CaliberCos Inc. (CWD) Earnings Call Transcript & Summary

Thanks for joining us this afternoon, everyone, for Caliber's call on our Q3 2026 financial results. With me are Chris Loeffler, our CEO and Co-Founder, and Michael Rosales, who is serving as Caliber's Acting CFO. A quick note: there's a quarterly earnings deck that goes along with what we'll say today, and you can locate it on our website, www.caliberco.com, under Investor Relations. After our prepared comments wrap up, we'll take your questions. Also, please keep in mind that what we cover today could contain forward-looking statements that carry risks and uncertainties. Words like believe, expect, and anticipate represent our best estimates as of today's call, and we can't guarantee that these things will actually happen. Actual results might differ materially from those statements. You can find more details about the company's risk factors in the quarterly and annual reports we file with the Securities and Exchange Commission. We'll also reference non-GAAP measures, which include platform results and platform adjusted EBITDA. You'll find reconciliations to the most directly comparable GAAP measures in our earnings release and supplement, both of which are posted on our website. At this point I'm happy to hand the call over to Chris. Please go ahead.

Thanks, Ilya, and good afternoon everyone. I hope you're all enjoying this email holiday as much as we are. There are a few things I'll address in my remarks today. The first is our real estate investment platform — where it stands and what it's designed to do. The second is our tokenization business and the progress we've made so far this quarter. The third is our outlook for 2026. Before I get into those topics, I'll give you a quick framing of the quarter. Platform revenue was up roughly 9% year-over-year, and platform adjusted EBITDA came in positive for a second quarter in a row, an improvement of about $0.8 million versus a year ago. Michael will take you through the financial details later on the call. Caliber is a single publicly traded company that runs two operations. First, there's our real estate investment platform—for 17 years it has sponsored, built, and managed middle market real estate, and today it generates substantially all of our revenue. Second, there's Caliber Tokenization Services, which we launched in August to bring tokenization to private real estate funds, beginning with the funds we manage. Each has its own objectives. The real estate platform is our foundation, and for it we aim for steady, consistent profitability. Tokenization serves as our growth engine, built to expand through scaled technology partners instead of a large internal team. I'll walk you through results for both businesses in that order. Turning to our real estate platform: commercial real estate has now spent four years in a slump, one that started when rates went up back in 2022. It's definitely dragged on longer than we anticipated. Throughout this stretch, we've concentrated on safeguarding client money and assets while getting Caliber ready for the upturn that follows. This year demonstrated just how bumpy that road can be — midway through, credit eased and deals began closing once more. After that, the Fed lifted rates in September. Longer-term rates climbed even though much of the market had figured they'd stay flat or decline, and lenders have snapped back hard into a cautious stance. Because construction and permanent financing are essential to our projects, this has pushed some of them off schedule. That's why we adjusted our revenue guidance, and I'll return to that point. Caliber can also benefit from this longer downturn. In my February shareholder letter, I wrote that the strongest window for buying in this cycle would span 2025 through 2027, and my view hasn't changed. With credit tighter, we think it's more probable that distressed assets will reach the market for purchase as growing numbers of owners confront maturities they can't refinance; we also think investors will recognize that same opening and turn to Caliber as a vehicle for capturing it. Although interest rates and this lengthy housing cycle are outside our control, our expense structure is something we can manage. Over the last two years, we have resized the company so it fits what the business produces in a sluggish market, and as a result, platform adjusted EBITDA has now been positive for two consecutive quarters. This cost discipline shows that Caliber need not become much bigger to return to steady profitability. Recurring fund management fees totaled $3.1 million in Q3, within $3.8 million of platform revenue. Roughly 82% of our revenues were recurring. The downturn has removed the transaction activity that supports our one-time revenues—things like financing fees, development, construction, and brokerage fees, which are earned when projects close or move forward. Importantly, it has also removed the ability to sell many of the assets held in the funds we manage. Selling is how the roughly $95.9 million of performance allocations on our books would be realized. We anticipate transaction fees and the chance to harvest performance fees coming back as conditions steady