the

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under construction and the portions substantially completed and only capitalize those costs associated with the portions under construction.

of Long-Lived Asset s

of Long-Lived Assets

evaluate our tangible and identifiable intangible real estate assets for impairment when events such as delays or changes in development,

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undiscounted cash flows of the property, including proceeds from disposition, are compared to the net book value of the property.

the carrying value of the asset exceeds the undiscounted cash flows of the asset, an impairment loss is recorded in earnings equal to

the shortage of the book value to fair value, calculated as the discounted net cash flows of the property.

the carrying value of the asset exceeds the undiscounted cash flows of the asset, an impairment loss is recorded in earnings to reduce

the carrying value of the asset to fair value, calculated as the discounted net cash flows of the property.

In circumstances where the highest and best use of a property is the fee simple value of vacant land, we compare

book value of the property to the appraised value of the land.

If the carrying value of the asset exceeds the appraised value of the land,

an impairment loss is recorded to reduce the carrying value to the appraised value.

Pursuit Costs

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project changes such that it is deemed no longer probable, the costs incurred will be expensed.

evaluate our loans receivable on a periodic basis to assess whether there are any indicators that the value may be impaired.

considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due from

the borrower in accordance with the original contractual terms of the loan.

If a loan receivable is deemed impaired, we would be required

to establish a reserve for losses in an amount deemed to be both probable and reasonably estimable.

income on real estate loans and notes receivable is recognized on an accrual basis over the lives of the loans or notes.

We stop accruing

interest on loans when circumstances indicate that it is probable that the ultimate collection of all interest due according to the loan

agreement will not be realized.

Direct Cost s

direct costs are incremental costs of a lease that would not have been incurred had the lease not been executed.

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in our consolidated balance sheets.

derivative instruments are measured at fair value and are recorded as either assets or liabilities in our consolidated balance sheets

depending on the pertinent rights or obligations under the applicable derivative contract.

The derivative contracts that we may enter

into are generally concurrent with obtaining floating rate debt and are intended to manage the economic risk of increases in benchmark

interest rates.

Our derivative instruments are not designated as hedges for accounting purposes, and therefore we account for changes

in the fair value of the derivative instruments as either a gain or loss in the consolidated statements of operations.

and Cash Equivalents

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receivable consists of units that have been issued with subscriptions that have not yet settled.

As of December 31, 2022 and 2021, there

was approximately zero and $ 20.3 million, respectively, in subscriptions that had not yet settled.

All of these funds were settled prior

to the filing of this report.

Subscriptions receivable are carried at cost which approximates fair value.

Value Measurements

value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

marketplace participants at the measurement date under current market conditions ( i.e.

, the exit price).

categorize our financial instruments, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy.

The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1)

and the lowest priority to unobservable inputs (Level 3).

If the inputs used to measure the financial instruments fall within different

levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the

assets and liabilities recorded on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as

1 – Quoted market prices in active markets for identical assets or liabilities.

2 – Significant other observable inputs ( e.g ., quoted prices for similar items in active markets, quoted prices for identical

or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield

curves, and market-corroborated inputs).

3 – Valuation generated from model-based techniques that use inputs that are significant and unobservable in the market.

unobservable assumptions reflect estimates of inputs that market participants would use in pricing the asset or liability.

techniques include use of option pricing models, discounted cash flow methodologies or similar techniques, which incorporate management’s

own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management

judgment or estimation.

Subscriptions receivable are carried

at cost which approximates fair value.

As of December 31, 2023 and 2022, there was no subscriptions that had not yet settled.

Non-controlling

A non-controlling interest in a subsidiary

(minority interest) is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial

statements and separate from the parent company’s equity.

In addition, consolidated net loss is required to be reported at amounts

that include the amounts attributable to both the parent and the noncontrolling interest and the amount of consolidated net loss attributable

to the parent and the noncontrolling interests are required to be disclosed on the face of the consolidated statements of operations.

non-controlling interest in a subsidiary (minority interest) is an ownership interest in the consolidated entity that should be reported

as equity in the consolidated financial statements and separate from the parent company’s equity.

In addition, consolidated net

loss is required to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest and

the amount of consolidated net loss attributable to the parent and the noncontrolling interests are required to be disclosed on the face

of the consolidated statements of operations.

Organization,

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Our Primary Offering costs for the years ended December 31, 2023, and 2022, were

million and $ 0.6 million, respectively, of which less than $ 0.1 million and $ 0.1 million, respectively, was unpaid and represents a non-cash

financing activity.

We became liable to reimburse our Manager and its affiliates, including our Sponsor, when the first closing was held

in connection with our Primary Offering, which occurred in October 2021.

$ 0.4 million, and $ 0.6 million, respectively.

We became liable to reimburse our Manager and its affiliates, including our Sponsor, when

the first closing was held in connection with our Primary Offering, which occurred in October 2021.

to a management agreement by and among the Company, our Operating Companies and our Manager (the “Management Agreement”),

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prior period amounts have been reclassified to conform to the current period presentation.

rent liabilities, net were previously presented separately, but are now included within Lease liabilities in the consolidated

balance sheets.

and Uncertainties

for multifamily and mixed-use rental properties is subject to uncertainty as a result of a number of factors, including, among others,

increasing interest rates, the availability of credit, higher rates of inflation, the rate of unemployment, ongoing supply chain disruptions,

and the continuing impact of COVID-19.

The potential effect of these and other factors 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 government and regulatory policies applicable to us.

closely monitoring the potential impact of these and other factors on all aspects of our investments and operations.

for multifamily and mixed-use rental properties is subject to uncertainty as a result of a number of factors, including, among

others, increasing interest rates, the availability of credit, higher rates of inflation, the rate of unemployment, and ongoing

supply chain disruptions.

The potential effect of these and other factors 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 government and

regulatory policies applicable to us.

We are closely monitoring the potential impact of these and other factors on all aspects of

our investments and operations.

Assets and Liabilities

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Accounting Pronouncements

February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02,

Leases (Topic 842) , codified as Accounting Standards Codification (“ASC”) Topic 842, and subsequently amended by ASU

2018-01, Leases (Topic 842):

Land Easement Practical Expedient for Transition to Topic 842 , ASU 2018-10, Codification Improvements

to Topic 842, Leases , ASU 2018-11, Leases (Topic 842):

Targeted Improvements , ASU 2018-20, Leases (Topic 842):

Improvements for Lessor , ASU 2019-01, Leases (Topic 842) :

Codification Improvements , ASU 2019-10, Financial Instruments—Credit

Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates , ASU 2020-05, Revenue from Contracts

with Customers (Topic 606) and Leases (Topic 842) Effective Dates for Certain Entities , and ASU No.

2021-05, Leases (Topic 842):

Lessors – Certain Leases with Variable Lease Payments (collectively “ASC 842”), which superseded ASC Topic 840,

ASC 842 amended the accounting standards for lease accounting, including requiring lessees to recognize most leases on

their balance sheets and making targeted changes to lessor accounting.

ASC 842 requires a modified retrospective transition approach

for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief.

As an emerging growth company, we are permitted, and have elected, to use an extended transition period for complying with new or revised

accounting standards that have different effective dates for public and private companies.

For private companies, ASC 842 is effective

for annual reporting periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022.

adopted ASC 842 for our annual period beginning January 1, 2022 (the “Date of Adoption”) using the modified retrospective

method—applying the transition provisions at the beginning of the period of adoption rather than at the beginning of the earliest

comparative period presented.

We elected and applied the optional package of practical expedients permitted under ASC 842’s transition

guidance, which allowed us to not reassess whether existing arrangements contain leases, lease classification, and initial direct costs.

The adoption of ASC 842 did not result in a cumulative effect adjustment to the opening balance of retained earnings as of January 1,

Right-of-use (“ROU”) assets represent our right to use an underlying asset over the lease term and lease liabilities

represent our obligation to make lease payments arising from the lease.

We determine if an arrangement contains a lease at contract inception

and determine the classification of the lease at commencement.

