Belpointe PREP, LLC: Form 10-Q for the period ended Jun 30, 2025

In this Quarterly Report on Form 10-Q (this “Form 10-Q”), unless context otherwise requires, references to “we,” “us,” “our” or the “Company” refer to Belpointe PREP, LLC, its operating companies, Belpointe PREP OC, LLC, and Belpointe PREP TN OC, LLC (each an “Operating Company” and collectively, the “Operating Companies”), and each of the Operating Companies’ direct and indirect subsidiaries, collectively.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2024 (our “Annual Report”) filed with the U.S. Securities and Exchange Commission on March 31, 2025, a copy of which may be accessed here. As discussed in the section entitled “Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below, identified in the section entitled “Forward-Looking Statements,” and those discussed in the section entitled “Risk Factors” included our Annual Report.

Overview

We are the only publicly traded qualified opportunity fund listed on a national securities exchange. We are a Delaware limited liability company formed on January 24, 2020, and a partnership for U.S. federal income tax purposes. We qualified as a qualified opportunity fund beginning with our taxable year ended December 31, 2020. Because we are a qualified opportunity fund certain of our investors are eligible for favorable capital gains tax treatment on their investments.

We are focused on identifying, acquiring, developing or redeveloping and managing properties in two operating segments: commercial and mixed-use real estate, in each case located within qualified opportunity zones. The commercial segment consists of properties such as office, retail centers, and warehouses (the “Commercial Segment”), and the mixed-use segment consists of properties that have both residential and retail spaces within a single real estate asset (the “Mixed-use Segment”).

At least 90% of our assets consist of qualified opportunity zone property, and all of our assets are and will continue to be held by, and all of our operations are and will continue to be conducted through, one or more of our Operating Companies, either directly or indirectly through their subsidiaries. We are externally managed by Belpointe PREP Manager, LLC (our “Manager”), which is an affiliate of our sponsor, Belpointe, LLC (our “Sponsor”). Subject to the oversight of our board of directors (our “Board”), our Manager is responsible for managing our affairs on a day-to-day basis and for identifying and making acquisitions and investments on our behalf.

On May 9, 2023, the U.S. Securities and Exchange Commission (the “SEC”) declared effective our registration statement on Form S-11, as amended (File No. 333-271262) (the “Follow-on Registration Statement”), registering the offer and sale of up to $750,000,000 of our Class A units on a continuous “best efforts” basis by any method deemed to be an “at the market” offering pursuant to Rule 415(a)(4) under the Securities Act of 1933, as amended (the “Securities Act”), including by offers and sales made directly to investors or through one or more agents (our “Follow-on Offering”).

In connection with the Follow-on Registration Statement, we entered into a non-exclusive dealer manager agreement with Emerson Equity LLC (the “Dealer Manager”), a registered broker-dealer, for the sale of our Class A units through the Dealer Manager. The Dealer Manager enters into participating dealer agreements and wholesale agreements with other broker-dealers, referred to as “selling group members,” to authorize those broker-dealers to solicit offers to purchase our Class A units. We pay our Dealer Manager commissions of up to 0.25%, and the selling group members commissions ranging from 0.25% to 4.50%, of the principal amount of Class A unit sold in the Follow-on Offering.

For the three and six months ended June 30, 2025, we have sold aggregate gross proceeds of $3,753,108 and $4,023,121, respectively, of Class A units in connection with our primary registered offering, which commenced in 2021 (our “Primary Offering” and, together with our Follow-on Offering, our “Public Offerings”) and our Follow-on Offering.

The purchase price for Class A units in our Follow-on Offering is the lesser of (i) the net asset value (“NAV”) of our Class A units, and (ii) the average of the high and low sale prices of our Class A units on the NYSE American (the “NYSE”) during regular trading hours on the last trading day immediately preceding the investment date on which the NYSE was open for trading and trading in our Class A units occurred. Our Manager calculates our NAV within approximately 60 days of the last day of each quarter, and any adjustments take effect as of the first business day following its public announcement. On May 30, 2025, we announced that our NAV as of March 31, 2025 was equal to $118.38 per Class A unit.

Our Business Outlook

Market conditions for commercial and mixed-use properties in the geographic regions in which we operate have generally remained consistent over the past several quarters. However, future economic conditions and demand for commercial and mixed-use properties are, and the real estate industry in general is, subject to ongoing uncertainty as a result of a number of factors, including, among others, the rate of rent growth, rate of new construction, rate of absorption, the rate of unemployment, higher interest rates, higher rates of inflation, potentially higher costs associated with the development of our projects, the availability of credit, financial market volatility, uncertainty around the timing, magnitude and impact of tariffs and general political and economic uncertainty, increasing energy costs, supply chain disruptions and labor shortages. The potential effect of these and other factors and the projected impact of these and other events on our business, results of operations and financial performance, presents material uncertainty and risk with respect to our future performance and financial results, including the potential to negatively impact our costs of operations, our financing arrangements, the value of our investments, and the laws, regulations and governmental and regulatory policies applicable to us. As a result, our past performance may not be indicative of future results.

In addition, on July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted, permanently extending multiple federal income tax provisions of the 2017 Tax Cuts and Jobs Act, and making significant changes to various other areas of the U.S. federal income tax laws. We are currently in the early stages of evaluating the impact of the OBBBA, and you are urged to consult with your tax advisors with respect to the OBBBA and its potential effect on an investment in our Class A units.

