CaliberCos Inc.

Ladies and gentlemen, welcome to Calibre's third quarter 2024 earnings call. As a reminder, today's call is being recorded for replay purposes. At this time, all lines 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. I would now like to turn the call over to Maura Conlon, Investor Relations for Caliber, please go ahead.

Thank you, Camille. Good afternoon, everyone, and thanks for joining us for Caliber's third quarter 2024 financial results conference call. I'm here today with Chris Loeffler, Chief Executive Officer and Co-Founder, and Jade Leung, Chief Financial Officer. 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 up to your questions. As a reminder, the information discussed today may include forward-looking statements that involve risks and uncertainties. Words like believe, accept, 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 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. Chris, please go ahead.

Thank you, Maura, and thank you, everyone, for joining the call today. For those of you who are new to Caliber, we are a real estate asset manager in the business of investing in, developing, and managing real estate through private funds and similar vehicles. We generate income through recurring asset management fees and one-time performance fees that continue through the life of the investments we manage, which typically spans from five to ten years. We invest in attractive markets, namely Arizona, Colorado, and Texas, for our non-hospitality commercial and residential real estate, and nationally through our hospitality investment platform. Investors can choose to participate with Caliber as a client of the firm, investing in our various private real estate funds, or as a stockholder in Caliber, owning a proportionate share of our operating business, also known as the sponsor of our private funds. Caliber became public in May of 2023 by listing on the NASDAQ through traditional IPO. And I wanted to turn now to our quarterly results. I'm very pleased with our progress this past quarter. And through a combination of well-placed cost savings and solid revenue growth, we've achieved positive adjusted EBITDA and positive platform earnings during the quarter. And we also nearly doubled our asset management revenues over the quarters. In our earnings release, we provided a definition of our platform results, which we believe, management believes, that directly shows the business performance that Caliber stockholders benefit from. Jay will provide you with some further detail on this during his comments when we get to his section. On our second quarter earnings call, we shared that we thought we would achieve positive platform adjusted EBITDA in Q4 of 2024 and positive platform net operating income in 2025. We are pleased to see that Caliber's tracking slightly ahead of our objectives, that you all may now see what we see for Caliber's future. Prior to that, we shared with you that Caliber's expenses had grown ahead of our planned revenue growth and that we needed to take some austere measures to right-size our business and return to consistent, profitable growth. This quarter's results show that we were not as far away from that goal as some may have thought. Having said that, we still face some volatility in our business, and long-term, we expect to achieve our strategic objectives. with business results generally flowing up into the right, albeit not perfectly linear. As you know, some of our prior headwinds have been caused by macro trends, such as the rapid rise in interest rates, corresponding decrease in commercial real estate values, and decrease in the pace of fundraising into private real estate funds. While these trends continue, we are also noticing countervailing information, such as the expectation from Deloitte's recent survey of real estate industry experts showing that 88% of surveyed participants expect revenues in commercial real estate to grow next year. So what has changed in the market? With the recent reduction in interest rates, asset prices, which had been falling rapidly, are now decelerating in their decline. And in some cases, they're finding their bottom. When we look at the data and we combine that with our on-the-ground knowledge, we think that we've reached an inflection point where it makes sense for us to buy real estate again. The timing is not dissimilar to what we saw in 2009 following the 2008 financial crisis, where asset values found a floor quickly, but the ability to buy those assets at a newly discounted price occurred slowly for years to come. Some of the fees associated with us gearing up for our investment engine came through in this quarter, which partially drove our results. and we saw an improvement in the debt financing fundamentals, which allowed us to close some financings despite the ongoing challenged debt environment. We are cautiously optimistic that better deal terms will continue to trend favorably for Caliber. Moving to Caliber's inner workings, we've mostly been very busy this quarter. Sometimes the announcements and activity can be hard to follow, so I would like to take some time to weave together some of our most recent announcements as they relate to our objective to increase revenue growth through three strategic priorities. The first priority is to acquire more income-generating real estate investments. As I mentioned, 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 start acquiring more attractive priced assets. One way we are doing this is through our planned roll-up of the Caliber Hospitality Trust, or CHT. targeting middle-market, income-producing hotels throughout the United States. We recently reached a definitive agreement with the Satori Collective to contribute seven hotels to the trust for a combined value of $120 million. These properties include a mix of middle-market, full-service, select-service, and extended-stay hotels in the Midwestern and Southern U.S. and represent well-known brands, including Marriott, Hilton, and IHG. With these Satori properties, CHT now has 15 hotels in the closing process, including the eight from LTD we announced previously. Assuming all these properties close, CHT will have a