Operating lease ROU assets and lease liabilities are recognized at the

lease commencement date based on the present value of lease payments over the lease term.

We do not include renewal options in the lease

term when calculating the lease liability unless we are reasonably certain we will exercise the option.

Variable lease payments are excluded

from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

expense for lease payments is recognized on a straight-line basis over the lease term.

determining the present value of lease payments, we use the discount rate implicit in the lease when readily determinable.

As the implicit

rate within our operating leases is generally not determinable, we use an incremental borrowing rate at the lease commencement date to

determine the present value of lease payments.

The determination of our incremental borrowing rate requires judgment.

We determine our

incremental borrowing rate for each lease using estimated baseline borrowing rate plus a spread.

The rates are then adjusted for various

factors, including level of collateralization and lease term.

the Date of Adoption, we recognized a $ 1.8 million ROU operating asset and a $ 1.2 million corresponding lease liability for the only

ground lease arrangement for which we were a lessee.

The recognition of the aforementioned ROU operating asset and lease liability included

the reclassification of our ground lease purchase option, and deferred rent from Intangible Assets in our consolidated balance sheet,

as of the Date of Adoption, to ROU asset (a net reclassification of $ 0.6 million).

The settlement date to close on the exercised purchase

option on our ground lease was extended in December 2022 (the “Remeasurement Date”) to April 30, 2023.

Accordingly, as of

the remeasurement date on December 29, 2022, we reclassified this contract from an operating lease to a finance lease and recorded a

finance lease liability.

See “ Note 4 – Leases ” for additional details regarding the presentation of these amounts in

our consolidated balance sheet.

Additionally,

the Company will not recognize a lease liability or ROU asset for any short-term lease (defined as a lease that, at commencement date,

has a term of 12 months of less and does not include an option to purchase the underlying asset that the lessee is reasonably certain

to exercise) and will recognize lease payments on a straight-line basis over the lease term.

A practical expedient under ASC 842 allows lessors to combine non-lease components (lease arrangements that include common

area maintenance services) with related lease components (lease revenue), if both the timing and pattern of transfer are the same for

the non-lease component and related lease component, the lease component is the predominant component, and the lease component would

otherwise be classified as an operating lease.

We elected this practical expedient.

For (i) operating lease arrangements involving real

estate that include common area maintenance services and (ii) all real estate arrangements that include real estate taxes and insurance

costs, we present these amounts within Rental revenue in our consolidated statements of operations.

We record amounts reimbursed by the

lessee in the period in which the applicable expenses are incurred.

As a result, we were not impacted by this change.

ASC 842, lessors are allowed to only capitalize incremental direct leasing costs.

326 - Financial Instruments — Credit Losses

June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial

November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07,

S e gment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after

December 15, 2024, and requires single reporting entities to comply with the expanded reportable segment disclosures outlined in the

The expanded reportable segment disclosures are intended to enhance certain disclosures surrounding significant segment expenses.

We are currently evaluating the impact of the new standard on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial

Instruments ( “ASU 2016-13”).

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allowance for losses.

As an emerging growth company, we are permitted, and have elected, to use an extended transition period for complying

with new or revised accounting standards that have different effective dates for public and private companies.

For private companies,

ASU 2016-13 will be effective for annual reporting periods beginning after December 15, 2022, including interim periods within those

fiscal years.

We do not expect the adoption of ASU 2016-13 to have a material impact in our consolidated financial statements.

ASU 2016-13 does not apply to receivables arising from operating leases, which are within the scope of ASU 2016-02 ,

Leases (Topic 842).

adopted ASU 2016-13 on January 1, 2023 using the modified retrospective method.

The adoption of this standard did not have a material

impact on our consolidated financial statements, and no cumulative-effect adjustment was recorded to retained earnings.

own rental properties which are leased to tenants under operating leases with current expirations ranging from 2024 to 2040, with options

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reimbursements of property level operating expenses.

We do not separate non-lease components from the related lease components as allowed

under the ASC 842 practical expedient, as the timing and pattern of transfer are the same, and account for the combined component in

accordance with ASC 842.

We do not separate non-lease components from the related lease components as the

timing and pattern of transfer are the same and account for the combined component.

lease revenues represent the base rent that each tenant is required to pay in accordance with the terms of their respective leases reported

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of Components of Lease Revenues

Years Ended December 31,

Fixed lease revenues

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Lease revenues (2) (3)

Lease revenues

reimbursements for property taxes, insurance, and common area maintenance services.

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$ 0.1 million of straight-line rent and $ 1.3 million of lease intangible amortization.

Straight-Line Rent

of December 31, 2022 and 2021, our unbilled rent receivables aggregating less than $ 0.1 million and zero , respectively, represent rent

reported on a straight-line basis in excess of rental payments required under the respective leases and are included in Other assets

in our consolidated balance sheets.

The unbilled rent receivable is to be billed and received pursuant to the lease terms during the

next 9.7 years.

of December 31, 2022 and 2021, our unbilled rent payables aggregating $ 0.1 million and $ 0.5 million, respectively, represent rent reported

on a straight-line basis less than rental payments required under the respective leases and are included in Accrued expenses and other

liabilities in our consolidated balance sheets.

The unbilled rent payable is to be billed and received pursuant to the lease terms during

the next 17.8 years.

assess the collectability of unbilled rent receivable balances by reviewing a tenant’s payment history and financial condition.

We have assessed the collectability of all unbilled rent receivable balances as probable as of December 31, 2023.

are a lessee under a ground lease in Sarasota, Florida.

As discussed in “ Note 3 - Summary of Significant Accounting Policies ”, we applied the optional package of practical expedients permitted under ASC 842’s transition

guidance, which permitted us to not reassess the original operating lease classification as of the Date of Adoption.

The settlement date

to close on the exercised purchase option on our ground lease was extended in December 2022 to April 30, 2023.

Accordingly, as of

the remeasurement date on December 29, 2022, we reclassified this contract from an operating lease to a finance lease and recorded a

financing lease liability of $ 5.0 million for the obligation to make payments under the lease (a non-cash financing activity during the

year ended December 31, 2022) and a financing ROU asset of $ 5.0 million for the right to use the underlying asset during the lease

term, which are included in Lease liabilities and Other assets, respectively, in our consolidated balance sheet.

As of December 31,

2022, the remaining lease term, including renewal options deemed exercised, is 0.3 years.

We applied a discount rate of 8.1 % based on

our incremental borrowing rate (“IBR”) given the term of the lease, as the rate implicit in the lease is not known.

IBR was determined based on borrowing rates available to us in the market for a term similar to the applicable lease.

During the year

ended December 31, 2022, we recognized $ 0.6 million of lease expense related to this ground lease on one of our development investments

which is included in Real estate under construction in our consolidated balance sheet.

Future Lease Payments

following table summarizes the minimum future lease payments related to our finance ground lease as of December 31, 2022 (amounts in

of Minimum Future Lease Payments

For the year ended December 31,

Total undiscounted cash flows

Present value discount

Lease liability

are no operating leases for which we are the lessee, therefore there are no related ROU assets or lease liabilities as of December 31,

further described in Note 5 – Real Estate, Net, on August 24, 2023, through an indirect majority-owned subsidiary of our Operating

Company, we purchased land located in Sarasota, Florida, which we previously leased.

Therefore, there is no longer a right of use (“ROU”)

asset or lease liabilities in our consolidated balance sheets as of December 31, 2023.

As of December 31, 2022, we were a lessee

under the aforementioned ground lease which was classified as a financing lease.

Accordingly, a finance lease liability of $ 5.0 million

is included in Lease liabilities in our consolidated balance sheets as of December 31, 2022, which represented our obligation to

make payments under this ground lease, and a ROU asset of $ 5.0 million is included in Other assets in our consolidated balance sheets

as of December 31, 2022, which represented our right to use the underlying asset during the lease term.

During the years ended December 31,

2023, and 2022 we capitalized $ 0.3 million and $ 0.3 million, respectively, of ground rent expense related to this ground lease on one

of our development investments, which is included in Real estate under construction in our consolidated balance sheets.

are no operating leases for which we are the lessee;

therefore, there are no related ROU assets or lease liabilities in our consolidated

balance sheets as of December 31, 2023 and 2022.

