Item 7. Management’s Discussion and Analysis
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The
following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited
consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K (this “Form 10-K”).
This discussion contains forward-looking statements that are subject to risks and uncertainties and assumptions relating to our operations,
financial results, financial condition, business prospects, growth strategy and liquidity. The factors listed under “Risk Factors”
and “Forward-Looking Statements” in this Form 10-K provide examples of risks, uncertainties and events that may cause our
actual results to differ materially from the expectations described in any forward-looking statements.
Overview
We
are the only publicly traded qualified opportunity fund listed on a national securities exchange. We are a Delaware limited liability
company formed to invest in and manage a portfolio consisting primarily of commercial real estate properties, real estate-related assets,
including commercial real estate loans and mortgages, and debt and equity securities issued by other real estate-related companies, and
private equity acquisitions and investments, and opportunistic acquisitions of other qualified opportunity funds and qualified opportunity
zone businesses. We currently intend to operate in a manner that will allow us to qualify as a partnership for U.S. federal income tax
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. We qualified as a qualified opportunity fund beginning
with our taxable year ended December 31, 2020. Because we are a qualified opportunity fund certain of our investors are eligible for
favorable capital gains tax treatment on their investments.
All
of our assets are and will continue to be held by, and all of our operations are and will continue to be conducted through, one or more
of our Operating Companies, either directly or indirectly through subsidiaries. We are externally managed by Belpointe PREP Manager,
LLC (our “Manager”), which is an affiliate of our sponsor, Belpointe, LLC (our “Sponsor”).
History
and Development of the Company
We
are the successor in interest to Belpointe REIT, Inc., a Maryland corporation (“Belpointe REIT”), incorporated on June 19,
2018. During the year ended December 31, 2021, we acquired all of the outstanding shares of common stock of Belpointe REIT in an exchange
offer and related conversion and merger transaction.
On
May 9, 2023, 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”).
In 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. The Dealer Manager has and will continue to 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.
For the year ended December 31, 2025, we issued 172,523 Class A units
in connection with our Follow-on Offering. Together with the gross proceeds raised in our primary offering, which expired in 2024 (our
“Primary Offering” and, together with the Follow-on Offering, our “Public Offerings”) and the gross proceeds raised
in Belpointe REIT’s prior offerings, as of December 31, 2025, we have raised aggregate gross offering cash proceeds of $368.6
million.
The
purchase price for Class A units in our Public Offerings is the lesser of (i) the NAV of our Class A units, and (ii) the average of the
high and low sale prices of our Class A units on the NYSE American during regular trading hours on the last trading day immediately preceding
the investment date on which the NYSE American was open for trading and trading in our Class A units occurred.
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Each
quarter, our Manager calculates our NAV and NAV per Class A unit as of the last day of the quarter (the “Determination Date”).
Our NAV per Class A unit is equal to our NAV as of the Determination Date, divided by the number of Class A units outstanding on the
Determination Date. We disclose our determination of NAV and NAV per Class A unit within approximately 60 days of the Determination Date.
Any adjustments to our NAV and the per Class A unit purchase price take effect as of the first business day following its public announcement.
As of December 31, 2025, our NAV per Class A units was $116.17.
Our
Business Outlook
Despite expectations of the U.S. falling into recession, market conditions
for multifamily and mixed-use rental properties in the geographic regions in which we operate have remained strong over the past several
quarters. Future economic conditions and the demand for multifamily and mixed-use rental properties are, and the real estate industry
in general is, subject to uncertainty as a result of a number of factors, including, among others, the rate of rent growth, rate of new
construction, rate of absorption, the rate of unemployment, the impact on regional labor markets as a result of changes in immigration
policies, increasing energy costs, increasing interest rates, higher rates of inflation, changes in the availability and price of insurance
coverage, the availability of credit and changes with respect to borrowing costs, financial market volatility, general economic uncertainty,
and other market conditions beyond our control, including impacts and uncertainties from political unrest, changes to trade policies,
trade disputes and tariffs, recent military actions in Iran and the Middle East, changes in federal income tax laws resulting from the
recent enactment of the One Big Beautiful Bill Act of 2025, and the forthcoming related administrative guidance and regulations, as well
as other recent and prospective legislation and regulation, including landlord-tenant laws in the markets in which we operate. The potential
effect of these and other factors and the projected impact of these and other events on our business, results of operations and financial
performance, presents material uncertainty and risk with respect to our future performance and financial results, including the potential
to negatively impact our costs of operations, our financing arrangements, the value of our investments, and the laws, regulations and
governmental and regulatory policies applicable to us. As a result, our past performance may not be indicative of future results.
