BELPOINTE PREP, LLC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

In this Quarterly Report on Form 10-Q (this "Form 10-Q"), unless context
otherwise requires, references to "we," "us," "our" "Belpointe" 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, together, the
"Operating Companies"), and each of the Operating Companies' subsidiaries,

taken
together.



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, 2021 (our "Annual
Report") filed with the U.S. Securities and Exchange Commission on March 11,
2022, 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 identified below, 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 we currently intend to operate in a manner that will allow
us to qualify as a partnership for U.S. federal income tax purposes. We are
focused on identifying, acquiring, developing or redeveloping and managing
commercial real estate located within qualified opportunity zones. At least 90%
of our assets consist of qualified opportunity zone property. 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.



All of our assets are held by, and all of our operations are 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").



On September 30, 2021, the U.S. Securities and Exchange Commission (the "SEC")
declared effective our registration statement on Form S-11, as amended (File No.
333-255424) (the "Registration Statement"), registering up to $750,000,000 in
our Class A units on a continuous "best efforts" basis, as part of our ongoing
initial public offering (the "Primary Offering"), at an initial price equal

to
$100.00 per Class A unit.

Our dealings with Belpointe REIT, Inc.

During the year ended December 31, 2021, pursuant to the terms of an Agreement
and Plan of Merger (the "Merger Agreement"), we conducted an offer to exchange
(the "Offer") each outstanding share of common stock (the "Common Stock"), of
Belpointe REIT, Inc. ("Belpointe REIT") validly tendered in the Offer for 1.05
of our Class A units, with any fractional Class A units rounded up to the
nearest whole unit (the "Transaction Consideration"). The Offer was completed on
September 14, 2021.



Following the Offer, and in accordance with the terms of the Merger Agreement,
Belpointe REIT converted from a corporation into a limited liability company
(the "Conversion") named BREIT, LLC ("BREIT"). In the Conversion each
outstanding share of Common Stock was converted into a limited liability company
interest (an "Interest") in BREIT. The Conversion was completed on October

1,
2021.



Following the Conversion, and in accordance with the terms of the Merger
Agreement, BREIT merged with and into BREIT Merger, LLC ("BREIT Merger"), our
wholly-owned subsidiary (the "Merger"). In the Merger, each outstanding Interest
was converted into the right to receive the Transaction Consideration. The
Merger was completed on October 12, 2021.


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Prior to and in connection with the Offer and Merger, we entered into a series
of loan transactions with Belpointe REIT, whereby Belpointe REIT advanced us an
aggregate of $74.0 million evidenced by a series of secured promissory notes
(the "Secured Notes") bearing interest at an annual rate of 0.14%, due and
payable on December 31, 2021, and secured by all of our assets. Upon
consummation of the Merger, BREIT Merger acquired the Secured Notes as successor
in interest to Belpointe REIT and, effective October 12, 2021, we entered into a
Release and Cancellation of Indebtedness agreement with BREIT Merger pursuant to
the terms of which BREIT Merger cancelled the Secured Notes and discharged us
from all obligations to repay the principal and any accrued interest on the

Secured Notes.



Our Business Outlook



While market conditions for multifamily and mixed-use rental properties have
remained strong over the past several quarters, future economic conditions and
the demand for multifamily and mixed-use rental properties are, and the real
estate industry in general is, subject to uncertainty as a result of a number of
factors, including, among others, increasing interest rates, higher rates of
inflation, financial market volatility, general economic uncertainty, increasing
energy costs, ongoing supply chain disruptions and labor shortages, and the
continuing impact of COVID-19. 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.



Given the evolving nature 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 report, our investment portfolio consisted of the following properties:

Investments in Multi-Family and Mixed-Use Rental Properties

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 three-story retail building, located in Sarasota,
Florida, 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 a 168-apartment home community consisting of one-bedroom,
two-bedroom and three-bedroom apartments, with approximately 7,000 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, 360-space
garage and 7-stories of apartments above, including a clubroom, fitness center,
courtyards with a swimming pool and rooftop terraces as well as a leasing
office. We have placed the development of 1700 Main on hold pending re-zoning by
the City of Sarasota. We have engaged an architectural firm for conceptual
studies so that we can prepare a design to present to the City of Sarasota for
approval once the re-zoning is complete.