4 – Related Party Arrangements

Note Transactions

Prior to and in connection with the Transaction,

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

We used the proceeds from the Secured Notes to make certain qualified opportunity zone investments, as described in greater detail

throughout “ Note 6 – Real Estate, Net.

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 (a non-cash financing activity).

All intercompany

activity between the Company and Belpointe REIT has been eliminated for the year ended December 31, 2021.

Transactions with Belpointe Investment Holding, LLC

furtherance of the Merger, Belpointe REIT sold its interest (the “1991 Main Interest”) in the holding company for 1991

Main Street (“1991 Main”) to Belpointe Investment Holding, LLC (“BI Holding”), an affiliate of our Chief

Executive Officer.

furtherance of the Merger, Belpointe REIT sold its interest (the “1991 Main Interest”) in the holding company for 1991 Main

Street (“1991 Main”) to Belpointe Investment Holding, LLC (“BI Holding”), an affiliate of our Chief Executive

As part of the transaction, BI Holding assumed a $ 10.8

million secured loan (the “Acquisition Loan”), and Belpointe REIT provided BI Holding with a $ 24.8

million loan, which was evidenced by a secured promissory note bearing interest at an annual rate of 5.0 %

and due and payable at maturity on September

14, 2021 (the “BI Secured Note”).

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

in interest to Belpointe REIT.

Effective 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.

million secured loan (the “Acquisition

Loan”), and Belpointe REIT provided BI Holding with a $ 24.8

million loan, which was evidenced by a secured

promissory note bearing interest at an annual rate of 5.0 %

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.

Effective 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.

On April 22, 2022, we repaid the Acquisition Loan in full.

For additional details

regarding our acquisition of the 1991 Main Interest see “ Note 6 – Real Estate,

Transaction with Norpointe, LLC

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2023, and was secured by a first mortgage lien on the Norpointe Property.

On December 13, 2022, the Restructured Norpointe Loan including

On December 13, 2022, the Restructured Norpointe Loan

including accrued interest of less than $ 0.1 million was repaid in full.

Transaction with Belpointe Development Holding, LLC

October 30, 2023, we borrowed $ 1.5 million from Belpointe Development Holding, LLC, an entity in which certain immediate family members

of our Chief Executive Officer have a passive indirect minority beneficial ownership interest, pursuant to the terms of an unsecured

promissory note (the “BDH Note”).

The BDH Note was due and payable on March 31, 2024 and interest accrued on the BDH Note

at an annual rate of 4.5 %.

The proceeds of the loan were used for general corporate purposes.

On December 29, 2023, the BDH Note, including

accrued interest of less than $ 0.1 million, was repaid in full.

the year ended December 31, 2022, $ 0.3 million of noncontrolling interest contributions were made by affiliates of our Sponsor representing

their 0.1 % ownership in various investments.

These noncontrolling interests will be allocated profit and loss in accordance with the

respective operating agreements.

Transaction with Lacoff Holding II, LLC

December 29, 2023, we borrowed $ 4.0 million from Lacoff Holding II LLC, an affiliate of our Chief Executive Officer, pursuant to the

terms of a promissory note (the “LH II

The LH II Loan is due and payable on April 1, 2024 and interest accrues on the LH II Note at an annual rate of 5.26 %.

proceeds of the loan were used for general corporate purposes.

the years ended December 31, 2023 and 2022, less than $ 0.1 million, and $ 0.3

million, respectively, of noncontrolling interest contributions were made by affiliates of our Sponsor representing their 0.1 %

ownership in various investments.

These noncontrolling interests will be allocated profit and loss in accordance with the respective

operating agreements.

Relationship with Our Manager and Sponsor

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following table summarizes the fees incurred on our behalf by, and expenses reimbursable to, our Manager and its affiliates, including

our Sponsor, in accordance with the terms of the relevant agreements (amounts in thousands):

Schedule of Non-Cash Activity to Related Party

Year Ended December 31,

Amounts Included in our Consolidated Statements of Operations

Management fees

our Sponsor, in accordance with the terms of our relevant agreements with such parties (amounts in thousands):

Schedule of Non Cash Activity to

Related Party

Years Ended December 31,

Amounts included in the Consolidated Statements of Operations

Costs incurred by our Manager and its affiliates (1)

Management fees (2)

Insurance (3)

Director compensation

Costs incurred by the

manager and its affiliates

Other capitalized costs

Costs incurred

by the manager and its affiliates

Capitalized costs included in the Consolidated Balance Sheets

Development fee and reimbursements

Insurance (3)

Offering costs

Acquisition fee

Other capitalized costs

Total capitalized costs

wage, overhead and other reimbursements to our Manager and its affiliates, including our Sponsor, which are included in General and

administrative expenses in our consolidated statements of operations.

the year ended December 31, 2022, we incurred insurance premiums of $ 4.8 million pertaining to insurance policies with effective

dates that commenced during the period, which are included in Other assets in our consolidated balance sheet.

Of this amount, zero

was unpaid as of December 31, 2022 and $ 1.6 million was amortized into Real estate under construction in our consolidated balance

administrative in our consolidated statements of operations.

in Property expenses in our consolidated statements of operations.

insurance premiums are prepaid and are included in Other assets in our consolidated balance sheets and are amortized monthly to

either Property expenses in our consolidated statements of operations or Real estate under construction in our consolidated balance

following table summarizes amounts included in Due to affiliates in our consolidated balance sheets (amounts in thousands):

Schedule of Due to Related Party

of Due to Related Party

Amounts Due to affiliates

Development fees

Management fees

Employee cost sharing and reimbursements (1)

Management fees

Director compensation

Acquisition fee

Due to affiliates

wage, overhead and other reimbursements to the Manager and its affiliates, including our Sponsor.

Organizational,

Primary Offering and Merger Expenses

Manager and its affiliates, including our Sponsor, will be reimbursed, as described in the following paragraph, for organizational and

offering expenses incurred in connection with our organization and Primary Offering and for expenses incurred in connection with the

See “ Note 1 – Organization, Business Purpose and Capitalization ” for additional details regarding our

Primary Offering, and “ Note 2 – Exchange Offer, Conversion and Merger, ” for additional details regarding the Transaction.

We became liable to reimburse our Manager and its affiliates, including our Sponsor, when the first closing was held in connection with

our Primary Offering, which occurred in October 2021.

were no organizational or Primary Offering expenses 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 organizational and Primary Offering

expenses of $ 0.6 million as well as transaction expenses of $ 0.2 million on our behalf, all of which have been fully repaid.

wage, overhead and other reimbursements to our Manager and its affiliates, including our Sponsor.

Offering Expenses

Manager and its affiliates, including our Sponsor, are reimbursed, for organizational and offering expenses incurred in connection with

our Public Offerings.

We became liable to reimburse our Manager and its affiliates, including our Sponsor, when the first closing was

held in connection with our Primary Offering, which occurred in October 2021.

were no organizational or Primary Offering expenses incurred by our Manager and its affiliates during the years ended December 31,

2023 and 2022.

Operating Expenses

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services to us.

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.

The expenses are payable, 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.

During the years ended December 31, 2023, and 2022, our Manager and its affiliates, including our Sponsor, incurred

operating expenses of $ 2.9 million and $ 2.9 million, respectively, on our behalf.

The expenses are payable, 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.

As of December 31,

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The management fee is based

on our NAV at the end of each quarter, which, no later than the first quarter following the December 31, 2022 year end, and every quarter

thereafter, will be announced within approximately 60 days of the last day of each quarter.

For the years ended December 31, 2022 and

2021, we incurred management fees of $ 2.6 million and $ 0.7 million, respectively, which are included in Property expenses in our consolidated

statements of operations.

on our NAV at the end of each quarter.

Fees and Reimbursements

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a development fee of 4.5 % of total project costs will be charged throughout the course of each project, of which one half was due at

the close of each acquisition and is included in Real estate under construction in our consolidated balance sheets.

the close of each acquisition.