and improve, and we are already seeing that play out favorably. Consistent profitability from this business is among the main routes we plan to use to retire our corporate notes over time. We are also converting notes into stock. We hold discounted payoff options secured against a portion of the notes, and we are looking at additional ways to repay that debt. Michael will take you through the substantial progress we made on this front during the third quarter. On financial visibility, we have updated our platform performance supplement through the close of the third quarter, giving investors a clear picture of our operating business; the supplement leaves out consolidated assets and concentrates on the part of our platform that directly drives shareholder value. By the close of Q3, our estimated performance allocations came in at $95.9 million, compared with $95.7 million when the prior quarter ended and $90.5 million at the end of Q3 2025. Turning to fundraising, managed capital finished the third quarter at $498.3 million, up from $495.6 million at the previous quarter's close, and we brought in $8.4 million of fresh capital during the quarter. In the wholesale channel, Q3 delivered the best fundraising quarter seen in more than three years. Wholesale volume this quarter came close to matching all of the first half of 2026 combined. Nine firms contributed capital, meaning production is no longer tied to just a few relationships. It's spread throughout the selling group base that Caliber has been building over the course of the year. Consider Hyatt Studios: our first two selling agreements were signed, one covering Steamboat and another for TSMC; concurrently, Schwab, Fidelity, NFS, and Community National Bank onboarded the initial Caliber Hyatt Studios offering, while numerous other custodians remain in process. Approval of each offering by the major custodians opens up distribution to a wider universe, and because of that, we brought on one additional producing advisor relationship in the quarter. We reinforced Caliber's commitment to this channel by securing admission to the Institute for Portfolio Alternatives, or the IPA, a members-only organization in the alternative investment space. When it comes to direct fundraising, results from our client base of more than 2,000 investor families delivered a solid third quarter, showing sequential growth above 200% and year-over-year growth above 100%. Although that growth came off a baseline lower than our historical average, it points to a trend we expect and hope will keep going, which underscores our view that investors regard real estate as an appealing asset class right now; next I'll hand things over for updates on the assets we manage and on how our managed real estate funds have performed; we stay focused on putting money into hospitality, multifamily, and multi-tenant industrial real estate, which we think gives Caliber's investor clients the strongest opportunities in today's market environment. These updates matter since our revenue is tied directly to how these projects progress, especially as they hit financing and development milestones.

Given how limited your time is each quarter, I’ll focus on the changes I consider most significant from the quarter and the period just after it closed, rather than trying to walk through every shift in every fund. Our Hyatt Studios projects are moving forward on schedule. We broke ground during the quarter on Hyatt Studios Steamboat Springs, and we also bought a 2.5-acre site for Hyatt Studios TSMC in Phoenix, Arizona; we now own a hotel development site just minutes from TSMC, a $265 billion investment in semiconductor manufacturing based in the U.S.; we also announced recently that both of these offerings went live with tokenized ownership, meaning investors may now pick between conventional paper ownership and a digital token when putting money into these assets. Every one of these assets is structured to move into long-term ownership inside Caliber Hospitality Trust Inc., or CHT, which we expect would use an option agreement to buy the assets once they are built and stabilized, giving Hyatt Studios investors a possible exit path and giving CHT investors a proprietary pipeline of newly income-producing hotels. As for CHT, the fund is still centered on buying quality hotels at appealing entry points via direct purchases and tax-deferred contributions under its UPREIT structure, as we explained on the previous call. The owner-centric hotel management structure we outlined last quarter is now in place, and we look forward to reporting results as it matures. This fresh approach to hotel management, called Caliber TriStar, begins with five managed assets, and it is already producing improved operating results for CHT’s assets while lowering overall management costs. Our website at www.caliberhospitality.com has been updated to reflect this innovative new structure, and we look forward to sharing the financial impact of this business line as it keeps contributing to Caliber’s earned revenue and earnings. Now to the portfolio: we are actively pursuing refinancings on several existing CHT assets, which we expect to fund property-level improvements and add to our financing-related revenues as those refinancings close. As we said on earlier calls, the CHT acquisition pipeline is rebuilding, and we expect to complete the first new acquisition of an asset in CHT in December, pushing AUM growth into CHT. Our PURE Pickleball & Padel project at Riverwalk in Scottsdale had an exciting third quarter. During the quarter, we took the PURE offering live with tokenized ownership, and investors can now decide whether to receive a token or follow the traditional paper path. As we bring existing equity on chain, we anticipate this tokenization structure will help with new fundraising and wider distribution of the chance to own a share of the PURE business. PURE also launched the inaugural season of the Arizona Club Pickleball. That league consists of 42 teams in total — 32 PURE Academy squads plus 10 from outside — with roughly 270 players taking part across 11 divisions that stretch from elementary through middle and high school and include adult men's and women's competition at several skill levels. Operating these programs brings in revenue for PURE right now while also building brand awareness. At PURE's Scottsdale location, the membership wait list currently stands at more than 2,200 people. PURE is still on track to break ground as soon as the construction financing we outlined last quarter is closed. Moving to Canyon, an adaptive reuse project in North Phoenix that converts underused class A office space into attainable luxury apartment homes within the TSMC and Apple Fab development corridor. That project continues along the path toward a HUD construction loan closing that we discussed on our second quarter call, with the closing now expected in the first quarter of 2027. At Encore and throughout our Johnstown developments, site planning, commercial leasing, and project financing all remain on the trajectory we laid out on our second quarter call. We expect a new construction loan to close in the first quarter of 2027 that will move these projects forward. Tokenization. Let me turn now to our second business, the growth engine. For those new to the topic, allow me to explain what tokenization is and what it means for our industry. Tokenization swaps out the paper records of a private fund for a secure digital record. Picture taking the paper security an investor buys when purchasing a real estate fund and turning it into a digital security — much like stocks once traded on paper and now trade online — except that this digital security becomes a piece of software programmable with a host of interesting features. Our view is that tokenizing a fund can reduce fund operating costs and bring greater transparency to valuations, and in time, as regulation allows, make positions simpler to transfer or borrow against. Tokenization leaves the underlying real estate investment unchanged. It makes a good investment better to own, yet it cannot turn a bad investment into a good one. On November 4, we brought three additional offerings live with tokenized ownership: the Caliber Hyatt Studios Steamboat, Caliber Hyatt Studios at Phoenix and TSMC, and the new Caliber Hyatt Studios Feeder Fund, which is built to help investors obtain diversified exposure across our Hyatt Studios platform. They come after PURE Pickleball & Padel, which went live in August. Combined, the four offerings represent over $110 million of maximum offered equity, surpassing our initial $100 million target. That figure is what the offerings can raise, not capital already raised, and we are working to bring all of the capital the offerings have already raised on chain, and we will be raising new capital into the offerings directly into the tokens. In August, we also launched Caliber Tokenization Services. That is a tokenization services business offering the same full-service capability Caliber has used to tokenize its own funds, now extended to a select group of third-party clients. CTS runs under the Tokenized by Caliber brand, and it's starting out by serving family office clients that own and operate sizable real estate portfolios. This is a fee-based service, and Caliber expects to earn one-time implementation fees as well as maintenance fees. The funds that Caliber manages are its first client, so the business generates revenue from the start, and those funds Caliber manages will gain from lower overall operating costs. As the CTS team refines its process, watch for future announcements about third-party client engagements. CTS provides its tokenization services via scaled technology partners; that lets Caliber steer clear of taking on major new overhead while still delivering the outcomes our clients and funds expect. Given this efficient business model, we're excited about CTS's growth potential. We aren't giving revenue projections for it today, but we do expect to report it on a separate revenue line down the road. A key first outcome from building CTS is the creation of Caliber's automated net asset value calculations, also called NAV, or in our case, CNAV, which remains in development. Keeping regular valuations that are meaningful and easy for investors to understand has always been both a challenge and an opportunity for the private funds industry.

CNAV is built to give investors a transparent picture of what their investment is actually worth, and our plan is to make it available across the entire industry, beginning with clients of our tokenization services. Our LINK Treasury stayed flat this quarter at 229,203 tokens, carrying a fair value of $3.3 million as of September 30th, which works out to a $1.6 million gain in value for the quarter. Let me end where I began. One company, two businesses. Our real estate platform is no legacy business. It is our foundation. Its cost basis is right-sized to the market we operate in, and platform-adjusted EBITDA has come in positive for two quarters in a row. Its revenue timing tracks the market. Development and financing fees get earned at milestones, like loan closings. With lenders now taking a defensive stance, a number of transactions we had expected to close in the fourth quarter have shifted into 2027. That is the reason we revised 2026 total revenue guidance to a $15 million-$17 million range, down from the earlier $18 million-$22 million range. The revised range presumes no improvement in the financing environment through year-end. Importantly, we are reaffirming guidance for positive platform-adjusted EBITDA for the full year in 2026. The company achieved meaningful progress in strengthening our balance sheet, as shown by our corporate note restructuring program, which has produced a better outlook for the business ahead. Tokenization is our growth engine; we are building it first on the funds we manage, and it is meant to scale via technology partners instead of headcount, and we are delivering solid, consistent quarterly progress; with that, I will hand it to Michael to review our financial results.

Thank you, Chris, and good afternoon to all of you. I'd like to begin by updating you on what we're doing about our corporate note maturities in order to strengthen our corporate liquidity position. At the close of the third quarter, we held 145 individual unsecured notes carrying an aggregate principal balance of roughly $25.6 million, and of that amount, $18.7 million has already matured or is set to mature over the coming 12 months. Typically, these notes carry either a 12-month or a 36-month term, and those holding 12-month notes can choose to extend. The notes represent unsecured obligations of CaliberCos Inc., the parent company, rather than of the funds we manage. As of September 30th, CaliberCos held $1.8 million in cash, which excludes cash held by the funds we consolidate. Consistent with prior quarters, our 10-Q contains going concern language, since our cash and other liquid assets are insufficient to fully repay these maturities, and our plans for addressing them rely on actions taken by note holders, investors, lenders, and other counterparties. We keep executing the strategies outlined in our filings to deal with these maturities. During this quarter, holders of approximately $14.3 million of notes chose to take part in the note exchange program we launched in September. Roughly $2.9 million got swapped into new 6% notes with monthly amortization, and about $0.6 million went into Series AAA preferred stock. For the rest — around $10.8 million — the holders chose a payoff option that lets Caliber settle those notes at 80% of principal, adding up to about $8.6 million in cash. All told, those choices account for roughly $13.1 million, which is about 62% of the $21 million in corporate and convertible notes we flagged in our second quarter 10-Q as coming due within 12 months. We're working on raising the capital required to exercise those payoff options, and that capital isn't committed yet. According to our view, this initiative has the potential to reduce leverage at Caliber, strengthen stockholders' equity, and give us more financial flexibility. When we listed on Nasdaq in August, we got a notice tied to the $1 minimum bid price requirement. We have until February 17, 2027, to get back into compliance, and a second 180-day period may be available. We plan to take the steps at our disposal to regain compliance, though we cannot guarantee that we will succeed. A new Nasdaq market value standard is also described in our 10-Q. That rule is presently stayed, and no notice has come to us under it. Our market value sits below the rule's $5 million threshold at this time, and we are watching it together with our other listing requirements. Now shifting to how we performed in Q3 2026. Our platform brought in $3.8 million for the quarter, up from $3.5 million during the same period last year. That gain came mainly from greater fund management fees plus development and construction fees, though lower financing fees partly offset it. Under consolidated GAAP, which takes in certain funds we consolidate, total revenue reached $4.3 million versus $3.6 million, while net loss attributable to Caliber came to $5 million against $4.4 million. Included in that number is a $0.7 million out-of-period correction — $0.07 per share — affecting how net loss was split between Caliber and non-controlling interests across the first and second quarters. This correction doesn't change consolidated net loss, total equity, or cash. Consolidated funds like those sit outside platform results, and you can see a reconciliation of both views in the release. Platform expenses in Q3 were $5.1 million, down from $5.2 million a year earlier — about a 3% decline. Most of that came from lower general and administrative costs, including less spent on legal, consulting, and events, partially offset by higher operating costs from payroll and bonuses and by franchise taxes being reclassified into operating costs. Platform net loss in Q3 was $4.3 million, versus $4.4 million in last year's comparable quarter. In Q3, we booked a $3.9 million non-cash deferred tax provision as we finalized the 2025 federal tax return; it mirrors the 80% yearly ceiling on how much taxable income our net operating losses may offset. No cash tax payment is involved here. Platform net loss before income taxes came to $0.4 million, compared with $4.4 million. That gain largely comes from a $1.6 million rise in fair value of our digital assets, versus a $0.7 million drop a year earlier, plus $0.5 million in lower interest expense. Our share count rose during the past year as we converted notes into stock and raised equity. Doing so cut our debt and diluted existing stockholders. You'll find the per-share numbers in the release; the year-over-year swing there mostly comes down to that bigger share count. Platform adjusted EBITDA came in at roughly $0.1 million for the third quarter, versus a $0.7 million loss a year earlier — an improvement of about $0.8 million. We're still keeping a tight grip on costs throughout the business, and that leaves us in good shape for our 2026 platform adjusted EBITDA guidance. At the close of the third quarter, managed capital was $498.3 million, which represents a 1.5% decline versus the end of the third quarter of 2025. Turning to our 2026 outlook, total revenue is now projected at $15 million-$17 million, compared with the prior range of $18 million-$22 million; the change reflects longer financing timelines on several transactions as credit conditions tightened, and it assumes the financing environment does not improve through the end of the year. We are no longer providing net operating income guidance. Based on what we can currently see in the pipeline and in financing activity, we are reaffirming our guidance for platform adjusted EBITDA profitability for 2026 as a whole. I will now hand it back to the operator for your questions. Thank you. Oh, I do see a question.

Hi Chris. From what I understand — or what you said — the target customers, or target audience, for CTS are family offices. Could that also be a way for you to widen the pool of investors in your funds?

Hi Michael. I hope you're doing well. We tend to view it almost as advertising that pays for itself through cash flow. Our thinking is that if we're able to assist a family office client in tokenizing and modernizing the real estate they hold — and honestly, in making it simpler for them to oversee their own portfolio and get a clearer view of it — then through that experience they might also get to know the rest of our team and could develop interest in some of the other projects we're pursuing, whether as an investment or as a chance to joint venture on projects. We're also examining many of our family office clients who've dealt with the same hospitality asset difficulties we dealt with during COVID, and our hope is that as we deliver this tokenization service for them, we may discover they hold a hotel or several that they could put into the CHT strategy. I believe your question is sharp, and it begins with first bringing them into an engagement where we can operate confidentially to assist them in improving how well they can see the portfolio they own. A fair number of these family offices might have 20 or 30 family members, yet usually just one or two actually run the real estate side of the family business. To that one or two people, I think it's a godsend to be able to share information more widely with the rest of the family and give the family a genuinely clear understanding of what they own.

Right, that's very clear. You said it's built to expand by way of technology partners. Can you give us one example of how that works?