Belpointe PREP LLC

Previous wording

The purchase price for Class A units in our Public Offerings will be 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 February 29, 2024, we announced that our NAV as of December 31, 2023 was equal to $100.88 per Class A unit.

Current wording

The purchase price for Class A units in our Public Offerings will be 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 June 3, 2024, we announced that our NAV as of March 31, 2024 was equal to $99.59 per Class A unit.

Previous wording

1991 Main is being developed as two 10 story buildings with over 900 garage and surface-level parking spaces marketed under the name “Aster & Links.” Aster & Links will feature 424-apartments, including a mix of one-bedroom, two-bedroom and three-bedroom apartments, four-bedroom townhome-style penthouse apartments, and six guest suite apartments, with approximately 51,000 square feet of retail space located on the first level. In May 2023, we announced the signing of a definitive lease agreement with Sprouts Farmers Market (“Sprouts”), one of the fastest growing specialty retailers of fresh, natural and organic food in the United States. Sprouts will occupy approximately 23,000 square feet of retail space at Aster & Links.

Current wording

1991 Main is being developed as two 10 story buildings with over 900 garage and surface-level parking spaces marketed under the name “Aster & Links.” Aster & Links features 424-apartments, 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. In May 2023, we announced the signing of a definitive lease agreement with Sprouts Farmers Market (“Sprouts”), one of the fastest growing specialty retailers of fresh, natural and organic food in the United States. Sprouts will occupy approximately 23,000 square feet of retail space at Aster & Links.

Previous wording

During the year ended December 31, 2022, our indirect wholly-owned subsidiary entered into a construction management agreement for the development 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 (a “GMP”). We currently anticipate that the funding for construction and soft costs associated with the development will be a minimum of $185.8 million, inclusive of the GMP, and are building to an estimated unlevered yield of greater than 6%. The property is currently under construction, and we expect initial occupancies to occur in the first half of 2024. Construction on both buildings is expected to be completed by the end of 2024.

Current wording

During the year ended December 31, 2022, our indirect wholly-owned subsidiary entered into a construction management agreement for the development 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 (a “GMP”). We currently anticipate that the funding for construction and soft costs associated with the development will be a minimum of $186.8 million, inclusive of the GMP, and are building to an estimated unlevered yield of greater than 6%.

Previous wording

On May 12, 2023, our indirect majority-owned subsidiary (the “Mortgage Borrower”) 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 (the “Mortgage Lender”), which is secured by 1991 Main and which matures on May 12, 2027, subject to a one-year extension option. 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 March 31, 2024, we have drawn down $50.0 million on the 1991 Main Construction Loan.

Current wording

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 (the “1991 Main Mortgage Lender”), which is secured by 1991 Main. 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, 2024, we have drawn down $71.7 million on the 1991 Main Construction Loan.

Previous wording

As required under the terms of the 1991 Main Construction Loan Agreement, the Mortgage Borrower also entered into an interest rate cap agreement, effective July 10, 2023 (“1991 Main Interest Rate Cap”), which, as of March 31, 2024, had a notional amount of approximately $95.5 million a one-month SOFR rate based strike price of 5.07%, and which is due to mature on July 10, 2024. The notional amount of the 1991 Main Interest Rate Cap increases in accordance with the schedule set forth in the interest rate cap agreement up to a maximum notional amount of $112.5 million.

Current wording

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, 2023 (the “1991 Main Interest Rate Cap”), which, as of June 30, 2024, had a notional amount of approximately $112.5 million, a one-month SOFR rate based strike price of 5.07%, and which had a maturity date of July 10, 2024. We reacquired an interest rate cap, effective July 10, 2024, which has a one year term to maturity with a maximum notional amount of $115.1 million and a one-month SOFR rate based strike price of 5.07%.

Previous wording

On January 31, 2024, our indirect majority-owned subsidiary (the “Mezzanine Borrower”) 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 “Mezzanine Lender”). The 1991 Main Mezzanine Loan bears interest at a rate of 13.0% per annum and is secured by our investment in 1991 Main. 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, 1991 Main. 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.

Current wording

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 1991 Main. 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, 1991 Main. 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.

