Q2 2024 CaliberCos Inc Earnings Call

August 12, 2024

Speaker Change: Thank you for watching.

Operator: Ladies and gentlemen, welcome to Caliber's second quarter 2024 earnings call. As a reminder, today's call is being recorded for replay purposes. At this time, all participants are now listened to on the emote. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference call over to Lisa Fortuna, Investment Relations for Caliber. Please go ahead.

Operator: Ladies and gentlemen, welcome to Caliber's second quarter 2024 earnings call. As a reminder, today's call is being recorded for replay purposes. At this time, all participants are now listened to on the emote. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press star zero for the option. I would now like to turn the conference call over to Lisa Fortuna, Investment Relations for Caliber. Please go ahead.

Operator: Ladies and gentlemen, welcome to Caliber's second quarter 2024 earnings call. As a reminder, today's call is being recorded for the play purposes. At this time, all participants are now listening on the mode.

Speaker Change: i

Speaker Change: Ladies and gentlemen, welcome to Caliber's second quarter 2024 earnings call. As a reminder, today's call is being recorded for replay purposes.

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator.

Speaker Change: At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator.

Lisa: I would now like to turn the conference call over to Lisa for Tuna Investor Relations for Caliber. Please go ahead.

Speaker Change: I would now like to turn the conference call over to Lisa Fortuna, Investor Relations for Caliber. Please go ahead.

Lisa: Good afternoon, everyone. Welcome to Caliber's second quarter, 2024 financial results conference call. With me today, are Chris Leffler, chief executive officer and co-founder, and J. Leong, Chief Financial Officer of Caliber. Please note that we have a quarterly earnings presentation, which will serve as a supplement to today's prepared remarks. You can access the presentation on the Investor Relations section of our website at www.caliberco.org. After management commentary, we will open the call for questions. As a reminder, the information discussed today may include forward-looking statements that involve risks for uncertainties. Words like expect, believe, and anticipate refer to our best estimates as of this call, and there can be no assurances that these will actually take place.

Lisa Fortuna: Good afternoon, everyone. Welcome to Caliber's second quarter 2024 financial results conference call. With me today are Chris Loeffler, chief executive officer and co-founder, and Jade Leong, chief financial officer of Caliber. Please note that we have a quarterly earnings presentation, which will serve as a supplement to today's prepared remarks. You can access the presentation in the investor relations section of our website at www.caliberco.com.

Lisa Fortuna: Good afternoon, everyone. Welcome to Caliber's second quarter 2024 Financial Results Conference. With me today are Chris Loeffler, Chief Executive Officer and Co-Founder, and Jade Leong, Chief Financial Officer, of Cowbell. Please note that we have a quarterly earnings presentation, which will serve as a supplement to today's prepared. You can access the presentation in the investor relations section of our website at www.caliberco.com. After management's commentary, we will open the call for questions. As a reminder, the information discussed today may include forward-looking statements that involve risks and uncertainties.

Lisa Fortuna: Good afternoon, everyone. Welcome to Caliber's second quarter 2024 financial results conference call.

Speaker Change: With me today are Chris Loeffler, Chief Executive Officer and Co-Founder, and Jade Leong, Chief Financial Officer of Caliber.

Speaker Change: Please note that we have a quarterly earnings presentation which will serve as a supplement to today's prepared remarks. You can access the presentation on the investor relations section of our website at After management's commentary, we will open the call for questions.

Lisa Fortuna: Words like expect, believe, and anticipate refer to our best estimates as of this call, and there can be no assurances that these will actually occur. Our actual future results could differ significantly from these. Further information on the company's risk factors is contained in the company's quarterly and annual reports and filed with the Securities and Exchange. It is now my pleasure to turn the call over to Chris. Thank you, Lisa, and thank you to everyone joining us on the call today.

Speaker Change: As a reminder, the information discussed today may include forward-looking statements that involve risks and uncertainties. Words like expect, believe, and anticipate refer to our best estimates as of this call, and there can be no assurances that these will actually take place.

Lisa: Our actual future results could differ significantly from these statements.

Speaker Change: So, our actual future results could differ significantly from these statements. Further information on the company's risk factors is contained in the company's quarterly and annual reports and filed with the Securities and Exchange Commission.

Lisa: Further information on the company's risk factors is contained in the company's quarterly and annual report.

Lisa Fortuna: After management's commentary, we will open the call for questions. As a reminder, the information discussed today may include forward-looking statements that involve risks and uncertainties. Words like expect, believe, and anticipate refer to our best estimates as of this call, and there can be no assurances that these will actually take place. So our actual future results could differ significantly from these estimates. Further information on the company's risk factors is contained in the company's quarterly and annual reports and filed with the Securities and Exchange Commission. It is now my pleasure to turn the call over to Chris. Please go ahead.

Speaker Change: It is now my pleasure to turn the call over to Chris. Please go ahead.

Chris Leffler: Thank you, Lisa, and thank you to everyone joining us on the call today. I'd like to begin our discussion by first thanking our employees, vendors, and partners for their dedication to Caliber. In May, Caliber initiated some cost reduction measures that are a key component of our plan to return our business to operating profitably. These measures have required many members of our team, vendors, and partners to take on additional responsibilities, sometimes with less resources. The entire team has risen to the challenge, and I'm grateful for their tremendous efforts. Their dedication has helped us adjust our cost basis to a level that, combined with our planned revenue growth.

Chris Loeffler: Thank you, Lisa, and thank you to everyone joining us on the call today. I'd like to begin our discussion by first thanking our employees, vendors, and partners for their dedication to Caliber. In May, Caliber initiated some cost-reduction measures that are a key component of our plan to return our business to operating profitably. These measures have required many members of our team, vendors, and partners to take on additional responsibilities, sometimes with fewer resources. The entire team has risen to the challenge, and I'm grateful for their tremendous effort.

Chris Loeffler: I'd like to begin our discussion by first thanking our employees, vendors, and partners for their dedication to Caliber. In May, Caliber initiated some cost reduction measures that are a key component of our plan to return our business to operating profitably. These measures have required many members of our team, vendors, and partners to take on additional responsibilities, sometimes with fewer resources. The entire team has risen to the challenge, and I'm grateful for their tremendous effort.

Chris Loeffler: Their dedication has helped us to just adjust our cost basis to a level that, combined with our planned revenue group, we expect we'll return Caliber to positive EBITDA in Q4 of 2024 and positive net operating income in 2025. As we continue to sharpen our focus on increasing revenue, Caliber has set three priorities for revenue growth. The first priority is to acquire more income-generating real estate investments. The real estate market has seen a significant drop in value from its most recent valuation peak, and we believe now is the time to acquire attractively priced assets.

Chris: Thank you, Lisa, and thank you to everyone joining us on the call today. I'd like to begin our discussion by first thanking our employees, vendors, and partners for their dedication to Caliber. In May, Caliber initiated some cost reduction measures that are a key component of our plan to return our business to operating profitably.

Chris: These measures have required many members of our team, vendors, and partners to take on additional responsibilities, sometimes with less resources. The entire team has risen to the challenge, and I'm grateful for their tremendous efforts.

Chris Loeffler: Their dedication has helped us to just adjust our cost basis to a level that, combined with our planned revenue growth, we expect we'll return Caliber to positive EBITDA in Q4 of 2024 and positive net operating income in 2025. As we continue to sharpen our focus on increasing revenue, Caliber has set three priorities for revenue growth. The first priority is to acquire more income-generating real estate investments. The real estate market has seen a significant drop in value from its most recent valuation peak, and we believe now is the time to acquire attractively priced assets.

Chris: Their dedication has helped us to adjust our cost basis to a level that, combined with our planned revenue growth, we expect will return Caliber to positive EBITDA in Q4 of 2024 and positive net operating income in 2025.

Chris Leffler: We expect we'll return Caliber to positive Evidda in Q4 of 2024 and positive net operating income in 2025.

Chris Leffler: As we continue to sharpen our focus on increasing revenue, Caliber has set three priorities for revenue growth. The first priority is to acquire more income-generating real estate investments. The real estate market has seen a significant drop in value from its most recent valuation peak, and we believe now is the time to acquire attractively priced assets. Prior to this changing real estate values, we did not see the same opportunities we are seeing in income-generating assets now. To begin, we intend to close on our first one billion of assets in our planned role of the Caliber Hospitality Trust or CHT.

Chris: As we continue to sharpen our focus on increasing revenue, Caliber has set three priorities for revenue growth.

Chris: The first priority is to acquire more income-generating real estate investments.

Chris: The real estate market has seen a significant drop in value from its most recent valuation peak, and we believe now is the time to acquire attractively priced assets.

Chris Loeffler: Prior to this change in real estate values, we did not see the same opportunities we are seeing in income-generating assets now. To begin... We intend to close on our first $1 billion of assets in our planned roll-up of the Caliber Hospitality Trust, or CHT. So far, we have seven hotels in CHT with a total estimated AUM of $234 million.

Chris: Prior to this change in real estate values, we did not see the same opportunities we are seeing in income generating assets now.

Speaker Change: To begin, we intend to close on our first $1 billion of assets in our planned roll-up of the Caliber Hospitality Trust, or CHT. So far, we have seven hotels in CHT, with a total estimated AUM of $234 million.

Chris Leffler: So far, we have seven hotels in CHT, with a total estimated AUM of 234 million. We expect to close the next eight hotels by the end of 2024, bringing the AUM of CHT to 410 million. We are pleased to announce that we have signed a definitive term sheet with an institutional investor that we expect will bring 35 to 65 million of preferred equity to CHT, which will provide the funds necessary to acquire these eight assets. The agreement is subject to customer enclosing conditions and diligence requirements, and we look forward to updating you on our progress.

Chris Loeffler: We expect to close the next eight hotels by the end of 2024, bringing the AUM of CHT to $410 million. We are pleased to announce that we have signed a definitive term sheet with an institutional investor that we expect will bring $35 to $65 million of preferred equity to CHT, which will provide the funds necessary to acquire these eight assets. The agreement is subject to customary closing conditions and diligence requirements, and we look forward to updating you on our progress.

Speaker Change: We expect to close the next eight hotels by the end of 2024, bringing the AUM of CHT to $410 million.

Chris Loeffler: We are pleased to announce that we have signed a definitive term sheet with an institutional investor that we expect will bring $35 to $65 million of preferred equity to CHT, which will provide the funds necessary to acquire these eight assets. The agreement is subject to customary closing conditions and diligence requirements, and we look forward to updating you on our progress. The roll-up of CHT will mark a significant change in the composition of Caliber's AUM, with a sizable portion of the portfolio being income-producing hotels.

Speaker Change: We are pleased to announce that we have signed a definitive term sheet with an institutional investor that we expect will bring $35 to $65 million of preferred equity to CHT, which will provide the funds necessary to acquire these eight assets.

Speaker Change: The agreement is subject as customary and we look forward to updating you on our progress.

Chris Leffler: The role of CHT will mark a significant change in the composition of Caliber's AUM for the sizeable portion of the portfolio being income-producing hotels.