Given the evolving nature of certain of these factors, the extent to which they may impact our future performance and financial results will depend on future developments which remain highly uncertain and, as a result, at this time we are unable to estimate the impact that these factors may have on our future financial results. Our Manager continuously reviews our investment and financing strategies for optimization and to reduce our risk in the face of the fluidity of these and other factors.

Our Investments

As of the date of this Form 10-Q, our investment portfolio consisted of the following commercial and mixed-use properties:

1991 Main Street – Sarasota, Florida (“Aster & Links”) – 1991 Main Street (“1991 Main” or “Aster & Links”) is a 5.13-acre site which was acquired for an aggregate purchase price of $20.7 million, inclusive of transaction costs. On August 24, 2023, we acquired an adjacent land parcel that was previously subject to a ground lease for a purchase price of $4.9 million, inclusive of transaction costs.

During the year ended December 31, 2024, we substantially completed construction and began lease up at Aster & Links, our mixed-use luxury development in downtown Sarasota, Florida. Aster & Links is comprised of 424 luxury residential units, including a mix of one-bedroom, two-bedroom, three-bedroom, four-bedroom apartments, townhome-style penthouse apartments, and six guest suite apartments, with approximately 51,000 square feet of retail space located on the first level. Aster & Links is made up of two distinct 10 story buildings and features over 900 garage and surface-level parking spaces, designed to cater to both residents and retail visitors.

In May 2023, we announced the signing of a definitive lease agreement with Sprouts Farmers Market (“Sprouts”). Sprouts, now open and occupying 23,000 square feet of retail space at Aster & Links, serves as a key anchor tenant, bringing fresh, natural and organic food options to the heart of downtown Sarasota.

Aster & Links offers a range of high-end amenities for residents, including a clubroom, fitness room, center courtyard with heated saltwater pool and roof top amenities including a community room and a private dining area for private events as well as outdoor grills and seating. Each building has its own leasing office to assist new residents.

Situated in downtown Sarasota, at the intersection of Main Street and Links Avenue, Aster & Links is located in a high foot traffic area next to a number of popular retail establishments. Sarasota’s metro area economy has historically been the largest of the southwest Florida markets and has experienced strong gains in jobs, population, and home values over the past few years. We believe that Aster & Links is well-positioned to be a premier residential and retail destination in the heart of what will continue to be a vibrant city.

1991 Main Construction Management Agreement

During the year ended December 31, 2022, our indirect wholly-owned subsidiary entered into a construction management agreement for the development of Aster & Links (the “1991 Main CMA”). The 1991 Main CMA contains terms and conditions that are customary for a project of this type and is subject to a guaranteed maximum price (a “GMP”). We currently anticipate that the funding for construction and soft costs associated with the development will be a minimum of $180.2 million, inclusive of the GMP, and are building to an estimated unlevered yield of greater than 6%.

1991 Main Construction Loan

On May 12, 2023, our indirect majority-owned subsidiary entered into a variable-rate construction loan agreement (the “1991 Main Construction Loan Agreement”) for up to $130.0 million in principal amount (the “1991 Main Construction Loan”) with Bank OZK, which is secured by Aster & Links. Advances under the 1991 Main Construction Loan bear interest at a per annum rate equal to the one-month term Secured Overnight Financing Rate (SOFR) plus 3.45%, subject to a minimum all-in per annum rate of 8.51%, and may be used to fund the development of 1991 Main. The 1991 Main Construction Loan has an initial maturity date of May 12, 2027 and contains a one-year extension option, subject to certain restrictions. As of June 30, 2025, we have drawn down $111.2 million on the 1991 Main Construction Loan.

1991 Main Interest Rate Cap

As required under the terms of the 1991 Main Construction Loan Agreement, our indirect majority-owned subsidiary also entered into an interest rate cap agreement, effective July 10, 2024, which, as of June 30, 2025, had a notional amount of approximately $115.1 million, a one-month SOFR rate based strike price of 5.07%, and which matured on July 10, 2025. On July 1, 2025, our indirect majority-owned subsidiary entered into a new interest rate cap agreement with a notional amount of $130.0 million, a strike price of 5.07% and which is scheduled to mature on July 10, 2026.

1991 Main Mezzanine Loan

On January 31, 2024, our indirect majority-owned subsidiary entered into a mezzanine loan agreement, for up to $56.4 million in principal amount (the “1991 Main Mezzanine Loan”) with Southern Realty Trust Holdings, LLC (the “1991 Main Mezzanine Lender”). The 1991 Main Mezzanine Loan bears interest at a rate of 13.0% per annum and is secured by our investment in Aster & Links. Advances under the 1991 Main Mezzanine Loan may be used to reimburse us for certain costs and expenses incurred in relation to, and to fund the continued development of, Aster & Links. The 1991 Main Mezzanine Loan has an initial maturity date of May 12, 2027 and contains a one-year extension option, subject to certain restrictions.

In connection with the 1991 Main Mezzanine Loan, we are required to maintain an interest reserve and carry reserve for purposes of paying accrued but unpaid interest on the 1991 Main Mezzanine Loan and interest, principal and other obligations under the 1991 Main Construction Loan. We also provided the 1991 Main Mezzanine Lender with (i) a completion guaranty, which, among other things, guarantees completion of the work on Aster & Links, and (ii) a carveout guaranty, which, among other things, indemnifies the 1991 Main Mezzanine Lender for losses resulting from certain “bad acts,” insolvency, environmental conditions, violations of the terms of the 1991 Main Mezzanine Loan and certain provisions of the 1991 Main Construction Loan Agreement. The 1991 Main Construction Loan and the 1991 Main Mezzanine Loan contain financial covenants requiring that we maintain liquid assets of no less than $20.0 million and a net worth of no less than $130.0 million. As of June 30, 2025, the principal balance of the 1991 Main Mezzanine Loan was $49.4 million.

