Business Context and Reporting Period
Company: Belpointe PREP, LLC (NYSE American: OZ)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Three months ended March 31, 2026
Business Overview: A publicly traded Qualified Opportunity Fund focused on acquiring, developing, and managing commercial and mixed-use real estate in qualified opportunity zones. The Company is externally managed by Belpointe PREP Manager, LLC.
Key Financial Metrics
| Metric (in thousands, except per unit) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $4,235 | $1,739 |
| Net Loss | $(10,673) | $(8,623) |
| Net Loss Attributable to Belpointe PREP, LLC | $(10,665) | $(8,619) |
| Loss Per Class A Unit (Basic & Diluted) | $(2.75) | $(2.35) |
| Net Cash Used in Operating Activities | $(6,106) | $(6,618) |
| Net Cash Used in Investing Activities | $(15,266) | $(20,629) |
| Net Cash Provided by Financing Activities | $15,966 | $25,922 |
| Cash and Cash Equivalents (End of Period) | $19,568 | $22,953 |
| Total Debt, Net | $275,516 | $260,638 |
| Total Assets | $565,742 | $564,196 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 144% to $4.2 million, driven primarily by the Mixed-use segment. The Mixed-use segment NOI improved by $0.4 million due to the contribution of the VIV project (substantially completed in late 2025) and increased occupancy at Aster & Links.
- Net Loss Expansion: Net loss increased by $2.0 million year-over-year. This was primarily due to a $0.9 million increase in interest expense (as development activities completed, interest capitalization ceased) and a $1.2 million increase in depreciation and amortization.
- Debt Position: Total debt increased by approximately $14.9 million to $275.5 million, reflecting draws on construction loans for the VIV and Aster & Links projects.
- Capitalization: The Company issued 61,408 Class A units during the quarter, raising gross proceeds of $3.2 million.
Outlook, Risks, and Unusual Items
Management Commentary and Outlook
- Project Status: As of May 4, 2026, the Aster & Links project (Sarasota, FL) was greater than 71% leased, and the VIV project (St. Petersburg, FL) was greater than 53% leased.
- Refinancing: In September 2025, the Company completed a $204.1 million post-construction refinancing for Aster & Links, expected to generate annual interest savings.
- Liquidity: Management believes cash on hand, proceeds from the Follow-on Offering, and debt obligations are sufficient to meet requirements for the next 12 months.
Risks and Contingencies
- Legal Proceedings:
- Galinn Fund LLC: A lawsuit alleging fraud and seeking foreclosure on a $3.0 million loan related to the 497-501 Middle Turnpike property. The Company disputes liability and has filed counterclaims.
- JZ Investments, Inc.: A subsequent event (filed April 24, 2026) alleging negligence and fraudulent transfer regarding a settlement agreement. The Company intends to vigorously defend.
- Related Party Transactions: On March 3, 2026, the Company made a $5.0 million convertible loan to 100 Tokeneke Road, LLC, an affiliate managed by the Company's CEO. A related party also made a $3.3 million loan to the same entity.
- Market Risks: Exposure to interest rate fluctuations (mitigated by interest rate caps), inflation, construction delays, and potential impacts from changes in federal tax laws (One Big Beautiful Bill Act of 2025).
Investor Verification Checklist
- Lease-up Progress: Verify current occupancy rates and rental rates for the VIV and Aster & Links projects against the >53% and >71% figures reported as of early May 2026.
- Debt Covenants: Confirm continued compliance with net worth ($110M) and liquid asset ($10M) covenants required by the Aster & Links and VIV loan agreements.
- Legal Exposure: Monitor the status of the Galinn Fund and JZ Investments litigation to assess potential financial impact or asset impairment risks.
- Related Party Loan: Review the terms and collateralization of the $5.0 million loan to the CEO-affiliated Tokeneke Road entity.
- Capital Commitments: Assess the $4.5 million unfunded commitment for development projects and the $12.1 million remaining funding anticipated for Aster & Links.