OZ

Business Context and Reporting Period

Company: Belpointe PREP, LLC (NYSE American: OZ)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended June 30, 2026
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 is externally managed by Belpointe PREP Manager, LLC.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenue increased 157% year-over-year (from $3.7M to $9.6M), driven primarily by the Mixed-use segment. This increase is attributed to the substantial completion of the "VIV" project in St. Petersburg, Florida, and increased occupancy at the "Aster & Links" project in Sarasota, Florida.
• Net Loss Expansion: Net loss increased by $3.7M year-over-year. While revenue grew, expenses rose significantly due to:
  • Interest Expense: Increased from $7.2M to $10.9M as development activities completed, causing interest to shift from capitalized to expensed.
  • Depreciation & Amortization: Increased from $3.8M to $6.2M due to new assets placed in service.
• Segment Performance:
  • Mixed-use Segment: NOI improved from a loss of $0.8M to a profit of $1.8M.
  • Commercial Segment: NOI remained negative at $(0.5M), slightly improved from $(0.5M) in the prior period.
• Liquidity: Cash and cash equivalents decreased by approximately $8.7M, primarily due to net cash used in operating and investing activities, partially offset by financing proceeds.

Guidance, Outlook, Risks, and Unusual Items

• Outlook: Management expects market conditions for multi-family and mixed-use properties to remain consistent despite recession fears. The Company anticipates sufficient liquidity for the next 12 months through cash on hand, debt obligations, and equity offerings.
• Capital Resources:
  • Debt: Total debt increased to $279.1M. Significant refinancing occurred for the Aster & Links project ($204.1M facility) in September 2025. The 900 8th Land Loan maturity was extended to July 2027.
  • Equity: Raised $3.2M in gross proceeds from the Follow-on Offering and $0.6M from private placements during the six-month period.
• Unusual Items & Related Party Transactions:
  • Issued a $5.0M convertible loan to an affiliate (100 Tokeneke Road, LLC) managed by the CEO's family.
  • Redeemed noncontrolling interests in the CMC Storrs SPV, LLC for $1.6M.
• Risks & Contingencies:
  • Litigation: Two active legal proceedings involving the CMC Storrs property (Galinn Fund LLC and JZ Investments, Inc.). The Company disputes liability and has not accrued losses, deeming them immaterial.
  • Market Risks: Exposure to interest rate fluctuations (mitigated by interest rate caps), inflation, construction delays, and potential impacts from geopolitical events and changes in tax laws (One Big Beautiful Bill Act of 2025).

Investor Verification Checklist

• Debt Covenants: Verify continued compliance with net worth ($110M) and liquid asset ($10M) covenants required by the Aster & Links and VIV loan agreements.
• Lease-up Progress: Confirm occupancy rates for VIV (reported >71% as of July 2026) and Aster & Links (reported >82% as of July 2026) to validate revenue projections.
• Litigation Status: Monitor the September 14, 2026 hearing regarding the JZ Investments motion to dismiss and the status of the Galinn Fund foreclosure claim.
• Related Party Loans: Review the terms and conversion status of the $5.0M loan to 100 Tokeneke Road, LLC.
• Capital Commitments: Assess the remaining unfunded commitments of $3.7M for Aster & Links and $3.6M for VIV against available liquidity.