1900 Fruitville Road – Sarasota Florida – 1900 Fruitville Road was a 1.2-acre site, consisting of a retail building and parking lot, which we acquired for an aggregate purchase price of $4.7 million, inclusive of transaction costs. In July 2024, we completed the redevelopment of this property into additional non-exclusive parking for Sprouts, our grocery store tenant at Aster & Links.

1000 First Avenue North and 900 First Avenue North – St. Petersburg, Florida (“VIV”) – 1000 First Avenue North, St. Petersburg, Florida (“1000 First” or “VIV”) consists of several parcels, comprising 1.6-acres of land, which we acquired for an aggregate purchase price of $12.1 million, inclusive of transaction costs. As of June 30, 2025, construction on VIV was 90% complete. We currently anticipate construction to be completed in the second half of 2025, with leasing to begin prior to completion.

VIV is comprised of two 11-story residential towers above a 4-story parking garage, featuring 269-apartment homes with a mix of studio, one-bedroom, two-bedroom and three-bedroom units, with approximately 15,500 square feet of retail space located on the first level. Amenities at VIV include a clubroom, fitness center, courtyard with a swimming pool, shared working space and a leasing office.

VIV is located in the downtown district of St. Petersburg, one mile west of Tampa Bay and the downtown waterfront district and only one block away from Tropicana Field, home to the Tampa Bay Rays professional baseball team. It features direct access to downtown amenities such as public parking, restaurants, museums and cultural sites.

St. Petersburg placed 46th on Niche’s 2025 Best Cities to Live in America list, earning an Overall Niche Grade of “A.” St. Petersburg is the 5th largest city in Florida and the 86th largest city in the United States and an annual population growth rate of approximately 0.6% in 2024. Downtown St. Petersburg is one of the fastest growing neighborhoods in the Tampa-St. Petersburg-Clearwater metropolitan statistical area (“MSA”) and has experienced increased demand in recent years because of proximity to the water, sporting events, shopping, bars and restaurants in the neighborhood. The Tampa-St. Petersburg-Clearwater MSA is home to more than 19 corporate headquarters, 13 of which are on the 2024 edition of the Inc. 5000 (listing the fastest-growing private companies in America). The St. Petersburg area also includes a branch of St. Petersburg College and the University of South Florida St. Petersburg and is home to two professional sports teams, the Tampa Bay Rays (Major League Baseball) and the Tampa Bay Rowdies (United Soccer League Championship).

900 First Avenue North (“900 First”) is a parcel of land with a two-tenant retail building which we acquired for an aggregate purchase price of $2.5 million, inclusive of transaction costs. 900 First will remain a two-tenant retail building and we have taken the additional development rights and added them to 1000 First.

1000 First Construction Management Agreement

In April 2023, our indirect majority-owned subsidiary entered into a construction management agreement in connection with the development of 1000 First (the “1000 First CMA”). The 1000 First CMA contains terms and conditions that are customary for a project of this type and will be subject to a GMP of $141.0 million.

1000 First Construction Loan

On June 28, 2024, our indirect majority-owned subsidiary entered into a variable-rate construction loan agreement (the “1000 First Construction Loan Agreement”) for up to $104.0 million in principal amount (the “1000 First Construction Loan”) with various lenders, which is secured by 1000 First. Advances under the 1000 First Construction Loan bear interest at a per annum rate equal to the one-month term SOFR plus 3.80%, subject to a minimum all-in per annum rate of 7.55% and may be used to fund the development of 1000 First. The 1000 First Construction Loan has an initial maturity date of June 28, 2027 and contains two one-year extension options, subject to certain restrictions. As of June 30, 2025, we have drawn down $62.6 million on the 1000 First Construction Loan. The 1000 First Construction Loan is prepayable in whole or in part at any time with not less than 45 days’ notice. Full prepayment is subject to an interest rate make-whole amount, if any, calculated as of the prepayment date.

1000 First Interest Rate Cap

As required under the terms of the 1000 First Construction Loan Agreement, our indirect majority-owned subsidiary also entered into an interest rate cap agreement, effective June 28, 2024, which, as of June 30, 2025, had a notional amount of approximately $104.0 million, a one-month SOFR rate based strike price of 6.25%, and which was due to mature on July 1, 2025. On June 26, 2025, our indirect majority-owned subsidiary entered into a new interest rate cap agreement, effective July 1, 2025, with a notional amount of $104.0 million, a strike price of 6.25% and which is scheduled to mature on July 1, 2026.

1701, 1702 and 1710 Ringling Boulevard – Sarasota, Florida – 1701 Ringling Boulevard (“1701 Ringling”) and 1710 Ringling Boulevard (“1710 Ringling”) make up a 1.6-acre site, consisting of a six-story office building and a parking lot which we acquired for an aggregate purchase price of $7.0 million, inclusive of transaction costs. We currently anticipate that 1701 Ringling will be renovated into a modern office building, consisting of approximately 80,000 square feet of rentable space, with 1710 Ringling consisting of an approximately 128-space parking lot. Upon acquiring 1701 Ringling, we entered into a new lease agreement with the existing tenant covering approximately 42,000 square feet for an initial term of 20 years, and several lease extension options.