Chris Loeffler: The roll-up of CHT will mark a significant change in the composition of Caliber's AUM, with a sizable portion of the portfolio being income-producing hotels. To further bolster our income-generating AUM, Caliber has taken action on a program to provide an elevated experience for 1031 exchange investors seeking quality income-generating assets. We believe Caliber provides a solution for a persistent challenge for investors seeking a quality partner to complete their exchange, and we look forward to sharing more as this program develops. Our second priority to accelerate revenue growth is to provide more single asset investment offerings.

Speaker Change: The roll-up of CHT will mark a significant change in the composition of Caliber's AUM, with a sizable portion of the portfolio being income-producing hotels.

Chris Leffler: To further bolster our income-generating AUM, Caliber has taken action on a program to provide an elevated experience for 1031 exchange investors seeking quality income-generating assets. We believe Caliber provides a solution for a persistent challenge for investors seeking a quality partner to complete their exchange, and we look forward to sharing more as this program develops.

Chris Loeffler: To further bolster our income-generating AUM, Caliber has taken action on a program to provide an elevated experience for 1031 exchange investors seeking quality income-generating assets. We believe Caliber provides a solution for a persistent challenge for investors seeking a quality partner to complete their exchange, and we look forward to sharing more as this program develops. Our second priority to accelerate revenue growth is to provide more single-asset investment offerings. We believe we will be able to attract more investment capital in this format, and we have a series of projects ready to present to investors seeking to build their wealth with real estate.

Speaker Change: To further bolster our income-generating AUM, Caliber has taken action on a program to provide an elevated experience for 1031 exchange investors seeking quality income-generating assets.

Speaker Change: We believe Caliber provides a solution for a persistent challenge for investors seeking a quality partner to complete their exchange and we look forward to sharing more as this program develops.

Chris Leffler: Our second priority to accelerate revenue growth is to provide more single asset investment offerings. We believe we will be able to attract more investment capital in this format, and we have a series of projects ready to present to investors seeking to build their wealth with real estate. Additionally, our discretionary multi-asset funds can act as a lead investor in the single asset offerings, providing the multi-asset funds with a first look at each Caliber project invested. After seeding our new funds with more assets, we expect the multi-asset funds will be better positioned to attract capital from our wholesale channel.

Speaker Change: Our second priority to accelerate revenue growth is to provide more single asset investment offerings.

Chris Loeffler: We believe we will be able to attract more investment capital in this format, and we have a series of projects ready to present to investors seeking to build their wealth with real estate. Additionally, our discretionary multi-asset funds can act as a lead investor in the single-asset offerings, providing the multi-asset funds with a first look at each Caliber project investment. After seeding our new funds with more assets, we expect the multi-asset funds will be better positioned to attract capital from our wholesale channel. Our third priority is what we call Build What We Own. While this priority may sound obvious for a real estate investment company, it is not always the case.

Speaker Change: We believe we'll be able to attract more investment capital in this format and we have a series of projects ready to present to investors seeking to build their wealth with real estate.

Chris Loeffler: Additionally, our discretionary multi-asset funds can act as a lead investor in the single-asset offerings, providing the multi-asset funds with a first look at each Caliber project investor. After seeding our new funds with more assets, we expect the multi-asset funds will be better positioned to attract capital from our wholesale channel. Our third priority is what we call Build What We Own. While this priority may sound obvious for a real estate investment company, it is not always the case.

Speaker Change: Additionally, our discretionary multi-asset funds can act as a lead investor in the single asset offerings, providing the multi-asset funds with a first look at each caliber project invests in.

Speaker Change: After seeding our new funds with more assets we expect the multi-asset funds will be better positioned to attract capital from our wholesale channel.

Chris Leffler: Our third priority is what we call Build-it-We-own. While this priority may sound obvious for real estate investment company, it is not always the case. Caliber, along with what we would estimate to be most companies investing in land and development, was impacted by a very disruptive cycle of events between COVID, inflation, ongoing challenges in the banking system, and the rapid rise in interest rates. With this drastic change in market conditions, we took a hard look at our projects to re-evaluate whether any changes to our plans were warranted, a step we believe is prudent for all real estate investors.

Speaker Change: Our third priority is what we call build what we own. While this priority may sound obvious for a real estate investment company, it is not always the case.

Chris Loeffler: Caliber, along with what we would estimate to be most companies investing in land and development, was impacted by a very disruptive cycle of events between COVID, inflation, ongoing challenges in the banking system, and the rapid rise in interest rates. With this drastic change in market conditions, we took a hard look at our projects to reevaluate whether any changes to our plans were warranted, a step we believe is prudent for all real estate investors.

Speaker Change: Caliber along with what we would estimate to be most companies investing in land and development was impacted by a very disruptive cycle of events between COVID, inflation, ongoing challenges in the banking system, and the rapid rise in interest rates.

Speaker Change: With this drastic change in market conditions, we took a hard look at our projects to reevaluate whether any changes to our plans were warranted, a step we believe is prudent for all real estate investors.

Chris Leffler: In completing our review, we found the path that we expect will lead to the most potential value creation for our clients and for Caliber to be that of a continued course to complete our developments according to our revised plans and build what we currently own. An important consideration in our analysis is that many of these development projects sit with little to no secured debt, offering traditional financing as the best potential path to capitalize their completion. In many cases, all or the majority of the equity required for the projects has already been raised. Our developments are also located in strong markets, with resilient demand, giving us confidence in leasing.

Chris Loeffler: In completing our review, we found the path that we expect will lead to the most potential value creation for our clients and for Caliber to be that of a continued course to complete our developments according to our revised plans and build what we currently own. An important consideration in our analysis is that many of these development projects sit with little to no secured debt, offering traditional financing as the best potential path to capitalizing their completion. In many cases, all or the majority of the equity required for the projects has already been raised.

Speaker Change: In completing our review, we found the path that we expect will lead to the most potential value creation for our clients and for Caliber to be that of a continued course to complete our developments according to our revised plans and build what we currently own.

Speaker Change: An important consideration in our analysis is that many of these development projects sit with little to no secured debt, offering traditional financing as the best potential path to capitalize their completion.

Speaker Change: In many cases, all or the majority of the equity required for the projects has already been raised. Our developments are also located in strong markets with resilient demand, giving us confidence in leasing.

Chris Loeffler: Our developments are also located in strong markets with resilient demand, giving us confidence in leasing. Financing is critical to achieve Caliber's revenue-generating priorities, and because of that, I would like to make some observations about the current financing environment. As a real estate asset manager, financing comes to Caliber in several forms. The first form of financing is what we call fundraising, which is equity capital, preferred equity, and convertible debt raised from Caliber's clients and partners for our funds and for our real estate projects. Today, the ongoing market conditions around fundraising remain challenging.

Chris Leffler: Financing is critical to achieve Caliber's revenue-generating priorities, and because of that, I would like to make some observations about the current financing environment. As a real estate asset manager, financing comes to Caliber in several forms. The first form of financing is what we call fund raising, which is equity capital, preferred equity, and comparable debt raised from Caliber's clients and partners for our funds and for our real estate projects. Today, the ongoing market conditions around fundraising remain challenging. We are focusing on things within our control to enhance our fundraising capabilities and expand in new target areas, despite these conditions.

Speaker Change: Financing is critical to achieve Caliber's revenue-generating priorities, and because of that, I would like to make some observations about the current financing environment.

Speaker Change: As a real estate asset manager, financing comes to caliber in several forms.

Speaker Change: The first form of financing is what we call fundraising, which is equity capital, preferred equity, and convertible debt raised from Caliber's clients and partners for our funds and for our real estate projects.

Speaker Change: Today, the ongoing market conditions around fundraising remain challenging. We are focusing on things within our control to enhance our fundraising capabilities and expand into new target areas despite these conditions.

Chris Loeffler: We are focusing on things within our control to enhance our fundraising capabilities and expand into new target areas despite these conditions. Caliber's target market for fundraising includes over 13 million accredited investor households in the United States alone, and Caliber has captured a small fraction of these households with significant room to grow. With our recent announcement of Steve Drew joining our team,

Chris Leffler: Caliber's target market for fund raising includes over 13 million accredited investor households in the United States alone, and Caliber has captured a small fraction of these households with significant room to grow. With our recent announcement of Steve Drew joining our team, we believe that we have put together the right internal group to build a fundraising engine to further penetrate our target market. Steve's track record as an early employee of CrowdStreet and an architect of the platform they used to raise over 4 billion in investor capital has already started to make an impact inside the hallways of Caliber.

Speaker Change: Caliber's target market for fundraising includes over 13 million accredited investor households in the United States alone and Caliber has captured a small fraction of these households with significant room to grow.

Chris Loeffler: We believe that we have put together the right internal group to build a fundraising engine to further penetrate our target market. Steve's track record as an early employee of CrowdStreet and an architect of the platform they use to raise over four billion in investor capital has already started to make an impact inside the hallways of Caliber. The next form of financing that drives our business is debt-based financing for our real estate assets and for our funds.

Chris Loeffler: We believe that we have put together the right internal group to build a fundraising engine to further penetrate our target market. Steve's track record as an early employee of CrowdStreet and an architect of the platform they used to raise over $4 billion in investor capital has already started to make an impact inside the hallways of Caliber. The next form of financing that drives our business is debt-based financing for our real estate assets and for our funds.

Speaker Change: With our recent announcement of Steve Drew joining our team, we believe that we have put together the right internal group to build a fundraising engine to further penetrate our target market.

Speaker Change: Steve's track record as an early employee of CrowdStreet and an architect of the platform they used to raise over $4 billion in investor capital has already started to make an impact inside the hallways of Caliber.

Chris Leffler: The next form of financing that drives our business is debt-based financing for our real estate assets and for our funds. Since the failure of Silicon Valley Bank and others in March of 2023, the real estate financing environment has gone from limited activity to a slow return to more normal activities as recently as the last 30 days. I would not say we are back to normal, but we are starting to see improvement. This is critical as many of Caliber's investments have seen their timelines delay due to the financing environment. We have sought to counteract this by progressing forward with the project elements we can prior to obtaining construction financing, and now that we are seeing improvements in financing availability in terms we expect to proceed forward with several projects.

Speaker Change: The next form of financing that drives our business is debt-based financing for our real estate assets and for our funds.

Chris Loeffler: Since the failure of Silicon Valley Bank and others in March of 2023, the real estate financing environment has gone from limited activity to a slow return to more normal activities as recently as the last 30 days. I would not say we are back to normal, but we are starting to see improvements.

Speaker Change: Since the failure of Silicon Valley Bank and others in March of 2023, the real estate financing environment has gone from limited activity to a slow return to more normal activities as recently as the last 30 days. I would not say we are back to normal, but we are starting to see improvement.

Chris Loeffler: This is critical as many of Caliber's investments have seen their timelines delay due to the financing environment. We have sought to counteract this by progressing forward with the project elements we can prior to obtaining construction financing. And now that we are seeing improvements in financing availability and terms, we expect to proceed forward with several projects. Overall, we remain confident that our ongoing work to create a more diversified financing infrastructure will better support our long-term goals.

Speaker Change: This is critical as many of Caliber's investments have seen their timelines delay due to the financing environment.