1701, 1702 and 1710 Ringling Boulevard - Sarasota, Florida - 1701 Ringling
Boulevard ("1701 Ringling") and 1710 Ringling Boulevard ("1710 Ringling") make
up a 1.62-acre site, consisting of a six-story previously owner-occupied office
building and a parking lot, located in Sarasota, Florida, 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 fully
functioning office building, consisting of approximately 80,000 square feet of
rentable space, with 1710 Ringling consisting of an approximately 128 space
parking lot. The existing tenant at 1701 Ringling has leased back approximately
42,000 square feet of the building for 20 years with several lease extensions.
Renovations to 1701 Ringling will include creation of a glass front lobby area,
the conversion of the existing freight elevator into an oversized passenger
elevator and the reinstallation of windows into the façade.



1702 Ringling Boulevard ("1702 Ringling") is a 0.265-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 and density and massing studies
are underway for conceptual design.


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902-1020 First Avenue North and 900 First Avenue North - St. Petersburg, Florida
- 902-1020 First Avenue North ("902-1020 First") consists of several parcels,
comprising 1.6-acres of land, located in St. Petersburg, Florida, which we
acquired for an aggregate purchase price of $12.1 million, inclusive of
transaction costs. We currently anticipate that 902-1020 First will be developed
into a high-rise apartment featuring approximately 269-apartment homes
consisting of studio, one-bedroom, two-bedroom and three-bedroom apartment
homes, with approximately 22,100 square feet of retail space located on the
first level and a four-level parking garage. We anticipate that 902-1020 First
will consist of two 15-story high-rise buildings and will have a clubroom,
fitness center, courtyard with a swimming pool, shared working space and a
leasing office.



900 First Avenue North ("900 First") is a parcel of land with a two-tenant
retail building, located in St. Petersburg, Florida, 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 902-1020 First.

1900 Fruitville Road – Sarasota Florida – 1900 Fruitville Road is a 1,205 acre site, consisting of a retail building and parking lot located in Sarasota, Floridawhich we acquired for an aggregate purchase price of $4.7 million, including transaction fees. The sole tenant of the building released in
January 2022 and the property will be used as a future development site.

900 8th Avenue South - Nashville, Tennessee - 900 8th Avenue South ("900 8th
Avenue South") is a 3.17-acre land assemblage, consisting of a few small
buildings, parking lots and open lots, located in Nashville, Tennessee, which we
acquired for an aggregate purchase price of $19.7 million, inclusive of
transaction costs.



As part of our acquisition of 900 8th Avenue South, on February 24, 2021, an
indirect wholly owned subsidiary of our Operating Company and an unaffiliated
third party (the "JV Partner") entered into a limited liability company
agreement (the "LLC Agreement") for BPOZ 900 Eighth QOZB, LLC (the "BPOZ 900
Eighth QOZB"), an indirect holding company for 900 8th Avenue South. Pursuant to
the LLC Agreement, the JV Partner assigned the purchase and sale agreement for
900 8th Avenue South together with a previously paid property deposit of $0.4
million to BPOZ 900 Eighth QOZB in exchange for the JV Partner's deemed initial
capital contribution of $0.2 million and a promissory note (the "900 Eighth
Promissory Note") from 900 Eighth, LP, the direct holding company for 900 8th
Avenue South, in the amount of $0.2 million. The 900 Eighth Promissory Note
earned interest at the greater of (i) 1% per annum, or (ii) the short-term
adjusted applicable federal rate for the current month for purposes of Section
1288(b) of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), and
was repaid in full in April 2022.



We currently anticipate that 900 8th Avenue South will be redeveloped into an
approximately 266-apartment home community consisting of one-bedroom,
two-bedroom and three-bedroom apartments, with approximately 14,100 square feet
of retail space located on the first level. We anticipate that 900 8th Avenue
South will consist of a 7-story building with a 2-story approximately 400-space
garage, a fitness center, courtyard with a swimming pool and rooftop terraces as
well as a leasing office. As of the date of this Form 10-Q, we have completed
the demolition of 900 8th Avenue South.

Storrs Road – Storrs, Connecticut – Storrs Road (“Storrs Road“) is a 9-acre parcel of land located in Storrs, Connecticutwhich we acquired for an aggregate purchase price of $0.1 million, including transaction fees. We are currently planning to hold Storrs Road for future multi-family development.

Nashville No. 2 - Nashville, Tennessee - Our second investment in Nashville,
Tennessee ("Nashville No. 2") is an approximately 8-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 Nashville No. 2 will be redeveloped into an approximately
412-apartment home community consisting of 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.



