CaliberCos Inc. (CWD) Earnings Call Transcript & Summary

Thanks a lot. Hello, everyone, and good afternoon. I'd like to welcome all of you to the conference call covering Caliber's financial results for the fourth quarter and the full year of 2025. Joining me on this call are Chris Loeffler, who serves as Chief Executive Officer and Co-Founder, along with Jade Leung, Caliber's Chief Financial Officer. I want to point out that a quarterly earnings presentation is available, and it will act as a supplement to the prepared remarks we're making today. That presentation can be found on our website, www.calcalibertco.com, under the Investor Relations section. Once management finishes its commentary, we'll take questions from participants. I'd also like to remind everyone that what we discuss today might contain forward-looking statements involving risks and uncertainties. Terms such as believe, expect, and anticipates reflect our best estimates as of this call, and we cannot provide assurances that any of these will actually occur. As a result, our actual future results may differ significantly from what these statements suggest. Additional details about the company's risk factors can be found in its quarterly and annual reports filed with the Securities and Exchange Commission. At this point, I'm happy to hand the call over to Chris. Please go ahead.

Thanks, Ilya. Hello, everyone, and good afternoon. In my remarks today, I'll begin by covering where we stand with our strategic push into blockchain and digital assets, then I'll touch on Caliber's financial condition, after that I'll discuss our real estate and private equity platform along with activity on the related projects, and I'll wrap up with what we expect for 2026. During Q3, Caliber moved our business into digital assets, beginning with the debut of our digital asset treasury, or DAT, which is built on the Link token from Chainlink. That DAT gave us an appealing entry point into this wider line of business, and I'm pleased to report that Caliber identifies additional opportunity ahead to leverage Chainlink's technology and take part in the fast-maturing field of private asset tokenization — in particular, the tokenization of real estate funds. Going forward, I'll describe all of this together as digital asset technologies. In Q4, we moved this expansion forward by pushing ahead on efforts to tokenize 2 particular real estate funds: our stake in North America's biggest pickleball facility, Pure Pickleball & Padel, along with our investments tied to developing 15 Hyatt Studios hotels. Our view is that tokenizing real estate represents a highly logical phase in how real estate investing evolves, with the capacity to boost liquidity, strengthen transparency and investor reporting, and widen both the pace and efficiency of raising capital for projects. Take, for instance, the opportunity zone funds Caliber runs; those investments demand a minimum illiquidity period of 10 to 13 years. With tokenization, the funds' investors could obtain better visibility into their asset values and how those assets perform, and could also obtain the ability either to borrow against their fund investment to gain more personal liquidity or to sell that fund investment to another party to achieve exit liquidity. This marks a thrilling development for the private real estate investment sector. Although digital asset technologies are still a developing field, the early strides we've taken here encourage us, and we think this can grow into a significant extension of our platform over the long haul. Now, on financial visibility. As our earnings release noted, delays in capital markets activities weighed on 2025, which influenced when project financings closed and when the associated fees were recognized. Put plainly, Caliber has assembled a project pipeline carrying contractual rights to revenue, and those are collected once critical capital markets activities are finished — chiefly construction financing and fundraising milestones. We anticipated a number of closings during Q4, yet many of them moved into 2026. The key point is that these delays did not diminish the value underlying our revenue pipeline. Rather, they moved when revenue gets realized. As we enter 2026, we're focused on getting these financings done and turning our current pipeline into realized revenue. We've refreshed our platform performance supplement through December 31, 2025, giving investors a transparent picture of our operating business. The following supplement leaves out consolidated assets and zeroes in on the slice of our platform that is the direct driver of shareholder value. As of year-end, our estimated performance allocations came to $104 million, climbing from $90.5 million during the quarter before, which reflects steady advancement throughout the portfolio. I want to note that certain alternative asset managers whose business model could resemble Caliber's might rely on investment company accounting, or rules based on fair value, whereas Caliber uses operating company accounting, or rules based on historical cost. Our team has started examining how these methodologies diverge, aiming to improve investor visibility into Caliber's business, and we put part of that analysis into our 10-K filing. What the results indicate is that had Caliber applied investment company accounting rules during 2025, we estimate an unrealized gain of between $10 million and $15 million would have been recorded. The complete supplement sits on our website, and we urge every shareholder to look it over. Moving to fundraising. Managed capital hit $517 million at year-end, rising from $506 million in the third quarter and $492.5 million 12 months earlier. Our wholesale distribution channel grew during 2025, and we think that leaves us well positioned for further growth in 2026. We brought on 19 new selling group relationships altogether in 2025, and many of them have already made initial investments. We aim to grow these key relationships in 2026. Caliber's wholesale priority for '26 is getting to 50 high-quality producing relationships, which we believe lets the company exceed its objectives; advisers we are engaging with — that we are engaging with — have told us that Caliber's emphasis on quality rather than quantity feels like a refreshing change next to comparable issuers; we stay committed to investing in hospitality, multifamily and multi-tenant industrial real estate, which we believe gives Caliber's investor clients the strongest opportunities in today's market environment; now I'll move to updates on the assets we manage and how our managed real estate funds are performing. These updates matter because our revenue is tied directly to how these projects advance, particularly when they hit financing and development milestones. To respect your time, each quarter I cover what I consider the most significant changes that took place during and after the close of the quarter, but I won't try to walk through every single movement in every fund. Beginning with Hyatt Studios. Our Hyatt Studios developments keep moving forward as planned, with several projects working through predevelopment. These assets are built to move into long-term ownership inside Caliber Hospitality Trust, which we expect will use an option agreement to buy the assets once they are built and stabilized, giving Hyatt Studios investors a defined exit and CHT investors a proprietary pipeline of newly income-producing hotels. Our first 4 projects are progressing well, and we'll share major milestones once they are reached. Our Pure Pickleball & Paddle development at Riverwalk in Scottsdale, Arizona is set to bring a world-class pickleball and paddle venue with 50 courts, a full-service clubhouse, plus a fitness center sponsored by HonorHealth. After PURE's building permits got the green light in late February 2026, PURE keeps moving toward shovel-ready status. Right now the emphasis is on locking down construction financing and completing the broader capital structure, which is underway as we speak. As part of securing that financing, the project just wrapped up a third-party market study, and it confirmed the business case for moving ahead into construction. Now shifting to Canyon, our large-scale mixed-use undertaking in North Phoenix within the TSMC and Apple Fab development corridor. In Q4, we achieved meaningful strides on design and site readiness, which included finishing interior demolition and pushing construction plans forward. The HUD financing process is still ongoing, and we're aiming to close construction financing and break ground later in 2026; and at core, we keep advancing construction site development along with planning and commercial activity, including continuing talks with national retailers regarding sales or leasing. How far the project gets remains contingent on financing and infrastructure milestones. When it comes to Caliber's primary hotel investment vehicle, the Caliber Hospitality Trust, we're still working on refinancing a number of the hotels within the CHT portfolio and directing that capital toward property improvements to boost their NOI.

Additionally, during February 2026, we shared news about the divestiture of the Holiday Inn Ocotillo, located within the Phoenix-Chandler submarket, for a price of $13 million. This move aligns with our repositioning strategy, aimed at deploying the proceeds to support CHT's expansion initiatives. Before the onset of COVID, we had purchased the Holiday Inn Ocotillo, steered it through a period marked by unprecedented disruption in the hospitality sector, and then sold the asset when we identified superior opportunities for our capital. Right now, we're pushing forward with a robust set of potential acquisitions for CHT, spanning outright cash deals as well as tax-deferred portfolio purchases, and we're eager to make these announcements once closing schedules are solidly in place. All things considered, Caliber experienced a year of repositioning during 2025. Although timing of revenue was affected by holdups in the capital markets, our foundational platform kept making strides in our projects, our ability to raise funds, and our move into digital assets. Looking ahead to 2026, we're concentrated on carrying out the business plan that we've communicated to all shareholders. We anticipate growth stemming from 3 main drivers: first, finalizing project-level financings throughout our current portfolio. Second, ongoing capital generation via fundraising efforts. And third, chances for fresh revenue streams and expense reductions tied to the LINK debt, the tokenization of our real estate holdings, and Caliber's broader digital asset approach. When combined, these efforts should transform our current pipeline into actual revenue and, through Caliber, provide a distinctive two-sided platform allowing investors to benefit from both the continued rebound in commercial real estate and the rapid expansion of digital asset technologies. I'm happy to report in today's earnings release that Caliber has provided its inaugural forward-looking guidance since becoming a public company, giving an anticipated 2026 revenue range of $18 million to $22 million, along with guidance indicating that management feels we are set up to reach adjusted EBITDA profitability and positive net operating income during 2026. Having said that, I'll hand things over to Jade to go through our financial results.

Thanks, Chris. Good afternoon, everybody. I'll begin by giving you an update regarding our corporate notes and where we stand on liquidity. At the close of Q4, we held 178 separate unsecured notes, carrying a total principal amount of roughly $29.6 million, and $24.5 million of that is set to come due over the coming 12 months. Typically, every note carries a 12-month term and includes an extension option. Beyond our wider plans and work aimed at tackling the company's near-term liquidity needs, we've introduced one more initiative. After Q4 ended, Caliber's Board of Directors gave the green light to a noteholder conversion program, granting holders of Caliber's unsecured corporate notes the ability to swap their notes for Series AAA convertible preferred — perpetual preferred stock. In management's view, a perpetual preferred stock structure benefits all shareholders, since notes that get converted would move out of debt and into equity. This initiative complements the Caliber common stock conversion program we announced earlier. Taking part in the Series AAA preferred stock program is optional, and that preferred stock can be converted into common stock across 3 tranches. A third of the preferred stock converts at $2.50 per common share, another third converts at $3.50 per common share, and the final third converts at $4.50 per common share. Joining the common stock conversion program is likewise optional, with terms set up to comply with NASDAQ rules governing at-the-market transactions. Our expectation is that these two programs together can bring down leverage, boost stockholders' equity and add financial flexibility as we work through our plan to reach profitability in 2026. Throughout the last 12 months, we've achieved meaningful headway in tackling our near-term liquidity, and we anticipate further headway via a mix of capital initiatives and operational execution. Now to our fourth quarter 2025 results. Platform revenue came in at $4 million for Q4, versus $4.6 million in the same quarter a year earlier. Asset management fees rose 6% year-over-year, whereas construction and development revenues fell, mainly because of the timing of project financings. A number of financings anticipated to close during Q4 wound up closing in Q1 2026. As Chris noted, that's a matter of timing shifting rather than underlying activity shrinking, and we expect those financings to add to revenue in 2026. Total platform expenses for Q4 reached $5.1 million, down 52% from a year earlier, largely because of lower payroll and related expenses. Average employee headcount fell 42.2% between Q4 2024 and Q4 2025 as part of our ongoing comprehensive cost-saving efforts to bring Caliber back to profitability. That took our total employees from 83 down to 48 at year-end. Platform adjusted EBITDA for the quarter showed a loss of about $400,000, versus a loss exceeding $1 million in the same quarter last year, which speaks to better cost discipline. At the close of the year, the capital we manage came to $517 million, which is 5% higher than the previous year; looking ahead to 2026, our projection for total revenue falls between $18 million and $22 million. As stated in our earnings release, we anticipate that roughly 60% of the growth in revenue will come from project level financings within our current portfolio, while the other 40% will stem from capital formation and asset management activities. Given what we can currently see regarding the pipeline and financing activity, we believe our position allows us to reach adjusted EBITDA profitability along with positive net operating income in 2026. At this point, I'll hand things back to the operator so you can ask your questions.

Regarding the digital approach you're taking, is there any schedule you could provide for when those 2 projects might be digitized?

Absolutely. Glad to do so. I appreciate the inquiry; we have kicked things off, selected the partners we'll collaborate with, and right now we're busy engaging those partners along with Chainlink's team to get things underway. From what I gather, this tends to be a fairly smooth undertaking, though I'll hold onto the option of being cautious about my timeline since this is our initial experience with it. Our expectation is that both projects will be tokenized within the next few months. Whether we subsequently make those tokens available on an exchange is a separate matter, yet tokenizing the offerings and leveraging that tokenized framework to enhance our investor experience and serve as a fundraising tool should happen over the next few months.

All right. And as far as the Pickleball financing goes, can it qualify under an opportunity zone?

Yeah, it sits within an opportunity zone, and that's one of the draws of this project, plus it's a draw for tokenizing the equity so as to achieve liquidity.

Understood. And from what I can tell — I know several other firms out there pursuing debt-related approaches — yours appears to be quite distinct, in that your real interest lies in Chainlink's digitization know-how as much as in the treasury side of things, is that right?

That's correct. We approached this with what you could call a several-pronged plan. The token itself is something we're enthusiastic about, and we view it as an opportunity that hasn't been priced fairly. So we're exploring every avenue available to capitalize on that. Another aspect of LINK we appreciate is the ability to stake it and earn an attractive yield. That said, what we're putting money into is a utility token supporting a brand-new system that functions as essential infrastructure for asset tokenization. Tokenizing public equities—shares, bonds, and so on—is among the biggest and, in my view, most respected developments in finance right now. We believe there's considerable opportunity when it comes to tokenizing private equities, which for us mostly means private real estate funds. Chainlink therefore plays an essential role in that infrastructure, in the tokenization process itself, and in feeding data to the smart contract. For us, taking a stake in their token served as an entry point, which differs from what you described regarding other digital asset treasuries—those are essentially focused only on stockpiling that token.

All right. You also brought up that you've begun staking. What kind of yield does that staking generate?

Absolutely. The public pool pays out roughly 4.5%, or — at this moment, I believe it's approximately 4.3%. Node operators themselves are able to make about 13% on the stake they have linked. Caliber is looking to stake our link straight with node operators so we capture a share of that 13%, and the amount really hinges on what terms we can work out for splitting profits between ourselves and them. As a result, we think it's fair to anticipate reaching a yield somewhere between 6% and 10%, subject to many different variables and how we put together the various partners we stake our link with — but that's a much stronger return than the public pool offers, assuming you're able to get your link staked into it.

Okay, then. And assuming you could achieve returns of around 10%, would it be logical for your company to start operating properties directly?

Do you mean us ourselves?

Yes.

With Chainlink, I believe there's a compelling chance here. Something we find appealing regarding Chainlink's Oracle network is its decentralized nature. That means you have node operators spread across the globe who frequently handle identical data and financial feeds simultaneously, which guarantees that if a single node operator fails, the underlying information itself won't fail. Consequently, a good number of firms worldwide carry out this work, sustain the Chainlink system ecosystem, and keep Chainlink running. So for us, that looks like a chance to begin by staking alongside those node operators, and afterward uncover ways to keep merging our business with theirs.

All right, that's excellent. So shifting our focus away from digital — I believe Jade said a few of the financings you were hoping to complete during Q4 got moved into Q1. Could you tell us the sizes of those, or give us any kind of detail on that?

I'm going to let Jade speak to that one himself, though it's a process — it'll be several components. The first involves financings that are already closed as of right now. The second involves financings that we anticipate closing. So I'll hand it over to him.