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AvalonBay Communities (AVB) for Opportunity Zone properties

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• Real Estate Development: Develops new residential, commercial, and hospitality properties primarily within designated Qualified Opportunity Zones.
• Real Estate Acquisition: Acquires existing properties and undeveloped land within Qualified Opportunity Zones for repositioning or future development.
• Property Management: Manages its portfolio of owned and developed real estate assets.

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Belpointe PREP (symbol: OZ) is a Real Estate Investment Trust (REIT) structured as a Qualified Opportunity Fund. It acquires, develops, and manages real estate properties in designated Opportunity Zones. Its primary "customers" are the investors who subscribe to its fund, seeking to deploy capital gains in a tax-advantaged manner.

The company primarily sells its investment opportunity to individuals and entities managing individual wealth. The key benefit it offers relates to the deferral or elimination of capital gains tax for its investors. Therefore, its customer base can be categorized as:

• Accredited Individual Investors with Capital Gains: These are individuals who have recently realized significant capital gains from the sale of assets (such as a business, stocks, or other appreciated property) and are looking to reinvest those gains into a Qualified Opportunity Fund to defer or potentially eliminate federal capital gains taxes.
• Family Offices and Multi-Family Offices: These entities manage the wealth of ultra-high-net-worth families. They seek sophisticated investment strategies, including tax-efficient real estate investments, on behalf of their clients who have capital gains to deploy.
• Registered Investment Advisors (RIAs) and Wealth Management Firms: These professionals and firms advise high-net-worth clients on investment strategies. They recommend and facilitate investments in vehicles like Belpointe PREP for clients who qualify and can benefit from the Opportunity Zone tax incentives.

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Brandon Lacoff, Chairman and Chief Executive Officer

Brandon Lacoff is the Founder, Chairman, and Chief Executive Officer of Belpointe PREP, LLC. He previously founded and led Belpointe REIT, Inc., one of the first Qualified Opportunity Zone real estate investment trusts, which successfully merged into Belpointe PREP in 2021. In 2011, he established Belpointe, a private investment firm that owns and operates several businesses, including Belpointe Asset Management LLC, which oversees more than $6 billion in assets. From 2004 to 2011, Mr. Lacoff was Managing Director and co-founder of Belray Capital, a real estate and investment firm that was later acquired by Belpointe. He co-founded Belray in 2001 and earlier worked at Arthur Andersen LLP and Ernst & Young LLP, specializing in mergers and acquisitions.

Martin Lacoff, Chief Strategic Officer and Principal Financial Officer

Martin Lacoff serves as Director, Chief Strategic Officer, Principal Financial Officer, and Principal Accounting Officer for Belpointe PREP, LLC. He is an entrepreneur with over 45 years of experience successfully starting, developing, and operating businesses within the securities, real estate, and natural resources industries.

Lori Wortz, Chief Operating Officer

Lori Wortz is the Chief Operating Officer of Belpointe Real Estate Operations. She is responsible for overseeing acquisitions, development, construction, property operations, and asset management for the Belpointe PREP portfolio. Ms. Wortz brings over 25 years of experience in developing large-scale, mixed-use properties.

Cody Laidlaw, Chief Business Development Officer

Cody Laidlaw is the Chief Business Development Officer and Head of Investor Relations at Belpointe PREP, LLC, where he is responsible for fundraising, investor relations, product development, marketing, and the implementation of the overall investment strategy. He also serves as a Principal at Belpointe, a private investment firm. Mr. Laidlaw previously held the role of Chief Business Development Officer and Head of Investor Relations for Belpointe REIT, Inc.

Vincent Prisco, Chief Accounting Officer

Vincent Prisco is the Chief Accounting Officer of Belpointe PREP, LLC. Further detailed background information on his past companies founded, managed, sold, or private equity backing was not readily available in the provided search results.

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The key risks to Belpointe PREP's (symbol: OZ) business primarily revolve around its early-stage development, its reliance on specialized tax incentives, and the potential for dilution to fund its growth.

1. Execution Risk and Limited Income Generation: Belpointe PREP is in an early growth phase, characterized by a substantial project pipeline but limited current revenue and cash flow generation. The company's financial success is heavily dependent on its ability to successfully develop, complete, and monetize these projects. As of recent reports, most of its assets do not generate meaningful revenue or cash flows, leading to operating losses.
2. Reliance on Opportunity Zone Tax Incentives: Belpointe PREP's business model is fundamentally built around investing in Qualified Opportunity Zones (QOZs) to leverage the associated tax benefits for investors. Any adverse changes to the Qualified Opportunity Zone program or the related tax laws could significantly impact the company's ability to attract capital and its overall profitability.
3. Dilution Risk: To fund its extensive development pipeline, Belpointe PREP has relied on equity issuance to raise capital. There is a considerable risk of further dilution for existing unitholders if the company continues to depend on external funding to finance its growth projects before it can generate substantial organic revenue and cash flows.

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The most significant emerging threat to Belpointe PREP (OZ) is the impending expiration and reduction of key tax benefits associated with the federal Opportunity Zone program. Under current legislation, the deferral of capital gains tax and the 10% step-up in basis for investments held for five years both require investments to be made by December 31, 2026. Furthermore, the ability to fully exclude capital gains on the Opportunity Fund investment itself (for holdings of 10+ years) also applies to investments made by this same date. As these critical deadlines approach, the unique tax advantages that drive investor interest in Belpointe PREP's Qualified Opportunity Fund structure will diminish or cease for new capital, potentially leading to a significant reduction in the flow of new investment into the company's funds and impacting its ability to acquire and develop new properties. This legislative sunset directly threatens the core value proposition of the company's business model for new investors.