1702 Ringling Boulevard (“1702 Ringling” and, together with 1701 Ringling and 1710 Ringling, “1701-1710 Ringling”) is a 0.327-acre site consisting of a fully-leased, single-story 1,546 gross square foot single-tenant office building and associated parking lot, which we acquired for an aggregate purchase price of $1.5 million, inclusive of transaction costs. We currently anticipate holding 1702 Ringling for future multifamily development.

1701-1710 Ringling is located within the historic downtown Sarasota area along Ringling Boulevard, a major two-way arterial road, with good access to the surrounding Sarasota market, as well as easy access to Interstate 75 and the greater Tampa-St Petersburg area. 1701-1710 Ringling is located in a high foot traffic area close to a number of popular restaurants and retail establishments.

497-501 Middle Turnpike and Cedar Swamp Road – Storrs, Connecticut – 497-501 Middle Turnpike (“497-501 Middle”) is an approximately 60.0-acre site, consisting of approximately 30 acres of former golf course and approximately 30 acres of wetlands some of which includes walking trails. On June 28, 2022, through an indirect majority-owned subsidiary, we acquired a 70.2% controlling interest (the “CMC Interest”) in CMC Storrs SPV, LLC (“CMC”), the holding company for 497-501 Middle, for an initial capital contribution of $3.8 million. As part of the transaction two unaffiliated joint venture partners (the “CMC JV Partners”) were deemed to have made initial capital contributions to CMC. Following our acquisition of the CMC Interest, we discovered that one of the CMC JV Partners had misappropriated cash from the other’s cash account. Accordingly, the CMC JV Partner forfeited $1.0 million, or 29.8%, of their noncontrolling interest in CMC on March 24, 2023. As a result of the forfeiture, we indirectly own a 100% controlling interest in CMC.

We currently anticipate 497-501 Middle will be developed into an approximately 261-apartment home community and an adjacent single-family home, with amenities that will include a leasing office, clubroom with a chef’s kitchen, fitness center, game room, study/lounge area, meeting rooms, and an outside AstroTurf meadow.

Cedar Swamp Road (“Cedar Swamp Road”) is a 1.1-acre site immediately adjacent to 497-501 Middle, which we acquired for a purchase price of $0.3 million, inclusive of transaction costs. We currently anticipate adding Cedar Swamp Road to the 497-501 Middle development.

497-501 Middle and Cedar Swamp Road are located less than a mile from the main college campus at the University of Connecticut (“UConn”) in Storrs, Connecticut (“Storrs”), approximately 30 minutes from Hartford, Connecticut, and 90 minutes from Boston, Massachusetts. UConn ranked 32nd among “Top Public Schools” nationally in the 2025 U.S. New & World Report (“U.S. News”) collegiate rankings, and, based on a fact sheet published by UConn, over 20,056 undergraduate students attended college at the Storrs campus in Fall 2024, with more than a third of a students living off campus.

900 8th Avenue South – Nashville, Tennessee – 900 8th Avenue South (“900 8th Avenue South”) is a 3.2-acre land assemblage, which we acquired for an aggregate purchase price of $19.7 million, inclusive of transaction costs.

On June 26, 2024, our indirect majority-owned subsidiary entered into a fixed-rate loan for $10.0 million in principal amount with KHRE SMA Funding, LLC, which is secured by 900 8th Avenue South (the “900 8th Land Loan”). The 900 8th Land Loan bears interest at a rate of 9.50% per annum, and is due to mature on January 2, 2026, with one six-month extension option remaining, subject to certain restrictions. In June 2025, we exercised the first of two available six-month extension options on the loan, extending the maturity to January 2026. One additional six-month extension option remains available, subject to certain conditions.

900 8th Avenue South is located in central Nashville at the north end of the 8th Avenue South District, within walking distance of a number of popular retail, dining and nightlife establishments in downtown Nashville. The parcels have received approval for a mixed-use development including residential, retail and office with a maximum of 300 residential multi-family units and a maximum of seven stories.

1700 Main Street – Sarasota, Florida – 1700 Main Street (“1700 Main”) is a 1.3-acre site, consisting of a former gas station, a three-story office building with parking lot and a two-story retail building, which we acquired for an aggregate purchase price of $6.9 million, inclusive of transaction costs. We currently anticipate that 1700 Main will be redeveloped into an approximate 187-apartment home community consisting of one-bedroom, two-bedroom and three-bedroom units, with approximately 6,000 square feet of retail space located on the first two levels. We anticipate that 1700 Main will consist of a 10-story podium style building with a 3-story, 330-space garage and 7 stories of apartments above, including a clubroom, fitness center and courtyard with a swimming pool, as well as a leasing office.

U.S. News & World Report ranked Sarasota as the 59th best place to live in Florida for 2025-2026, and the 4th best place to retire in the United States. Sarasota is headquarters to a diverse group of large companies, such as Boar’s Head Provisions, CAE Healthcare, Sun Hydraulics and Voalte. The Sarasota area also has a large number of universities including the University of Southern Florida, Florida State University’s College of Medicine campus, Ringling College, State College of Florida, Keiser College and New College of Florida.

1700 Main is located in historic downtown Sarasota along Main Street and is located in a high foot traffic area next to a number of popular restaurants and retail establishments.