Nashville No. 3 - Nashville, Tennessee - Our third investment in Nashville,
Tennessee, is an approximately 1.66-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.
The building is leased back to the seller through November 2023, with the
ability to continue month to month thereafter.


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1991 Main Street - Sarasota, Florida - 1991 Main Street ("1991 Main") is a
5.2-acre site located in Sarasota, Florida, which was originally acquired for an
aggregate purchase price of $20.7 million, inclusive of transaction costs and
deferred financing fees. A portion of the aggregate purchase of 1991 Main was
funded by a $10.8 million secured loan from First Foundation Bank (the
"Acquisition Loan"). On April 22, 2022 we repaid the Acquisition Loan in full.



We currently anticipate that 1991 Main will be redeveloped into an approximately
418-apartment home community consisting of one-bedroom, two-bedroom and
three-bedroom apartments, and four-bedroom townhome-style penthouse apartments,
with approximately 51,000 square feet of retail space located on the first
level. We anticipate that 1991 Main will consist of two high-rise buildings with
7-stories in the front and 10-stories in the rear, and approximately 721 parking
spaces including 590 from an existing parking garage, currently subject to a
parking garage easement agreement, 104 new underground spaces, and 27 new street
level spaces.



During the nine months ended September 30, 2022, we entered into a construction
management agreement for the redevelopment of 1991 Main. The construction
management agreement contains terms and conditions that are customary for a
project of this type and will be subject to a guaranteed maximum price. We
currently anticipate that the remaining funding for construction and soft costs
associated with the redevelopment will be a minimum of $228.7 million, and are
building to an unlevered yield of greater than 6%. The redevelopment is
currently under construction and we expect to begin leasing units in the first
quarter of 2024, with construction completed by the second quarter of 2024.



901-909 Central Avenue North - St. Petersburg, Florida - 901-909 Central Avenue
North is a 0.129-acre site consisting of a fully leased 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.



Cedar Swamp Road - Mansfield, Connecticut - Cedar Swamp Road is a 1.1-acre site
located in Mansfield, Connecticut, which we acquired for a purchase price of
$0.3 million, inclusive of transaction costs, and upon closing leased back to
the seller for a term of 12 months. We currently anticipate holding Cedar Swamp
Road for future multifamily development.

497-501 Intermediate Turnpike – Mansfield, Connecticut – 497-501 Intermediate Turnpike
(“497-501 Middle”) is an approximately 60 acre site located in Mansfield, Connecticut, consisting of a former golf course of approximately 30 acres and approximately 30 acres of undeveloped hiking and biking trails surrounding the wetlands. We acquired a majority stake in CMC Storrs SPV, LLC
(“CMC”), the holding company of 497-501 Middle, for an initial capital contribution of $3.8 million.

We currently anticipate that 497-501 Middle will be developed into an
approximately 250-apartment home community and that amenities will include a
leasing office, clubhouse with a demonstration kitchen, fitness center, game
room, study/lounge area, meeting rooms, and an outside AstroTurf meadow.



1750 Storrs Road - Storrs, Connecticut - 1750 Storrs Road ("1750 Storrs") is a
19-acre development site located near the University of Connecticut in Storrs,
which we acquired for an aggregate purchase price of approximately $5.4 million,
exclusive of transaction costs.



We currently anticipate that 1750 Storrs will be developed into a 120-unit Class
A multifamily mixed-use development. The development will feature approximately
120 one- and two-bedroom apartments and three-bedroom townhomes in five 3-story
buildings. Amenities are anticipated to include a clubhouse, with
state-of-the-art fitness center, chef's kitchen and more. The development will
also include approximately 48,000 square feet of retail and office.

Investments in commercial real estate loans

Norpointe Secured Loan - On January 3, 2022, through an indirect wholly-owned
subsidiary, we provided a commercial mortgage loan in the principal amount of
$30.0 million (the "Norpointe Loan") to Norpointe, LLC ("Norpointe"), an
affiliate of our Chief Executive Officer. Norpointe is the owner of certain real
property located at 41 Wolfpit Avenue, Norwalk, Connecticut 06851 (the
"Norpointe Property"). The Norpointe Loan was evidenced by a promissory note
bearing interest at an annual rate of 5.0%, due and payable on December 31,
2022, and was secured by a first mortgage lien on the Norpointe Property. Given
our excess cash on hand as of the year ended December 31, 2021, management
viewed the Norpointe transaction as an opportunity to earn a strong rate of
return on that cash by making a low risk-due to the low loan-to-value ratio and
first priority mortgage interest-short-term loan rather than depositing the
funds in a lower yielding account pending investment in future developments.