Previous wording

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 (the “Reserves”). We also provided the Mezzanine Lender with (i) a completion guaranty, which, among other things, guarantees completion of the work on 1991 Main, and (ii) a carveout guaranty, which, among other things, indemnifies the 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 (collectively, the “Mezzanine Guarantees”). Similar to the Carveout Guaranty we provided to the Mortgage Lender, the Mezzanine Guarantees 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 March 31, 2024, the principal balance of the 1991 Main Mezzanine Loan was $41.8 million.

Current wording

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 (the “Reserves”). We also provided the 1991 Main Mezzanine Lender with (i) a completion guaranty, which, among other things, guarantees completion of the work on 1991 Main, 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 (collectively, the “Mezzanine Guarantees”). Similar to the Carveout Guaranty we provided to the 1991 Main Mortgage Lender, the Mezzanine Guarantees 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, 2024, the principal balance of the 1991 Main Mezzanine Loan was $43.3 million.

Previous wording

1900 Fruitville Road – Sarasota Florida – 1900 Fruitville Road is 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 March 2024 we completed demolition of the building and commenced construction of the lot, with the intention to use the property as additional parking for Sprouts, our grocery store tenant at Aster & Links.

Current wording

1900 Fruitville Road – Sarasota Florida – 1900 Fruitville Road is 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.

Previous wording

1000 First Avenue North and 900 First Avenue North – St. Petersburg, Florida (also known as “Viv”) – We have consolidated several parcels, comprising 1.6-acres of land (previously referred to as 902-1020 First Avenue North, St. Petersburg, Florida), which we acquired for an aggregate purchase price of $12.1 million, inclusive of transaction costs, into 1000 First Avenue North, St. Petersburg, Florida (“1000 First” or “Viv”).

Current wording

1000 First Avenue North and 900 First Avenue North – St. Petersburg, Florida (also known as “Viv”) – We will consolidate several parcels, comprising 1.6-acres of land (previously referred to as 902-1020 First Avenue North, St. Petersburg, Florida), which we acquired for an aggregate purchase price of $12.1 million, inclusive of transaction costs, into 1000 First Avenue North, St. Petersburg, Florida (“1000 First” or “Viv”).

Previous wording

1000 First is being developed into a 15-story high-rise building marketed under the name “Viv.” Viv will be comprised of two 11-story residential towers above a 4-story parking garage, featuring approximately 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 will include a clubroom, fitness center, courtyard with a swimming pool, shared working space and a leasing office.

Current wording

1000 First is being developed into a 15-story high-rise building marketed under the name “Viv.” Viv will be comprised of two 11-story residential towers above a 4-story parking garage, featuring approximately 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 will include a clubroom, fitness center, courtyard with a swimming pool, shared working space and a leasing office. We currently anticipate construction to be completed in the second half of 2025.

Previous wording

In April 2023, our indirect majority-owned subsidiary entered into a construction management agreement in connection with the development of 1000 First. The construction management agreement contains terms and conditions that are customary for a project of this type and will be subject to a GMP of $78.4 million.

Current wording

In April 2023, our indirect majority-owned subsidiary entered into a construction management agreement in connection with the development of 1000 First. The construction management agreement contains terms and conditions that are customary for a project of this type and will be subject to a GMP of $140.1 million.

Previous wording

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 expected 226-apartment home community consisting of one-bedroom, two-bedroom and three-bedroom units, with approximately 6,400 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.

Current wording

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 200-apartment home community consisting of one-bedroom, two-bedroom and three-bedroom units, with approximately 6,400 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.

Previous wording

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. The building is leased back to the seller through June 2024. 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.

Current wording

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.

Previous wording

The following table sets forth information regarding our consolidated results of operations during the three months ended March 31, 2024 and 2023 (amounts in thousands):

Current wording

The following table sets forth information regarding our consolidated results of operations during the three and six months ended June 30, 2024 and 2023 (amounts in thousands):

Previous wording

During the three months ended March 31, 2024 as compared to the same period in 2023, rental revenue decreased by $0.2 million. This decrease is primarily due to lower below-market rent intangible amortization as certain intangible liabilities became fully amortized subsequent to March 31, 2023.

Current wording

During the three and six months ended June 30, 2024 as compared to the same period in 2023, rental revenue decreased by $0.4 million and $0.6 million, respectively. This decrease is primarily due to lower below-market rent intangible amortization as certain intangible liabilities became fully amortized subsequent to June 30, 2023.