690/1106 Davidson Street – Nashville, Tennessee – 690/1106 Davidson Street (“690/1106 Davidson Street”) is an approximately 8.0-acre site, consisting of two industrial buildings and associated parking, which we acquired for an aggregate purchase price of $21.0 million, inclusive of transaction costs. We currently anticipate that 690/1106 Davidson Street will be redeveloped into mixed-use residential community consisting of studio, one-bedroom, two-bedroom and three-bedroom apartments. The buildings will have a fitness center, game room, co-working spaces, outdoor heated saltwater swimming pool, riverfront courtyards and rooftop terraces as well as a leasing office. In September 2023, the parcels were successfully rezoned to accommodate medium to high density multi-family residential and a mix of other commercial uses including hotel, office, retail and restaurant.

1130 Davidson Street – Nashville, Tennessee – 1130 Davidson Street (“1130 Davidson Street”) is an approximately 1.7-acre site consisting of a single-story, 10,000 square foot retail building and associated parking lot, which we acquired for an aggregate purchase price of $2.1 million, inclusive of transaction costs. In September 2023, the parcel was successfully rezoned to accommodate medium to high density multi-family residential and a mix of other commercial uses including hotel, office, retail and restaurant.

1400 Davidson Street – Nashville, Tennessee – 1400 Davidson Street (“1400 Davidson Street”) is an approximately 5.9-acre site consisting of an industrial building, which we acquired for an aggregate purchase price of $16.4 million, inclusive of transaction costs. We currently anticipate that 1400 Davidson Street will be redeveloped into a mixed-use residential community consisting of studio, one-bedroom, two-bedroom and three-bedroom apartments. In September 2023, the parcel was successfully rezoned to accommodate medium to high density multi-family residential and a mix of other commercial uses including hotel, office, retail and restaurant.

Storrs Road – Storrs, Connecticut – Storrs Road (“Storrs Road”) is a 9.0-acre parcel of land near UConn, which we acquired for an aggregate purchase price of $0.1 million, inclusive of transaction costs. We currently anticipate holding Storrs Road for future multifamily development.

1750 Storrs Road - Storrs, Connecticut – 1750 Storrs Road (“1750 Storrs”) is an approximately 19.0-acre development site near UConn, which we acquired for an aggregate purchase price of $5.5 million, inclusive of transaction costs.

We currently anticipate that 1750 Storrs will be developed into a multifamily mixed-use development, featuring one-bedroom, two-bedroom and three-bedroom apartments. Amenities are anticipated to include a clubhouse, with state-of-the-art fitness center, chef’s kitchen and more.

901-909 Central Avenue North – St. Petersburg, Florida – 901-909 Central Avenue North (“901-909 Central Avenue”) is a 0.13-acre site consisting of a single-story 5,328 gross square foot retail/office building comprised of 4 units located in St. Petersburg, Florida, which we acquired for an aggregate purchase price of $2.6 million, inclusive of transaction costs.

Segment Reporting

As a result of having placed Aster & Links into service and commencing operations in 2024, we revised our reportable segments into two distinct operating segments based on the way that we organize and evaluate our business internally: Commercial Segment and Mixed-use Segment. Our Commercial Segment includes properties such as office, retail centers, and warehouses, and our Mixed-use Segment includes properties that blend both residential and retail components within a single real estate asset.

Our Chief Executive Officer is our chief operating decision maker (“CODM”), and our CODM reviews our financial information on a segment basis for purposes of allocating resources, making decisions and assessing financial performance.

Segment and Non-Segment Net Operating Income

We believe that analyzing net operating income (loss) (“NOI”) at the segment level (“Segment NOI”) provides a useful financial performance measure, because it reflects the core rental operations of our real estate assets. We calculate Segment NOI as rental revenue, less property expenses, excluding non-segment NOI (“Non-Segment NOI”). Non-Segment NOI includes corporate level items, such as management fees incurred to our Manager, general and administrative expenses, interest expense, depreciation and amortization, interest income and other non-operating items.

NOI is not a financial measure included in accounting principles generally accepted in the United States of America (“U.S. GAAP”), however it is widely used in the real estate industry as a measure of the operating performance of real estate assets. Notwithstanding its common usage, NOI should not be considered as an alternative to net income (loss), operating income (loss), or cash flow from operating activities as determined in accordance with U.S. GAAP. Our computation of NOI may differ from methods used by other companies, and therefore may not be comparable. A reconciliation of Segment NOI to the most directly comparable U.S. GAAP measure has been included below.

Results of Operations

Comparison of the Three Months Ended June 30, 2025 to the Three Months Ended June 30, 2024

The following table sets forth information regarding our results of Segment NOI, reconciled to our consolidated statement of operations, for the three months ended June 30, 2025 and 2024 (amounts in thousands):

26

Segment NOI

Commercial Segment

During the three months ended June 30, 2025 as compared to the same period in 2024, Commercial Segment NOI decreased by $0.5 million, primarily due to higher real estate taxes.

Mixed-use Segment

During the three months ended June 30, 2025 as compared to the same period in 2024, Mixed-use Segment NOI decreased by $0.3 million, primarily driven by the recent placement in service of Aster & Links. Aster & Links commenced operations in the prior year period, and as such, the year-over-year comparison is not directly comparable. The current year period primarily reflects operating activity of Aster & Links during its lease-up phase.

Non-Segment NOI

Management Fees

Pursuant to the terms of a management agreement between us, our Operating Companies and our Manager (the “Management Agreement”), we pay our Manager a quarterly management fee in arrears of one-fourth of 0.75%. The management fee is based on our NAV at the end of each quarter. During the three months ended June 30, 2025 as compared to the same period in 2024, management fees increased by $0.1 million due to an increase in our NAV.