On June 28, 2022, for purposes of complying with the qualified opportunity fund
requirements, we restructured the Norpointe Loan through BPOZ 1000 First QOZB,
LLC ("BPOZ 1000"), our indirect majority-owned subsidiary, whereby BPOZ 1000
provided a commercial mortgage loan in the principal amount of $30.0 million
(the "QOZB Loan") to Norpointe. Thereafter, on June 28, 2022, Norpointe repaid
the Norpointe Loan in full. The QOZB Loan is evidenced by a promissory note
bearing interest at an annual rate of 5.0%, due and payable on June 28, 2023 and
is secured by a first mortgage lien on the Norpointe Property.


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Visco Secured Loan - On February 23, 2022, through an indirect wholly-owned
subsidiary, we provided a commercial mortgage loan in the principal amount of
$5.0 million (the "Visco Loan") to Visco Propco, LLC ("Visco"). Visco is the
owner of certain real property located at 801 Visco Drive, Nashville, Tennessee
37210 (the "Visco Property"). The Visco Loan is evidenced by a promissory note
bearing interest at an annual rate of 6.0%, due and payable on February 18,
2023, and is secured by a first lien deed of trust on the Visco Property.



Results of Operations



                          Three Months Ended September                                     Nine Months Ended September
                                       30,                                                             30,
(amounts in thousands)      2022                2021         $ Change       % Change          2022              2021        $ Change       % Change
Revenue
Rental revenue           $      338         $        278     $      60             22 %    $      979         $     679     $     300             44 %
Total revenue                   338                  278            60             22 %           979               679           300             44 %

Expenses
Property expenses               973                  148           825            557 %         2,804               315         2,489            790 %
General and
administrative                  794                  176           618            351 %         3,908               365         3,543            971 %
Depreciation and

amortization expense            349                  163           186            114 %           899               370           529            143 %
Total expenses                2,116                  487         1,629            334 %         7,611             1,050         6,561            625 %

Other income (loss)
Gain on redemption of
equity investment                 -                  251          (251 )         (100 )%            -               251          (251 )         (100 )%
Interest income                 450                   56           394            704 %         1,500                56         1,444           2579 %
Other income (expense)           (1 )                 35           (36 )         (103 )%          (27 )              (4 )         (23 )          575 %
Total other income
(loss)                          449                  342           107             31 %         1,473               303         1,170            386 %
(Loss) income before
income taxes                 (1,329 )                133        (1,462 )        (1099 )%       (5,159 )             (68 )      (5,091 )         7487 %
Provision for income
taxes                            (1 )                  -            (1 )          100 %          (112 )               -          (112 )          100 %
Net (loss) income            (1,330 )                133        (1,463 )        (1100 )%       (5,271 )             (68 )      (5,203 )         7651 %
Net loss (income)
attributable to
noncontrolling
interests                       285                  (82 )         367           (448 )%          324               (75 )         399           (532 )%
Net (loss) income
attributable to
Belpointe PREP, LLC      $   (1,045 )       $         51     $  (1,096 )        (2149 )%   $   (4,947 )       $    (143 )   $  (4,804 )         3359 %




Revenue



Rental Revenue



For the three and nine months ended September 30, 2022, rental revenue increased
by $0.1 million and $0.3 million, respectively, as compared to the same periods
in 2021. This increase is primarily due to an increase in lease revenues as a
result of our acquisition of additional properties partially offset by a
decrease in rental revenue as a result of the sole tenant vacating our 1900

Fruitville Road investment.



Expenses



Property Expenses



For the three and nine months ended September 30, 2022, property expenses
consisted of management fees, property operational expenses, real estate taxes,
and utilities and insurance expenses incurred in relation to our acquired
investments. For the three months and nine months ended September 30, 2021
property expenses consisted of property expenses, real estate taxes, and
utilities and insurance expenses incurred in relation to our acquired
investments. For the three and nine months ended September 30, 2022, property
expenses increased by $0.8 million and $2.5 million, respectively, as compared
to the same period in 2021. This increase is primarily due to management fees
incurred following our Registration Statement being declared effective and
properties acquired during 2022 and 2021.