Previous wording

During the three months ended March 31, 2024 and 2023, property expenses consisted of management fees, property operational expenses, real estate taxes, and utilities and insurance expenses incurred in relation to our property acquisitions. During the three months ended March 31, 2024, as compared to the same period in 2023, property expenses increased by $0.2 million. This increase is primarily due to property general and administrative expenses incurred at Aster & Links in the current year period, whereas there was no such expenses in the prior year period.

Current wording

During the three and six months ended June 30, 2024 and 2023, property expenses consisted of management fees, property operational expenses, real estate taxes, and utilities and insurance expenses incurred in relation to our operating properties. During the three and six months ended June 30, 2024, as compared to the same period in 2023, property expenses increased by $0.4 million and $0.7 million, respectively. This increase is primarily due to property general and administrative expenses incurred at Aster & Links in the current year periods, whereas there was no such expenses in the prior year periods.

Previous wording

During the three months ended March 31, 2024 and 2023, 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 three months ended March 31, 2024 as compared to the same period in 2023, general and administrative expenses decreased by $0.2 million. This decrease is primarily due to lower legal fees and marketing expenses, partially offset by higher tax professional fees.

Current wording

During the three and six months ended June 30, 2024 and 2023, 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 three months ended as compared to the same period in 2023, general and administrative expenses remained relatively unchanged. During the six months ended June 30, 2024 as compared to the same period in 2023, general and administrative expenses decreased by $0.2 million, primarily due to lower legal fees and marketing expenses, partially offset by higher tax professional fees.

Previous wording

During the three months ended March 31, 2024, interest expense was comprised of interest related costs associated with our debt obligations. During the three months ended March 31, 2024 interest expense totaled $0.7 million, due to gross interest expense incurred on our outstanding loan balances of $1.6 million, and the impact of amortization of debt discount and debt issuance costs of $0.4 million, partially offset by capitalized interest fees and expenses of $1.3 million. Please see “Note 7– Debt” in our consolidated financial statements in this Form 10-Q for additional information of our debt arrangements.

Current wording

During the three and six months ended June 30, 2024, interest expense was comprised of interest related costs associated with our debt obligations. During the three and six months ended June 30, 2024, interest expense totaled $1.7 million and $2.4 million, respectively, due to gross interest expense of $2.6 million and $4.3 million, respectively, and the impact of non-cash amortization of debt discount and debt issuance costs of $0.4 million and $0.8 million, respectively, partially offset by capitalized interest and fees of $1.3 million and $2.6 million, respectively. Please see “Note 7– Debt” in our consolidated financial statements in this Form 10-Q for additional information regarding our debt arrangements.

Previous wording

During the three months ended March 31, 2024 as compared to the same period in 2023, depreciation and amortization decreased by $0.2 million. This decrease is primarily due to lower in-place lease intangible amortization as certain intangible assets became fully amortized subsequent to March 31, 2023.

Current wording

During the three and six months ended June 30, 2024 as compared to the same periods in 2023, depreciation and amortization decreased by less than $0.1 million and $0.3 million, respectively. This decrease is primarily attributable to lower in-place lease intangible amortization as certain intangible assets became fully amortized subsequent to June 30, 2023, partially offset by the impact of placing certain fixed assets into service at Aster & Links during the three and six months ended June 30, 2024.

Previous wording

During the three months ended March 31, 2024, we recorded impairment charges of $0.6 million 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.

Current wording

During the three and six months ended June 30, 2024, we recorded impairment charges of $0.2 million and $0.8 million, respectively. During the three and six months ended June 30, 2023, we recorded impairment charges of $2.2 million and $2.2 million, respectively. The impairment charges for all periods 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.

Previous wording

Interest income for the three months ended March 31, 2024, totaled $0.1 million, which was comprised of interest earned from cash balances held in interest bearing bank accounts.

Current wording

Interest income for the three and six months ended June 30, 2024, totaled $0.1 million and $0.2 million, respectively, which was comprised of interest earned from cash balances held in interest bearing bank accounts.

Previous wording

Other expense for the three months ended March 31, 2024, was comprised of a unrealized loss in connection with the 1991 Main Interest Rate Cap. Please see “Note 9 – Derivative Instruments” in our consolidated financial statements in this Form 10-Q for additional information.

Current wording

Other (expense) income for the periods presented was primarily comprised of gains and losses in connection with our interest rate caps. Please see “Note 9 – Derivative Instruments” in our consolidated financial statements in this Form 10-Q for additional information.