General and Administrative Expense

During the three months ended June 30, 2025 and 2024, general and administrative expenses primarily consisted of employee cost sharing expenses (pursuant to our Management Agreement and the employee and cost sharing agreement between us, our Operating Companies, our Manager and our Sponsor (the “Employee and Cost Sharing Agreement”)), marketing expenses, legal, audit, tax and accounting fees. During the three months ended June 30, 2025, as compared to the same period in 2024, general and administrative expenses remained relatively unchanged.

Interest Expense

During the three months ended June 30, 2025 and 2024, interest expense totaled $2.9 million and $1.7 million, respectively, consisting of gross interest expense of $5.5 million and $2.6 million, respectively, and the impact of non-cash amortization of debt discount and debt issuance costs of $0.7 million and $0.4 million, respectively, partially offset by capitalized interest and fees of $3.3 million and $1.3 million, respectively. The increase in interest expense during the three months ended June 30, 2025 as compared to the same period in 2024, is primarily due to a higher weighted average outstanding debt balance in the current year period as compared to the prior year period, partially offset by an increase in capitalized interest and fees.

Please see “Note 7– Debt, Net” in our consolidated financial statements in this Form 10-Q for additional information regarding our debt obligations.

Depreciation and Amortization

During the three months ended June 30, 2025 as compared to the same periods in 2024, depreciation and amortization increased by $1.2 million. This increase is primarily attributable to the impact of placing fixed assets in service at Aster & Links subsequent to June 30, 2024.

Impairment of Real Estate

During the three months ended June 30, 2024, we recorded impairment charges of $0.2 million. The impairment charges recorded were in relation to one of our real estate assets located in Nashville, Tennessee, based on our conclusion that the estimated fair market value of the real estate asset was lower than the carrying value, and as a result, we reduced the carrying value to the estimated fair market value.

Interest Income

During the three months ended June 30, 2025 and 2024, interest income totaled approximately $0.3 million and $0.1 million, respectively, and was comprised of interest earned from cash balances held in interest bearing bank accounts. The increase in interest income during the three months ended June 30, 2025 as compared to the same period in 2024, is attributable to higher cash balances in interest bearing accounts.

Comparison of the Six Months Ended June 30, 2025 to the Six Months Ended June 30, 2024

The following table sets forth information regarding our results of Segment NOI, reconciled to our consolidated statement of operations, for the six months ended June 30, 2025 and 2024 (amounts in thousands):

Segment NOI

Commercial Segment

During the six months ended June 30, 2025 as compared to the same period in 2024, Commercial Segment NOI decreased by $0.6 million, primarily due to higher real estate taxes.

Mixed-use Segment

During the six months ended June 30, 2025 as compared to the same period in 2024, Mixed-use Segment NOI remained relatively unchanged. Aster & Links commenced operations during the second quarter of 2024 and therefore the year-over-year comparison is not directly comparable. The current year period primarily reflects operating activity of Aster & Links during its lease-up phase.

Non-Segment NOI

Management Fees

Pursuant to our Management Agreement, we pay our Manager a quarterly management fee in arrears of one-fourth of 0.75%. The management fee is based on our NAV at the end of each quarter. During the six months ended June 30, 2025 as compared to the same period in 2024, management fees increased by $0.3 million due to an increase in our NAV.

General and Administrative Expense

During the six months ended June 30, 2025 and 2024, general and administrative expenses primarily consisted of employee cost sharing expenses (pursuant to our Management Agreement and Employee and Cost Sharing Agreement), marketing expenses, legal, audit, tax and accounting fees. During the six months ended June 30, 2025, as compared to the same period in 2024, general and administrative expenses remained relatively unchanged.

Interest Expense

During the six months ended June 30, 2025 and 2024, interest expense totaled $7.2 million and $2.4 million, respectively, consisting of gross interest expense of $10.0 million and $4.3 million, respectively, and the impact of non-cash amortization of debt discount and debt issuance costs of $1.5 million and $0.8 million, respectively, partially offset by capitalized interest and fees of $4.3 million and $2.7 million, respectively. The increase in interest expense during the six months ended June 30, 2025 as compared to the same period in 2024, is primarily due to a higher weighted average outstanding debt balance in the current year period as compared to the prior year period, as well as no longer capitalizing interest on properties that were under development during the prior year period.

Please see “Note 7– Debt, Net” in our consolidated financial statements in this Form 10-Q for additional information regarding our debt obligations.

Depreciation and Amortization

During the six months ended June 30, 2025 as compared to the same periods in 2024, depreciation and amortization increased by $2.9 million. This increase is primarily attributable to the impact of placing fixed assets in service at Aster & Links subsequent to June 30, 2024.

Impairment of Real Estate

During the six months ended June 30, 2024, we recorded impairment charges of $0.8 million. The impairment charges recorded were in relation to one of our real estate assets located in Nashville, Tennessee, based on our conclusion that the estimated fair market value of the real estate asset was lower than the carrying value, and as a result, we reduced the carrying value to the estimated fair market value.

Interest Income

During the six months ended June 30, 2025 and 2024, interest income totaled approximately $0.5 million and $0.2 million, respectively, and was comprised of interest earned from cash balances held in interest bearing bank accounts. The increase in interest income during the six months ended June 30, 2025 as compared to the same period in 2024, is attributable to higher cash balances in interest bearing accounts.