Speaker Change: We have sought to counteract this by progressing forward with the project elements we can prior to obtaining construction financing, and now that we are seeing improvements in financing availability and terms, we expect to proceed forward with several projects.

Chris Leffler: Overall, we remain confident that our ongoing work to create a more diversified financing infrastructure will better support our long-term goals.

Speaker Change: Overall, we remain confident that our ongoing work to create a more diversified financing infrastructure will better support our long-term goals.

Chris Leffler: Next, I will briefly touch on progress we have made on the assets we manage; the details of which are included in our earnings press release. The Land Sold and John's Town allows each fund to capture a profitable, partial sale of each associated land development. We draw that cash and the profits from those sales back into the projects, reducing debt and preparing the projects for their next phase of development. We plan to complete these next phases of development and sell the remaining land, at which point our clients will harvest a return of their capital and associated profits, and Caliber will harvest its profit-sharing interests.

Chris Loeffler: Next, I will briefly touch on progress we've made on the assets we manage, the details of which are included in our earnings press release. The land sold in Johnstown allows each fund to capture a profitable partial sale of each associated land development.

Speaker Change: Next, I will briefly touch on progress we've made on the assets we manage, the details of which are included in our earnings press release.

Speaker Change: The land sold in Johnstown allows each fund to capture a profitable partial sale of each associated land development. We drove that cash and the profits from those sales back into the projects, reducing debt and preparing the projects for their next phase of development.

Chris Loeffler: We drove that cash and the profits from those sales back into the projects, reducing debt and preparing the projects for their next phase of development. We plan to complete these next phases of development and sell the remaining land, at which point our clients will harvest a return of their capital and associated profits, and Caliber will harvest its profit share. The capitalization of SP-10 is one of our first examples of addressing a distressed asset. In this case, a hotel that required a conversion to multifamily, and we are now actively working on transforming the property. Finally, in June, we completed the construction of our first project in Texas. Jordan Loftis.

Speaker Change: We plan to complete these next phases of development and sell the remaining land, at which point our clients will harvest a return of their capital and associated profits, and Caliber will harvest its profit-sharing interests.

Chris Leffler: The capitalization of SB 10 is one of our first examples of addressing a distressed asset. In this case, a hotel that required a conversion of multi-family, and we are now actively working on transforming the property.

Speaker Change: The capitalization of SP10 is one of our first examples of addressing a distressed asset. In this case, a hotel that required a conversion to multifamily, and we are now actively working on transforming the property.

Chris Loeffler: In this case, a hotel that required a conversion to multifamily, and we are now actively working on transforming the property. Finally, in June, we completed construction of our first project in Texas, Jordan Lodge. A 48-unit Class A multifamily property in downtown Bryan. The building features 6,500 square feet of retail space on the ground floor. Our team leased 96% of the units just weeks after opening its doors, reflecting the strong demand for housing in the area.

Chris Leffler: Finally, in June, we completed construction of our first project in Texas. Jordan Loss, a 48-unit Class A multifamily property in downtown Bryan. The building features 6,500 square feet of retail space in the ground floor. Our team leased 96% of the units just weeks after opening its doors, reflecting the strong demand for housing in the area. We are already at the early stages of planning a second multi-family development in downtown Bryan, one of the most attractive opportunities on locations we have invested in. These profitable transactions confirm that Caliber is investing in the right markets, which is allowing us to help investors make money across all market cycles.

Speaker Change: Finally, in June, we completed construction of our first project in Texas, Jordan Lofts.

Chris Loeffler: 48 unit class A multifamily property in downtown Bryan. The building features 6,500 square feet of retail space on the ground floor. Our team leased 96% of the units just weeks after opening its doors, reflecting the strong demand for housing in the area. We're already at the early stages of planning a second multifamily development in downtown Bryan, one of the most attractive opportunity zone locations we have invested in. These profitable transactions confirm that Caliber is investing in the right markets, which is allowing us to help investors make money across all market cycles.

Speaker Change: A 48-unit Class A multifamily property in downtown Bryan.

Speaker Change: The building features 6,500 square feet of retail space in the ground floor. Our team leased 96 percent of the units just weeks after opening its doors, reflecting the strong demand for housing in the area.

Chris Loeffler: We're already at the early stages of planning a second multifamily development in downtown Bryan, one of the most attractive opportunities in locations we have invested in. These profitable transactions confirm that Caliber is investing in the right markets, which is allowing us to help investors make money across all market cycles. Moving you along, a few recent changes in our leadership team. In April, we announced that Ignacio Martinez was named Chief Operating Officer, responsible for leading all operational aspects of Caliber, including people operations, project management, information technology, and security, regulatory compliance, legal, customer service, and fundraising operations.

Speaker Change: We're already at the early stages of planning a second multifamily development in downtown Bryan, one of the most attractive opportunity zone locations we have invested in.

Speaker Change: These profitable transactions confirm that Caliber is investing in the right markets, which is allowing us to help investors make money across all market cycles.

Chris Leffler: Shifting you a few recent changes in our leadership team. In April, we announced that Ignacio Martinez was named Chief Operating Officer, responsible for leading all operational aspects of Caliber, including people operations, project management, information technology and security, regulatory compliance, legal customer service, and fundraising operations. He is taking the leadership role in many strategic projects within the company, including Caliber's focus on cost reduction. In addition, last month, we announced Steve Drew joined Caliber as a Senior Vice President of Marketing, Strategy, and Technology. You already heard me mention Steve's name as it relates to fundraising. Since joining, Steve has immediately identified actionable steps to optimize our go-to-market strategy and technology platform.

Chris Loeffler: Moving you along, a few recent changes in our leadership team. In April, we announced that Ignacio Martinez was named Chief Operating Officer, responsible for leading all operational aspects of Caliber, including people operations, project management, information technology and security, regulatory compliance, legal, customer service, and fundraising operations. Martinez is taking the lead leadership role in many strategic projects within the company, including Caliber's focus on cost reduction. In addition, last month we announced Steve Drew joined Caliber as the Senior Vice President of Marketing Strategy and Technology. You have already heard me mention his name as it relates to fundraising. Since joining, Steve has immediately identified actionable steps to optimize our go-to-market strategy and technology platform.

Speaker Change: Shifting you a few recent changes in our leadership team.

Ignacio Martinez: In April, we announced that Ignacio Martinez was named Chief Operating Officer, responsible for leading all operational aspects of Caliber, including people operations, project management, information technology and security, regulatory compliance, legal, customer service, and fundraising operations.

Chris Loeffler: He is taking a leadership role in many strategic projects within the company, including Caliber's focus on cost reduction. In addition, last month, we announced Steve Drew joined Caliber as a Senior Vice President of Marketing Strategy and Technology.

Ignacio Martinez: He is taking a leadership role in many strategic projects within the company, including Caliber's focus on cost reduction.

Ignacio Martinez: In addition, last month we announced Steve Drew joined Caliber as a Senior Vice President of Marketing, Strategy, and Technology.

Chris Loeffler: You've already heard me mention Steve's name as it relates to fundraising. Since joining, Steve has immediately identified actionable steps to optimize our go-to-market strategy and technology platform. With these appointments, we are confident that Caliber has assembled the right team and capabilities to take transformational technologies like AI and utilize them to achieve our goal of consistent, profitable growth. Now, turning to a few high-level comments about the quarter. In Q2 2024, we continue to see positive year-over-year improvement in asset management revenues, a key focus of our team. This is an important source of stable recurring revenues.

Speaker Change: You already heard me mention Steve's name as it relates to fundraising. Since joining, Steve has immediately identified actionable steps to optimize our go-to-market strategy and technology platform.

Chris Leffler: With these appointments, we are confident that Caliber has assembled the right team and capabilities to take traditional technologies like AI and utilize them to achieve our goal of consistent, profitable growth.

Chris Loeffler: With these appointments, we are confident that Caliber has assembled the right team and capabilities to take transformational technologies like AI and utilize them to achieve our goal of consistent, profitable growth. Now, turning to a few high-level comments about the quarter. In Q2 2024, we continue to see positive year-over-year improvement in asset management revenues, a key focus of our team. This is an important source of stable recurring revenues. With our singular focus on achieving consistent profitable growth.

Speaker Change: With these appointments, we are confident that Calibre has assembled the right team and capabilities to take transformational technologies like AI and utilize them to achieve our goal of consistent profitable growth.

Chris Leffler: Turning to a few high-level comments about the quarter. In Q2 2024, we continue to see positive year-of-year improvement in asset management revenues, a key focus of our team. This is an important source of stable, recurring revenues. With our singular focus on achieving consistent profitable growth, we implement necessary expense-saving actions during the quarter, and since executing these actions in mid-May, we are on track to see the initial six-and-a-half million of annualized savings starting in the second half of 2024, and we expect to generate positive adjusted EBITDA in Q4 2024, with a full realization of cost improvements anticipated in 2025.

Speaker Change: Turning to a few high-level comments about the quarter.

Speaker Change: In Q2 2024 we continue to see positive year-over-year improvement in asset management revenues, a key focus of our team. This is an important source of stable recurring revenues.

Chris Loeffler: With our singular focus on achieving consistent profitable growth, we implemented necessary expense-saving actions during the quarter, and since executing these actions in mid-May, we are on track to see the initial $6.5 million of annualized savings starting in the second half of 2024, and we expect to generate positive adjusted EBITDA in Q4 2024, with a full realization of cost improvements anticipated in 2025. Moreover, we remain confident in Caliber's medium and long-term growth prospects and are acting to ensure that we can achieve our previously announced three-year goal.

Chris Loeffler: We implemented necessary expense-saving actions during the quarter, and since executing these actions in mid-May, we are on track to see the initial $6.5 million of annualized savings starting in the second half of 2024, and we expect to generate positive adjusted EBITDA in Q4 2024, with a full realization of cost improvements anticipated in 2025. Moreover, we remain confident in Caliber's medium and long-term growth prospects and are acting to ensure that we can achieve our previously announced three-year goal.

Speaker Change: With our singular focus on achieving consistent, profitable growth,

Speaker Change: We implemented necessary expense-saving actions during the quarter, and since executing these actions in mid-May, we are on track to see the initial six and a half million of annualized savings starting in the second half of 2024.

Speaker Change: And we expect to generate positive adjusted EBITDA in Q4 2024 with a full realization of cost improvements anticipated in 2025.

Chris Leffler: Moreover, we remain confident in Caliber's medium and long-term growth prospects and are acting to ensure we can achieve our previously announced three-year goals.

Speaker Change: Moreover, we remain confident in Caliber's medium and long-term growth prospects and are acting to ensure we can achieve our previously announced three-year goals.

Chris Leffler: Before I turn over the call of the Jade, I want to provide an update on our corporate debt. As I discussed in a prior call, we are seeking to refinance our unsecured debt. Through the end of the second quarter, we've paid off approximately 4.2 million in debt and have extended approximately 27.4 million in debt at various future maturities, with the overarching objective of improving our balance sheet over time. We continue to make progress, and we will keep you apprised of our progress as it occurs.