Previous wording

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

Current wording

Our primary needs for liquidity and capital resources are to fund our investments, including construction and development costs, pay our Public 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.

Previous wording

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 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.

Current wording

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

Previous wording

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 Public Offering costs incurred by our Manager and its affiliates during the three months ended March 31, 2024 and 2023. During the three months ended March 31, 2024 and 2023, our Manager and its affiliates, including our Sponsor, incurred operating expenses of $0.7 million and $0.6 million, respectively, on our behalf.

Current wording

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, 2024 and 2023. During the three months ended June 30, 2024 and 2023, our Manager and its affiliates, including our Sponsor, incurred operating expenses of $0.5 million and $0.6 million, respectively, on our behalf. During the six months ended June 30, 2024 and 2023, our Manager and its affiliates, including our Sponsor, incurred operating expenses of $1.2 million and $1.3 million, respectively, on our behalf.

Previous wording

During the year ended December 31, 2022, our indirect majority-owned subsidiary entered into a construction management agreement for the development of 1991 Main. For additional details regarding 1991 Main, see “—Our Investments—1991 Main Street**–**Sarasota Florida (Astor & Links).” 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 March 31, 2024, we had an unfunded capital commitment totaling $51.0 million under the terms of this agreement as well as other construction related commitments for the development of 1991 Main. 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 1991 Main will be a minimum of $65.3 million (inclusive of the aforementioned unfunded capital commitment).

Current wording

During the year ended December 31, 2022, our indirect majority-owned subsidiary entered into a construction management agreement for the development of 1991 Main. For additional details regarding 1991 Main, see “—Our Investments—1991 Main Street**–**Sarasota Florida (Aster & Links).” 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 June 30, 2024, we had an unfunded capital commitment totaling $30.5 million under the terms of this agreement as well as other construction related commitments for the development of 1991 Main. 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 1991 Main will be a minimum of $52.7 million (inclusive of the aforementioned unfunded capital commitment).

Previous wording

During the year ended December, 31, 2023, our indirect majority-owned subsidiary entered into a variable-rate construction loan agreement for up to $130.0 million in principal amount to fund the development of 1991 Main. Advances under the 1991 Main Construction Loan bear interest at a per annum rate equal to the one-month term SOFR plus 3.45%, subject to a minimum all-in per annum rate of 8.51%. 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 March 31, 2024, we have drawn down $50.0 million on the 1991 Main Construction Loan. For additional details regarding the 1991 Main Construction Loan, see “—Our Investments—1991 Main Street**–**Sarasota Florida (Astor & Links).”

Current wording

During the year ended December, 31, 2023, our indirect majority-owned subsidiary entered into a variable-rate construction loan agreement for up to $130.0 million in principal amount to fund the development of 1991 Main. Advances under the 1991 Main Construction Loan bear interest at a per annum rate equal to the one-month term SOFR plus 3.45%, subject to a minimum all-in per annum rate of 8.51%. 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, 2024, we have drawn down $71.7 million on the 1991 Main Construction Loan. For additional details regarding the 1991 Main Construction Loan, see “—Our Investments—1991 Main Street**–**Sarasota Florida (also known as “Aster & Links”).”

Previous wording

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 bears interest at a rate of 13.0% per annum, and is secured by 1991 Main. 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. As of March 31, 2024, the 1991 Main Mezzanine Loan balance was $41.8 million. Proceeds under the 1991 Main Mezzanine Loan may be used to reimburse the Company for certain costs and expenses incurred in relation to, and to fund the continued development of, 1991 Main. 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. For additional details regarding the 1991 Main Interest Rate Cap and 1991 Main Mezzanine Loan, see “—Our Investments—1991 Main Street**–**Sarasota Florida (Astor & Links).”

Current wording

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 bears interest at a rate of 13.0% per annum, and is secured by 1991 Main. 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. As of June 30, 2024, the 1991 Main Mezzanine Loan balance was $43.3 million. Proceeds under the 1991 Main Mezzanine Loan may be used to reimburse the Company for certain costs and expenses incurred in relation to, and to fund the continued development of, 1991 Main. 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. For additional details regarding the 1991 Main Mezzanine Loan, see “—Our Investments—1991 Main Street**–**Sarasota Florida (also known as “Aster & Links”).”

