Business Context and Reporting Period
This Form 8-K was filed by Belpointe PREP, LLC on December 10, 2021, reporting the completion of an asset acquisition. The Company, an emerging growth company with Class A units trading on NYSE American under the symbol "OZ," is a real estate investment vehicle focused on development projects.
Key Financial Metrics and Transaction Details
- Transaction Type: Acquisition of a 99.99% interest in BPOZ 1991 Main, LLC via debt-for-equity swap.
- Debt Satisfied: The acquisition satisfied the remaining obligations of a Secured Note originally issued to Belpointe Investment Holding, LLC (an affiliate of the CEO). The original principal was $24,773,000.
- Recent Cash Flow: On November 30, 2021, the affiliate made an interest payment of $262,946.29 to the Company.
- Existing Debt on Asset: The acquired property carries an outstanding Acquisition Loan principal balance of $10,800,000 from First Florida Integrity Bank, bearing 4.75% interest and due May 6, 2022.
- Historical Cost: The property was originally acquired by Belpointe REIT for approximately $20,701,000.
Material Changes and Asset Description
The primary material change is the transfer of the "1991 Main" property interest from an affiliate to the Company in satisfaction of debt. The asset is a 5.3-acre site at 1991 Main Street, Sarasota, Florida. The Company plans to redevelop the site into a 418-apartment community with two high-rise buildings (7 and 10 stories) and approximately 60,000 square feet of retail space, including a 23,000 square foot grocer and a 12,000 square foot food hall.
Outlook, Risks, and Management Commentary
Management anticipates the development will include amenities such as a heated saltwater pool, fitness rooms, and rooftop dining areas. The filing includes standard forward-looking statements regarding the redevelopment timeline and financial performance, noting that actual results may vary due to risks outlined in the Company's October 1, 2021 prospectus. The transaction was approved by the conflicts committee of the Board of Directors.
Investor Verification Checklist
- Verify the terms of the "Agreement to Accept Interests" filed as Exhibit 2.2 to confirm the exact valuation of the debt forgiven.
- Confirm the status and repayment schedule of the $10,800,000 Acquisition Loan due May 6, 2022.
- Review the related-party nature of the transaction involving Belpointe Investment Holding, LLC and CEO Brandon Lacoff.
- Assess the development timeline and permitting status for the proposed 418-unit residential and retail project in Sarasota.