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General and Administrative



For the three and nine months ended September 30, 2022, general and
administrative expenses increased by $0.6 million and $3.5 million,
respectively, as compared to the same period in 2021. General and administrative
expenses for the three and nine months ended September 30, 2022 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. The Company became liable for general and
administrative costs in October 2021, in connection with the first closing of
our Offering, and therefore general and administrative expenses for the three
and nine months ended September 30, 2021 primarily consisted of employee cost
sharing expenses (pursuant to our management agreement and employee and cost
sharing agreement).

Depreciation and amortization

For the three and nine months ended September 30, 2022depreciation increased by $0.2 million and $0.5 millionrespectively, compared to the same periods in 2021. This increase is mainly attributable to the operating properties acquired in 2022 and 2021.

Other Income (Loss)

Gain on redemption of A fair investment

On September 30, 2021, we lent approximately $3.5 million to CMC Storrs SPV, LLC
a Connecticut limited liability company ("CMC"), pursuant to the terms of a
promissory note (the "CMC Note") secured by a Mortgage Deed and Security
Agreement. CMC used the proceeds from the CMC Note to enter into a Redemption
Agreement with BPOZ 497 Middle Holding, LLC, a Connecticut limited liability
company ("BPOZ 497"), and indirect majority-owned subsidiary of Belpointe REIT,
to redeem BPOZ 497's preferred equity investment in CMC in accordance with the
terms of the Merger Agreement.



In connection with CMC's redemption of BPOZ 497's preferred equity investment,
we recognized a gain on redemption of equity investment of $0.3 million for the
three and nine months ended September 30, 2021. There was no comparable activity
for the three and nine months ended September 30, 2022.



Interest Income



For the three months ended September 30, 2022, interest income was $0.5 million
and is primarily related to interest of $0.4 million earned on the QOZB Loan and
$0.1 million earned on the Visco Loan. For the nine months ended September 30,
2022, interest income was $1.5 million and is primarily related to interest of
$0.7 million earned on the Norpointe Loan, $0.4 million earned on the QOZB Loan,
$0.2 million earned on the CMC Loan, and $0.2 million earned on the Visco Loan.
For additional details regarding our commercial real estate loans, see "-Our
Investments-Investments in Commercial Real Estate Loans."



Effective September 14, 2021, Belpointe REIT lent $24.8 million to Belpointe
Investment Holding, LLC, a Delaware limited liability company ("Belpointe
Investment"), and affiliate of our Sponsor, pursuant to the terms of a secured
promissory note (the "BI Secured Note"). Interest accrued on the BI Secured Note
at a rate of 5% per annum and was repaid on November 30, 2021, in connection
with our acquisition of 1991 Main. For the three and nine months ended September
30, 2021, interest income on the BI Secured Note was $0.1 million and was
primarily related to interest earned on the BI Secured Note.



Other Income (Expense)



For the three and nine months ended September 30, 2022, other income (expense)
primarily relates to tax fees, sales tax in connection with the 1991 Main
parking garage easement agreement and interest expense on the 900 Eighth
Promissory Note. For the three months ended September 30, 2021, other income
(expense) relates to the elimination of interest expense on the Secured Notes as
a result of the Offer. For the nine months ended September 30, 2021, other
income (expense) relates to Belpointe PREP's proportionate share of losses from
one unconsolidated joint venture as well as interest expense incurred on the 900
Eighth Promissory Note.


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Provision for Income Taxes



For the three and nine months ended September 30, 2022, provision for income
taxes relates to taxes incurred (including penalties and interest) in connection
with our acquisition of Belpointe REIT. As a result of the Conversion of
Belpointe REIT into BREIT, Belpointe REIT was deemed to have been liquidated and
its tax year ended on October 1, 2021. Belpointe REIT's deemed liquidation
resulted in a taxable gain for the year ended October 1, 2021. In connection
with the Conversion, we filed an extension for the time to file Belpointe REIT's
2021 tax returns, however, we did not make an estimated payment at that time as
we had not yet calculated Belpointe REIT's 2021 tax liability.

Net loss attributable to non-controlling interest

Net loss attributable to noncontrolling interest represents the share of
earnings generated in entities we consolidate in which we do not own 100% of the
equity. For the three and nine months ended September 30, 2022, net loss
attributable to noncontrolling interest increased by $0.4 million and $0.4
million, respectively, as compared to the same period in 2021. This increase
primarily relates to losses allocated to noncontrolling interest holders on our
CMC and 900 8th Avenue South investments based upon an allocation of each
investment's net assets at book value as if the investments were hypothetically
liquidated at the end of each reporting period.