Given
the evolving nature of certain of these factors, the extent to which they may impact our future performance and financial results will
depend on future developments which remain highly uncertain and, as a result, at this time we are unable to estimate the impact that
these factors may have on our future financial results. Our Manager continuously reviews our investment and financing strategies for
optimization and to reduce our risk in the face of the fluidity of these and other factors.
Results
of Operations
The
results of operations below presents the operating results of our two reportable segments, Commercial and Mixed-use, along with our consolidated
results for the years ended December 31, 2025, and 2024. We believe that analyzing net operating income (loss) (“NOI”) at
the segment level (“Segment NOI”) provides a useful financial performance measure, because it reflects the core rental operations
of our real estate assets. We calculate Segment NOI as rental revenue, less property expenses, excluding non-segment NOI (“Non-Segment
NOI”). Non-Segment NOI includes corporate level items, such as management fees incurred to our Manager, general and administrative
expenses, interest expense, depreciation and amortization, interest income and other non-operating items.
NOI
is not a financial measure included in accounting principles generally accepted in the United States of America (“U.S. GAAP”),
however it is widely used in the real estate industry as a measure of the operating performance of real estate assets. Notwithstanding
its common usage, NOI should not be considered as an alternative to net income (loss), operating income (loss), or cash flow from operating
activities as determined in accordance with U.S. GAAP. Our computation of NOI may differ from methods used by other companies, and therefore
may not be comparable. A reconciliation of Segment NOI to the most directly comparable U.S. GAAP measure has been included below.
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Comparison
of the Year Ended December 31, 2025 to the Year Ended December 31, 2024
The
following table sets forth information regarding our results of Segment NOI, reconciled to our consolidated statement of operations,
for the years ended December 31, 2025, and 2024 (amounts in thousands):
Years Ended December 31,
2025
2024
Commercial Segment
Mixed-use Segment
Total
Commercial Segment
Mixed-use Segment
Total
Segment NOI:
Rental revenue
$ 936
$ 8,251
$ 9,187
$ 1,099
$ 1,576
$ 2,675
Property expenses
(2,077 )
(9,580 )
(11,657 )
(1,145 )
(2,989 )
(4,134 )
Total Segment NOI
$ (1,141 )
$ (1,329 )
$ (2,470 )
$ (46 )
$ (1,413 )
$ (1,459 )
Non-segment items:
Management fees, included in Property expenses
(3,309 )
(2,705 )
General and administrative
(6,166 )
(5,111 )
Interest expense
(17,441 )
(10,006 )
Depreciation and amortization
(8,707 )
(4,215 )
Impairment of real estate
—
(777 )
Interest income
1,028
646
Other expense
(46 )
(228 )
Loss on extinguishment of debt
(2,960 )
—
Loss before income taxes
(40,071 )
(23,855 )
Provision for income taxes
—
(1 )
Net loss
(40,071 )
(23,856 )
Net loss attributable to noncontrolling interests
25
—
Net loss attributable to Belpointe PREP, LLC
$ (40,046 )
$ (23,856 )
Segment
NOI
Commercial
Segment
For
the year ended December 31, 2025, as compared to the same period in 2024, Segment NOI decreased by $1.1 million. This decrease is primarily
due to higher real estate tax expenses.