March 29, 2022, we commenced construction on one of our properties located in Sarasota, Florida, and in connection therewith, due to

an increase in scope of work, we agreed to increase the development fee payable to an affiliate of our Sponsor under the terms of

our existing development management agreement from 4.0% to 4.25%.

In addition, again due to the increase in scope of work, as well

as due to increases in construction costs, we also revised our construction budget.

As a result of the increase in development fees

and revisions to our construction budget, we incurred an additional upfront development fee of $ 2.5

million, which is included in Real estate under construction in our consolidated balance sheets.

The remaining development fee will

be charged throughout the course of the project in accordance with the terms of the development management agreement.

the years ended December 31, 2022 and 2021, we incurred development fees earned during the construction phase of $ 4.3 million and $ 1.5

million, respectively.

As of December 31, 2022 and 2021, $ 4.3 million and zero , respectively, remained due and payable to our affiliates

for development fees.

the years ended December 31, 2022 and 2021, we incurred employee reimbursement expenditures to our affiliates acting as development managers

of $ 1.5 million and $ 0.6 million, respectively, of which $ 1.3 million and $ 0.5 million, respectively, is included in Real estate under

construction in our consolidated balance sheets, and $ 0.2 million and $ 0.1 million, respectively, is included in General and administrative

expenses in our consolidated statements of operations.

As of December 31, 2022 and 2021, $ 0.3 million and $ 0.4 million, respectively,

remained due and payable to our affiliates for employee reimbursement expenditures.

an increase in scope of work, we agreed to increase the development fee payable to an affiliate of our Sponsor under the terms of our

existing development management agreement from 4.0 % to 4.25 %.

In addition, again due to the increase in scope of work, as well as due

to increases in construction costs, we also revised our construction budget.

As a result of the increase in development fees and revisions

to our construction budget, we incurred an additional upfront development fee of $ 2.5 million, which is included in Real estate under

construction in our consolidated balance sheets.

The remaining development fee will be charged throughout the course of the project in

accordance with the terms of the development management agreement.

the years ended December 31, 2023, and 2022, we incurred development fees earned during the construction phase of $ 5.9 million,

and $ 4.3 million, respectively.

As of December 31, 2023 and 2022, $ 6.1 million and $ 4.3 million, respectively, remained due and

payable to our affiliates for development fees.

the years ended December 31, 2023, and 2022, we incurred employee reimbursement expenditures to our affiliates acting as development

managers of $ 1.6 million, and $ 1.5 million, respectively, of which $ 1.2 million, and $ 1.3 million, respectively, is included in Real

estate under construction in our consolidated balance sheets, and $ 0.4 million, $ 0.2 million, respectively, is included in General and

administrative expenses in our consolidated statements of operations.

As of December 31, 2023 and 2022, $ 1.3 million and $ 0.3 million,

respectively, remained due and payable to our affiliates for employee reimbursement expenditures.

April 25, 2023, each of the indirect majority-owned subsidiaries for our Nashville investments entered into development management agreements

with certain development entities in which immediate family members of our Chief Executive Officer have a passive indirect minority beneficial

ownership interest (collectively, the “Nashville DMAs”).

The aggregate development fees payable under the Nashville DMAs

are equal to 55 % of 4.5 % of the development budget or hard costs, as applicable.

During the year ended December 31, 2023, we incurred

$ 0.4 million of development fees related to the Nashville DMAs, which were capitalized to Real estate under construction in our consolidated

balance sheets, with the remaining development fees payable upon our achieving various milestones throughout the development of our Nashville

As of December 31, 2023, $ 0.4 million in development fees related to the Nashville DMAs remained outstanding and payable.

will pay our Manager, Sponsor, or an affiliate of our Manager or Sponsor, an acquisition fee equal to 1.5 % of the total value of any

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We did not incur any acquisition fees during the

year ended December 31, 2022, since all investments acquired during these periods were, or will be, subject to payment of development

For the year ended December 31, 2021, we incurred acquisition fees of less than $ 0.1 million in connection with our acquisition

of 901-909 Central (as defined and described in greater detail in “ Note 6 – Real Estate, Net ”).

years ended December 31, 2023 and 2022, since all investments acquired during these periods were, or will be, subject to payment

of development fees.

immediate family members of our Chief Executive Officer have a passive indirect minority beneficial ownership interest in Belpointe Specialty

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related to owner-controlled insurance programs, for which we pay an administration fee.

the year ended December 31, 2022, we obtained insurance coverage and paid premiums in the aggregate amount of $ 4.8 million from which

Belpointe Specialty Insurance earned commissions of $ 0.5 million.

During the year ended December 31, 2022, Belpointe Specialty Insurance

earned administration fees of less than $ 0.1 million.

Insurance premiums are prepaid and are included in Other assets in our consolidated

balance sheets.

With respect to our properties under development, for the year ended December 31, 2022, $ 1.6 million was amortized into

Real estate under construction on the consolidated balance sheet.

As it pertains to our operating properties, for year ended December

31, 2022, $ 0.4 million was amortized into Property expenses on the consolidated statement of operations.

the years ended December 31, 2023, and 2022, we obtained insurance coverage and paid premiums in the aggregate amount of $ 2.6

million, and $ 4.8

million, respectively, from which Belpointe Specialty Insurance earned commissions and administrative fees of $ 0.2

million, and $ 0.5

million, respectively.

Insurance premiums are prepaid and are included in Other assets in our consolidated balance

various agreements we have engaged our Manager and its affiliates, including in certain cases our Sponsor, to provide certain services

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of Real Estate During 2023

January 7, 2022, through an indirect majority-owned subsidiary of our Operating Company, we completed the acquisition of a 1.1 -acre site,

located in Mansfield, Connecticut, for a purchase price of $ 0.3 million, inclusive of transaction costs of less than $ 0.1 million.

closing, the building was leased back to the seller for a term of 12 months.

This acquisition was deemed to be an asset acquisition and

all direct transaction costs were capitalized.

June 28, 2022, through an indirect majority-owned subsidiary of our Operating Company, we acquired a 70.2 % controlling interest (the

“CMC Interest”) in CMC Storrs SPV, LLC (“CMC”), a holding company for an approximately 60 -acre site located in

Mansfield, Connecticut.

As part of the transaction, two unaffiliated joint venture partners (the “CMC JV Partners”) were

deemed to have made initial capital contributions to CMC.

Following our acquisition of the CMC Interest, we discovered that one of the

CMC JV Partners had misappropriated cash from the other’s cash account.

Accordingly, the CMC JV Partner forfeited $ 1.0 million,

or 29.8 %, of their noncontrolling interest in CMC on March 24, 2023 (a non-cash financing activity during the year ended December 31,

As a result of the forfeiture, we indirectly own a 100 % controlling interest in CMC.

August 24, 2023, through an indirect majority-owned subsidiary of our Operating Company, we acquired land located in Sarasota, Florida,

that was previously subject to a ground lease (See Note 3 – Leases for additional information) for a purchase price of $ 4.9 million,

inclusive of transaction costs of $ 0.1 million.

We accounted for the transaction as an asset acquisition.

As the acquired land is being

held for development, the total purchase price was allocated to Real estate under construction on the consolidated balance sheets as of

December 31, 2023.

of Real Estate During 2022

January 7, 2022, through an indirect majority-owned subsidiary of our Operating Company, we completed the acquisition of a 1.1 -acre

site, located in Mansfield, Connecticut, for a purchase price of $ 0.3 million, inclusive of transaction costs of less than $ 0.1 million.

Upon closing, the building was leased back to the seller for a term of 12 months.

This acquisition was deemed to be an asset acquisition

and all direct transaction costs were capitalized.

The purchase price was allocated to land and building of $ 0.1 million and $ 0.2 million,

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on the purchase price and acquisition costs incurred.

May 9, 2022, through an indirect majority-owned subsidiary of our Operating Company, we completed the acquisition of a 0.265 -acre site,

located in Sarasota, Florida, for a purchase price of $ 1.5 million, inclusive of transaction costs of $ 0.1 million.

