Part I Financial Statements (Unaudited) The company reported a net loss of $15.6 million for the nine months ended September 30, 2024, with assets growing to $495.7 million, primarily funded by new debt for real estate development Consolidated Balance Sheets Total assets increased to $495.7 million as of September 30, 2024, driven by real estate growth and a significant rise in total debt to $144.1 million Consolidated Balance Sheets (in thousands) | Financial Item | September 30, 2024 (Unaudited, in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Real estate, net | $463,821 | $353,541 | | Cash and cash equivalents | $23,990 | $20,125 | | Total Assets | $495,675 | $382,117 | | Liabilities | | | | Debt, net | $144,135 | $19,678 | | Total Liabilities | $184,705 | $57,053 | | Members' Capital | | | | Total members' capital | $310,970 | $325,064 | | Total Liabilities and Members' Capital | $495,675 | $382,117 | Consolidated Statements of Operations Net loss widened to $6.9 million in Q3 2024 and $15.6 million for the nine months, primarily due to increased interest and property expenses Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $860 | $468 | $1,581 | $1,743 | | Total Expenses | $7,799 | $3,782 | $17,365 | $12,142 | | - Interest Expense | $3,331 | $0 | $5,757 | $0 | | - Property Expenses | $2,083 | $1,020 | $4,775 | $3,027 | | Net Loss | $(6,924) | $(3,302) | $(15,622) | $(10,180) | | Net Loss per Class A unit | $(1.90) | $(0.92) | $(4.30) | $(2.87) | Consolidated Statements of Cash Flows Net cash increased by $3.9 million for the nine months ended September 30, 2024, with $123.4 million from financing activities funding $110.8 million in real estate investments Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 (in thousands) | Nine Months Ended Sep 30, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(8,710) | $(5,243) | | Net cash used in investing activities | $(110,785) | $(101,231) | | Net cash provided by financing activities | $123,425 | $1,189 | | Net increase (decrease) in cash | $3,930 | $(105,285) | Notes to Consolidated Financial Statements Notes detail significant related-party transactions, a substantial increase in debt to $151.1 million for development, and $83.8 million in unfunded construction commitments - The company is focused on acquiring, developing, and managing commercial real estate within 'qualified opportunity zones' and is externally managed by Belpointe PREP Manager, LLC2627 - The company has significant related-party transactions, including management fees, development fees, and reimbursements for operating and development costs paid to its Manager and affiliates. For the nine months ended Sep 30, 2024, these totaled over $11.3 million between operating expenses and capitalized costs54 - Total debt increased significantly from $23.1 million at year-end 2023 to $151.1 million as of September 30, 2024, primarily from new construction and mezzanine loans to fund the Aster & Links and Viv projects82 - As of September 30, 2024, the company had an aggregate unfunded commitment of $83.8 million related to its construction management agreements for the Viv and Aster & Links development projects112 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses real estate development, noting the Aster & Links project's impact, increased debt for Viv, and sufficient liquidity for the next 12 months Our Investments The company's portfolio includes multifamily and mixed-use properties in Florida, Tennessee, and Connecticut, with key projects like the completed Aster & Links and the ongoing Viv development - Aster & Links (Sarasota, FL): A mixed-use luxury development with 424 residential units and 51,000 sq. ft. of retail space, with construction completed and lease-up initiated during the nine months ended September 30, 2024125126 - Viv (St. Petersburg, FL): A 15-story high-rise development with 269 apartment units and 15,500 sq. ft. of retail, approximately 60% complete as of September 30, 2024, with completion expected in the second half of 2025137138 - Nashville, TN Portfolio: Includes several properties intended for redevelopment, such as 900 8th Avenue South (3.2 acres approved for mixed-use) and multiple sites on Davidson Street (rezoned for high-density residential and commercial use)153159160161 - Storrs, CT Portfolio: Includes multiple sites near the University of Connecticut, such as 497-501 Middle Turnpike (planned 261-unit community) and 1750 Storrs Road (19-acre development site), targeting future multifamily development149150163 Results of Operations Rental revenue increased in Q3 2024 due to Aster & Links, but higher property and interest expenses resulted in a net loss of $6.9 million for the quarter and $15.6 million for the nine months Key Financial Changes (in thousands) | Metric | Q3 2024 vs Q3 2023 Change (in thousands) | 9M 2024 vs 9M 2023 Change (in thousands) | | :--- | :--- | :--- | | Rental Revenue | +$392 (+84%) | -$162 (-9%) | | Property Expenses | +$1,063 (+104%) | +$1,748 (+58%) | | Interest Expense | +$3,331 (+100%) | +$5,757 (+100%) | | General & Administrative | -$561 (-38%) | -$802 (-18%) | | Net Loss Attributable to Belpointe PREP | +$3,644 (+111%) | +$5,456 (+54%) | - The Q3 2024 increase in rental revenue and property expenses was primarily due to the Aster & Links project being placed into service and beginning its lease-up phase during the year166168 - Interest expense emerged as a major cost in 2024, totaling $3.3 million in Q3 and $5.8 million for the nine-month period, following the company taking on significant construction and mezzanine debt170171 Liquidity and Capital Resources The company's liquidity, primarily from public offerings and debt financing, is deemed sufficient for the next 12 months, despite $83.8 million in unfunded capital commitments for development projects - The company believes its cash on-hand, proceeds from Public Offerings, and financing activities will be sufficient to meet liquidity and capital requirements for the next 12 months179 - As of September 30, 2024, the company had unfunded capital commitments of $17.8 million for the Aster & Links project and $66.0 million for the Viv project181183 Cash Flow Summary (in thousands) | Cash Flow Summary | Nine Months Ended Sep 30, 2024 (in thousands) | | :--- | :--- | | Net cash used in operating activities | $(8,710) | | Net cash used in investing activities | $(110,785) | | Net cash provided by financing activities | $123,425 | | Net increase in cash | $3,930 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk194 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period196 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls196 Part II – Other Information Legal Proceedings As of September 30, 2024, the company was not subject to any material legal proceedings or aware of any threatened litigation - The company is not currently subject to any material legal proceedings198 Risk Factors No material changes have been made to the risk factors disclosed in the company's 2023 Annual Report on Form 10-K - No material changes have been made to the risk factors disclosed in the company's 2023 Annual Report on Form 10-K199 Unregistered Sales of Equity Securities and Use of Proceeds The company raised $1.7 million in gross proceeds from Class A unit offerings during the nine months ended September 30, 2024, with cumulative net proceeds of $235.2 million primarily used for real estate development - For the nine months ended September 30, 2024, the company sold Class A units for aggregate gross proceeds of $1,711,020 through its public offerings203207 Use of Net Offering Proceeds (in thousands) | Use of Net Offering Proceeds | Amount (in thousands) | | :--- | :--- | | Purchases and development of real estate | $180,594 | | Funding of loans receivable | $34,955 | | Working capital | $19,685 | | Total | $235,234 |
BELPOINTE PREP(OZ) - 2024 Q3 - Quarterly Report