DEF 14A: Belpointe PREP, LLC Announces Annual Meeting of Unitholders

Belpointe PREP, LLC will hold its annual meeting of unitholders on December 19, 2024, to elect directors and ratify the appointment of its independent accounting firm.

Summary

• Belpointe PREP, LLC is holding its annual meeting of unitholders on December 19, 2024, in Greenwich, Connecticut.
• The meeting will address the election of two Class III directors and the ratification of Citrin Cooperman & Company, LLP as the independent registered public accounting firm for the fiscal year ended December 31, 2024.
• Unitholders of record as of October 30, 2024, are entitled to vote.
• The Board of Directors recommends voting FOR the election of the director nominees and FOR the ratification of the accounting firm appointment.
• The company had 3,647,093 Class A units, 100,000 Class B units, and one Class M unit outstanding as of the record date.

Sentiment

Score: 7

Explanation: The document is a standard proxy statement, which is generally neutral in tone. The company is following standard corporate governance procedures, which is a positive sign. However, the presence of related party transactions and the management fee structure warrant careful consideration.

Positives

• The Board is actively engaged in corporate governance, with established committees for audit, compensation, nominating and governance, and conflicts of interest.
• The company has an Executive Advisory Board to provide advice on investment opportunities and market conditions.
• The company has a code of business conduct and ethics in place.
• The audit committee has pre-approved all audit and non-audit services to be provided by the independent registered public accounting firm.

Negatives

• The Manager is entitled to 5% of any gain recognized by or distributed to the company, regardless of whether the holders of Class A units have received a return of their capital.
• As of June 30, 2024, $2.7 million remained due and payable to the Manager and its affiliates for fees and expenses.
• As of June 30, 2024, $1.2 million remained due and payable to the Sponsor and its affiliates for fees, expenses and employment costs.
• As of June 30, 2024, $1.6 million remained due and payable to affiliates of the Sponsor for development fees.

Risks

• Directors may have business interests and engage in activities that compete with the company.
• The company is reliant on its Manager for day-to-day operations and investment decisions.
• Conflicts of interest may arise due to related party transactions and relationships with the Manager and Sponsor.
• The management agreement can be terminated, resulting in a termination fee payable to the Manager.

Future Outlook

The management agreement will automatically renew for an unlimited number of three-year terms unless the company elects not to renew it by providing the Manager with 180 days prior notice.

Management Comments

• Brandon E. Lacoff, Chairman of the Board and Chief Executive Officer, thanks unitholders for their continued support.
• The Board recommends a vote FOR each of the proposals set forth in the proxy statement.

Industry Context

Proxy statements are standard documents for publicly traded companies, providing transparency and enabling shareholders to participate in corporate governance decisions. Belpointe PREP, LLC, as a listed entity, follows this practice to ensure compliance and shareholder engagement.

Comparison to Industry Standards

• The structure of Belpointe PREP, LLC, as a limited liability company with a manager, is common in the real estate investment sector, particularly for opportunity zone funds.
• The management fee of 0.75% of NAV is within the typical range for externally managed real estate investment vehicles.
• The Class B unit allocation, entitling the Manager to 5% of gains, is a form of incentive compensation that aligns the Manager's interests with those of the unitholders, although the specific percentage can vary among different funds.
• The related party transactions disclosed are typical for companies with external management structures, but they require careful scrutiny to ensure fairness and transparency.

Related Party Transactions

• The company borrowed $1.5 million from Belpointe Development Holding, LLC (BDH), an affiliate of the Chief Executive Officer, pursuant to the terms of an unsecured promissory note.
• The company entered into an agreement to borrow up to $3.0 million in principal amount from BDH, pursuant to the terms of a revolving credit facility agreement.
• The company borrowed $4.0 million from Lacoff Holding II LLC, an affiliate of the Chief Executive Officer, pursuant to the terms of a promissory note secured by a first mortgage lien on certain property owned by subsidiaries of the Company.
• Certain immediate family members of the Chief Executive Officer have a passive indirect minority beneficial ownership interest in Belpointe Specialty Insurance, LLC (Belpointe Specialty Insurance).
• The company is externally managed by Belpointe PREP Manager, LLC, which is an affiliate of Belpointe, LLC, the company's sponsor.
• The company has an employee and cost sharing agreement with its Sponsor.

Stakeholder Impact

• Unitholders have the opportunity to vote on key decisions affecting the company's governance and financial oversight.
• The election of directors and ratification of the auditor directly impact the company's leadership and financial accountability.
• The management fee structure and related party transactions affect the company's financial performance and returns to unitholders.

Next Steps

• Unitholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will announce preliminary voting results at the Annual Meeting and publish final results in a Current Report on Form 8-K.

Key Dates

Keywords

annual meeting, proxy statement, directors, unitholders, Belpointe PREP, Citrin Cooperman, corporate governance, related party transactions