Previous wording

In April 2023, our indirect majority-owned subsidiary entered into a construction management agreement for the development of 1000 First. For additional details regarding 1000 First, see “—Our Investments—1000 First Avenue North and 900 First Avenue North**–**St. Petersburg, Florida (Viv).” 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 March 31, 2024, we had an unfunded capital commitment of $26.3 million under the terms of this agreement. We currently anticipate the remaining funding for construction and soft costs associated with the development of 1000 First will be a minimum of approximately $110.5 million (inclusive of the aforementioned unfunded capital commitment), and we are in the process of obtaining a first mortgage construction loan to fund these costs (the “1000 First Construction Loan”). However, due to our liquidity constraints caused in part by our obligation to maintain Reserves in connection with the 1991 Main Construction Loan and 1991 Main Mezzanine Loan, if we do not finalize the 1000 First Construction Loan prior to May 31, 2024, we will stop or delay construction until we can obtain additional financing.

Current wording

In April 2023, our indirect majority-owned subsidiary entered into a construction management agreement for the development of 1000 First. For additional details regarding 1000 First, see “—Our Investments—1000 First Avenue North and 900 First Avenue North**–**St. Petersburg, Florida (also known as “Viv”).” 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 June 30, 2024, we had an unfunded capital commitment of $78.7 million under the terms of this agreement. We currently anticipate the remaining funding for construction and soft costs associated with the development of 1000 First will be a minimum of approximately $103.9 million (inclusive of the aforementioned unfunded capital commitment).

Previous wording

We expect to continue to obtain the liquidity and capital resources that we need over the short and long-term from the proceeds of our Public Offerings 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 secured or unsecured financing from banks and other lenders, and from any 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.”

Current wording

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 Public Offerings 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 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.”

Previous wording

The following table provides a breakdown of the net change in our cash and cash equivalents and restricted cash during the three months ended March 31, 2024 and 2023 (amounts in thousands):

Current wording

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, 2024 and 2023 (amounts in thousands):

Previous wording

As of March 31, 2024 and 2023, cash and cash equivalents and restricted cash totaled approximately $42.2 million and $122.3 million, respectively.

Current wording

As of June 30, 2024 and 2023, cash and cash equivalents and restricted cash totaled approximately $35.2 million and $90.1 million, respectively.

Previous wording

Net cash flows used in operating activities during the three months ended March 31, 2024 primarily relates to the prepayment of development costs, the payment of employee cost sharing expenses as well as payments for legal, marketing, and accounting fees. Net cash flows used in operating activities during the three months ended March 31, 2023 primarily relates to the payment of management fees and employee cost sharing expenses as well as payments for legal, marketing, and accounting fees.

Current wording

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 operating activities during the six months ended June 30, 2023 primarily relates to the payment of management fees and employee cost sharing expenses as well as payments for legal, marketing, and accounting fees.

Previous wording

Net cash flows used in investing activities during the three months ended March 31, 2024 and 2023 primarily relates to funding costs for our development properties. For additional details regarding our development properties, see “—Our Investments.”

Current wording

Net cash flows used in investing activities during the six months ended June 30, 2024 and 2023 primarily relates to funding costs for our development properties. For additional details regarding our development properties, see “—Our Investments.”

Previous wording

Net cash flows provided by financing activities for the three months ended March 31, 2024 primarily relates to net proceeds received from the 1991 Main Mezzanine Loan and proceeds from the 1991 Main Construction Loan. Net cash flows used in financing activities for the three months ended March 31, 2023 primarily relates to the payment of offering costs incurred in connection with our Public Offerings.

Current wording

Net cash flows provided by financing activities for the six months ended June 30, 2024 primarily relates to net proceeds from the 1991 Main Mezzanine Loan, proceeds from the 1991 Main Construction Loan, and net proceeds from the 900 8th Land Loan. For additional details regarding our outstanding indebtedness, see “—Liquidity and Capital Resources.” Net cash flows provided by financing activities for the six months ended June 30, 2023 primarily relates to net proceeds received from our Public Offerings, partially offset by deferred financing costs paid in connection with the 1991 Main Construction Loan.

Previous wording

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 three months ended March 31, 2024 as compared to those disclosed in “Note 2—Summary of Significant Accounting Policies” included in our Annual Report for the year ended December 31, 2023, a copy of which may be accessed here.

Current wording

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, 2024 as compared to those disclosed in “Note 2—Summary of Significant Accounting Policies” included in our Annual Report for the year ended December 31, 2023, a copy of which may be accessed here.