Liquidity and Capital Resources

Overview

Our primary needs for liquidity and capital resources are to fund our investments, including construction and development costs, pay our Follow-on Offering and operating fees and expenses, pay any distributions that we may make to the holders of our units and pay interest on our outstanding indebtedness.

Our Follow-on Offering and operating fees and expenses include, among other things, legal, audit and valuation fees and expenses, federal and state filing fees, SEC, FINRA and NYSE filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution fees, the management fee that we pay to our Manager, and fees and expenses related to acquiring, financing, appraising, and managing our commercial real estate properties. We are externally managed and do not have office or personnel expenses as we do not have any employees.

Liquidity

Our future needs for liquidity will depend on a variety of factors, including, without limitation, our ability to generate cash flows from operations, the timing and availability of net proceeds from our Follow-on Offering and any future offerings that we may conduct, the timing and extent of our real estate acquisition and disposition activities, and the timing and extent of our construction and development costs.

Economic uncertainty, fluctuating interest rates, volatility in the real estate markets, slowdowns in transaction volume, delays in financings from banks and other lenders and other negative trends may, in the future, adversely impact our ability to timely access potential sources of liquidity. If we are unable to raise additional capital when desired, or on terms that are acceptable to us, our business, financial condition and results of operations could be adversely affected.

We believe that our cash on-hand, the anticipated net proceeds from our Follow-on Offering and any future offerings that we may conduct, the proceeds from our current debt obligations, the projected cash flows from our real estate assets and our current and anticipated financing activities will be sufficient to meet our liquidity and capital resource requirements for the next 12 months from the date of issuance of this Form 10-Q.

Capital Resources

Where our Manager and its affiliates, including our Sponsor, have funded, and in the future if they continue to fund, our capital requirements by advancing us offering and operating fees and expenses, we reimburse our Manager and its affiliates, including our Sponsor, pursuant to the terms of our Management Agreement and Employee and Cost Sharing Agreement. Fees payable and expenses reimbursable to our Manager and its affiliates, including our Sponsor, may be paid, at the election of the recipient, in cash, by issuance of our Class A Units at the then-current NAV, or through some combination of the foregoing. There were no Public Offering costs incurred by our Manager and its affiliates during the six months ended June 30, 2025 and 2024. During the three months ended June 30, 2025 and 2024, our Manager and its affiliates, including our Sponsor, incurred operating expenses of $0.4 million and $0.5 million, respectively, on our behalf. During the six months ended June 30, 2025 and 2024, our Manager and its affiliates, including our Sponsor, incurred operating expenses of $0.9 million and $1.2 million, respectively, on our behalf. Our Manager and its affiliates, including our Sponsor, have deferred the collection of management fees and the reimbursement of operating fees and expenses, without interest, and may continue to do so in the future, to support our operations and ensure that we maintain sufficient liquidity under the terms of our loan Covenants (as hereinafter defined). All or any part of deferred fees and expenses may be taken in any period as determined by the Manager.

Aster & Links

As of June 30, 2025, we have drawn down $111.2 million on the 1991 Main Construction Loan, the principal balance under the 1991 Main Mezzanine Loan was $49.4 million, and we had an unfunded capital commitment totaling $4.0 million under the 1991 Main CMA as well as other construction related commitments for the development of Aster & Links.

The 1991 Main Construction Loan and 1991 Main Mezzanine Loan contain financial covenants requiring that we maintain liquid assets of no less than $20.0 million and a net worth of no less than $130.0 million (the “Covenants”). In addition, under the terms of 1991 Mezzanine Loan, we are required to maintain an interest reserve and carry reserve for purposes of paying accrued but unpaid interest on the 1991 Main Mezzanine Loan and interest, principal and other obligations under the 1991 Main Construction Loan (the “Reserves”). Undrawn amounts were held back at closing to establish the Reserves and are being maintained by an administrative agent appointed by the lender. As interest and other obligations accrue, the Reserves balance will be reduced and be added to the principal outstanding on the 1991 Main Mezzanine Loan. As of June 30, 2025, we were in compliance with the Covenants, and the Reserves balance was $7.0 million.

As of the date of this Form 10-Q, we currently anticipate that the remaining funding for construction and soft costs associated with the development of Aster & Links will be a minimum of $16.2 million (inclusive of the aforementioned unfunded capital commitment). For additional details regarding Aster & Links, the 1991 Main Construction Loan, 1991 Main CMA and 1991 Main Mezzanine Loan, see “—Our Investments—1991 Main Street – Sarasota Florida (“Aster & Links”).”

VIV

As of June 30, 2025, we have drawn down $62.6 million on the 1000 First Construction Loan and had an unfunded capital commitment of $22.0 million under the 1000 First CMA.

As of the date of this Form 10-Q, we currently anticipate the remaining funding for construction and soft costs associated with the development of VIV will be a minimum of approximately $35.8 million (inclusive of the aforementioned unfunded capital commitment). For additional details regarding Viv, the 1000 First CMA and 1000 First Construction Loan, see “—Our Investments— 1000 First Avenue North and 900 First Avenue North – St. Petersburg, Florida (“VIV”).”