total of 22 hotels in its portfolio, and we will have expanded CHT's asset center management from $234 million to $530 million. In addition, with all 22 properties in CHT, we expect Caliber's asset management revenue run rate to increase by approximately 2.4 million or 42% given the value of the portfolios contributed in the terms of the contribution in management agreements. Another avenue for bolstering our income generating AUM is the elevated experience we have created for 1031 exchange investors seeking quality income generating assets. If you're not familiar with a 1031 exchange, it's a program that allows an investor to sell real estate and avoid capital gains taxes by buying new real estate within 180 days of the sale date. The short window investors have to sell an asset, identify a new asset, and close drives challenges for many investors seeking to reduce their tax liabilities. We believe Caliber provides a solution for these persistent challenges. Caliber offers a unique white glove experience for investors seeking a quality partner to complete their exchange, and we expect to close our first exchange investment in the fourth quarter of 2024. We've also created a 1031-focused page on our website, and we have been pleasantly surprised with the early results of incoming inquiries for seven-figure exchange candidates. Our second revenue growth priority is to accelerate, is to create more single asset investment offerings. 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 who are seeking to build wealth with real estate. For example, in September, we acquired the Canyon Corporate Center in Phoenix, which features over 300,000 square feet of Class A but mostly vacant office space, as well as two parking garages and nine acres of development property. We were able to purchase this property at a very attractive price point and plan to renovate the two buildings into a minimum of 400 apartment units, with the potential to go up to 700 units on the project site. Additionally, there is an adjacent vacant parcel of land that we will evaluate for future development. The property is ideally located near the redevelopment of Metro Center Shopping Mall and is in close proximity to Taiwan Semiconductor's North Phoenix campus, making it an attractive housing option for their expanding workforce. Canyon is an exciting single asset investment opportunity that is well positioned in the multifamily asset class, where demand continues to exceed supply as the housing shortage in this country persists. Another example is our Pure Pickleball and Padel project at Riverwalk in Scottsdale, Arizona. On an 11-acre parcel, we plan to build a state-of-the-art pickleball facility, including 50 indoor courts for daily open play, as well as large tournaments, a clubhouse, fitness center, pro shop, teen center, office, restaurant, cafe, and locker rooms. We expect to break ground in 2025 and complete construction in 2026. Single asset offerings boost fundraising as they offer multiple ways for investors to participate, including as a diversified fund investor, direct project investor, a 1031 investor, an opportunity zone investor, or as a self-directed IRA investor. Our third priority to drive revenue growth is what we call build what we own. Recent macro improvements to the construction financing environment and Caliber's recent on-the-ground success in gaining approval from the town of Johnstown, Colorado's council to issue special improvement bonds, or SIDS bonds, is driving our ability to keep projects moving forward in attractive markets. Where our competitors may not be finding a path forward, Caliber has tapped its creativity to uncover unique, complex, and accretive financing sources. Speaking of unique, complex, and accretive financing sources, this quarter, Caliber announced the launch of its innovative new Qualified Opportunity Zone Fund Roll-Up Program, or QOF, which is what we name Opportunity Zone Funds, to save us some words here. and we completed our first merger with a third-party fund resulting in a $14 million increase in managed capital in Caliber's existing QOF, the Caliber Tax Advantage Opportunity Zone Fund, LP, or CTAF1. This program offers a potential solution for investors who have not previously been able to realize the benefits of these complex investment vehicles. For Caliber, The program offers a unique way for us to raise larger investments into our Opportunity Zone strategy without sourcing capital in small amounts over time. For investors who manage their own fund, our new QOF roll-up program solves many problems for single asset or single family funds. Many of these funds have investment capital to deploy, but they lack access to quality investment targets. Additionally, some funds have made investments and are facing challenges to finish their projects. Caliber was one of the first firms in the United States to create and successfully fund a QOF, and we are uniquely positioned to rapidly deploy a new QOF capital into potentially attractive projects, particularly the acquisition and development of distressed real estate properties. Caliber's platform includes in-house development and construction management, allowing our team to efficiently assess projects midstream and continue or improve the existing plans. Turning to a few high-level comments about the quarter, as I mentioned in my opening remarks, in Q3 2024, we achieved positive adjusted EBITDA and platform earnings one quarter ahead of our plan. The cost savings we implemented in the first half combined with the healthy revenue growth in the quarter drove these strong results. We remain on track to continue realizing the initial 6 million of annualized savings in the final quarter of 2024. with the benefit of cost improvements anticipated in 2025 for the full year. We also stand by our target to achieve positive net operating income at the platform level for the full year 2025. Moreover, we remain confident in Caliber's medium and long-term growth prospects, and we are acting to ensure that we can achieve our previously announced three-year goals. I will now turn the call over to Jade, who will take you through our third quarter financials in greater detail.