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Item 9A. Controls and Procedures

2024-03-29 compared with 2023-03-31 · 77 added, 65 removed, 574 unchanged (20% of the section changed)

21 unchanged sentences

Based on such evaluation, our principal executive

officer and principal financial officer have concluded that as of December 31, 2022, our disclosure controls and procedures were effective

at the reasonable assurance level.

officer and principal financial officer have concluded that as of December 31, 2023, our disclosure controls and procedures were

effective at the reasonable assurance level.

Report on Internal Control Over Financial Reporting

Our management is responsible

for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is a process

designed under the supervision of management, including our Chief Executive Officer and principal financial officer, to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting

purposes in accordance with U.S.

Our internal control

over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect transactions and dispositions of our assets;

provide reasonable assurance that transactions are recorded

as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that our receipts and expenditures are being

made only in accordance with authorizations of management and our Board;

provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material

effect on our financial transactions.

management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over

financial reporting is a process designed under the supervision of management, including our Chief Executive Officer and principal financial

officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial

statements for external reporting purposes in accordance with U.S.

internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in

reasonable detail, accurately and fairly reflect transactions and dispositions of our assets;

provide reasonable assurance that transactions

are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that our receipts and expenditures

are being made only in accordance with authorizations of management and our Board;

and provide reasonable assurance regarding prevention

or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial

transactions.

management conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023

2022 based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission.

Based on its assessment, management has determined that our internal control over

financial reporting as of December 31, 2022 was effective.

based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations

of the Treadway Commission.

Based on its assessment, management has determined that our internal control over financial reporting as

of December 31, 2023 was effective.

in Internal Control Over Financial Reporting

have been no changes in our internal control over financial reporting during the year ended December 31, 2022 that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

have been no changes in our internal control over financial reporting during the year ended December 31, 2023 that have materially

affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

During the three months

ended December 31, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase

or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1

trading arrangement” (as defined in Item 408 of Regulation S-K of the Exchange Act).

Directors, Executive Officers and Corporate Governance.

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public accounting firm’s qualifications, independence and performance.

audit committee is comprised of Dean Drulias, Shawn Orser and Ronald Young Jr.

audit committee is comprised of Timothy Oberweger, Shawn Orser and Ronald Young Jr.

The chair of our audit committee is Shawn Orser.

has determined that each member of our audit committee satisfies the independence standards under Rule 10A-3 promulgated under the Exchange

Act and the NYSE American listing standards.

Our Board has determined that each member of our audit committee satisfies the independence standards under Rule 10A-3 promulgated under

the Exchange Act and the NYSE American listing standards.

The audit committee has a charter that is available on our website, www.belpointeoz.com ,

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expenses incurred in connection with attending board and committee meetings (including, but not limited to, airfare, hotel and food).

For the year ended December 31, 2022, all of our Board and committee meetings have been held virtually and our directors did not incur

any expenses in connection with attending board or committee meetings.

For the year ended December 31, 2023, all of our Board and committee meetings have been held virtually and our directors did not

incur any expenses in connection with attending board or committee meetings.

Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters.

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any person known to us to be the beneficial owner of more than 5% of our outstanding units.

of March 24, 2023, there were 3,523,449 Class A units issued and outstanding, 100,000 Class B units issued and outstanding and one Class

M unit issued and outstanding.

of March 22, 2024, there were 3,631,703 Class A units issued and outstanding, 100,000 Class B units issued and outstanding and one

Class M unit issued and outstanding.

ownership is determined in accordance with the rules of the SEC.

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(“Empirical”) on February 8, 2024.

According to the Schedule 13G, as of December 31, 2022, Empirical had sole power to

According to the Schedule 13G/A, as of December 31, 2023, Empirical had sole power to

vote or direct the vote of 275,137 of our Class A units beneficially owned and sole power to dispose of or direct the disposition

5 unchanged sentences

Certain Relationships and Related Transactions, and Director Independence.

following describes all transactions during the year ended December 31, 2022 and all currently proposed transactions involving us, our

executive officers, directors, Manager, Sponsor and any of their respective affiliates.

following describes all transactions during the year ended December 31, 2023 and all currently proposed transactions involving us,

our executive officers, directors, Manager, Sponsor and any of their respective affiliates.

Transactions with Belpointe REIT

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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.

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

million, was repaid in full on April 22, 2022.

Upon consummation of the Merger,

we acquired the BI Secured Note as successor in interest to Belpointe REIT.

