CaliberCos Inc. Reports Second Quarter 2023 Results

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--CaliberCos Inc. (the "Company" or "Caliber") (NASDAQ: CWD), a leading vertically integrated alternative asset manager, today reported results for the second quarter ended on June 30, 2023.

Second Quarter 2023 Financial Results, Compared to Second Quarter 2022

• Total revenues of $20.4 million, a 9.4% increase
• Asset management ("AM") revenue⁽¹⁾ of $2.4 million, a 9.8% increase; asset management revenue run rate⁽¹⁾ increases to $9.6 million, a 15.3% increase as compared to the full year results in 2022
• Net loss attributable to Caliber of $5.7 million, or $0.29 per diluted share, compared to a net loss of $0.5 million or $0.03 per diluted share
• Caliber Adjusted EBITDA⁽²⁾ loss of $2.3 million, compared to $0.5 million
• Fair value assets under management⁽³⁾ ("FV AUM") of $825.3 million, a 29.4% year-over-year increase
• Managed capital⁽⁴⁾ of $401.8 million, a 24.1% year-over-year increase

Management Commentary

"In the second quarter, our team executed well on our strategic plan. We successfully completed our IPO in May, delivered year-over-year consolidated revenue growth of 9.4%, and increased our FV AUM as of June 30, 2023 to $825.3 million," said Chris Loeffler, CEO of Caliber.

"During the quarter, we continued to make strategic investments in our business to position Caliber for sustained growth. We expanded our overall sales force and built out our wholesale team to significantly expand the distribution of our funds in the Registered Investment Advisor (RIA) and independent broker-dealer channels. Simultaneously, we developed new funds and investment products for both the private and wholesale channels that will enhance our ability to capitalize on the growing number of attractive real estate investment opportunities created by this elevated interest rate environment, where access to attractively priced capital is a challenge for many property owners. While these investments increased the current period expenses, we believe they are critical to supporting our strategic plan to accelerate AUM, increase our annualized asset management revenue run rate and capture distressed real estate investment opportunities."

"We continue to make great strides in building out Caliber Hospitality Trust ("CHT"), our externally advised private hospitality company. We signed our first third-party contribution agreement with L.T.D. Hospitality Group through which it will contribute nine hotel properties to CHT. Upon closing, this addition will more than double the value of CHT's current portfolio to $405 million and increase Caliber's FV AUM⁽³⁾ by approximately 25%. In addition, Caliber's asset management revenue run rate will further increase by approximately $2 million, or 20%⁽¹⁾, considering the value of the portfolio contributed and the terms of the contribution and management agreements. We are in active discussions with other potential third parties and expect to make additional announcements in the second half of 2023."

Business Update

The following are key milestones completed both during and subsequent to the second quarter ended June 30, 2023.

• On May 19, 2023, as previously disclosed, Caliber successfully completed its initial public offering raising $4.8 million through the issuance of 1,200,000 Class A common shares at an offering price of $4.00 per share.
• On June 30, 2023, Caliber reached an agreement with L.T.D. Hospitality Group LLC ("L.T.D.") in which L.T.D. will contribute nine hotel properties to its subsidiary, Caliber Hospitality Trust. The transaction is subject to customary closing conditions and is expected to close before the end of the year.
• As of June 30, 2023, Caliber is actively developing 2,460 multifamily units, 2,300 single family units, 2.5 million square feet of commercial and industrial, and 1.3 million square feet of office and retail.
• On July 19, 2023, Caliber sold 38 lots in its Ridge at Johnstown, CO project for $3.8 million. The lots were part of Caliber's holdings where it owns over 600 acres of land through various funds.

Summary of Consolidated Results

Second Quarter 2023 Consolidated Financial Review

Total revenues for the second quarter of 2023 increased 9.4% to $20.4 million, compared to $18.7 million for the second quarter 2022, primarily due to higher revenues in the Company's consolidated fund hotel assets with the addition of the Hilton Tucson East property. This was offset by lower transaction and advisory fees. Consolidated asset and performance-based fees decreased during the quarter due to lower transaction and advisory fees, primarily due to decreased capital raise and loan service fees.