900 8th Avenue South

As of June 30, 2025, we have drawn down $10.0 million on the 900 8th Land Loan, we also exercised the first of two available six-month extension options on the 900 8th Land Loan, extending the maturity to January 2026. One additional six-month extension option remains available, subject to certain conditions. For additional details regarding 900 8th Avenue South and 900 8th Land Loan, see “—Our Investments—900 8th Avenue South – Nashville, Tennessee.” We expect to continue to obtain the capital resources that we need over the short and long-term from cash on-hand, from the proceeds of our Follow-on Offering and any future offerings that we may conduct, from the advancement of reimbursable fees and expenses by our Manager and its affiliates, including our Sponsor, from the proceeds of our current debt obligations and future secured or unsecured financing from banks and other lenders, from projected operating funds from our real estate assets and from any other undistributed cash flow generated from operations. For additional details regarding our Public Offerings, see “—Overview” and “Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds—Use of Proceeds from Registered Sales of Securities.”

Leverage

We employ leverage in order to provide more funds available for investment. We believe that careful use of conservatively structured leverage will help us to achieve our diversification goals and potentially enhance the returns on our investments.

Our targeted aggregate property-level leverage, excluding any debt at the Company level or on assets under development or redevelopment, after we have acquired a substantial portfolio of stabilized commercial real estate, is between 50-70% of the greater of the cost (before deducting depreciation or other non-cash reserves) or fair market value of our assets. During the period when we are acquiring, developing and redeveloping our investments, we may employ greater leverage on individual assets. An example of property-level leverage is a mortgage loan secured by an individual property or portfolio of properties incurred or assumed in connection with our acquisition of such property or portfolio of properties. An example of debt at the Company level is a line of credit obtained by us or our Operating Companies.

Our Manager may from time to time modify our leverage policy in its discretion in light of then-current economic conditions, relative costs of debt and equity capital, market values of our assets, general conditions in the market for debt and equity securities, growth and acquisition opportunities or other factors. There is no limit on the amount we may borrow with respect to any individual property or portfolio.

Cash Flows

The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash during the six months ended June 30, 2025 and 2024 (amounts in thousands):

As of June 30, 2025 and 2024, cash and cash equivalents and restricted cash totaled approximately $29.7 million and $35.2 million, respectively.

Net cash flows used in operating activities during the six months ended June 30, 2025 primarily relates to interest expense incurred on our indebtedness, the payment of employee cost sharing expenses as well as payments for property management, legal, and accounting fees. Net cash flows used in operating activities during the six months ended June 30, 2024 primarily relates to interest expense incurred on our indebtedness, the payment of employee cost sharing expenses as well as payments for legal, marketing, and accounting fees.

Net cash flows used in investing activities during the six months ended June 30, 2025 and 2024 primarily relates to funding costs for our development properties. For additional details regarding our development properties, see “—Our Investments.”

Net cash flows provided by financing activities for the six months ended June 30, 2025 primarily relates to the proceeds from financings, including the 1991 Main Mezzanine Loan, the 1991 Main Construction Loan, and the 1000 First Construction Loan. Net cash flows provided by financing activities for the six months ended June 30, 2024 primarily relates to net proceeds received from the 1991 Mezzanine Loan, proceeds from the 1991 Main Construction Loan, and net proceeds from the 900 9th Land Loan. For additional details regarding our outstanding indebtedness, see “—Liquidity and Capital Resources.”

Critical Accounting Policies

The unaudited consolidated financial statements in this Form 10-Q have been prepared in accordance with U.S. GAAP and Article 8 of Regulation S-X of the rules and regulations of the SEC. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

Our significant accounting policies are described in “Note 2—Summary of Significant Accounting Policies,” in our consolidated financial statements in this Form 10-Q. There have been no changes to our significant accounting policies and estimates during the six months ended June 30, 2025 as compared to those disclosed in “Note 2—Summary of Significant Accounting Policies” included in our Annual Report for the year ended December 31, 2024, a copy of which may be accessed here.

Emerging Growth and Smaller Reporting Company Status

We are an “emerging growth company,” as defined in the Jump Start Our Business Startups Act of 2012 (“JOBS Act”). Under Section 107 of the JOBS Act, emerging growth companies are permitted to use an extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards that have different effective dates for public and private companies.

We have elected to use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary of the effective date of our Primary Offering (which will fall on September 26, 2026), (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a “large accelerated filer” (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period, or (iii) the date that we affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B). By electing to extend the transition period for complying with new or revised accounting standards, our consolidated financial statements may not be comparable to the consolidated financial statements of companies that comply with public company effective dates.

We are also a “smaller reporting company” (as defined in Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K). Even after we no longer qualify as an emerging growth company, we may remain a smaller reporting company and may continue to take advantage of the scaled disclosure obligations available to smaller reporting companies. We will be a smaller reporting company until the last day of the fiscal year in which (i) the market value of our Class A units held by non-affiliates exceeds $250 million, measured as of the last business day of the immediately preceding second fiscal quarter, and (ii) our annual revenue exceed $100 million as of the most recently completed fiscal year and the market value of our Class A units held by non-affiliates exceeds $700 million.

We are a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K), and as a result are not required to provide the information required by this Item.

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) of the Exchange Act), as of the end of the period covered by this Form 10-Q, was undertaken by management, under the supervision and with the participation of our principal executive officer and principal financial officer. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures (i) were effective to ensure that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified by SEC rules and forms, and (ii) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period covered by this Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors disclosed in Part I, Item 1A under the heading “Risk Factors” in our Annual Report for the year ended December 31, 2024, a copy of which may be accessed here. You should carefully consider the risk factors set forth in our Annual Report and be aware that these risk factors and other information may not describe every risk facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.