Chris Loeffler: Before I turn over the call to Jade, I want to provide an update on our corporate debt. As I discussed in a prior call, we are seeking to refinance our unsecured debt. Through the end of the second quarter, we've paid off approximately $4.2 million in debt and have extended approximately $27.4 million in debt at various future maturities, with the overarching objective of improving our balance sheet over time. We continue to make progress, and we will keep you apprised of our progress as it occurs. I will now turn over the call to Jade, who will take you through our second quarter financials in greater detail. Thank you, Chris. Good afternoon, everyone.

Speaker Change: Before I turn over the call to Jade, I want to provide an update on our corporate debt. As I discussed in a prior call, we are seeking to refinance our unsecured debt.

Speaker Change: Through the end of the second quarter, we've paid off approximately $4.2 million in debt and have extended approximately $27.4 million in debt at various future maturities, with the overarching objective of improving our balance sheet over time.

Speaker Change: We continue to make progress and we will keep you apprised of our progress as it occurs.

Speaker Change: I will now turn over the call to Jade, who will take you through our second quarter financials in greater detail.

Jade Leong: We appreciate you joining us today. As we have previously discussed, beginning in Q1, we are no longer required to consolidate Caliber Hospitality LP and the underlying six Caliber hotels. Additionally, as of Q2 2024, we are no longer required to consolidate the assets associated with our Elliott 10 partnership, further advancing our goal to deconsolidate all assets managed by Caliber. In simple terms, when we consolidate an asset we manage, all of the corresponding fees and revenues we earn get removed from our results.

Jade Leong: Good afternoon, everyone. We appreciate you joining us today. As we have previously discussed, beginning in Q1, we are no longer required to consolidate Caliber Hospitality LP and the underlying six Caliber hotels. Additionally, as of Q2 2024, we are no longer required to consolidate the assets associated with our Elliott 10 partnership, further advancing our goal to deconsolidate all assets managed by Caliber. In simple terms, when we consolidate an asset we manage, all of the corresponding fees and revenues we earn get removed from our results.

Speaker Change: i

Jade: Thank you, Chris. Good afternoon, everyone. We appreciate you joining us today.

Jade: As we have previously discussed, beginning in Q1, we are no longer required to consolidate Caliber Hospitality LP and the underlying six Caliber hotels. Additionally, as of Q2 2024, we are no longer required to consolidate the assets associated with our Elliott 10 partnership, further advancing our goal to deconsolidate all assets managed by Caliber. In simple terms, when we consolidate an asset we manage, all of the corresponding fees and revenues we earn get removed from our results. We then have to replace those fees with the revenues and expenses of that consolidated asset, of which the majority of those amounts do not benefit Caliber or its shareholders.

Jade Leong: We then have to replace those fees with the revenues and expenses of that consolidated asset, of which the majority of those amounts do not benefit Caliber or its shareholders. As a simple example, if we earn, say, $10 on asset management.

Jade: As we have previously discussed, beginning in Q1, we are no longer required to consolidate Caliber Hospitality LP and the underlying six Caliber hotels.

Jade Leong: And $6 of that fee is generated from one of our consolidated assets that itself generates, say, $50 of hotel revenue; we would reflect $54 of total consolidated revenue, $50 of which is largely not a benefit to Caliber, the public company. We believe these changes simplify our financial statements by removing most of the asset performance that has historically been included in our consolidated results. As a result, our comparative financial information is less meaningful since the prior year's results continue to include the historical performance of these assets.

Jade: Additionally, as of Q2 2024, we are no longer required to consolidate the assets associated with our Elliott 10 partnership.

Jade: further advancing our goal to deconsolidate all assets managed by Caliber. In simple terms, when we consolidate an asset we manage, all of the corresponding fees and revenues we earn get removed from our results.

Jade: We then have to replace those fees with the revenues and expenses of that consolidated asset, of which the majority of those amounts do not benefit Caliber or its shareholders.

Jade: As a simple example, if we earn, say, $10 of asset management fees and $6 of that fee is generated from one of our consolidated assets, that itself generated, say, $50 of hotel revenue, we would reflect $54 of total consolidated revenue. $50, of which is largely not the benefit of Caliber, the public company. We believe these changes simplify our financial statements by removing most of the asset performance that has historically been included in our consolidated results. As a result, our comparative financial information is less meaningful since the prior year's results continue to include the historical performance of these assets.

Jade: As a simple example, if we earn, say, $10 of asset management fees, and $6 of that fee is generated from one of our consolidated assets that itself generated, say, $50 of hotel revenue,

Jade: we would reflect $54 of total consolidated revenue.

Jade: $50 of which is largely not a benefit of Calgary the public company.

Jade: We believe these changes simplify our financial statements by removing most of the asset performance that has historically been included in our consolidated results.

Jade: As a result, our comparative financial information is less meaningful since the prior year's results continue to include the historical performance of these assets.

Jade: It's for these reasons that we continue to include unconsolidated platform performance information in these updates to provide a more clear understanding about the performance and growth of the company. With that background, I'll now turn to our results for the second quarter of 2024. Second quarter total consolidated revenue was 8.2 million, a decrease of 60% versus the same period a year ago due to a decrease in consolidated fund revenues, which was primarily due to the deconsolidation of Caliber Hospitality LP and Eliot 10 and the underlying assets, partially offset by a corresponding 70.3% increase in consolidated asset management revenues.

Jade: It's for these reasons that we continue to include unconsolidated platform performance information in these updates.

Jade: to provide a more clear understanding about the performance and growth of the company.

Jade Leong: Second quarter total consolidated revenue was $8.2 million, a decrease of 60% versus the same period a year ago due to a decrease in consolidated fund revenues, which was primarily due to the deconsolidation of Caliber Hospitality LP and Elliott 10 and the underlying assets, partially offset by a corresponding 70.3% increase in consolidated asset management revenue. Consolidated expenses for the first quarter declined by 59.7% to 12.7 million. The decrease was also due to the deconsolidation previously mentioned.

Jade Leong: It's for these reasons that we continue to include unconsolidated platform performance information in these updates to provide a more clear understanding of the performance and growth of the company. With that background, I'll now turn to our results for the second quarter of 2024. Second quarter total consolidated revenue was $8.2 million, a decrease of 60% versus the same period a year ago due to a decrease in consolidated fund revenues, which was primarily due to the deconsolidation of Caliber Hospitality LP and Elliott 10 and the underlying assets, partially offset by a corresponding 70.3% increase in consolidated asset management revenue. Consolidated expenses for the first quarter declined by 59.7% to 12.7 million. The decrease was also due to the deconsolidation previously mentioned.

Jade: With that background, I'll now turn to our results for the second quarter of 2024.

Jade: Second quarter total consolidated revenue was $8.2 million.

Jade: A decrease of 60% versus the same period a year ago due to a decrease in consolidated fund revenues, which was primarily due to the deconsolidation of Caliber Hospitality LP and Elliott 10 and the underlying assets.

Jade: partially offset by a corresponding 70.3% increase in consolidated asset management revenues.

Jade: Consolidated expenses for the first quarter declined by 59.7% to 12.7 million, but the decrease was also due to the deconsolidation previously mentioned. For the second quarter of 2024, net loss attributed to Caliber, which excludes net loss attributable to non-controlling interests, was 4.7 million, or 22 cents per diluted share. This compares to a net loss attributed to Caliber of 5.7 million, or 29 cents per diluted share, in the same period a year ago. Caliber adjusted EBITDA loss for the second quarter was 2.4 million compared to adjusted EBITDA loss of 2.3 million during the same period a year ago due to an increase in GNA expenses, largely related to professional services, offset by an increase in total revenue of about 800,000.

Jade: Consolidated expenses for the first quarter.

Jade: declined by 59.7% to 12.7 million.

Jade: The decrease was also due to the deconsolidation previously mentioned.

Jade Leong: For the second quarter of 2024, net loss attributed to Caliber, which excludes net loss attributable to non-controlling interest, was $4.7 million, or $0.22 per diluted share. This compares to net loss attributed to Caliber of $5.7 million, or $0.29 per diluted share, in the same period a year ago. Caliber's Adjusted EBITDA loss for the second quarter was $2.4 million compared to an Adjusted EBITDA loss of $2.3 million during the same period a year ago.

Jade: For the second quarter of 2024, net loss attributed to Caliber, which excludes net loss attributable to non-controlling interest, was $4.7 million, or $0.22 per diluted share.

Jade: This compares to net loss attributed to caliber of 5.7 million or 29 cents per diluted share in the same period a year ago.

Jade: Caliber-adjusted EBITDA.

Jade: loss for the second quarter was $2.4 million compared to adjusted EBITDA loss of $2.3 million during the same period a year ago.

Jade Leong: Due to an increase in G&A expenses, largely related to professional services, offset by an increase in total revenue of about 800,000. Total unconsolidated or platform revenue increased 24.9% to 4.2 million, mainly due to higher asset management revenue. Breaking down our platform revenue a bit further, fund setup fees increased to $665,000 from $9,000 in the prior year due to the recognition of revenue earned related to two new fund offerings opened during the quarter.

Jade Leong: Due to an increase in GNA expenses, largely related to professional services, offset by an increase in total revenue of about 800,000. Total unconsolidated or platform revenue increased 24.9% to 4.2 million, mainly due to higher asset management revenue. Breaking down our platform revenue a bit further, fund setup fees increased to $665,000 from $9,000 in the prior year due to the recognition of revenue earned related to two new fund offerings opened during the quarter.

Jade: Due to an increase in G&A expenses, largely related to professional services, offset by an increase in total revenue of about $800,000.

Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator.

Jade: Total unconsolidated or platform revenue increased 24.9% to 4.2 million, mainly due to higher asset management revenue. Breaking down our platform revenue a bit further, fund setup fees increased to 665,000 from 9,000 in the prior year due to the recognition of revenue earned related to two new fund offerings up and during the quarter. Fund management fees increased by 12.5% to 2.7 million due to an increase in managed capital and fees earned from the Caliber Hospitality Trust, which added one third party hotel property in Q1. During the three months ended June 30th, 2024, the company earned a fund management fee of 0.7% of the Caliber Hospitality Trust Enterprise Valley.

Jade Leong: Fund management fees increased by 12.5% to $2.7 million due to an increase in managed capital and fees earned from the Caliber Hospitality Trust, which added one third-party hotel property in Q1. For the three months ended June 30th, 2024, the company earned a fund management fee of 0.7% of the Caliber Hospitality Trust's enterprise value. Development and construction fees decreased by 50.1% due to higher activities in each of Mesa Commons, Jordan Lofts, and Ridge 2 in Colorado in the prior year, offset by an increase in construction activities related to J-25 in the current year.

Jade: Total unconsolidated or platform revenue increased 24.9% to 4.2 million, mainly due to higher asset management revenue.

Lisa: I would now like to turn the conference call over to Lisa for tuna investor relations for Caliber. Please go ahead.

Jade: Breaking down our platform revenue a bit further, fund set-up fees increased to $665,000 from $9,000 in the prior year due to the recognition of revenue earned related to two new fund offerings opened during the quarter.

Lisa: Good afternoon, everyone. Welcome to Caliber's second quarter, 2024 financial results conference call. With me today, our Chris Leffler, chief executive officer and co-founder, and J. Leong, chief financial officer of Caliber. Please note that we have a quarterly earnings presentation, which will serve as a supplement to today's prepared remarks. You can access the presentation on the investor relations section of our website at www.caliberco.org After management commentary, we will open the call for questions.