Mixed-use
Segment
For the year ended
December 31, 2025, as compared to the same period in 2024, Segment NOI increased by $0.1 million. The increase in both rental revenues
and property expenses relates to the continued stabilization of Aster & Links, which commenced lease-up June 30, 2024, as well as
VIV, which commenced leasing activities in the fourth quarter of 2025. As a result, Mixed-use Segment NOI is not directly comparable
from year to year. See “ Part I, Item 1—Our Investments ” for a more detailed discussion of Aster
& Links and the recent substantial completion of VIV.
Non-Segment
NOI
Management
Fees
Pursuant
to the terms of a Management Agreement by and among us, our Operating Companies and our Manager (the “Management Agreement”),
we pay our Manager a quarterly management fee in arrears of one-fourth of 0.75%. The management fee is based on our NAV at the end of
each quarter. For the year ended December 31, 2025, as compared to the same period in 2024 management fees increased by $0.6 million
due to an increase in our NAV.
General
and Administrative
General
and administrative expenses primarily consists of employee cost sharing expenses (pursuant to our Management Agreement and the
Amended and Restated Services and Cost Sharing Agreement (the “Services and Cost Sharing Agreement”) by and among us,
our Operating Companies, our Manager, our Sponsor and certain of our Sponsor’s subsidiaries, associates and affiliates (collectively, the “Sponsor Group”)), marketing expenses,
legal, audit, tax and accounting fees. See “ Certain Relationships and Related Transactions, and Director
Independence—Our Management Agreement ” for additional details regarding our Management Agreement, and “ Certain
Relationships and Related Transactions, and Director Independence—Our Services and Cost Sharing Agreement ” for
additional details regarding our Services and Cost Sharing Agreement.
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For
the year ended December 31, 2025, as compared to the same period in 2024, general and administrative expenses increased by $1.1 million.
This increase is primarily due to the capitalization of certain employee cost sharing and reimbursements to our Manager in the prior year period, which are no longer being capitalized in the current year period, as well as an increase in legal
expenses incurred.
Interest
Expense
During
the years ended December 31, 2025 and 2024, interest expense totaled $17.4 million and $10.0 million, respectively, consisting of
gross interest expense of $19.7 million and $12.1 million, respectively, and the impact of non-cash amortization of debt discount
and debt issuance costs of $2.7 million and $2.3 million, respectively, partially offset by capitalized interest and fees of $5.0
million and $4.4 million, respectively. The increase in interest expense is primarily due to a higher weighted average outstanding
debt balance and lower capitalized interest and fees.
Depreciation
and Amortization
For
the year ended December 31, 2025, as compared to the same period in 2024, depreciation and amortization increased by $4.5 million. This
increase is primarily due to the placement of fixed assets in service at Aster & Links and VIV which primarily occurred during the
second quarter of 2024 and the fourth quarter of 2025, respectively.
Impairment
of Real Estate
During
the year ended December 31, 2024, we recorded impairment charges of $0.8 million, in relation to one of our real estate assets located
in Nashville, Tennessee, based on our conclusion that the estimated fair market value of the real estate asset was lower than the carrying
value, and as a result, we reduced the carrying value to the fair market value.
Interest
Income
Interest
income for the periods presented were comprised of interest earned from cash balances held in interest bearing bank accounts. The increase
in the current year periods as compared to the prior year periods were attributable to higher cash balances in interest bearing accounts.
Other
expense
Other
expense for the periods presented were primarily comprised of losses in connection with our interest rate caps. Please see “ Note 9 – Derivative Instruments ” in our consolidated financial statements in this Form 10-K for additional details regarding our interest rate caps.
Loss
on extinguishment of debt
During
the year ended December 31, 2025, in connection with the Aster & Links Refinance Transactions, we recorded a loss on
extinguishment of debt of $3.0 million, which includes a non-cash write off of unamortized deferred financing costs of $2.6 million.
See “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota, Florida (“Aster
& Links”)—Aster & Links Mortgage and Mezzanine Loans ” above, and “ Note
7– Debt, Net ” in our consolidated financial statements for a more detailed discussion of the Aster & Links
Refinance Transactions.
Liquidity
and Capital Resources
Overview
Our
primary needs for liquidity and capital resources are to fund our investments, including construction and development costs, pay our
Follow-on Offering and operating fees and expenses, pay any distributions that we may make to the holders of our units and pay interest
on our outstanding indebtedness.
Our
Follow-on Offering and operating fees and expenses include, among other things, legal, audit and valuation fees and expenses, federal
and state filing fees, SEC, FINRA and NYSE filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution
fees, the management fee that we pay to our Manager, and fees and expenses related to acquiring, financing, appraising, and managing
our commercial and mixed-use properties. We are externally managed and do not have office or personnel expenses as we do not have any
employees.
Liquidity
Our
future needs for liquidity will depend on a variety of factors, including, without limitation, our ability to generate cash flows from
operations, the timing and availability of net proceeds from our Follow-on Offering and any future offerings that we may conduct, the
timing and extent of our real estate acquisition and disposition activities, and the timing and extent of our construction and development
costs.
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Economic uncertainty, fluctuating interest rates, unemployment rates, energy
prices, trade disputes, tariffs, recent military actions in Iran and the Middle East, immigration, taxes, inflation, volatility in the
real estate markets, slowdowns in transaction volume, delays in financings from banks and other lenders and other negative trends may,
in the future, adversely impact our ability to timely access potential sources of liquidity. If we are unable to raise additional capital
when desired, or on terms that are acceptable to us, our business, financial condition and results of operations could be adversely affected.
We
believe that our cash on-hand, the anticipated net proceeds from our Follow-on Offering, and any future offerings that we may conduct,
the proceeds from our current debt obligations, the projected cash flows from our real estate assets and our current and anticipated
financing activities will be sufficient to meet our liquidity and capital resource requirements for the next 12 months from the date
of issuance of this Form 10-K.
Capital
Resources
Where our Manager and its affiliates, including our Sponsor, have funded,
and in the future if they continue to fund, our capital requirements by advancing us offering and operating fees and expenses, we reimburse
our Manager and its affiliates, including members of the Sponsor, Group pursuant to the terms of our M anagement
Agreement and Services and Cost Sharing Agreement. Fees payable and expenses reimbursable to our Manager and its affiliates, including
members of the Sponsor Group, may be paid, at the election of the recipient, in cash, by issuance of our Class A Units at the then-current
NAV, or through some combination of the foregoing. There were no Public Offering costs incurred by our Manager
and its affiliates during the years ended December 31, 2025 and 2024 . During the years
ended December 31, 2025 and 2024 , our Manager and its affiliates, including members of the Sponsor Group,
incurred operating expenses of $2.1 million and $2.6 million ,
respectively, on our behalf. Our M anager and its affiliates, including members of the Sponsor Group, have
deferred the collection of management fees and the reimbursement of operating fees and expenses, without interest, and may continue
to do so in the future, to support our operations and ensure that we maintain sufficient liquidity under the terms of our guaranty agreements.
All or any part of deferred fees and expenses may be taken in any period as determined by the Manager.
Aster
& Links
In
September 2025, we completed approximately $204.1 million in post-construction Aster & Links Refinance Transactions, the
proceeds of which were used to retire existing construction debt and will provide additional liquidity to support lease-up and
stabilization. In connection with the Aster & Links Refinance Transactions we also entered into a series of guaranty agreements
whereby we have guaranteed payment and performance of certain of the Aster & Links Borrowers’ obligations under the Aster
& Links Loan Agreements. The guaranty agreements require, among other things, that we maintain certain net worth and liquid
asset standards during the term of the Aster & Links Loans. As of December 31, 2025, we were in compliance with all of the
net worth and liquid asset standards. See “ Part I, Item 1—Our Investments—1991 Main Street
– Sarasota, Florida (“Aster & Links”)—Aster & Links Mortgage and Mezzanine Loans ” above,
and “ Note 7– Debt, Net ” in our consolidated financial statements for a more detailed
discussion of the Aster & Links Refinance Transactions.
As
of December 31, 2025, we had an unfunded capital commitment totaling $3.7 million under the 1991 Main CMA as well as other construction
related commitments for the development of Aster & Links. See “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota Florida (“Aster & Links”)—Aster & Links Construction Management Agreement ” above for
additional details regarding the 1991 Main CMA.
As
of the date of this Form 10-K, we currently anticipate that the remaining funding for construction and soft costs associated with the
development of Aster & Links will be a minimum of $12.4 million (inclusive of the aforementioned unfunded capital commitment). For
additional details regarding Aster & Links, see “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota Florida (“Aster & Links”) .”
VIV
As
of December 31, 2025, we have drawn down $81.3 million on the 1000 First Construction Loan and had an unfunded capital commitment of
$10.6 million under the 1000 First CMA. See “ Part I, Item 1—Our Investments—1000 First Avenue North and 900 First Avenue North – St. Petersburg, Florida (“VIV”) ” above for a more detailed discussion of the 1000 First Construction
Loan and 1000 First CMA.
As
of the date of this Form 10-K, we currently anticipate the remaining funding for construction and soft costs associated with the development
of VIV will be a minimum of approximately $13.3 million (inclusive of the aforementioned unfunded capital commitment). For additional
details regarding VIV, see “ Part I, Item 1—Our Investments—1000 First Avenue North and 900 First Avenue North – St. Petersburg, Florida (“VIV”) ”
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900
8th Avenue South
As
of December 31, 2025, we have drawn down $10.0 million on the 900 8th Land Loan, which is due to mature in July 2026. For additional
details regarding 900 8th Avenue South and 900 8th Land Loan, see “ Part I, Item 1—Our Investments—900 8th Avenue South – Nashville, Tennessee. ”
Short
and Long-Term Capital Resources
We
expect to continue to obtain the capital resources that we need over the short and long-term from cash on-hand, from the proceeds of
our Follow-on Offering and any future offerings that we may conduct, from the advancement of reimbursable fees and expenses by our
Manager and its affiliates, including member of the Sponsor Group, from the proceeds of our current debt obligations and future secured
or unsecured financing from banks and other lenders, from projected operating funds from our real estate assets and from any other
undistributed cash flow generated from operations. For additional details regarding our Public Offerings, see “ Part
II, Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities—Use of Proceeds from Registered Sales of Securities. ”
Leverage
We
employ leverage in order to provide more funds available for investment. We believe that careful use of conservatively structured leverage
will help us to achieve our diversification goals and potentially enhance the returns on our investments.
Our
targeted aggregate property-level leverage, excluding any debt at the Company level or on assets under development or redevelopment,
after we have acquired a substantial portfolio of stabilized commercial and mixed-use real estate, is between 50-70% of the greater of
the cost (before deducting depreciation or other non-cash reserves) or fair market value of our assets. During the period when we are
acquiring, developing and redeveloping our investments, we may employ greater leverage on individual assets. An example of property-level
leverage is a mortgage loan secured by an individual property or portfolio of properties incurred or assumed in connection with our acquisition
of such property or portfolio of properties. An example of debt at the Company level is a line of credit obtained by us or our Operating
Companies.
Our
Manager may from time to time modify our leverage policy in its discretion in light of then-current economic conditions, relative costs
of debt and equity capital, market values of our assets, general conditions in the market for debt and equity securities, growth and
acquisition opportunities or other factors. There is no limit on the amount we may borrow with respect to any individual property or
portfolio.
Cash
Flows
The
following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash (amounts in thousands):
Years Ended December 31,
2025
2024
Cash flows used in operating activities
$ (25,208 )
$ (13,689 )
Cash flows used in investing activities
(61,980 )
(138,089 )
Cash flows provided by financing activities
87,029
157,024
Net (decrease) increase in cash and cash equivalents, and restricted cash
$ (159 )
$ 5,246
As
of December 31, 2025 and 2024, cash and cash equivalents and restricted cash totaled approximately $28.7 million and $28.8 million, respectively.
Net
cash flows used in operating activities for the year ended December 31, 2025 primarily relates to interest expense incurred on our indebtedness,
the payment of employee cost sharing expenses as well as payments for property management, legal, and accounting fees. Operating revenues
from recently placed into service properties were substantially offset by the related operating expenses. Net cash flows used in operating
activities for the year ended December 31, 2024 primarily relates to the payment interest incurred on our indebtedness, the payment of
employee cost sharing expenses as well as payments for property management, legal, and accounting fees.
Net
cash flows used in investing activities for the year ended December 31, 2025 primarily relates to the funding of development properties.
For additional details regarding our development properties, see “ Part I, Item 1—Our Investments. ” Net cash flows used
in investing activities for the year ended December 31, 2024 primarily relates to the funding of development properties.
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Net
cash flows provided by financing activities for the year ended December 31, 2025 primarily relates to the net proceeds from debt financing
activities, including additional draws on the 1000 First Construction Loan and net cash proceeds generated from the Aster & Links
Refinancing Transactions further described in “ Part I, Item 1—Our Investments—1000 First Avenue North and 900 First Avenue North – St. Petersburg, Florida (“VIV”) ” and “ Part I, Item 1—Our Investments—1991 Main Street – Sarasota Florida (“Aster & Links”)—Aster & Links Mortgage and Mezzanine Loans. ” Net
cash flows provided by financing activities for the year ended December 31, 2024 primarily relates to the net proceeds from financings,
including the variable-rate construction loan with Bank OZK and mezzanine loan with Southern Realty Trust Holdings, LLC that were subsequently
retired by the Aster & Links Refinancing Transactions, the 1000 First Construction Loan, and the 900 8th Land Loan.
Critical
Accounting Estimates
Our
audited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States
of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an
ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under
the circumstances. Our actual results could differ from these estimates.
Our
significant accounting policies are described in “ Note 2 — Summary of Significant Accounting Policies. ”
Many of these accounting policies require judgment and the use of estimates and assumptions when applying these policies in the preparation
of our consolidated financial statements. On a quarterly basis, we evaluate these estimates and judgments based on historical experience
as well as other factors that we believe to be reasonable under the circumstances. These estimates are subject to change in the future
if underlying assumptions or factors change. Certain accounting policies, while significant, may not require the use of estimates. The
recent accounting changes that may potentially impact our business are described under “Recent Accounting Pronouncements”
in “ Note 2 — Summary of Significant Accounting Policies. ”
Off-Balance
Sheet Arrangements
We
currently have no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Emerging
Growth and Smaller Reporting Company Status
We
are an “emerging growth company,” as defined in the Jump Start Our Business Startups Act of 2012 (“JOBS Act”).
Under Section 107 of the JOBS Act, emerging growth companies are permitted to use an extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards that have different effective dates for public and private
companies.
We
have elected to use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised
accounting standards that have different effective dates for public and private companies until the earlier of (i) the last day of the
fiscal year (a) following the fifth anniversary of the effective date of our Primary Offering (which will fall on September 26, 2026),
(b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a “large accelerated
filer” (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), (ii) the
date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period, or (iii) the date
that we affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B). By electing to extend
the transition period for complying with new or revised accounting standards, our consolidated financial statements may not be comparable
to the consolidated financial statements of companies that comply with public company effective dates.
We
are also a “smaller reporting company” (as defined in Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K).
Even after we no longer qualify as an emerging growth company, we may remain a smaller reporting company and may continue to take advantage
of the scaled disclosure obligations available to smaller reporting companies. We will be a smaller reporting company until the last
day of the fiscal year in which (i) the market value of our Class A units held by non-affiliates exceeds $250 million, measured as of
the last business day of the immediately preceding second fiscal quarter, and (ii) our annual revenue exceed $100 million as of the most
recently completed fiscal year and the market value of our Class A units held by non-affiliates exceeds $700 million.
Item
7A. Quantitative and Qualitative Disclosures about Market Risk.
We
are a smaller reporting company, as defined in Item 10(f)(1) of Regulation S-K, as a result are not required to provide the information
required by this Item.
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