May 9, 2022, through an indirect majority-owned subsidiary of our Operating Company, we completed the acquisition of a 0.265 -acre

site, located in Sarasota, Florida, for a purchase price of $ 1.5 million, inclusive of transaction costs of $ 0.1 million.

This acquisition

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costs incurred.

June 28, 2022, through an indirect majority-owned subsidiary of our Operating Company, we acquired a 70.2 %

controlling interest (the “CMC Interest”) in CMC Storrs SPV, LLC (“CMC”), a holding company for an

approximately 60 -acre

site located in Mansfield, Connecticut, for an initial capital contribution of $ 3.8

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 (a non-cash financing activity during the year ended December 31, 2022).

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 resulting in

the loss of $ 0.4 million included in Other income (expense) in the accompanying consolidated statement of operations for the

year ended December 31, 2022.

June 28, 2022, through an indirect majority-owned subsidiary of our Operating Company, we acquired a 70.2 % controlling interest

(the “CMC Interest”) in CMC Storrs SPV, LLC (“CMC”), a holding company for an approximately 60 -acre site located

in Mansfield, Connecticut, 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 (a non-cash

financing activity during the year ended December 31, 2022).

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 resulting in the loss of $ 0.4 million

included in Other expense in the accompanying consolidated statement of operations for the year ended December 31, 2022.

The CMC JV Partner agreed to forfeit its interest in CMC as of March 24, 2023.

Our acquisition of

the CMC Interest was deemed to be an asset acquisition and all direct transaction costs were capitalized.

All related assets and

liabilities, including identifiable intangibles, were recorded at their relative fair values based on the purchase price and

acquisition costs incurred.

As a result of our controlling financial interest, we consolidate this development project.

price was allocated as follows (amounts in thousands):

Schedule of Real Estate Properties

June 28, 2022

and improvements

Intangible assets

Our acquisition of the CMC Interest was deemed to be an

asset acquisition and all direct transaction costs were capitalized.

All related assets and liabilities, including identifiable intangibles,

were recorded at their relative fair values based on the purchase price and acquisition costs incurred.

As a result of our controlling

financial interest, we consolidate this development project.

The purchase price was allocated as follows (amounts in thousands):

of Real Estate Properties

As of June 28, 2022

Intangible asset

Real estate under construction

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Real estate, net

and cash equivalents

Cash and cash equivalents

Other assets (1)

Accounts payable

3 unchanged sentences

Total net assets

Includes restricted cash of $ 1.4 million.

Represents a non-cash financing activity during the year ended December 31, 2022.

restricted cash of $ 1.4 million.

a non-cash financing activity during the year ended December 31, 2022.

October 13, 2022, through an indirect majority-owned subsidiary of our Operating Company, we completed the acquisition of an approximately

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December 2, 2022, an indirect majority-owned subsidiary of our Operating Company acquired a 99 % controlling interest in a jointly-owned

investment with an unaffiliated third party to acquire an approximately

site, located in Nashville, Tennessee (“Nashville No.

4”) for a purchase price of $ 16.4

million, inclusive of transaction costs $ 0.2

This acquisition was deemed to be an asset acquisition and all direct transaction costs were capitalized.

The purchase price was allocated to land, building, intangible assets and below-market lease liability of $ 15.2

million, $ 0.8

million, $ 0.6

million and $ 0.4

million, respectively.

investment with an unaffiliated third party to acquire an approximately 5.9 -acre site, located in Nashville, Tennessee (“Nashville

4”) for a purchase price of $ 16.4 million, inclusive of transaction costs $ 0.2 million.

This acquisition was deemed to be an

asset acquisition and all direct transaction costs were capitalized.

The purchase price was allocated to land, building, intangible assets

and below-market lease liability of $ 15.2 million, $ 0.8 million, $ 0.6 million and $ 0.4 million, respectively.

All related assets and

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costs incurred.

of Real Estate During 2021

February 24, 2021, an indirect majority owned subsidiary of our Operating Company and an unaffiliated third party (the “JV Partner”)

entered into a limited liability company agreement (the “LLC Agreement”) for BPOZ 900 Eighth QOZB, LLC, a Delaware limited

liability company (“BPOZ 900 Eighth QOZB”).

BPOZ 900 Eighth QOZB was formed for purposes of acquiring all of the limited

partnership interests of 900 Eighth, LP, a Tennessee limited partnership (“900 Eighth”).

900 Eighth was formed to acquire

a 3.17 -acre land assemblage, consisting of a few small buildings, parking lots and open lots, located in Nashville, Tennessee (together

“900 8th Avenue South”).

Pursuant to the LLC Agreement, the JV Partner assigned the purchase and sale agreement for 900 8th

Avenue South together with a previously paid property deposit of $ 0.4 million to BPOZ 900 Eighth QOZB in exchange for the JV Partner’s

deemed initial capital contribution of $ 0.2 million (a non-cash investing activity during the year ended December 31, 2021) and a promissory

note (the “900 Eighth Promissory Note”) from 900 Eighth in the amount of $ 0.2 million.

The 900 Eighth Promissory Note, which

is included in Accrued expenses and other liabilities in our consolidated balance sheets, earns interest at the greater of (i) 1 % per

annum, or (ii) the short-term adjusted applicable federal rate for the current month for purposes of Section 1288(b) of the Code, and

was repaid in full in April 2022.

On May 28, 2021, 900 Eighth completed the acquisition of 900 8th Avenue South for a purchase price

of $ 19.7 million, inclusive of transaction costs of $ 0.1 million.

We funded this acquisition with proceeds from the Secured Notes.

acquisition was deemed to be an asset acquisition and all transaction costs were capitalized.

All related assets were recorded at their

relative fair values based on the purchase price and acquisition costs incurred.

We anticipate funding entitlement and development costs

with a mix of equity investments by the JV Partner and proceeds from the Primary Offering.

March 12, 2021, through an indirect majority-owned subsidiary of our Operating Company, we completed the acquisition of a parcel of land

with a two-tenant retail building and a parking lot located in St.

Petersburg, Florida, for a purchase price of $ 2.5 million, inclusive

of transaction costs of $ 0.1 million.

We funded this acquisition with proceeds from the Secured Notes.

This acquisition was deemed to

be an asset acquisition and all transaction costs were capitalized.

The purchase price was allocated to land, building, intangible assets

and below-market lease liability of $ 1.9 million, $ 0.6 million, $ 0.2 million and $ 0.2 million, respectively.

All related assets and liabilities,

including identifiable intangibles, were recorded at their relative fair values based on the purchase price and acquisition costs incurred.

May 7, 2021, through an indirect majority-owned subsidiary of our Operating Company, we completed the acquisition of a 1.205 -acre site,

consisting of a retail building and parking lot located in Sarasota, Florida, for a purchase price of $ 4.7 million, inclusive of transaction

costs of $ 0.1 million.

We funded this acquisition with proceeds from the Secured Notes.

The sole tenant in the building vacated in January

2022 and the property will be used as a future development site.

This acquisition was deemed to be an asset acquisition and all transaction

costs were capitalized.

The purchase price was allocated to land and intangible in-place lease assets of $ 4.5 million and $ 0.2 million,

respectively.

All related assets, including identifiable intangibles, were recorded at their relative fair values based on the purchase

price and acquisition costs incurred.

July 15, 2021, through an indirect majority-owned subsidiary, we completed the acquisition of a 9 -acre parcel of land located in Storrs,

Connecticut, for a purchase price of $ 0.1 million, inclusive of transaction costs of less than $ 0.1 million.

We funded the purchase price

with proceeds from the Secured Notes and anticipate holding Storrs Road for future multifamily development.

October 29, 2021, through certain indirect majority-owned subsidiaries of our Operating Company, we completed the acquisition of an approximately

8 -acre site consisting of two industrial buildings and associated parking located in Nashville, Tennessee, for a purchase price of $ 21.0

million, inclusive of transaction costs of $ 0.2 million.