Cash and capital resources

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



Our 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 American 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 do not have office or
personnel expenses as we do not have any employees.



Where our Manager and its affiliates, including our Sponsor, have funded, and in
the future if they continue to fund, our liquidity and capital resource needs 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 organization or Primary Offering costs incurred by our Manager and
its affiliates during the three and nine months ended September 30, 2022. During
the three and nine months ended September 30, 2021, our Manager and its
affiliates, including our Sponsor, incurred organization and Primary Offering
expenses of $0.1 million and $0.6 million, respectively. During the three and
nine months ended September 30, 2022, our Manager and its affiliates, including
our Sponsor, incurred operating expenses of $0.4 million and $1.3 million,
respectively, on our behalf. During the three and nine months ended September
30, 2021, our Manager and its affiliates, including our Sponsor, incurred
operating expenses of $0.2 million and $0.5 million, respectively, on our
behalf.



During the nine months ended September 30, 2022, our indirect wholly owned
subsidiary entered into a construction management agreement for the
redevelopment of 1991 Main. The construction management agreement contains terms
and conditions that are customary for a project of this type and will be subject
to guaranteed maximum price. As of September 30, 2022, we had an unfunded
capital commitment of $155.3 million under the terms of this agreement. We
currently anticipate that the remaining funding for construction and soft costs
associated with the redevelopment will be a minimum of $228.7 million.



We expect to obtain the liquidity and capital resources that we need over the
short and long-term from the proceeds of our Primary 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 secured
or unsecured financings from banks and other lenders and from any undistributed
funds from operations. For additional details regarding our Primary Offering,
see "Part II-Other Information, Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds-Use of Proceeds from Registered Sales of Securities."


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We currently anticipate that our available capital resources, including the
proceeds from our Primary Offering and the proceeds from any construction or
other loans that we may incur, when combined with cash flow generated from our
operations, will be sufficient to meet our anticipated working capital and
capital expenditure requirements over the next 12 months and beyond.



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 our restricted cash (amounts in thousands):

                                                       Nine Months Ended September 30,
                                                         2022                   2021
Cash flows (used in) provided by operating
activities                                         $         (4,483 )     $             13
Cash flows used in investing activities                     (62,950 )              (21,712 )
Cash flows provided by financing activities                  15,987        

39,000

Net (decrease) increase in cash and cash
equivalents and restricted cash                    $        (51,446 )     $

        17,301

From September 30, 2022 and 2021, cash and cash equivalents and restricted cash totaled approximately $140.9 million and $23.9 millionrespectively.

Cash flows used in operating activities for the nine months ended September 30,
2022 primarily relates to the payment of management fees and employee cost
sharing expenses as well as payments for legal, marketing, and accounting fees.
These outflows were partially offset by interest received on our Norpointe Loan,
QOZB Loan and CMC Loan during the period. Cash flows provided by operating
activities for the nine months ended September 30, 2021 primarily relates to
operating properties acquired.



Cash flows used in investing activities for the nine months ended September 30,
2022 relate primarily to funding of loans receivable in addition to funding
costs for our development properties and investments in real estate. These
outflows were partially offset by inflows from the repayment of the CMC Loan
during the period as well as cash acquired as part of the acquisition of CMC
(Note 4). Cash flows used in investing activities for the nine months ended
September 30, 2021 primarily relates to four properties acquired during the
period, costs paid for our development properties and the funding of a loan
receivable, all of which were offset by cash acquired in connection with the
Offer.


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Cash flows provided by financing activities for the nine months ended September
30, 2022 primarily relates to net proceeds received from the Primary Offering
partially offset by the repayment of the Acquisition Loan. Cash flows provided
by financing activities for the nine months ended September 30, 2021 relates to
Secured Notes funded by Belpointe REIT.



Critical Accounting Policies

The unaudited consolidated financial statements in this Form 10-Q have been
prepared in accordance with generally accepted accounting principles in the
United States of America. The preparation of these unaudited 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 unaudited consolidated financial
statements in this Form 10-Q. There have been no changes to our significant
accounting policies and estimates during the nine months ended September 30,
2022 as compared to those disclosed in "Note 3 - Summary of Significant
Accounting Policies" included in our Annual Report on Form 10-K for the year
ended December 31, 2021 (our "Annual Report"), a copy of which may be accessed
here.

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