Belpointe PREP, LLC Commitments Disclosure

Note 11 – Commitments and Contingencies

 

Litigation

 

From time to time the Company may become involved in certain non-material litigation, as described below, or other claims arising in the ordinary course of business. As of December 31, 2025, neither we nor any of our subsidiaries were subject to any material legal proceedings nor were we aware of any material legal proceedings threatened against us or any of our subsidiaries.

 

The Galinn Fund LLC

 

On December 5, 2024, the Galinn Fund LLC, a New York limited liability company (“Galinn”), filed a complaint in Connecticut State Superior Court naming CMC Storrs SPV, LLC (“CMC”), the holding company for our investment property located at 497-501 Middle Turnpike, Storrs, Connecticut (“497-501 Middle”), as a defendant, alongside Chen Ji, an individual (“Chen”), and two additional entities (the “Guarantors”).

 

In the complaint Galinn alleges, among other things, that on May 24, 2024, Chen, on behalf of CMC, executed a mortgage note (the “Note”) in the principal amount of $3.0 million (the “Loan”), which was secured in part by a mortgage against 497-501 Middle (the “Mortgage”). Galinn further alleges that CMC is in default under both the Note and Mortgage for failure to make payments when due. Galinn is seeking to foreclose on the Mortgage and damages against CMC and the Guarantors.

 

In March 2020, when we first acquired an equity interest in CMC, Chen was an affiliate of the entity, however, he thereafter exited the investment and is no longer in any way affiliated with or authorized to act on behalf of CMC. We maintain that the Loan was obtained as a result of Chen’s fraud and Galinn’s negligence, and had Galinn done adequate due diligence, or reviewed the publicly available filings on the State of Connecticut’s Business Records website, or even a basic Google search, Chen’s lack of authority would have been readily apparent prior to Galinn having made the Loan.

 

On September 15, 2025, CMC filed an amended counterclaim and cross complaint against Chen and Galinn alleging, among other things, fraud, wrongful conduct, theft, conversion, forgery, slander and violations of the Connecticut Unfair Trade Practices Act, and seeking certain declaratory relief as well as damages, attorneys’ fees, and costs and expenses related thereto.

 

We dispute any liability in this litigation, believe we have substantial defenses to Galinn’s claims, and continue to vigorously defend the matter.

 

Development Projects

 

In connection with the development of our commercial real estate assets, we have entered into separate construction management agreements for each asset which contain terms and conditions that are customary for the related scope of work. As of December 31, 2025, we have two development projects with an aggregate unfunded commitment of $14.3 million. As of December 31, 2025, $12.4 million, inclusive of retainage of $12.2 million, is outstanding and payable in connection with these developments.