Asset management fees were $1.2 million, a year-over-year increase of 8.3%; performance allocations were $0.01 million, a decrease of 88.3%; and transaction and advisory fees were $0.7 million, a decrease of 62.0%. Consolidated funds from hospitality revenues were $16.3 million, an increase of 14.3%, while consolidated funds other revenues were $2.3 million, a 56.2% increase from the prior year period.

Total expenses for the second quarter of 2023 were $31.4 million, up 53.5% from the second quarter of 2022, primarily due to an increase in consolidated fund-related hospitality expenses related to one property, the Hilton Tucson East, which was consolidated beginning March 31, 2023. As this segment continued to recover, it has been hiring additional employees to serve increasing occupancies. In addition, operating costs were $6.8 million, up 141.1%, primarily due to additional payroll costs associated with increased headcount and cost of human capital driven by the Company's growth initiatives, as the Company looks to enhance its capabilities across all lines of service.

Net loss for the second quarter of 2023 was $11.6 million, compared to $2.0 million in the second quarter of 2022 and Consolidated Adjusted EBITDA for the second quarter of 2023 was a loss of $1.3 million, compared to $4.1 million in the prior year period. The decreases compared to the prior year period were due to lower net income attributed to higher expenses related to investment in the Company's strategic growth initiatives.

After adjusting for net income attributable to noncontrolling interests, net loss attributable to the Company for the second quarter of 2023 was $5.7 million, or $0.29 per diluted share, as compared to net loss attributable to the Company of $0.5 million, or $0.03 per diluted share, in the prior year period.

Caliber's business is organized into three reportable segments: Fund Management, Development, and Brokerage. The following highlights results from each of those segments. For segment reporting purposes, revenues, expenses, and Caliber Adjusted EBITDA are presented on a basis that deconsolidates the consolidated funds. As a result, segment amounts are different than those presented on a consolidated basis in accordance with U.S. GAAP basis because certain amounts are eliminated in consolidation when they are derived from a consolidated fund. Eliminating the impact of consolidated funds and noncontrolling interest provides investors with a view of the performance attributable to CaliberCos Inc. and is consistent with performance models and analysis used by management.

Second Quarter Segment Performance

Total segment revenues for the second quarter of 2023 decreased 23.0% to $3.4 million, compared to $4.4 million for the second quarter 2022, primarily due to lower transaction and advisory fees in the fund management segment.

Fund Management Segment

Total fund management segment revenues for the second quarter of 2023 were $2.6 million, a decrease of $0.7 million, or 20.4%. Asset management fees were $2.4 million, an increase of 9.8%, while the asset management revenue run rate was $9.6 million, an increase of 15.3%, as compared to the full year results in 2022. The higher asset management fees were driven by a higher year-over-year average balance of managed assets. Performance allocations decreased $0.1 million or 77.7% and transaction and advisory fees decreased $0.8 million or 82.5%. The decrease in the transaction and advisory fees was primarily related to a decrease in capital raise and loan service fees, partially offset by increased fund administration fees.

Total fund management segment expenses for the second quarter of 2023 were $7.7 million, an increase of $2.5 million, or 49.1% from the second quarter 2022. The increase was primarily due to an increase in operating costs from additional payroll associated with increased headcount and cost of human capital driven by the Company's growth initiatives, as the Company looks to enhance its capabilities across all lines of service.

Fund management segment net loss for the second quarter of 2023 was $5.8 million, compared to segment net loss of $2.1 million in the second quarter of 2022.

Development Segment

Development segment revenues for the second quarter of 2023 were $0.7 million, a decrease of $0.2 million, or 26.9%. The decrease was primarily due to a decrease in development fees related to two commercial development projects in Colorado and one commercial development project in Arizona.

Development segment expenses for the second quarter of 2023 were $0.6 million, an increase of $0.1 million, or 24.9% from the second quarter 2022. The increase was primarily due to additional payroll associated with increased headcount and cost of human capital driven by the Company's growth initiatives resulting in higher operating costs.

Development segment net income for the second quarter of 2023 was $0.1 million, a decrease of $0.3 million, or 82.5%, from the second quarter of 2022.

Brokerage Segment

Brokerage segment revenues for the second quarter of 2023 were $0.2 million, a decrease of $0.1 million, or 40.8%. The decrease was primarily due to a $7.3 million decrease in brokerage transactions between periods.

