PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited statements show a wider net loss and asset growth driven by real estate investments under construction Consolidated Financial Statements Financials reveal increased assets and liabilities, with a net loss doubling due to higher property and interest expenses Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $537,351 | $517,591 | | Real estate, net | $505,722 | $485,276 | | Cash and cash equivalents | $22,953 | $24,737 | | Total Liabilities | $241,647 | $213,534 | | Debt, net | $203,321 | $177,017 | | Total members' capital | $295,704 | $304,057 | Consolidated Statement of Operations Highlights (in thousands) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Rental revenue | $1,739 | $337 | | Total expenses | $10,595 | $4,433 | | Interest expense | $4,358 | $721 | | Net loss | ($8,623) | ($3,981) | | Net loss per unit | ($2.35) | ($1.10) | Consolidated Statement of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,618) | ($6,628) | | Net cash used in investing activities | ($20,629) | ($37,865) | | Net cash provided by financing activities | $25,922 | $63,084 | | Net (decrease) increase in cash | ($1,325) | $18,591 | Notes to Consolidated Financial Statements Notes detail the company's business focus, public offerings, debt covenants, and a significant legal proceeding - The company's business is focused on identifying, acquiring, developing, and managing commercial real estate within "qualified opportunity zones" and is externally managed by Belpointe PREP Manager, LLC2425 - The company is conducting a continuous "at the market" offering of up to $750 million in Class A units and has raised aggregate gross proceeds of $357.6 million from its public offerings2729 - The company is subject to financial covenants, including maintaining liquid assets of no less than $20.0 million and a net worth of no less than $130.0 million, and was in compliance84 - The company is a defendant in a lawsuit concerning a fraudulent $3.0 million loan and is vigorously defending the matter107108110 Related Party Fees & Reimbursements (Q1 2025, in thousands) | Type | Amount | | :--- | :--- | | Costs incurred by Manager (G&A) | $747 | | Management fees (Property Exp.) | $825 | | Insurance | $122 | | Director compensation | $20 | | Total Operating | $1,714 | | Total Capitalized | $1,711 | Debt Summary (as of March 31, 2025, in thousands) | Loan | Type | Interest Rate | Maturity | Carrying Value | | :--- | :--- | :--- | :--- | :--- | | 1991 Main Mezzanine Loan | Fixed | 13.00% | May 2027 | $47,784 | | 900 8th Land Loan | Fixed | 9.50% | June 2025 | $10,000 | | 1991 Main Construction Loan | Variable | SOFR + 3.45% | May 2027 | $103,056 | | 1000 First Construction Loan | Variable | SOFR + 3.80% | June 2027 | $47,983 | | Total Debt (Gross) | | | | $208,823 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses its investment portfolio, development progress, and operational results, confirming sufficient liquidity Our Investments The investment portfolio is concentrated in qualified opportunity zones, with two major mixed-use projects underway - Aster & Links (Sarasota, FL): A major mixed-use development with 424 luxury residential units and retail space, which has substantially completed construction and begun lease-up130131 - Viv (St. Petersburg, FL): A development with 269 apartment homes, which was 84% complete as of March 31, 2025, with expected completion in H2 2025140141 - Financing for Key Projects: The company has secured a $130.0M construction loan and a $56.4M mezzanine loan for Aster & Links, and a $104.0M construction loan for Viv135137146 - The company holds a significant portfolio in Nashville, TN, including 3.2 acres approved for mixed-use and other parcels rezoned for high-density development155157161 Results of Operations The quarterly net loss widened due to increased interest and depreciation as a key project became operational - Interest expense increased to $4.4 million in Q1 2025 from $0.7 million in Q1 2024, primarily due to no longer capitalizing interest on a major project174 - Depreciation and amortization increased by $1.6 million year-over-year due to placing fixed assets in service at the Aster & Links project176 Segment Net Operating Income (NOI) (in thousands) | Segment | Q1 2025 NOI | Q1 2024 NOI | Change | | :--- | :--- | :--- | :--- | | Commercial | ($59) | $63 | ($122) | | Mixed-use | ($81) | ($302) | $221 | | Total Segment NOI | ($140) | ($239) | $99 | Liquidity and Capital Resources The company outlines its liquidity sources, capital commitments, and leverage targets, affirming near-term sufficiency - As of March 31, 2025, the company had unfunded capital commitments totaling $8.6 million for the Aster & Links project and $34.1 million for the Viv project184185 - The company's targeted aggregate property-level leverage, after acquiring a substantial stabilized portfolio, is between 50-70% of the greater of cost or fair market value188 - Management believes that current resources will be sufficient to meet liquidity and capital requirements for the next 12 months182 Cash Flow Summary (Q1 2025 vs Q1 2024, in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,618) | ($6,628) | | Net cash used in investing activities | ($20,629) | ($37,865) | | Net cash provided by financing activities | $25,922 | $63,084 | | Net Change in Cash | ($1,325) | $18,591 | Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide information for this item - As a smaller reporting company, the registrant is not required to provide the information required by this Item195 Controls and Procedures Disclosure controls and procedures were deemed effective, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report196 - No material changes to the company's internal control over financial reporting occurred during the first quarter of 2025196 PART II – OTHER INFORMATION Legal Proceedings The company is defending a lawsuit related to a fraudulent loan obtained against one of its properties - The company is involved in litigation with The Galinn Fund LLC over a $3.0 million loan secured by a company property, which it alleges was obtained fraudulently by a former affiliate199200 - The company maintains that the loan resulted from the former affiliate's fraud and the lender's negligence, disputes any liability, and is vigorously defending the case201202 Risk Factors No material changes to previously disclosed risk factors were reported for the period - There have been no material changes to the risk factors disclosed in the company's Annual Report for the year ended December 31, 2024203 Unregistered Sales of Equity Securities and Use of Proceeds The company details the use of proceeds from its registered public offerings, primarily for real estate development - During Q1 2025, the company sold 4,215 Class A units through its registered public offerings for aggregate gross proceeds of $270,013211 - Direct or indirect payments from offering proceeds to directors, officers, and affiliates totaled $10.0 million for development and $9.6 million for working capital214215 Use of Net Offering Proceeds (as of March 31, 2025, in thousands) | Use of Proceeds | Amount | | :--- | :--- | | Purchases and development of real estate | $180,594 | | Funding of loans receivable | $34,955 | | Working capital | $21,301 | | Total Used | $236,850 | Other Items (Items 3, 4, 5) No defaults, mine safety issues, or other material information were reported for the quarter - Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information) are all noted as "Not Applicable" or have no information to report217218219
BELPOINTE PREP(OZ) - 2025 Q1 - Quarterly Report