This acquisition was deemed to be an asset acquisition and all transaction costs

were capitalized.

All related assets were recorded at their relative fair values based on the purchase price and acquisition costs incurred.

November 18, 2021, through an indirect majority-owned subsidiaries of our Operating Company, we completed the acquisition of an approximately

1.66 -acre site consisting of a 10,000 square foot retail building and associated parking lot located in Nashville, Tennessee, for a purchase

price of $ 2.1 million, inclusive of transaction costs of $ 0.1 million.

The building was leased back to the seller through November 2023,

with the ability to continue month to month thereafter.

This acquisition was deemed to be an asset acquisition and all transaction costs

were capitalized.

The purchase price was allocated to land, building and in-place lease intangible asset of $ 1.8 million, $ 0.2 million

and $ 0.1 million, respectively.

All related assets and liabilities, including identifiable intangibles, were recorded at their relative

fair values based on the purchase price and acquisition costs incurred.

November 30, 2021, pursuant to the terms of an Agreement to Accept Interests in Satisfaction of Obligations, through an indirect majority

owned subsidiary, we acquired the 1991 Main Interest from BI Holding for a gross purchase price of $ 33.9 million, excluding the Acquisition

Loan of $ 10.8 million which assumed in connection with the transaction.

On April 22, 2022, the Acquisition Loan was repaid in full.

“ Note 5 – Related Party Agreements ” for additional details regarding our transactions with BI Holding.

This acquisition

was deemed to be an asset acquisition and all transaction costs were capitalized.

All related assets and liabilities, including identifiable

intangibles, were recorded at their relative fair values based on the purchase price and acquisition costs incurred.

The purchase price

was allocated as follows (amounts in thousands):

Schedule of Real Estate Properties

November 30, 2021

Building and improvements (1)

Intangible assets (1)

Real estate under construction (1)

Total Real estate (1)

Accumulated depreciation and amortization (1)

Real estate, net (1)

Cash and cash equivalents

Other assets (2)

Debt, net (1)

Due to affiliates (1)

Accounts payable (1)

Accrued expenses and other liabilities (1)

Total liabilities

Total net assets

non-cash investing activity during the year ended December 31, 2021.

restricted cash of $ 0.3 million.

The remaining $0.2 million represents non-cash investing activity during the year ended December

December 21, 2021, through an indirect majority-owned subsidiary of our Operating Company, we completed the acquisition of a 0.129 -acre

site, consisting of a fully leased singly-story 5,328 gross square foot mixed-use building, located in St.

Petersburg, Florida (“901-909

Central”), for a purchase price of $ 2.6 million, inclusive of transaction costs of $ 0.1 million.

This acquisition was deemed to

be an asset acquisition and all transaction costs were capitalized.

The purchase price was allocated to land, building, in-place lease

intangible asset and below-market lease liability of $ 1.1 million, $ 1.6 million, $ 0.4 million and $ 0.5 million, respectively.

assets and liabilities, including identifiable intangibles, were recorded at their relative fair values based on the purchase price and

acquisition costs incurred.

expense was $ 0.7 million and $ 0.2 million for the years ended December 31, 2022 and 2021, respectively.

Estate Under Construction

following table provides the activity of our Real estate under construction (amounts in thousands):

Schedule of Real Estate Under Construction

of Real Estate Under Construction

Beginning balance

1 unchanged sentence

Land held for development (3)

Impairment charges (4)

Capitalized interest

Acquisition of construction in progress (1)

Ending balance

non-cash investing activity of $ 13.9

million (inclusive of land contributed by one of the CMC JV Partners, unpaid development fees of $ 4.3

million, and unpaid employee cost sharing and reimbursements of $ 0.3 million) and $ 1.6

million for the years ended December 31, 2022 and 2021, respectively.

See “ Note 5 – Related Party Agreements ” for additional details

regarding our transactions with related parties .

development fees and employee reimbursement expenditures of $ 5.6 million and $ 2.7 million for the years ended December 31, 2022 and

2021, respectively.

development fees and employee reimbursement expenditures.

See “ Note 4 – Related Party Agreements ” for additional

details regarding our transactions with related parties.

direct and indirect project costs to the construction and development of real estate projects, including but not limited to loan

fees, property taxes and insurance, incurred of $ 2.2 million and $ 0.5 million for the years ended December 31, 2022 and 2021, respectively.

ground lease payments and straight-line rent adjustments incurred of $ 0.8 million and less than $ 0.1 million for the years ended

December 31, 2022 and 2021, respectively.

fees, property taxes and insurance, incurred of $ 3.4 million and $ 2.2 million for the years ended December 31, 2023 and 2022,

respectively.

the acquisition of land located in Sarasota, Florida during the year ended December 31, 2023 as discussed above.

Additionally,

includes ground lease payments and straight-line rent adjustments incurred of $ 0.1 million and $ 0.8 million for the years ended December 31,

2023 and 2022, respectively.

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 estimated fair market value.

estate under construction includes non-cash investing activity of $ 27.6 million for year ended December 31, 2023 (inclusive of unpaid

development fees of $ 6.1 million and unpaid employee cost sharing and reimbursements of $ 1.3 million) and $ 13.9 million for the year

ended December 31, 2022 (inclusive of land contributed by one of the CMC JV partners, unpaid development fees of $ 4.3 million and

unpaid employee cost sharing and reimbursements of $ 0.3 million).

Depreciation expense was $ 0.8 million, and $ 0.7 million for the years ended December 31, 2023, and 2022, respectively,

and is included in Depreciation and amortization in our consolidated statements of operations.

6 – Intangible Assets and Liabilities

following table summarizes our intangible assets and liabilities (amounts in thousands):

Schedule of Intangible Assets And Liabilities

of Intangible Assets And Liabilities

Gross Carrying Amount

8 unchanged sentences

Development rights

Ground lease purchase option

Total intangible assets

3 unchanged sentences

lease intangible assets recorded for acquisitions of real estate during 2022, noted above, are included in Intangible assets in our consolidated

balance sheet and are being amortized over a weighted average lease term of approximately 1.1 years.

balance sheets and are being amortized over a weighted average lease term of approximately 1.1 years.

See “ Note 5 – Real Estate, Net ” for additional details regarding our acquisitions of real estate during 2022.

In-place lease intangible assets recorded

for acquisitions of real estate during 2021, noted above, are included in Intangible assets in our consolidated balance sheet and are

being amortized over a weighted average lease term of 3.5 years.

See “ Note 6 – Real Estate, Net ” for additional details

regarding our acquisitions of real estate during 2021.

the years ended December 31, 2022 and 2021, the amortization of in-place lease intangible assets was $ 0.6 million and $ 0.4 million, respectively,

and is included in Depreciation and amortization expense in our consolidated statements of operations.

assets recorded in connection with our acquisition of the 1991 Main Interest (as described in greater detail in “ Note 5 - Related Party Arrangements, ” and “ Note 6 – Real Estate, Net ”) include land development rights of $ 5.7 million (which

have a perpetual legal and economic life) and an exercised ground lease purchase option of $ 1.1 million and are included in Intangible

assets in our consolidated balance sheet as of December 31, 2021.

Upon the adoption of ASC 842 on the Date of Adoption, the ground lease

purchase option recognized was reclassified to a ROU operating asset.

As discussed further in “ Note 4 - Leases ”, the settlement

date to close on the exercised purchase option on our ground lease was extended in December 2022 to April 30, 2023.

Accordingly, as of

the remeasurement date on December 29, 2022, we reclassified this contract from an operating lease to a finance lease and recorded a

ROU asset of $ 5.0 million for the right to use the underlying asset during the lease term, which is included in Other assets in our consolidated

balance sheet.

See “ Note 6 – Real Estate, Net ” for additional details regarding our ROU asset as of December 31, 2022.

the years ended December 31, 2023, and 2022, the amortization of in-place lease intangible assets was $ 1.2 million, and $ 0.6 million,

respectively, and is included in Depreciation and amortization in our consolidated statements of operations.

below-market lease liabilities recorded for acquisitions of real estate during 2022, noted above, are included in Lease liabilities in

1 unchanged sentence

See “ Note 5 – Real Estate, Net ” for additional details regarding our acquisitions of real estate during 2022.