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Belpointe PREP (symbol: OZ) primarily operates within the real estate investment sector, focusing on Qualified Opportunity Zone (QOZ) investments, functioning as a Real Estate Investment Trust (REIT), and offering Delaware Statutory Trust (DST) products for 1031 exchanges.

The addressable markets for their main products and services in the U.S. are sized as follows:

• Qualified Opportunity Zone (QOZ) Investments (U.S.): The total investment into Opportunity Funds from 2019 to 2022 was $89 billion, with an average of over $20 billion in investments annually. More than $100 billion has been invested in Opportunity Zones between 2018 and 2024. The broader addressable market is significantly larger, with over $6 trillion of unrealized capital gains in the U.S. eligible for investment in QOZs. Real estate projects constitute a substantial portion of these investments, attracting 68% of the capital.
• Real Estate Investment Trust (REIT) Market (U.S. and Global): As of 2024, U.S. REITs own more than $4.5 trillion of gross real estate, with publicly traded REITs holding $2.5 trillion in assets. The equity market capitalization of U.S.-listed REITs exceeded $1.4 trillion in 2024. Globally, the Real Estate Investment Trust market was valued at $2.6 trillion in 2022 and is projected to reach $4.2 trillion by 2032, with a compound annual growth rate (CAGR) of 5.1% from 2023 to 2032. North America accounted for the largest share of the REIT market in 2022.
• Delaware Statutory Trust (DST) Market (U.S.): The equity raised for Delaware Statutory Trust (DST) offerings in the U.S. reached approximately $5.66 billion in 2024. The DST market is projected to grow to $7.5 billion by the end of 2025. Since 2004, an estimated $20 billion has been raised through securitized 1031 co-ownerships, predominantly structured as Delaware Statutory Trusts.

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• Completion and Stabilization of Development Projects: The recent completion of the Aster & Links property, which began generating rental income in the second half of 2024, is a significant driver. Furthermore, the Viv project is expected to commence generating rental revenue in early 2026. The refinancing of Aster & Links is set to support its continued lease-up and stabilization, contributing to ongoing revenue growth.
• Robust Development Pipeline within Opportunity Zones: Belpointe PREP specializes in Opportunity Zones and maintains a substantial development pipeline aimed at generating future income. The company has over 2,500 units under development across four cities, representing a total project cost exceeding $1.3 billion. This pipeline provides a clear path for expanding revenue-generating assets.
• Strategic Acquisitions and Market Expansion: The company's growth strategy includes identifying, acquiring, and developing or redeveloping properties within Opportunity Zones, particularly focusing on multifamily developments across the United States. While specific upcoming acquisitions are not detailed, the strategy involves continuous expansion into new markets and strategic acquisitions to broaden its asset base and revenue streams.
• Long-term Asset Management and Real Estate Value Appreciation: As a publicly traded Qualified Opportunity Fund, Belpointe PREP focuses on long-term dividends and capital appreciation through its multifamily rental communities. The effective management and inherent appreciation in value of its real estate holdings, particularly those within Opportunity Zones, are expected to contribute to the company's overall financial performance and future revenue potential. The fund currently trades at a discount to its Net Asset Value (NAV), suggesting potential for asset value increases to be realized.

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Share Issuance

• Belpointe PREP issued 41,774 Class A units during the fiscal year ended December 31, 2024, raising net offering proceeds of $3.0 million.
• As of December 31, 2024, Belpointe OZ had raised more than $345 million of equity capital through its ongoing qualified opportunity fund offering.
• Belpointe PREP had raised aggregate gross offering cash proceeds of $357.3 million as of December 31, 2024.

Inbound Investments

• Belpointe PREP has attracted a diverse range of investors, including high-net-worth individuals and family offices seeking tax-advantaged investment opportunities in Qualified Opportunity Funds.
• As of November 2024, Belpointe PREP had 50 institutional owners and shareholders holding a total of 1,389,901 shares.
• In 2023, Belpointe PREP announced a $750 million Qualified Opportunity Fund offering for broker-dealers, aiming to reach a broad base of retail investors.

Outbound Investments

• Belpointe PREP focuses on identifying, acquiring, developing, or redeveloping commercial real estate properties within qualified opportunity zones across the United States.
• The company's investment portfolio includes multifamily and mixed-use rental properties, with significant ongoing development projects in Sarasota, Florida (Aster & Links) and St. Petersburg, Florida (VIV).
• As of August 2024, Belpointe PREP had a significant pipeline of investments totaling about $1.3 billion, primarily consisting of undeveloped land and properties under construction.

Capital Expenditures

• The primary focus of capital expenditures is on the acquisition, development, and redevelopment of commercial real estate located within qualified opportunity zones.
• Property expenses for the quarter ended September 30, 2024, were $2,083,000, primarily due to expenses incurred at Aster & Links.
• The company's primary needs for liquidity and capital resources are to fund its investments, pay operating fees and expenses, and pay interest on outstanding indebtedness.