The Acquisition Loan, including outstanding interest of less

than $0.1 million, was repaid in full on April 22, 2022.

to an Agreement to Accept Interest in Satisfaction of Obligations (the “Agreement to Accept”), effective November 30, 2021,

14 unchanged sentences

Loan, including accrued interest of less than $0.1 million, 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.

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 secured by a first mortgage lien on certain property owned by subsidiaries of the Company (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.

On February 8 2024, the LH II Loan was repaid in full, including accrued interest.

opportunity zone regulations allow us to apply the 90% Asset Test without taking into account any proceeds from our Primary Offering

55 unchanged sentences

or decreased, without the consent of our Manager.

During the years ended December 31, 2022 and 2021, we did not make any Class B unit

allocations or distributions to our Manager.

During the years ended December 31, 2023 and 2022, we did not make any Class B

unit allocations or distributions to our Manager.

to the Management Agreement, we reimburse our Manager and its affiliates, including our Sponsor, for actual fees and expenses incurred

5 unchanged sentences

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Transactions with Belpointe REIT, Inc.”

the years ended December 31, 2022 and 2021, our Manager and its affiliates, including our Sponsor, incurred $2.9 million and $1.3 million,

respectively, for fees and expenses on our behalf.

the years ended December 31, 2023, and 2022, our Manager and its affiliates, including our Sponsor, incurred $2.9 million, and $2.9

million, respectively, for fees and expenses on our behalf.

Employee and Cost Sharing Agreement

6 unchanged sentences

“Business—Human Capital .”

the years ended December 31, 2022 and 2021, our Sponsor and its affiliates incurred $1.8 million and $0.8 million, respectively, for

fees, expenses and employment costs on our behalf.

the both years ended December 31, 2023, and 2022, our Sponsor and its affiliates incurred $1.8 million for fees, expenses and employment costs on our behalf.

to the terms of development agreements that we enter into with affiliates of our Sponsor, such affiliates are entitled to receive (i)

2 unchanged sentences

incurred in connection with the project.

In connection with

our acquisitions of 902-1020 First and 900 8th Avenue South, a development fee of 4.5% of total project costs will be charged throughout

the course of each project (the “Development Fee”), of which one half was due at the close of each acquisition.

In connection

with our acquisition of 1991 Main Street, on 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 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 sheet.

The remaining development fee will be earned throughout

the project in accordance with the terms of the development management agreement.

connection with our acquisitions of 902-1020 First and 900 8th Avenue South, a development fee of 4.5% of total project costs will be

charged throughout the course of each project (the “Development Fee”), of which one half was due at the close of each acquisition.

In connection with our acquisition of 1991 Main Street, on 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 revised our construction budget.

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

earned throughout the project in accordance with the terms of the development management agreement.

development company receiving the Development Fee is indirectly owned by our Chief Executive Officer and beneficially owned by certain

3 unchanged sentences

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Investments—Investments in Multifamily and Mixed-Use Rental Properties.

the year ended December 31, 2022, we incurred $4.3 million for development fees, of which zero was paid, and we incurred $1.5 million

for employee reimbursement expenditures relating to projects under development, of which $1.2 million was paid.

During the year ended

December 31, 2021, we incurred $1.5 million for development fees, of which $1.5 million was paid, and we incurred $0.6 million for employee

reimbursement expenditures relating to projects under development, of which $0.3 million was paid.

the year ended December 31, 2023, we incurred $5.9 million for development fees, and we incurred

$1.7 million for employee reimbursement expenditures relating to projects under development.

year ended December 31, 2022, we incurred $4.3 million for development fees, and we incurred $1.5 million

for employee reimbursement expenditures relating to projects under development.

Class A units are listed on the NYSE American under the symbol “OZ.” Pursuant to NYSE American’s corporate governance

12 unchanged sentences

Year Ended December 31,

Year Ended December 31, 2021

Audit fees (1)

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The following exhibits are filed with this Form 10-K:

Incorporated by Reference

Agreement and Plan of Merger, dated as of April 21, 2021, by and among Belpointe PREP, LLC, BREIT Merger, LLC and Belpointe REIT, Inc.

6 unchanged sentences

Mortgage Deed and Security Agreement, dated January 3, 2022.

Promissory Note (Mezzanine Loan), dated as of January 31, 2024.

Subsidiaries of Registrant.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Belpointe PREP, LLC Clawback Policy.

XBRL Instance Document.

13 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures