CaliberCos Inc.

Thank you for standing by. My name is JL and I will be your conference operator today. At this time, I would like to welcome everyone to the Calibers 24 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Lisa Fortuna of Investor Relations. You may begin.

Good afternoon, everyone. Welcome to Caliber's first 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 on 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. Words like believe, expect, 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 figures 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. It is now my pleasure to turn the call over to Chris. Please go ahead.

Thank you, Lisa, and thank you to everyone joining on the call today. Since we just reported our fourth quarter and full year results from 2023 a few weeks ago, I thought I'd keep my prepared remarks as brief as possible. providing an update on fundraising and transaction activity, our first quarter 2024 performance, the deconsolidation of six of our hotel assets, as well as our cost reduction initiatives that we spoke about in mid-April. The goal, of course, being to bring Caliber to profitability as soon as possible. Let me begin with some observations about the current fundraising environment. As I mentioned in our last call, we are stepping up our activities in fundraising and despite the ongoing muted conditions we're finding in the market. We are focusing on things within our control to enhance our fundraising capabilities and move into new target areas. These include building products that are attractive to registered investment advisors and institutions, building and supporting our wholesale platform to raise capital through registered investment advisors and broker-dealers, formally engaging with family office investors to grow our family office direct channel, issuing institutional equity offerings for the Caliber Hospitality Trust, or CHT, in both the equity and debt markets, directly engaging with new high net worth individuals and ultra high net worth individuals via low cost live and digital events, and transforming our digital marketing platform with new talent and strategies to reduce our marketing costs while increasing lead generation. We're confident that a more diversified fundraising infrastructure will support our long-term goals. Furthermore, we're now gaining improved visibility to increasing fundraising activity and pipeline levels. For example, in wholesale to date, we have signed 26 selling agreements with regional broker-dealers and registered investment advisors for investments in company-sponsored products. In total, these partners have approximately 380 representatives, representing $3.4 billion of accessible AUM. It generally takes three to six months to build momentum in this channel once the selling agreement has been executed, and we are now starting to see the initial dollars coming in. We expect progress in the channel to accelerate this year as it has driven much of the recent growth of our fundraising pipeline. Additionally, in our family office direct channel, we recently doubled the committed capital to CHT via a $10 million equity commitment from qualified investors. This capital continues momentum for CHT which we expect will allow us to close our pipeline of contributed assets while recovering some of the capital that Caliber had invested into CHT to launch the investment strategy in 2023. We have also made meaningful progress in the past few months on our assets. On April 29th, 2024, we announced the sale of areas B and C of the ridge development in Colorado, each approximately 20 acre parcels of land in Johnstown for an aggregate of about $12.3 million. Earlier this week, we announced the sale of approximately a 50-acre parcel of land in Johnstown for another $7.7 million, which was purchased in 2021 by a Caliber-sponsored single asset syndication, the Encore Fund Co. LLC. This latest transaction was the fourth asset sale in northern Colorado by Caliber-sponsored entities since the end of 2023, bringing the total acreage sold to approximately 170 for a total proceeds of nearly $28 million. Given the current industry conditions and low transaction volume, these profitable transactions serve as further proof that Caliber is investing in the right markets, which is allowing us to help investors make money across all market cycles. Additionally, the impact of some of these sales includes potential performance fees for Caliber as the sales are captured within the underlying partnerships that Caliber manages. In some cases, the performance fees will not be realized by Caliber until the partnerships complete a full sale of all the underlying land. The funding of phase one of our SP-10 project, which is the conversion of an existing Phoenix-based hotel to apartments, initiates the turnaround of an asset that was negatively affected by the COVID pandemic. In capitalizing a new construction loan, Caliber paid off an existing $11 million loan, which was past its original maturity, and combined with new investor equity, has fully capitalized the conversion of the hotel to apartments. This demonstrates our unwavering dedication to find a path forward for each of our assets and to protect our investors' capital to the best of our ability. I look forward to seeing this plan fully executed over the coming three to five years and including the SP-10 project in Caliber's track record as a successful turnaround story. Turning to the deconsolidation, As we alluded to in our recent full year 2023 earnings call, Caliber has been working diligently with our internal team and our auditors at Deloitte to evaluate the presentation of our financial information. At the end of 2023, we changed our reporting segments to reflect a single segment. Presentation we believe matches our current view of the business and simplifies our financial reporting. As of March 7th, 2024, after completing the seventh hotel contribution to CHT, we concluded that Caliber's no longer needed to consolidate six hotels we had consolidated in 2023. It's important to note that the change excludes hotel results from our Q1 2024 financial information, which was a primary driver of the year-over-year decline in our revenues. For those of you who may not enjoy technical accounting, I'll share that the consolidation of an asset is typically done when an asset management business like Caliber controls an asset has a sizable economic interest in that asset and may provide some form of loan guarantees. The effect of that consolidation is that we bring the financial results of the asset itself into Caliber's financial results, including the debt on that asset's balance sheet, and we often eliminate other financial results, such as the fees that we earn managing that asset, from the presentation of Caliber's results. This influences our income statement in our balance sheet, and it may make it appear, for example, that Caliber has debt inside the public company that it is not actually the borrower for. Why am I spending so much time on the topic? I think because it's a change in the current period that creates a lack of comparability to the prior period, and we want to make sure investors understand this lack of comparability. Going forward, this change will continue to affect period over period comparability, and Caliber will seek to provide investors with an understanding of what our prior history would look like on a comparison basis. excluding the deconsolidated assets. Importantly, we expect this deconsolidation to help investors better understand our balance sheet. As an example, the change was a primary contributor to the $98 million reduction of our assets from $299 million in Q1 2023 to $201 million in Q1 of 2024, as well as the reduction in our liabilities by $118 million to 115 million in Q1 of 2024. Caliber will continue to take a critical eye to the structure of each of its investments and funds, and we will continue to evaluate opportunities to enhance transparency in our financial presentation. Turning to our Q1 2024 results, I'm sure you all had a moment to read our earnings release, and Jade will go through the quarter in some detail. Having said that, I wanted to highlight a few things that I think are notable. The first is that Caliber continues to see positive year-over-year improvement in asset management revenues, a key focus of the management team. This is an important source of stable recurring revenues. Second, our platform results and net loss attributable to Caliber primarily reflect the increase in our year-over-year expenses that we've previously discussed and the strong performance allocations of $2.5 million that we earned in Q1 of 2023, which did not repeat in Q1 of 2024. As we mentioned in our year-end call three weeks ago, we initiated a review of our cost structure to evaluate potential reductions that would better reflect current market dynamics. The entire Caliber Management team is focused on a single objective, consistent, profitable growth. We intend to achieve profitability as soon as possible. With this objective in mind, we have identified expense savings of approximately 6 million on an annualized basis, which puts us on a path to return to annual operating costs of approximately 15 million. We have already started to implement these measures, beginning with significant reductions in non-payroll operating costs, where we expect to achieve an annualized savings of approximately 2.5 million compared to 2023. We expect to realize 1.5 million in this fiscal 2024 and the remainder in 2025. In addition, we have reduced payroll expense by $4 million on an annualized basis through a combination of attrition and a reduction in force, which will partially offset that significant increase we experienced in 2023. We expect to achieve $2 million in annualized savings in 2024, with the full $4 million to be realized in 2025. These actions have been difficult and we don't take these decisions lightly. However, we believe that they're necessary to return Caliber to profitability and ensure that our business has a strong foundation for future growth and success. We remain confident in Caliber's medium and long-term growth prospects and are acting to ensure that we can achieve our stated goals. I'll now turn the call over to Jade, who will take you through our financials in greater detail.