Jade Leong: Fund management fees increased by 12.5% to $2.7 million due to an increase in managed capital and fees earned from the Caliber Hospitality Trust, which added one third-party hotel property in Q1. During the three months ended June 30th, 2024, the company earned a fund management fee of 0.7% of the Caliber Hospitality Trust's enterprise value. However, development and construction fees decreased by 50.1%.

Jade: Fund management fees increased by 12.5% to $2.7 million due to an increase in managed capital and fees earned from the Caliber Hospitality Trust, which added one third-party hotel property in Q1.

Jade: During the three months ended June 30th, 2024, the company earned a fund management fee of 0.7% of the Caliber Hospitality Trust's enterprise value.

Lisa: As a reminder, the information discussed today may include forward-looking statements that involve risks for uncertainties. Words like expect, believe and anticipate, refer to our best estimates as of this call, and there can be no assurances that these will actually take place. Our actual future results could differ significantly from these statements. Further information on the company's risk factors is contained in the company's quarterly and annual report.

Jade: Development and construction fees decreased by 50.1% due to higher activities in each of Mesa Commons, Jordan Loss, and Ridge 2 in Colorado in the prior year, offset by an increase in construction activities related to G25 in the current year.

Jade: Development and construction fees decreased by 50.1 percent due to higher activities in each of Mesa Commons, Jordan Lofts, and Ridge 2 in Colorado in the prior year, offset by an increase in construction activities related to J-25 in the current year.

Jade Leong: Due to higher activities in each of Mesa Commons, Jordan Lofts, and Ridge 2 in Colorado in the prior year, offset by an increase in construction activities related to J25 in the current year, performance allocations during the quarter were nominal. Total unconsolidated or platform expenses in Q2 were $8.2 million, a decrease of 4.1% compared to Q2 last year. Primarily due to a decrease in operating costs stemming from a decrease in stock compensation expense and a decrease in accrued bonuses. This is partially offset by an increase in general and administrative expenses associated with increased legal and accounting fees. Interest expense in the second quarter was $1.3 million, essentially flat compared to the year-ago period.

Jade: Performance allocations during the quarter were nominal. Total unconsolidated or platform expenses in Q2 were 8.2 million, a decrease of 4.1% compared to Q2 last year. Primarily due to a decrease in operating costs, stemming from a decrease in stock compensation expense and a decrease in accrued bonus. This was partially offset by an increase in general in administrative expenses associated with increased leave on accounting fees. Interest expense in the second quarter was 1.3 million, essentially flat compared to the year-ago period. Total managed capital increased by 32.2 million or 7.4% from 438 million to 470 million from December 31, 2023, to June 30, 2024.

Jade Leong: Performance allocations during the quarter were nominal. Total unconsolidated or platform expenses in Q2 were $8.2 million, a decrease of 4.1% compared to Q2 last year. Primarily due to a decrease in operating costs stemming from a decrease in stock compensation expense and a decrease in accrued bonuses. This is partially offset by an increase in general and administrative expenses associated with increased legal and accounting fees. Interest expense in the second quarter was $1.3 million, essentially flat compared to the year-ago period.

Jade: Performance allocations during the quarter were nominal.

Jade: Total unconsolidated or platform expenses in Q2 were $8.2 million, a decrease of 4.1% compared to Q2 last year.

Chris Leffler: Thank you, Lisa, and thank you to everyone joining us on the call today.

Chris Leffler: I'd like to begin our discussion by first thanking our employees, vendors and partners for their dedication to Caliber. In May, Caliber initiated some cost reduction measures that are a key component of our plan to return our business to operating profitably. These measures have required many members of our team, vendors and partners to take on additional responsibilities, sometimes with less resources. The entire team has risen to the challenge, and I'm grateful for their tremendous efforts.

Jade: primarily due to a decrease in operating costs stemming from a decrease in stock compensation expense and a decrease in accrued bonus. This was partially offset by an increase in general and administrative expenses associated with increased legal and accounting fees.

Jade: Interest expense in the second quarter was $1.3 million, essentially flat compared to the year-ago period.

Jade Leong: Total managed capital increased by $32.2 million or 7.4% from $438 million to $470 million from December 31, 2023 to June 30, 2024. I'll now turn it back to Chris for his final remarks before we take your questions. Thank you, Jade.

Jade: Total managed capital increased by $32.2 million or 7.4% from $438 million to $470 million from December 31, 2023 to June 30, 2024.

Chris Leffler: Their dedication has helped us adjust our cost basis to a level that combined with our planned revenue growth. We expect we'll return Caliber to positive Evidda in Q4 of 2024 and positive net operating income in 2025.

Jade: I'll now turn it back to Chris for his final remarks before we take your questions.

Jade Leong: Total managed capital increased by $32.2 million, or 7.4%, from $438 million to $470 million from December 31, 2023 to June 30, 2024. I'll now turn it back to Chris for his final remarks before we take your questions. Thank you, Jade. Before turning to the Q&A session, I just want to reiterate our commitment to delivering consistent, profitable growth to our shareholders. Caliber has been working to both adjust our cost basis and grow our revenues.

Chris Leffler: As we continue to sharpen our focus on increasing revenue, Caliber has set three priorities for revenue growth. The first priority is to acquire more income generating real estate investments. The real estate market has seen a significant drop in value from its most recent valuation peak, and we believe now is the time to acquire attractively priced assets. Prior to this changing real estate values, we did not see the same opportunities we are seeing in income generating assets now.

Jade: I'll now turn it back to Chris for his final remarks before we take your questions.

Chris Leffler: Chris? Thank you, Jade. Before turning to the Q&A session, I just want to reiterate our commitment to delivering consistent, profitable growth to our shareholders. Caliber has been working to both adjust our cost basis and grow our revenues, and we see significant opportunities in our business to continue to improve and capture a large market opportunity today.

Chris Loeffler: Before turning to the Q&A session, I just want to reiterate our commitment to delivering consistent, profitable growth to our shareholders. Caliber has been working to both adjust our cost basis and grow our revenues. And we see significant opportunities in our business to continue to improve and capture a large market opportunity today. Thank you to all the call participants. I appreciate you joining us today and engaging with Caliber and look forward to any questions.

Jade: Chris?

Chris: Thank you, Jade. Before turning to the Q&A session, I just want to reiterate our commitment to delivering consistent profitable growth to our shareholders.

Jade Leong: And we see significant opportunities in our business to continue to improve and capture a large market opportunity today. Thank you to all the call participants. I appreciate you joining us today and engaging with Caliber and look forward to any questions. Thank you.

Chris: Caliber has been working to both adjust our cost basis and grow our revenues and we see significant opportunities in our business to continue to improve and capture a large market opportunity today.

Chris Leffler: Thank you to all the call participants. I appreciate you joining today and engaging with Caliber, and I look forward to any questions. Thank you.

Chris: Thank you to all the call participants. I appreciate you joining today and engaging with Calibre and look forward to any questions.

Chris Leffler: To begin, we intend to close on our first one billion of assets in our planned role of the Caliber Hospitality Trust or CHT. So far, we have seven hotels in CHT, with a total estimated AUM of 234 million. We expect to close the next eight hotels by the end of 2024, bringing the AUM of CHT to 410 million. We are pleased to announce that we have signed a definitive term sheet with an institutional investor that we expect will bring 35 to 65 million of preferred equity to CHT, which will provide the funds necessary to acquire these eight assets.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press start followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question. The first question comes from the line of Brendan McCarty from Sidoti. Your line is now open.

Chris Loeffler: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press R followed by the number 1 on your touchstone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press start followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any button.

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press or follow with the number one on your touchstone phone. We'll hear a prompt that your hand has been raised.

Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press R followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised.

Operator: Should you wish to decline from the following process, please press start followed by the number two. If you're using a speaker phone, please lift the handset before pressing any keys. One moment, please, for your first question.

Speaker Change: Should you wish to decline from the polling process, please press start followed by the number 2.

Speaker Change: If you are using a speakerphone, please lift the handset before pressing any keys.

Operator: One moment, please, for your first question. Your first question comes from the line of Brendan McCarty from Sidoti. Your line is now open. Good afternoon, everybody.

Speaker Change: One moment, please, for your first question.

Brendan McCarty: Your first question comes from the line of Brendan McCarty from Sedotti.

Chris Leffler: The agreement is subject to customer enclosing conditions and diligence requirements and we look forward to updating you on our progress. The role of CHT will mark a significant change in the composition of Caliber's AUM for the sizeable portion of the portfolio being income-producing hotels.

Brendan McCarty: Your line is not open. Good afternoon, everybody. Thanks for taking my questions. Chris, I just wanted to start off with fundraising. I know you mentioned the environment remains challenging. I'm just wondering if you can discuss how fundraising trended in the second quarter across the three different distribution channels.

Speaker Change: Your first question comes from the line of Brendan McCarty from Sidoti. Your line is now open.

Brendan McCarty: Good afternoon, everybody. Thanks for taking my questions. Chris, I just wanted to start off with fundraising. I know you mentioned the environment remains challenging. I'm just wondering if you could discuss how fundraising trended in the second quarter across the three different distribution channels. Sure.

Brendan McCarty: Thanks for taking my question. Chris, I just wanted to start off with fundraising. I know you mentioned the environment remains challenging. I'm just wondering if you could discuss how fundraising trended in the second quarter across three different distribution channels. Sure. Thank you.

Brendan McCarty: Good afternoon, everybody. Thanks for taking my questions.

Brendan McCarty: Chris, I just wanted to start off with fundraising. I know you mentioned the environment remains challenging. I'm just wondering if you can discuss how fundraising trended in the second quarter across the three different distribution channels.

Chris Leffler: To further bolster our income generating AUM, Caliber has taken action on a program to provide an elevated experience for 1031 exchange investors seeking quality income-generating assets. We believe Caliber provides a solution for a persistent challenge for investors seeking a quality partner to complete their exchange and we look forward to sharing more as this program develops.

Chris Loeffler: Sure, thank you. Yeah, in our first quarter, we raised a little less than $10 million. In our second quarter, we raised approximately $20 million, so we saw it about double, primarily driven by our fundraising in CHT and our retail group. We actually saw our first checks come in from wholesale. It was not a meaningful amount of money, but it was the first investment starting to come in from the wholesale channel, so that continues to be an area of focus as well, building into the selling agreements we've already signed and continuing to grow that base.

Chris Leffler: Sure. Thank you. Yeah. In our first quarter, we raised a little less than 10 million; in our second quarter, we raised approximately 20 million. So we saw it about double, primarily driven by our fundraising and CHT and our retail group. We actually saw our first checks come in from wholesale. It was not a meaningful amount of money, but it was the first investment starting to come in from the wholesale channel. So that continues to be an area of focus as well. Building into the selling agreements we've already signed and continuing to grow that base. So that's the progress we've made so far.

Chris Loeffler: Yeah, in our first quarter, we raised a little less than $10 million. In our second quarter, we raised approximately $20 million, so we saw it about double, primarily driven by our fundraising in CHT and our retail group. We actually saw our first checks come in from wholesale.

Speaker Change: Sure, thank you. Yeah, in our first quarter we raised a little less than $10 million. In our second quarter we raised approximately $20 million, so we saw it about double.

Speaker Change: primarily driven by our

Speaker Change: our fundraising in CHT and our retail group.

Chris Leffler: Our second priority to accelerate revenue growth is to provide more single asset investment offerings. We believe we will be able to attract more investment capital in this format and we have a series of projects ready to present to investors seeking to build their wealth with real estate. Additionally, our discretionary multi-asset funds can act as a lead investor in the single asset offerings, providing the multi-asset funds with a first look at each Caliber project invested. After seeding our new funds with more assets, we expect the multi-asset funds will be better positioned to attract capital from our wholesale channel.

Speaker Change: We actually saw our first checks come in from wholesale. It was not a meaningful amount of money, but it was the first investment starting to come in from the wholesale channel. So that continues to be an area of focus as well.

Chris Loeffler: It was not a meaningful amount of money, but it was the first investment starting to come in from the wholesale channel, so that continues to be an area of focus as well, building into the selling agreements we've already signed and continuing to grow that base. So that's the progress we've made so far, and then the announcement we made today at the top of the earnings call would be incremental in new capital compared to the numbers I just quoted you, so the $35 to $65 million of institutional capital for CHT is additional capital we expect to close. God, that's really helpful.

Chris Loeffler: So, that's the progress we've made so far, and then the announcement we made today at the top of the earnings call would be incremental in new capital compared to the numbers I just quoted you. So, the $35 to $65 million of institutional capital for CHT is additional capital we expect to grow.

Speaker Change: building into the selling agreements we've already signed and continuing to grow that base. So that's the progress we've made so far.

Brendan McCarty: And then the announcement we made today at the top of the earnings call would be incremental in new capital compared to the numbers I just quoted you. So the 35 to 65 million of institutional capital for CHT is additional capital we expect to close. God, that's helpful.

Speaker Change: And then the announcement we made today at the top of the earnings call would be incremental in new capital compared to the numbers I just quoted you. So the $35 to $65 million of institutional capital for CHT is additional capital we expect to close.

Chris Leffler: Our third priority is what we call build-it-we-own. While this priority may sound obvious for real estate investment company, it is not always the case. Caliber, along with what we would estimate to be most companies investing in land and development, was impacted by a very disruptive cycle of events between COVID, inflation, ongoing challenges in the banking system, and the rapid rise in interest rates. With this drastic change in market conditions, we took a hard look at our projects to re-evaluate whether any changes to our plans were warranted, a step we believe is prudent for all real estate investors.

Chris Loeffler: I think on the flip side, I know it seems like redemption, just redemptions have trended somewhat favorably over the past couple quarters. Um, can you talk about any trends you're seeing at the redemption level? They seem pretty low relative to, you know, just some of the industry pressure That's making headlines.

Brendan McCarty: On the flip side, I know it seems like redemptions have trended somewhat favorably over the past couple quarters. Um, can you talk about any trends you're seeing at the redemption level? They seem, I guess, pretty low relative to, you know, just some of the industry pressure that's making headlines.

Brendan McCarty: On the flip side, I know it seems like redemption. Redemptions have trended somewhat favorably with past couple of quarters. Can you talk about any trends you're seeing at the redemption level? I guess they seem pretty low relative to just some of the industry pressure that's making headlines.

Speaker Change: God, that's helpful.

Speaker Change: On the flip side, I know it seems like redemption, just redemptions have trended somewhat favorably over the past couple quarters.

Speaker Change: Can you talk about any trends you're seeing at the redemption level? They seem, I guess they seem pretty low relative to, you know, just some of the industry pressure that's making headlines.

Chris Leffler: Sure, yeah, happy to. So certainly see the same kinds of or similar kinds of redemption activity and requests from our clientele. I think a lot of investors have positions that have been in real estate funds that are illiquid. Our funds are illiquid as well, but unlike some of the funds that have liquidity gates, we're forced to liquidate assets typically at the wrong time. Caliber is not forced to sell an asset based on a redemption request. So we have been prudent in terms of looking at the underlying assets and the investments we have in our funds and making sure that we're not just seeking a sell and asset.

Chris Loeffler: Sure, yeah, happy to. We certainly see the same kinds of or similar kinds of redemption activity and requests from our clientele. I think a lot of investors have positions that have been in real estate funds that are illiquid. Our funds are illiquid as well, but unlike some of the funds that have liquidity gates where we're forced to liquidate assets, typically at the wrong time, Caliber is not forced to sell an asset based on a redemption request.

Speaker Change: Sure, yeah, happy to. So certainly see the same kinds of or similar kinds of redemption activity and requests from our clientele. I think a lot of investors have.

Brendan McCarty: Our funds are illiquid as well, but unlike some of the funds that have liquidity gates where we're forced to liquidate assets, typically at the wrong time, Caliber is not forced to sell an asset based on a redemption request. So we have been prudent in terms of looking at the underlying assets and the investments we have in our funds and making sure that we're not just seeking to sell an asset at what I would call the last 12 months a terrible time to sell, and that we're looking at the properties that we own to maximize the profit and the return for all investors, not just for an investor that's seeking a redemption. So we've certainly seen redemption requests increase over time as interest rates go up in our underlying funds, but we've been managing that effectively so far. Yeah, that's helpful.

Speaker Change: positions that have been in real estate funds that are illiquid. Our funds are illiquid as well but unlike you know some of the the funds that have

Speaker Change: Liquidity gates, where we're forced to liquidate assets, typically at the wrong time. Caliber is not forced to sell an asset based on a redemption request. So, we have been prudent in terms of...

Chris Loeffler: So we have been prudent in terms of looking at the underlying assets and the investments we have in our funds and making sure that we're not just seeking to sell an asset at what I would call the last 12 months a terrible time to sell, and that we're looking at the properties that we own to maximize the profit and the return for all investors, not just for an investor that's seeking a redemption. So we've certainly seen redemption requests increase over time as interest rates go up in our underlying funds, but we've been managing that effectively so far.

Speaker Change: looking at the underlying assets and the investments we have in our funds and making sure that we're

Chris Leffler: What I would call the last 12 months being a terrible time to sell, and that we're looking at the properties that we own to maximize the profit and the return for all investors, not just for an investor that's seeking a redemption. So we've certainly seen redemption requests increase over time as interest rates went up in our underlying funds, but we've been managing that effectively so far.

Speaker Change: We're not just seeking to sell an asset at what I would call the last 12 months being a terrible time to sell.

Speaker Change: looking at the properties that we own to maximize the profit and the return for all investors, not just for an investor that's seeking a redemption. So we've certainly seen redemption requests increase over time as interest rates went up in our

Speaker Change: our underlying funds, but we've been managing that effectively so far.

Brendan McCarty: Got it, that's helpful.

Chris Loeffler: And then looking at the, just looking at the prepared remarks you mentioned, there's a goal to provide more single asset investment offerings. That's just, you know, an initiative that's more appealing to target investors or, or I guess, and then as a follow-up, how does that impact the 2026 financial target? Sure. Yeah. So, um, the point is that if you think about single asset offerings, they have two significant benefits. One reason is that they're just easier for an investor to understand.

Chris Loeffler: Yeah, that's helpful. And then looking at the, just looking at the prepared remarks, you mentioned there's a goal to provide more single asset investment offerings. That's just, you know, an initiative that's more appealing to target investors or, or I guess, and then as a follow-up, how does that impact the 2026 financial target?

Brendan McCarty: And then looking at the just look at the prepare remarks you mentioned, there's a goal to provide more single asset investment offerings. That's an initiative that's more appealing to target investors, or I guess, and then as a follow-up, how does that impact the 2026 financial targets? Sure. Yeah, so if you think about single asset offerings, they have two significant benefits. One is they're just easier for an investor to understand, and since our strongest fundraising has been in our direct to high net worth channel, which we call the retail channel, that's the right matchup between the type of offering that those investors typically like to invest in, something they can get their hands around on a single project, and in the strength of our fundraising.

Speaker Change: i

Speaker Change: Yeah, that's helpful. Just looking at the prepared remarks, you mentioned there's a goal to provide more single asset investment offerings. Is that just an initiative that's more appealing to target investors? And then as a follow-up, how does that impact the 2026 financial targets?

Chris Leffler: We are focusing on things within our control to enhance our fund raising capabilities and expand in new target areas, despite these conditions. Caliber's target market for fund raising includes over 13 million accredited investor households in the United States alone, and Caliber has captured a small fraction of these households with significant room to grow. With our recent announcement of Steve Drew joining our team, we believe that we have put together the right internal group to build a fundraising engine to further penetrate our target market. Steve's track record as an early employee of CrowdStreet and an architect of the platform they used to raise over 4 billion in investor capital has already started to make an impact inside the hallways of Caliber.

Chris Loeffler: Sure, yeah, so, um, the... If you think about single asset offerings, they have two significant benefits. One reason is that they're just easier for an investor to understand. And since our strongest fundraising has been in our direct to high net worth channel, which we call the retail channel, that's the right matchup between the type of offering that those investors typically like to invest in, something they can get their hands on on a single project, and the strength of our fundraising.

Speaker Change: Sure, yeah, so, um, the...

Speaker Change: If you think about single asset offerings, they have two...

Chris Loeffler: And since our strongest fundraising has been in our direct to high net worth channel, which we call the retail channel, that's the right matchup between the type of offering that those investors typically like to invest in, something they can get their hands on on a single project, and the strength of our fundraising. At the same time, what we have seen in the current environment with investors being uncertain about, you know, the future and interest rates and with, you know, fears of a recession and everything else that I'm sure you and the rest of the market are experiencing, investors want to know if I'm going to invest in this specific project with this specific planned outcome.

Speaker Change: significant benefits. One is they're just easier for an investor to understand.

Speaker Change: And since our strongest fundraising has been in our direct to high net worth channel, which is.

Speaker Change: we call the retail channel, that's the right match-up between the type of offering that those investors typically like to invest in, something they can get their hands around on a single project, and the strength of our fundraising.

Chris Leffler: At the same time, what we have seen in the current environment with investors being uncertain about the future and with interest rates and with fears of recession and everything else that I'm sure you and the rest of the market are experiencing, investors want to know I'm going to invest in this specific project with this specific plan outcome. So I think that there's a lot of certainty in single asset offerings. And then the second thing we have found that ties into the business plan from last year, rolling into this year, is last year we spent a lot of time launching our larger multi-asset funds.

Chris Loeffler: At the same time, what we have seen in the current environment with investors being uncertain about, you know, the future and interest rates and with, you know, fears of a recession and everything else that I'm sure you and the rest of the market are experiencing, investors want to know if I'm going to invest in this specific project with this specific planned outcome. So I think that there's a lot of certainty in single asset offerings.

Speaker Change: At the same time, what we have seen in the current environment with investors being uncertain about the future and with interest rates and with fears of a recession and everything else that I'm sure you and the rest of us are aware of.

Speaker Change: of the market are experiencing, investors want to know, I'm going to invest in this specific project with this specific planned outcome.

Chris Loeffler: So I think that there's a lot of certainty in single asset offerings. And then the second thing we have found that ties into, you know, the business plan from last year rolling into this year is that last year, we spent a lot of time launching our larger multi-asset funds. We needed to do that so that we had a product that fit with the wholesale channel for fundraising. And as we've gone out there and started selling those funds, we found feedback from a lot of the broker dealers and investment advisors we've been working with that they like the funds, they like the structure, but they want to see more assets in the funds so that they can show those funds to their clients with, you know, that would be like, essentially, a seeded group of assets inside the fund.

Speaker Change: So, I think that there's a lot of certainty in single asset offerings.

Chris Loeffler: And then the second thing we have found that ties into the business plan from last year rolling into this year is that last year, we spent a lot of time launching our larger multi-asset funds. We needed to do that so that we had a product that fit with the wholesale channel for fundraising. And as we've gone out there and started selling those funds, we found feedback from a lot of the broker dealers and investment advisors we've been working with that they like the funds, they like the structure, but they want to see more assets in the funds so that they can show those funds to their clients with, you know, that would be like, essentially, a seeded group of assets inside the fund.

Chris Leffler: This is critical as many of Caliber's investments have seen their timelines delay due to the financing environment. We have sought to counteract this by progressing forward with the project elements we can prior to obtaining construction financing and now that we are seeing improvements in financing availability in terms we expect to proceed forward with several projects. Overall we remain confident that our ongoing work to create a more diversified financing infrastructure will better support our long-term goals.

Speaker Change: And then the second thing we have found that ties into the business plan from last year rolling into this year is last year we spent a lot of time launching our larger multi-asset funds. We needed to do that so that we had a product that fit with the wholesale channel for fundraising.

Chris Leffler: We needed to do that so that we had a product that fit with the wholesale channel for fundraising. And as we've gone out there and started selling those funds, we found feedback from a lot of the broker-dealers and investment advisors we've been working with that they like the funds, they like the structure, but they want to see more assets in the funds so that they can show those funds to their clients with, you know, that would say like essentially a seeded group of assets inside the funds. So the best way for us to do that and the fastest way for us to do that is to spin up our single asset investment offerings, go out and acquire projects that are attractive for both our retail investors and our wholesale investors, get them purchased, and then provide an allocation to our multi asset funds that they can take a piece of each deal and start to build the track record of the funds, so to speak.

Speaker Change: And as we've gone out there and started selling those funds, we found feedback from a lot of the broker-dealers and investment advisors we've been working with that

Speaker Change: They like the fund, they like the structure, but they want to see more assets in the fund so that they can show those funds to their clients with, I would say, essentially a seeded group of assets inside the funds. So the best way for us to do that and the fastest way for us to do that is to...

Chris Leffler: Next, I will briefly touch on progress we have made on the assets we manage, the details of which are included in our earnings press release. The Land Sold and John's Town allows each fund to capture a profitable, partial sale of each associated land development. We draw that cash and the profits from those sales back into the projects, reducing debt and preparing the projects for their next phase of development. We plan to complete these next phases of development and sell the remaining land at which point our clients will harvest a return of their capital and associated profits and Caliber will harvest its profit sharing interests.

Chris Loeffler: So the best way for us to do that, and the fastest way for us to do that, is to spin up our single asset investment offerings, go out and acquire projects that are attractive for both our retail investors and our wholesale investors, get them purchased, and then provide an allocation to our multi-asset funds so that they can take a piece of each deal and start to build the track record of the funds, so to speak. So that's the plan. It does not impact our goals. We just think that this is the best possible strategy for Caliber in the near term to both raise capital and achieve those goals.

Speaker Change: spin up our single asset investment offerings, go out and acquire projects that are attractive for both our retail investors and our wholesale investors.

Speaker Change: Get them

Speaker Change: purchased and then provide an allocation to our multi-asset funds that they can take a piece of each deal and start to build the track record of the funds, so to speak. So that's the strategy. It does not impact our goals. We just think that this is a

Chris Leffler: So, that's the strategy; it does not impact our goals. We just think that this is the best possible strategy for Caliber in the near term to both raise capital and achieve those goals.

Brendan McCarty: We just think that this is the best possible strategy for Caliber in the near term to both raise capital and achieve those goals. Thanks, Chris. That's very helpful. One more question for me, just looking at the financial targets, the $3 billion targeted AUM by 2026, I guess, has that target or your confidence in achieving that target changed at all throughout the first six months of the year? We have not changed the targets, and we don't intend to.

Chris Leffler: The capitalization of SB 10 is one of our first examples of addressing a distressed asset. In this case a hotel that required a conversion of multi-family and we are now actively working on transforming the property.

Speaker Change: the best possible strategy for caliber in the near term to both raise capital and achieve those goals.

Brendan McCarty: Thanks, Kirsten. That's helpful.

Chris Loeffler: Got it. Thanks, Chris. That's helpful. One more question for me. Just looking at the financial targets, the $3 billion targeted AUM by 2026, I guess, has that target or your confidence in achieving that target changed at all throughout the first six months of the year?

Brendan McCarty: One more question for me, just looking at the financial targets, the $3 billion targeted AUM by 2026. I guess has that target, or has your confidence in achieving that target change at all throughout the first six months of the year? We have not changed the targets, and we don't intend to. We feel pretty confident about what we put out there because when we built those targets in the first place, we accounted for some of the environment we're in. So I think that our acknowledgement of the fact that it's a difficult environment and that interest rates are up and such was all part of the original plan.

Chris Leffler: Finally, in June, we completed construction of our first project in Texas. Jordan Loss, a 48-unit-class-a-multifamily property in downtown Bryan. The building features 6,500 square feet of retail space in the ground floor. Our team leased 96% of the units just weeks after opening its doors reflecting the strong demand for housing in the area. We are already at the early stages of planning a second multi-family development in downtown Bryan, one of the most attractive opportunities on locations we have invested in. These profitable transactions confirm that Caliber is investing in the right markets, which is allowing us to help investors make money across all market cycles.

Speaker Change: Got it. Thanks, Chris. That's helpful. One more question for me, just looking at the financial targets, the $3 billion targeted AUM by 2026. I guess, has that target, or has your confidence in achieving that target changed at all throughout the first six months of the year?

Chris Loeffler: We have not changed the targets, and we don't intend to. We feel pretty confident about what we put out there because, you know, when we built those targets in the first place, we accounted for some of the, you know, environment we're in. So I think that our acknowledgement of the fact that it's a difficult environment and that interest rates are up and such was all part of the original plan.

Chris Loeffler: We feel pretty confident about what we put out there because, you know, when we built those targets in the first place, we accounted for some of the environment we're in. So I think that our acknowledgement of the fact that it's a difficult environment and that interest rates are up and such was all part of the original plan. I think if you were to tie out that, that $3 billion target is an example.

Speaker Change: We have not changed the targets and we don't intend to we feel pretty confident about what we put out there because we you know When we when we built those targets in the first place we accounted for

Chris Loeffler: I think if you were to tie out that, the $3 billion target is an example. Presuming we execute on our minimum goal for CHT, then we'll be bringing the portfolio AUM up to close to $2 billion with that transaction, which... leaves the remaining $1 billion to be additional assets going into CHT or other investments we make over the next essentially two and a half years. So I think we feel pretty comfortable with the target. That makes sense. Thanks, Chris.

Speaker Change: some of the, you know, environment we're in. So I think that our acknowledgment of the fact that it's a difficult environment and that interest rates are up and such was all part of the original plan. I think if you were to tie out that...

Chris Leffler: I think if you were to tie out that $3 billion target as an example, presuming we execute on our minimum goal for CHT, then we'll be bringing the portfolio AUM up to close to two billion with that transaction, which leads the remaining $1 billion to be additional assets going into CHT or other investments we make over the next essentially two and a half years. So, I think we feel pretty comfortable with the targets.

Chris Leffler: Shifting you a few recent changes in our leadership team.

Brendan McCarty: That makes sense. Thanks, Chris. That's all for me.

Chris Loeffler: Presuming we execute on our minimum goal for CHT, then we'll be bringing the portfolio AUM up to close to $2 billion with that transaction, which... leaves the remaining $1 billion to be additional assets going into CHT or other investments we make over the next essentially two and a half years. So I think we feel pretty comfortable with the target. That makes sense.

Speaker Change: That $3 billion target is an example. Presuming we execute on our minimum goal for CHT, then we'll be bringing the portfolio AUM up to close to $2 billion with that transaction, which

Chris Leffler: In April, we announced that Ignacio Martinez was named Chief Operating Officer, responsible for leading all operational aspects of Caliber including people operations, project management, information technology and security, regulatory compliance, legal customer service and fundraising operations.

Speaker Change: leaves the remaining $1 billion to be additional assets going into CHT or other investments we make over the next essentially two and a half years. So I think we feel pretty comfortable with the targets.

Chris Leffler: He is taking the leadership role in many strategic projects within the company including Caliber's focus on cost reduction.

Brendan McCarty: That makes sense. Thanks, Chris.

Brendan McCarty: Thanks, Chris. That's all for me. There are no further questions at this time. I will now turn the call back to Chris for closing comments. All right.

Brendan McCarty: That's all from me.

Speaker Change: That makes sense. Thanks, Chris. That's all for me.

Chris Leffler: In addition, last month, we announced Steve Drew joined Caliber as a Senior Vice President of Marketing, Strategy, and Technology. You already heard me mention Steve's name as it relates to fundraising. Since joining, Steve has immediately identified actionable steps to optimize our go-to-market strategy and technology platform. With these appointments, we are confident that Caliber has assembled the right team and capabilities to take traditional technologies like AI and utilize them to achieve our goal of consistent profitable growth.

Operator: There are no further questions at this time.

Operator: There are no further questions at this time. I will now turn the call back to Chris for closing comments.

Chris Leffler: I would now turn the call back to Chris for a close comment. Great. Thank you and thank you, Brennan. Appreciate the engagement.

Speaker Change: There are no further questions at this time. I will now turn the call back to Chris for closing comments.

Chris Loeffler: Great. Thank you. And thank you, Brendan. I appreciate the engagement. In closing, I'd like to reiterate to our employees, first and foremost, our gratitude for your ongoing dedication and commitment. I know how hard you guys have been working, and I really appreciate it. I'd also like to thank our loyal investors and partners for your continued interest in Caliber and your investment and your faith and trust in our leadership and our management team.

Chris Loeffler: And thank you, Brendan. I appreciate the engagement. In closing, I'd like to reiterate to our employees, first and foremost, our gratitude for your ongoing dedication and commitment. I know how hard you guys have been working, and I really appreciate it.

Chris Leffler: In closing, I'd like to reiterate to our employees, first and foremost, our gratitude for your ongoing dedication and commitment. I know how hard you guys have been working, and I really appreciate it.

Chris: Great, thank you, and thank you, Brendan. I appreciate the engagement.

Chris: In closing, I'd like to reiterate to our employees, first and foremost, our gratitude.

Chris: for your ongoing dedication and commitment.

Chris Loeffler: I'd also like to thank our loyal investors and partners for your continued interest in Caliber and your investment and your faith and trust in our leadership and our management team. Thank you again for your time today, for everyone on the call. We look forward to speaking with and meeting with many of you in the near future. And if you have any questions, we encourage you to reach out to our investor relations team at Financial Profiles.

Chris Leffler: I'd also like to thank our loyal investors and partners for your continued interest in Caliber and your investment and your faith and trust in our leadership and our management team. Thank you again for your time today for everyone on the call. We look forward to speaking and meeting with many of you in the near future.

Chris: I know how hard you guys have been working and I really appreciate it.

Chris: I'd also like to thank our loyal investors and partners for your continued interest in Caliber and your investment and your faith and trust in our leadership and our management team.

Chris Loeffler: And especially, if you can, go to our website and sign up for the investor relations newsletter. So, thank you very much and have a good day. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation.

Chris Leffler: Turning to a few high-level comments about the quarter. In Q2 2024, we continue to see positive year-of-year improvement in asset management revenues, a key focus of our team. This is an important source of stable recurring revenues. With our singular focus on achieving consistent profitable growth, we implement a necessary expense saving actions during the quarter, and since executing these actions in mid-May, we are on track to see the initial six-and-a-half million of annualized savings starting in the second half of 2024, and we expect to generate positive adjusted EBITDA in Q4 2024 with a full realization of cost improvements anticipated in 2025. Moreover, we remain confident in Caliber's medium and long-term growth prospects and are acting to ensure we can achieve our previously announced three-year goals.

Chris Loeffler: Thank you again for your time today and for everyone on the call. We look forward to speaking and meeting with many of you in the near future. And if you have any questions, we encourage you to reach out to our investor relations team at Financial Profiles and, especially if you can, go to our website and sign up for the investor relations newsletter. So, thank you very much and have a good day.

Chris: Thank you again for your time today, for everyone on the call. We look forward to speaking and meeting with many of you in the near future, and if you have any questions, we encourage you to reach out to our Investor Relations team at Financial Profiles, and especially, if you can, go to our website and sign up for the Investor Relations newsletter. So, thank you very much and have a good day.

Chris Leffler: And if you have any questions, we encourage you to reach out to our Investor Relations team and financial profiles. And especially if you can go to our website and sign up for the Investor Relations newsletter.

Operator: So, thank you very much, and have a good day.

Operator: Ladies and gentlemen, this concludes this conference call. Thank you for your participation. You may now disconnect. Thank you.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Jade: I will now turn over the call to Jade, who will take you through our second quarter financials in greater detail. Thank you, Chris. Good afternoon, everyone. We appreciate you joining us today. As we have previously discussed, beginning in Q1, we are no longer required to consolidate Caliber hospitality LP and the underlying six Caliber hotels. Additionally, as of Q2 2024, we are no longer required to consolidate the assets associated with our Elliott 10 partnership, further advancing our goal to deconsolidate all assets managed by Caliber.

Jade: In simple terms, when we consolidate an asset we manage, all of the corresponding fees and revenues we earn get removed from our results. We then have to replace those fees with the revenues and expenses of that consolidated asset, of which the majority of those amounts do not benefit Caliber or its shareholders. As a simple example, if we earn, say, $10 of asset management fees and $6 of that fee is generated from one of our consolidated assets, that itself generated, say, $50 of hotel revenue, we would reflect $54 of total consolidated revenue.

Jade: $50 of which is largely not the benefit of Caliber, the public company. We believe these changes simplify our financial statements by removing most of the asset performance that has historically been included in our consolidated results. As a result, our comparative financial information is less meaningful since the prior years results continue to include the historical performance of these assets.

Jade: It's for these reasons that we continue to include unconsolidated platform performance information in these updates to provide a more clear understanding about the performance and growth of the company. With that background, I'll now turn to our results for the second quarter of 2024. Second quarter total consolidated revenue was 8.2 million, a decrease of 60% versus the same period a year ago due to a decrease in consolidated fund revenues, which was primarily due to the deconsolidation of Caliber hospitality LP and Eliot 10 and the underlying assets, partially offset by a corresponding 70.3% increase in consolidated asset management revenues.

Jade: Consolidated expenses for the first quarter declined by 59.7% to 12.7 million, but decrease was also due to the deconsolidation previously mentioned. For the second quarter of 2024, net loss attributed to Caliber, which excludes net loss attributable to non-controlling interests, was 4.7 million or 22 cents per diluted share. This compares to net loss attributed to Caliber of 5.7 million or 29 cents per diluted share in the same period a year ago. Caliber adjusted EBITDA loss for the second quarter was 2.4 million compared to adjusted EBITDA loss of 2.3 million during the same period a year ago due to an increase in GNA expenses, largely related to professional services offset by an increase in total revenue of about 800,000.

Jade: During the three months ended June 30th, 2024, the company earned a fund management fee of 0.7% of the Caliber Hospitality Trust Enterprise Valley. Development and construction fees decreased by 50.1% due to higher activities in each of Mesa Commons, Jordan Loss, and Ridge 2 in Colorado in the prior year offset by an increase in construction activities related to G25 in the current year. Performance allocations during the quarter were nominal. Total unconsolidated or platform expenses in Q2 were 8.2 million a decrease of 4.1% compared to Q2 last year.

Jade: Primarily due to a decrease in operating costs, stemming from a decrease in stock compensation expense and a decrease in accrued bonus. This was partially offset by an increase in general in administrative expenses associated with increased leave on accounting fees. Interest expense in the second quarter was 1.3 million essentially flat compared to the year ago period. Total managed capital increased by 32.2 million or 7.4% from 438 million to 470 million from December 31, 2023 to June 30, 2024.

Chris Leffler: I'll now turn it back to Chris for his final remarks before we take your questions. Chris? Thank you Jade.

Chris Leffler: Before turning to the Q&A session, I just want to reiterate our commitment to delivering consistent profitable growth to our shareholders. Caliber has been working to both adjust our cost basis and grow our revenues and we see significant opportunities in our business to continue to improve and capture a large market opportunity today. Thank you to all the call participants. I appreciate you joining today and engaging with Caliber and look forward to any questions. Thank you.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press or follow with the number one on your touchstone phone. We'll hear a prompt that your hand has been raised. Should you wish to decline from the following process, please press start followed with the number two. If you're using a speaker phone, please lift the handset before pressing any keys. One moment please for your first question.

Brendan McCarty: Your first question comes from the line of Brendan McCarty from Sedotti. Your line is not open.

Chris Leffler: Good afternoon everybody. Thanks for taking my questions. Chris, I just wanted to start off with fundraising. I know you mentioned the environment remains challenging. I'm just wondering if you can discuss how fundraising trended in the second quarter across the three different distribution channels. Sure. Thank you. Yeah. In our first quarter, we raised a little less than 10 million in our second quarter, we raised approximately 20 million. So we saw it about double, primarily driven by our fundraising and CHT and our retail group.

Chris Leffler: We actually saw our first checks come in from wholesale. It was not a meaningful amount of money, but it was the first investment starting to come in from the wholesale channel. So that continues to be an area of focus as well. Building into the selling agreements we've already signed and continuing to grow that base. So that's the progress we've made so far. And then the announcement we made today at the top of the earnings call would be incremental in new capital compared to the numbers I just quoted you.

Chris Leffler: So the 35 to 65 million of institutional capital for CHT is additional capital we expect to close. God, that's helpful. On the flip side, I know it seems like redemption. Redemptions have trended somewhat favorably with past couple quarters. Can you talk about any trends you're seeing at the redemption level? I guess they seem pretty low relative to just some of the industry pressure that's making headlines. Sure, yeah, happy to. So certainly see the same kinds of or similar kinds of redemption activity and requests from our clientele.

Chris Leffler: I think a lot of investors have positions that have been in real estate funds that are illiquid. Our funds are illiquid as well, but unlike some of the funds that have liquidity gates, we're forced to liquidate assets typically at the wrong time. Caliber is not forced to sell an asset based on a redemption request. So we have been prudent in terms of looking at the underlying assets and the investments we have in our funds and making sure that we're not just seeking a sell and asset.

Chris Leffler: What I would call the last 12 months being a terrible time to sell and that we're looking at the properties that we own to maximize the profit and the return for all investors, not just for an investor that's seeking a redemption. So we've certainly seen redemption requests increase over time as interest rates went up in our underlying funds, but we've been managing that effectively so far. Got it, that's helpful. And then looking at the just look at the prepare remarks you mentioned, there's a goal to provide more single asset investment offerings.

Chris Leffler: That's an initiative that's more appealing to target investors, or I guess, and then as a follow-up, how does that impact the 2026 financial targets? Sure. Yeah, so if you think about single asset offerings, they have two significant benefits. One is they're just easier for an investor to understand, and since our strongest fundraising has been in our direct to high net worth channel, which is we call the retail channel, that's the right matchup between the type of offering that those investors typically like to invest in, something they can get their hands around on a single project, and in the strength of our fundraising.

Chris Leffler: So the best way for us to do that and the fastest way for us to do that is to to spin up our single asset investment offerings, go out and acquire projects that are attractive for both our retail investors and our wholesale investors, get them purchased and then provide an allocation to our multi asset funds that they can take a piece of each deal and start to build the track record of the funds, so to speak. So, that's the strategy, it does not impact our goals.

Chris Leffler: We just think that this is the best possible strategy for Caliber in the near term to both raise capital and achieve those goals. Thanks, Kirsten. That's helpful. One more question for me, just looking at the financial targets, the $3 billion targeted AUM by 2026. I guess has that target, or has your confidence in achieving that target change at all throughout the first six months of the year? We have not changed the targets and we don't intend to.

Chris Leffler: We feel pretty confident about what we put out there because when we built those targets in the first place, we accounted for some of the environment we're in, so I think that our acknowledgement of the fact that it's a difficult environment and that interest rates are up and such was all part of the original plan. I think if you were to tie out that $3 billion target as an example, presuming we execute on our minimum goal for CHT, then we'll be bringing the portfolio AUM up to close to two billion with that transaction, which leads the remaining $1 billion to be additional assets going into CHT or other investments we make over the next essentially two and half years. So, I think we feel pretty comfortable with the targets. That makes sense. Thanks, Chris.

Brendan McCarty: That's all from me. There are no further questions at this time.

Chris Leffler: I would now turn the call back to Chris for a close comment. Great. Thank you and thank you, Brennan. Appreciate the engagement. In closing, I'd like to reiterate to our employees first and foremost, our gratitude for your ongoing dedication and commitment. I know how hard you guys have been working and I really appreciate it. I'd also like to thank our loyal investors and partners for your continued interest in caliber and your investment and your faith and trust in our leadership and our management team.

Chris Leffler: Thank you again for your time today for everyone on the call. We look forward to speaking and meeting with many of you in the near future. And if you have any questions, we encourage you to reach out to our investor relations team and financial profiles. And especially if you can go to our website and sign up for the investor relations newsletter. So, thank you very much and have a good day.

Operator: Ladies and gentlemen, this concludes this conference call. Thank you for your participation. You may now disconnect. Thank you.

Q2 2024 CaliberCos Inc Earnings Call

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