OZ

Business Context and Reporting Period

Company: Belpointe PREP, LLC (Ticker: OZ)
Filing Type: Form 10-Q (Unaudited)
Period Ended: September 30, 2025
Business Overview: A publicly traded Qualified Opportunity Fund focused on acquiring, developing, and managing commercial and mixed-use real estate within qualified opportunity zones. The company operates two segments: Commercial (office, retail, warehouse) and Mixed-use (residential and retail). As of the reporting date, the company is an Emerging Growth Company and a Smaller Reporting Company.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Rental revenue increased significantly year-over-year. For the nine months ended Sept 30, 2025, revenue was $6.12 million compared to $1.58 million in the prior year period, driven by the stabilization of the "Aster & Links" mixed-use project.
• Net Loss Expansion: Net loss widened to $(28.39) million for the nine months ended Sept 30, 2025, from $(15.62) million in the prior year. This was primarily due to a $2.96 million loss on extinguishment of debt, higher interest expense ($12.07 million vs. $5.76 million), and increased depreciation/amortization ($5.66 million vs. $2.39 million) as assets were placed in service.
• Debt Restructuring: In September 2025, the company completed a $204.1 million refinancing for the Aster & Links project, extinguishing prior construction loans. This resulted in the aforementioned loss on extinguishment but is expected to generate annual interest savings.
• Asset Reclassification: $180.8 million was reclassified from "Real estate under construction" to "Real estate, net" upon the substantial completion of the VIV project in St. Petersburg, Florida.

Guidance, Outlook, and Risks

• Outlook: Management expects the Aster & Links refinancing to provide liquidity for lease-up and stabilization. The VIV project reached substantial completion in September 2025, with leasing commencing in October 2025. The company anticipates remaining funding needs of approximately $13.0 million for Aster & Links and $26.2 million for VIV.
• Legislative Impact: The "One Big Beautiful Bill Act" (OBBBA) enacted in July 2025 made Qualified Opportunity Zones permanent and introduced new rural opportunity fund categories. Management is evaluating the impact on future investment strategies.
• Risks:
  • Market Conditions: Uncertainty regarding interest rates, inflation, and labor markets could impact development costs and financing.
  • Litigation: The company is defending against a foreclosure claim by Galinn Fund LLC regarding a $3.0 million loan allegedly obtained by a former affiliate without authority. The company disputes liability and has filed counterclaims.
  • Liquidity: Future liquidity depends on the Follow-on Offering, debt financing, and cash flows from operations. The company maintains a $10.0 million liquid asset covenant.
• Subsequent Events: On November 12, 2025, the Board authorized a three-year renewal of the Management Agreement and an amended Services and Cost Sharing Agreement.

Investor Verification Checklist

• Debt Covenants: Verify continued compliance with the $10.0 million liquid asset and $110.0 million net worth covenants required by the Aster & Links and VIV loan agreements.
• Lease-Up Progress: Monitor the occupancy rates and rental revenue stabilization of the Aster & Links (Sarasota) and VIV (St. Petersburg) projects, which are currently in early lease-up phases.
• Litigation Status: Track the outcome of the Galinn Fund LLC litigation regarding the 497-501 Middle Turnpike property in Storrs, Connecticut.
• Capital Raise: Review the pace of the "Follow-on Offering" to ensure sufficient capital is raised to fund remaining construction commitments (~$39 million total).
• Tax Legislation: Assess the long-term impact of the OBBBA on the company's Qualified Opportunity Fund status and investor tax benefits.