The below-market lease

liabilities recorded for acquisitions of real estate during 2021, noted above, are included in Lease liabilities in our consolidated

balance sheets and are being amortized over a weighted average lease term of approximately 5.2 years.

See “ Note 6 – Real Estate, Net ” for additional details regarding our acquisitions of real estate during 2021.

the years ended December 31, 2022 and 2021, the amortization of below-market lease liability was $ 0.3 million and $ 0.1 million, respectively,

and is included in Rental revenue in our consolidated statements of operations.

on the intangible assets and liabilities recorded as of December 31, 2022, scheduled annual net amortization of intangibles for the next

five calendar years and thereafter is as follows (in thousands):

the years ended December 31, 2023, and 2022, the amortization of below-market lease liability was $ 0.8 million and $ 0.3 million,

respectively, and is included in Rental revenue in our consolidated statements of operations.

on the intangible assets and liabilities recorded as of December 31, 2023, scheduled annual net amortization of intangibles for

the next five calendar years and thereafter is as follows (in thousands):

Schedule of Annual Net Amortization of Intangibles

Years Ending December 31,

Rental Revenue

Increase in Rental Revenue

Increase to Amortization

7 – Loans Receivable

described in greater detail in “ Note 5 - Related Party Arrangements ” and “ Note 6 – Real Estate, Net ”, pursuant

to the terms of the BI Secured Note, Belpointe REIT provided BI Holding with a $ 24.8 million loan, bearing interest at an annual rate

of 5.0 % and due and payable at maturity on September 14, 2022.

Effective 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.

September 30, 2021, we lent approximately $ 3.5 million to CMC (the “CMC Loan”) 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,

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 REIT.

See “ Note 2 – Exchange Offer, Conversion and Merger, ” for additional

details regarding the Transaction.

Interest accrued on the CMC Note at an annual rate of 12.0 %, and was due and payable at maturity on

June 27, 2022 .

On June 28, 2022, CMC repaid the CMC Note in full, including accrued interest of $ 0.3 million.

January 3, 2022, through an indirect wholly owned subsidiary, we provided a commercial mortgage loan in the principal amount of $ 30.0

million to Norpointe, an affiliate of our Chief Executive Officer.

The Norpointe Loan was evidenced by a promissory note bearing interest

at an annual rate of 5.0 %, was due and payable on December 31, 2022 , and was secured by a first mortgage lien on the Norpointe Property.

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 through an indirect majority owned subsidiary.

The Restructured Norpointe Loan was evidenced by a

promissory note bearing interest at an annual rate of 5.0 %, due and payable on June 28, 2023 , and was secured by a first mortgage lien

on the Norpointe Property.

On December 13, 2022, the Restructured Norpointe Loan was repaid in full, including accrued interest of less

than $ 0.1 million.

See “ Note 5 – Related Party Arrangements ” for additional details regarding our transactions with

February 23, 2022, through an indirect wholly-owned subsidiary, we provided a commercial mortgage loan in the principal amount of approximately

$ 5.0 million (the “Visco Loan”) to Visco Propco, LLC (“Visco”).

Visco is the owner of certain real property located

at 801 Visco Drive, Nashville, Tennessee 37210 (the “Visco Property”).

The Visco Loan was evidenced by a promissory note

bearing interest at an annual rate of 6.0 %, due and payable on February 18, 2023 , and was secured by a first lien deed of trust on the

Visco Property.

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

income from loans receivable was $ 1.8 million and $ 0.4 million for the years ended December 31, 2022 and 2021, respectively, and is included

in Interest income in our consolidated statements of operations.

described in greater detail in “ Note 4 - Related Party Arrangements ”, pursuant to the terms of the BI

Secured Note, Belpointe REIT provided BI Holding with a $ 24.8

million loan, bearing interest at an annual rate

and due and payable at maturity on September 14, 2022.

Effective 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.

September 30, 2021, we lent approximately $ 3.5 million to CMC (the “CMC Loan”) 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 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 REIT.

Interest accrued on the CMC Note at an annual rate of 12.0 %, and was due

and payable at maturity on June 27, 2022.

On June 28, 2022, CMC repaid the CMC Note in full, including accrued interest of

$ 0.3 million.

January 3, 2022, we provided a $ 30.0 million commercial mortgage loan to Norpointe, LLC (“Norpointe”) an affiliate

of our Chief Executive Officer, pursuant to the terms of a secured promissory note bearing interest at an annual rate of 5.0 %, was

due and payable on December 31, 2022 (the “Norpointe Loan”).

On June 28, 2022, for purposes of complying with the

qualified opportunity fund requirements under the Internal Revenue Code of 1986, as amended (the “Code”), and related

Treasury Regulations, we restructured the Norpointe Loan through an indirect majority owned subsidiary (the “Restructured

Norpointe Loan”).

The Restructured Norpointe Loan was evidenced by a secured promissory note bearing interest at an annual

rate of 5.0 %, due and payable on June 28, 2023.

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

including accrued interest of less than $ 0.1 million.

See “ Note 4 – Related Party

Arrangements ” for additional details regarding our transactions with Norpointe.

February 23, 2022, we provided an approximately $ 5.0 million commercial mortgage loan to Visco Propco, LLC (“Visco”) pursuant

to the terms of a secured promissory note bearing interest at an annual rate of 6.0 %, due and payable on February 18, 2023 (the

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

income from loans receivable was zero , and $ 1.8 million, for the years ended December 31, 2023, and 2022, respectively, and is

included in Interest income in our consolidated statements of operations.

8 – Debt, Net

net consisted of one non-recourse mortgage loan—the Acquisition Loan (as described in greater detail in “ Note 6 – Real Estate, Net, ”)—which was guaranteed by our Chief Executive Officer and held with an unrelated third party, and which was

collateralized by the assignment of real property with a carrying value of $ 33.1 million at December 31, 2021.

As of December 31, 2021,

the Acquisition Loan had an outstanding balance of $ 10.8 million (excluding debt discount net of accumulated amortization of less than

$ 0.1 million) and a fixed annual interest rate of 4.75 %.

The Acquisition Loan, including outstanding interest of less than $ 0.1 million,

was repaid in full on April 22, 2022.

May 12, 2023, our indirect majority-owned subsidiary (the “Mortgage Borrower”) entered into a variable-rate construction

loan agreement (the “1991 Main Construction Loan Agreement”) for up to $ 130.0

million in principal amount (the “1991 Main Construction Loan”) with Bank OZK (the “Mortgage Lender”), which

is secured by our investment in 1991 Main Street, Sarasota, Florida (“1991 Main”).

Advances under the 1991 Main

Construction Loan bear interest at a per annum rate equal to the one-month term SOFR plus 3.45 % ,

subject to a minimum all-in per annum rate of 8.51 % ,

and will be used to fund the development of 1991 Main.

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, and have incurred interest expense of $ 0.1

million which was capitalized to Real estate under construction in our consolidated balance sheets.

We incurred deferred financing

costs of $ 4.0

million (inclusive of debt discount of $ 1.4

million) for the 1991 Main Construction Loan which are reflected as a component of Debt, net in our consolidated balance sheets as of

December 31, 2023.

During the construction period, the deferred financing costs are amortized to Real estate under construction

in our consolidated balance sheets.

As of December 31, 2023, the accumulated amortization for deferred financing costs was

In connection with the 1991 Main Construction Loan, we provided a carveout

guaranty to the Lender (the “Guaranty”) pursuant to which we guaranteed the Borrower’s obligations to the Lender with

respect to certain non-recourse carveout events, such as “bad acts,” environmental conditions, and violations of certain provisions

of the loan documents.

The Guaranty contains financial covenants requiring that we maintain liquid assets of no less than $ 20.0 million

and a net worth of no less than $ 130.0 million.

As of December 31, 2023, the Company was in compliance with all covenants under the

with the Borrower, we also provided a customary environmental indemnity agreement to the Lender pursuant to which we agreed to protect,

defend, indemnify, release and hold harmless the Lender from and against certain environmental liabilities related to 1991 Main.

9 – Fair Value of Financial Instruments

18 unchanged sentences

judgment or estimation.

carrying value of our loans receivable totaled zero and $ 3.5 million as of December 31, 2022 and 2021, respectively, and had estimated

fair values of zero and $ 3.5 million as of December 31, 2022 and 2021, respectively.

We determined the estimated fair value of our loans

receivable using a discounted cash flow model taking into account the investments liquidity, the strength of the loan collateral, quality

of the credit profile of the obligor, term to maturity and the likelihood of a liquidity event, among other factors.

These fair value

measurements fall within Level 3 of the fair value hierarchy.

estimated that our other financial assets and liabilities had fair values that approximated their carrying values as of December 31,

2023 and 2022.

Fair Value Measurements

measured at fair value on a recurring basis is comprised of our interest rate cap (see Note 10 – Derivative Instruments).

The valuation of our interest rate cap is

prepared by an independent third-party and is classified as Level 2 in the fair value hierarchy, as the valuation is approximated

using market values of similar instruments in active markets.

10 – Derivative Instruments

1991 Main Construction Loan Agreement required the Borrower to enter into an interest rate cap agreement with a one-month SOFR rate

based strike price of 5.07 %

(the “1991 Main Interest Rate Cap”).

The notional amount of the 1991 Main Interest Rate Cap increases in accordance with

the schedule set forth in the interest rate cap agreement up to a maximum notional amount of $ 112.5

following table details our derivative financial instrument as of December 31, 2023 (amounts in thousands):

of Table Derivative Financial Instrument

Interest Rate Derivative

Notional Amount

Maturity Date

Fair Value (1)

1991 Main Interest Rate Cap

in Other assets in our consolidated balance sheets.

following table details the effect of our derivative financial instrument on our consolidated statement of operations for the

year ended December 31, 2023 (amounts in thousands):

of Table Details Effect Derivative Financial Instrument

Interest Rate Derivative

Location of Gain (Loss)

1991 Main Interest Rate Cap

Other expense

11 – Members’ Capital

6 unchanged sentences

of an unlimited number of Class A units, 100,000 Class B units and one Class M unit.

the years ended December 31, 2022 and 2021, we issued 141,300 Class A units and 3,382,049 Class A units (inclusive of 1,250,010 Class

A units exchanged in connection with the Merger), respectively.

See “ Note 2 – Exchange Offer, Conversion and Merger, ”

for additional details regarding the Merger.

As of December 31, 2022, there were 3,523,449 Class A units, 100,000 Class B units and one

Class M unit issued and outstanding.

As of December 31, 2021, there were 3,382,149 Class A units, 100,000 Class B units and one Class

M unit issued and outstanding.

of December 31, 2021, there were 202,952 Class A units issued by the Company pursuant to subscription agreements which had not yet settled.

Accordingly, $ 20.3 million was a non-cash financing activity during 2021 and was recorded as a Subscriptions receivable in our consolidated

balance sheet relating to such units issued as of December 31, 2021.

All of these funds were received during January 2022.

the years ended December 31, 2023, and 2022, we issued 98,950 , and 141,300 , respectively, Class A units.

As of December 31,

2023, there were 3,622,399 Class A units, 100,000 Class B units and one Class M unit issued and outstanding.

As of December 31,

2022, there were 3,523,449 Class A units, 100,000 Class B units and one Class M unit issued and outstanding.

payment in full of any consideration payable with respect to the initial issuance of our Class A units, the holder thereof will not be

36 unchanged sentences

and set the designations, preferences, rights, powers and duties of such classes or series.

Subscriptions

receivable consist of Class A units that have been issued with subscriptions that have not yet settled.

As of December 31, 2022 and 2021,

there was zero and $ 20.3 million, respectively, in subscriptions that had not yet settled.

Subscriptions receivable are carried at cost,

which approximates fair value.

and Diluted Loss Per Class A Unit

1 unchanged sentence

respectively.

For the years ended December 31, 2022 and 2021, net loss attributable to our Class A units was $ 7.7

million and $ 3.1 million,

respectively, and the loss per basic and diluted unit was $ 2.25 and

respectively.

For the years ended December 31, 2023, and 2022, net loss attributable to our Class A units was $ 14.4 million, and

$ 7.7 million, respectively, and the loss per basic and diluted unit was $ 4.04 , and $ 2.25 , respectively.

12 – Commitments and Contingencies

of December 31, 2022, the Company is not subject to any material litigation nor is the Company aware of any material litigation threatened

the year ended December 31, 2022, we entered into a construction management agreement in connection with the development of one of our

commercial real estate properties.

As of December 31, 2022, we had an unfunded capital commitment of $ 144.3 million (excluding capitalized

interest, development fees and indirect project costs) under the terms of this agreement.

We expect to incur this capital commitment

incrementally over the course of the next 18 months.

As of December 31, 2022, $ 6.6 million, inclusive of retainage of $ 1.9 million, is

outstanding and payable in connection with this development.

of December 31, 2023, the Company is not subject to any material litigation nor is the Company aware of any material litigation

threatened against it.

connection with the development of our commercial real estate assets, we have entered into separate construction management

agreements for each asset which contain terms and conditions that are customary for the related scope of work.

As of December 31,

2023, we have two development projects with an aggregate unfunded commitment of $ 102.1 million.

As of December 31, 2023, $ 19.2

million, inclusive of retainage of $ 12.2 million, is outstanding and payable in connection with these developments.

13 – Subsequent Events

has evaluated subsequent events to determine if events or transactions occurring after the balance sheet date through the date the audited

consolidated financial statements were available for issuance require potential adjustment to or disclosure in the audited consolidated

financial statements and has concluded that all such events or transactions that would require recognition or disclosure have been recognized

or disclosed.

has evaluated subsequent events to determine if events or transactions occurring after the balance sheet date through the date the

audited consolidated financial statements were issued require potential adjustment to or disclosure in the audited consolidated

financial statements and has concluded that, except as set forth below and disclosed herein, all such events or transactions that would require

recognition or disclosure have been recognized or disclosed.

Loan Agreement

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 Loan”) with Southern Realty Trust Holdings, LLC (the “Mezzanine

The 1991 Main Mezzanine Loan bears interest at a rate of 13.0 % per

annum and is secured by our investment in 1991 Main.

Advances under the 1991 Main Mezzanine Loan may be used to reimburse us for

certain costs and expenses incurred in relation to, and to fund the continued development of, 1991 Main.

The 1991 Main Mezzanine

Loan has an initial maturity date of May

12, 2027 and contains a one-year extension

option, subject to certain restrictions.

In connection with the 1991 Main Mezzanine Loan, we are required to maintain an interest reserve and carry reserve

for purposes of paying accrued but unpaid interest on the 1991 Main Mezzanine Loan and interest, principal and other obligations under

the 1991 Main Construction Loan (the “Reserves”).

We also provided the Mezzanine Lender with (i) a completion guaranty, which, among other things, guarantees completion of the work on 1991 Main, and (ii) a carveout

guaranty, which, among other things, indemnifies the Mezzanine Lender for losses resulting from certain “bad acts,”

insolvency, environmental conditions, violations of the terms of the 1991 Main Mezzanine Loan and certain provisions of the 1991 Main

Construction Loan Agreement (collectively, the “Mezzanine Guarantees”).

Similar to the Carveout Guaranty, we provided to the Mortgage Lender, the Mezzanine Guarantees

contain financial covenants requiring that we maintain liquid assets of no less than $ 20.0 million and a net worth of no less than $ 130.0

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

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

February 8 2024, the LH II Loan was repaid in full, including accrued interest (see Note 4 – Related Party Arrangements).

the date of this Form 10-K, we drew down $ 17.0 million on the 1991 Main Construction Loan.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures.

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 8. Financial Statements and Supplementary Data