Brokerage segment expenses for the second quarter of 2023 were $0.3 million, comparable with the second quarter of 2022.

Brokerage segment net income for the second quarter of 2023 was $0.1 million, in line with the second quarter of 2022.

Managed Capital

Managed capital as of June 30, 2023 was $401.8 million, an increase of $78.0 million, or 24.1%, from June 30, 2022, and an increase of $18.6 million, or 4.8%, from December 31, 2022. The sequential $9.3 million increase from March 31, 2023 was due to $11.2 million of originations and was partially offset by $2.0 million of redemptions. Originations during the quarter were primarily driven by a $15.9 million increase in the Company's commercial investment funds as a result of capital raised and funds contributed to support commercial development and acquisition activity in the quarter.

FV AUM

Fair value assets under management as of June 30, 2023 were $825.3 million, an increase of $79.8 million, or 10.7%, from December 31, 2022, and an increase of $18.4 million, or 2.3%, from March 31, 2023. The increase in the second quarter of 2023 was primarily due to $19.1 million of construction and net market appreciation, as the value of Caliber's hospitality assets continued to recover in an improving economy.

Balance Sheet and Liquidity

The Company, excluding consolidated funds, ended the quarter with $55.0 million of total debt and unrestricted cash and cash equivalents of $1.3 million.

(1)		Asset management revenue run rate is an estimate that annualizes asset management revenue, which are on a basis that deconsolidates the consolidated funds, for the month ended June 30, 2023.
(2)		Caliber Adjusted EBITDA is a non-GAAP financial measure. See "Non-GAAP Financial Measures" below.
(3)		Fair value assets under management is defined as the aggregate fair value of the real estate assets the Company manages from which it derives management fees, performance revenues and other fees and expense reimbursements as of June 30, 2023.
(4)		Managed capital is defined as the total equity capital raised by the Company from investors for its investment funds as of June 30, 2023.

About CaliberCos Inc.

Caliber (NASDAQ: CWD) is an alternative asset management firm whose purpose is to build generational wealth for investors seeking to access opportunities in real estate. Caliber differentiates itself by creating, managing, and servicing proprietary products, including middle-market investment funds, private syndications, and direct investments, which are managed by our in-house asset services group. The Company leverages access to both the public and private markets to maximize value for its customers and funds. Our funds include investment vehicles focused primarily on real estate, private equity, and debt facilities. Additional information can be found at Caliberco.com and CaliberFunds.co.

Forward-Looking Statements

This press release contains "forward-looking statements" that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as "anticipate," "believe," "contemplate," "could," "estimate," "expect," "intend," "seek," "may," "might," "plan," "potential," "predict," "project," "target," "aim," "should," "will" "would," or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are based on the Company's current expectations and are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate including, but not limited to, the closing of the transaction with L.T.D. Hospitality Group LLC. These and other risks and uncertainties are described more fully in the section titled "Risk Factors" in the final prospectus related to the Company's public offering filed with the SEC and other reports filed with the SEC thereafter. Forward-looking statements contained in this announcement are made as of this date, and the Company undertakes no duty to update such information except as required under applicable law.

CALIBERCOS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
Revenues
Asset management fees	$	1,229			$	1,135			$	2,511			$	2,066
Performance allocations		12				103				2,438				2,405
Transaction and advisory fees		665				1,750				1,419				2,371
Consolidated funds - hospitality revenue		16,273				14,242				39,482				32,813
Consolidated funds - other revenue		2,266				1,451				4,117				3,328
Total revenues		20,445				18,681				49,967				42,983
Expenses
Operating costs		6,820				2,829				11,324				5,218
General and administrative		1,426				2,149				3,242				4,137
Marketing and advertising		325				765				678				1,005
Depreciation and amortization		137				7				269				16
Consolidated funds - hospitality expenses		20,749				12,685				41,032				29,826
Consolidated funds - other expenses		1,949				2,030				3,874				4,469
Total expenses		31,406				20,465				60,419				44,671
Consolidated funds - gain on sale of real estate investments		-				-				-				21,530
Other income (loss), net		546				(3	)			1,065				216
Interest income		96				3				194				3
Interest expense		(1,261	)			(175	)			(2,092	)			(344	)
Net (loss) income before income taxes		(11,580	)			(1,959	)			(11,285	)			19,717
Provision for income taxes		-				-				-				-
Net (loss) income		(11,580	)			(1,959	)			(11,285	)			19,717
Net (loss) income attributable to noncontrolling interests		(5,854	)			(1,499	)			(4,352	)			19,628
Net (loss) income attributable to CaliberCos Inc.		(5,726	)			(460	)			(6,933	)			89
Basic net (loss) income per share attributable to common stockholders	$	(0.29	)		$	(0.03	)		$	(0.37	)		$	0.01
Diluted net (loss) income per share attributable to common stockholders	$	(0.29	)		$	(0.03	)		$	(0.37	)		$	0.01
Weighted average common shares outstanding:
Basic		19,612				17,791				18,901				17,873
Diluted		19,612				17,791				18,901				19,750

CALIBERCOS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
	June 30, 2023				December 31, 2022
Assets
Cash	$	1,335			$	1,921
Restricted cash		2,330				23
Real estate investments, net		21,411				2,065
Due from related parties		7,675				9,646
Investments in unconsolidated entities		3,246				3,156
Operating lease - right of use assets		215				1,411
Prepaid and other assets		2,722				5,861
Assets of consolidated funds
Cash		7,220				5,736
Restricted cash		10,527				8,254
Real estate investments, net		219,834				196,177
Accounts receivable, net		1,700				2,228
Notes receivable - related parties		31,657				28,229
Due from related parties		4				15
Operating lease - right of use assets		8,780				8,769
Prepaid and other assets		10,356				5,343
Total assets	$	329,012			$	278,834

CALIBERCOS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
	June 30, 2023				December 31, 2022
Liabilities and Stockholders' Equity
Notes payable	$	54,964			$	14,653
Notes payable - related parties		-				365
Accounts payable and accrued expenses		7,784				6,374
Buyback obligation		-				12,391
Due to related parties		101				171
Operating lease liabilities		131				1,587
Other liabilities		560				64
Liabilities of consolidated funds
Notes payable, net		147,277				134,256
Notes payable - related parties		10,391				6,973
Accounts payable and accrued expenses		9,792				9,252
Due to related parties		129				68
Operating lease liabilities		12,419				12,461
Other liabilities		2,852				3,030
Total liabilities		246,400				201,645
Commitments and Contingencies
Preferred stock Series B, $0.001 par value; 12,500,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and 1,651,302 shares issued and outstanding as of December 31, 2022		-				-
Common stock Class A, $0.001 par value; 100,000,000 shares authorized, 13,820,978 and 10,790,787 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		14				11
Common stock Class B, $0.001 par value; 15,000,000 shares authorized, 7,416,414 shares issued and outstanding as June 30, 2023 and December 31, 2022		7				7
Paid-in capital		38,979				33,108
Less treasury stock, at cost, 277,342 shares repurchased and 3,432,351 forward repurchase shares as of December 31, 2022. As of June 30, 2023, there was no treasury stock or forward repurchase shares		-				(13,626	)
Accumulated deficit		(31,060	)			(22,709	)
Stockholders' equity (deficit) attributable to CaliberCos Inc.		7,940				(3,209	)
Stockholders' equity attributable to noncontrolling interests		74,672				80,398
Total stockholders' equity		82,612				77,189
Total liabilities and stockholders' equity	$	329,012			$	278,834

Non-GAAP Measures

We present Consolidated EBITDA, Consolidated Adjusted EBITDA, and Caliber Adjusted EBITDA, which are not recognized financial measures under U.S. GAAP, as supplemental disclosures because we regularly review these measures to evaluate our funds, measure our performance, identify trends, formulate financial projections and make strategic decisions.

Consolidated EBITDA represents the Company's and the consolidated funds' earnings before net interest expense, income taxes, depreciation and amortization. Consolidated Adjusted EBITDA represents Consolidated EBITDA as further adjusted to exclude stock-based compensation, transaction fees, expenses and other public registration direct costs related to aborted or delayed offerings and our Reg A+ offering, the share repurchase costs related to the Company's Buyback Program, litigation settlements, expenses recorded to earnings relating to investment deals which were abandoned or closed, any other non-cash expenses or losses, as further adjusted for extraordinary or non-recurring items.

Caliber Adjusted EBITDA represents Consolidated Adjusted EBITDA on a basis that deconsolidates our consolidated funds (intercompany eliminations) and eliminates noncontrolling interest. Eliminating the impact of consolidated funds and noncontrolling interest provides investors a view of the performance attributable to CaliberCos Inc. and is consistent with performance models and analysis used by management.

When analyzing our operating performance, investors should use these measures in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. We generally use these non-U.S. GAAP financial measures to evaluate operating performance and for other discretionary purposes. We believe that these measures enhance the understanding of ongoing operations and comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. Because not all companies use identical calculations, our presentation of Consolidated EBITDA, Consolidated Adjusted EBITDA, and Caliber Adjusted EBITDA may not be comparable to similarly identified measures of other companies.

Consolidated EBITDA, Consolidated Adjusted EBITDA, and Caliber Adjusted EBITDA are not intended to be measures of free cash flow for our discretionary use because they do not consider certain cash requirements such as tax and debt service payments. These measures may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

The following table presents a reconciliation of net loss to Consolidated EBITDA, Consolidated Adjusted EBITDA, and Caliber Adjusted EBITDA for the three months ended June 30, 2023 and 2022 (in thousands):

NON-GAAP RECONCILIATIONS (AMOUNTS IN THOUSANDS)
	Three Months Ended June 30,
	2023				2022
Net loss	$	(11,580	)		$	(1,959	)
Interest expense		1,261				175
Depreciation expense		137				7
Consolidated funds' EBITDA adjustments		7,003				4,906
Consolidated EBITDA		(3,179	)			3,129
Share buy-back		-				79
Stock-based compensation		1,922				75
Public registration costs		-				779
Consolidated Adjusted EBITDA		(1,257	)			4,062
Intercompany eliminations		1,781				1,293
Non-controlling interest Adjusted EBITDA eliminations		(2,851	)			(5,884	)
Caliber Adjusted EBITDA	$	(2,327	)		$	(529	)

FUND MANAGEMENT SEGMENT (AMOUNTS IN THOUSANDS)
	Three Months Ended June 30,
	2023				2022				$ Change				% Change
Revenues
Asset management fees	$	2,366			$	2,154			$	212			9.8	%
Performance allocations		23				103				(80	)		(77.7	)%
Transaction and advisory fees		167				955				(788	)		(82.5	)%
Total revenues		2,556				3,212				(656	)		(20.4	)%
Expenses
Operating costs		6,049				2,318				3,731			161.0	%
General and administrative		1,296				2,074				(778	)		(37.5	)%
Marketing and advertising		326				764				(438	)		(57.3	)%
Depreciation and amortization		30				8				22			275.0	%
Total expenses		7,701				5,164				2,537			49.1	%
Other expense, net		(48	)			(1	)			(47	)		4700.0	%
Interest expense		(1,070	)			(160	)			(910	)		568.8	%
Interest income		497				2				495			24750.0	%
Net loss	$	(5,766	)		$	(2,111	)		$	(3,655	)		173.1	%

DEVELOPMENT SEGMENT (AMOUNTS IN THOUSANDS)
	Three Months Ended March 31,
	2023				2022				$ Change				% Change
Revenues
Transaction and advisory fees	$	656			$	898			$	(242	)		(26.9	)%
Total revenues		656				898				(242	)		(26.9	)%
Expenses
Operating costs		501				416				85			20.4	%
General and administrative		81				58				23			39.7	%
Depreciation and amortization		-				(8	)			8			(100.0	)%
Total expenses		582				466				116			24.9	%
Other expense, net		-				(10	)			10			(100.0	)%
Net income	$	74			$	422			$	(348	)		(82.5	)%

BROKERAGE SEGMENT (AMOUNTS IN THOUSANDS)
	Three Months Ended March 31,
	2023				2022				$ Change				% Change
Revenues
Transaction and advisory fees	$	161			$	272			$	(111	)		(40.8	)%
Total revenues		161				272				(111	)		(40.8	)%
Expenses
Operating costs		180				194				(14	)		(7.2	)%
General and administrative		22				17				5			29.4	%
Depreciation and amortization		62				-				62			100.0	%
Total expenses		264				211				53			25.1	%
Other income, net		346				-				346			100.0	%
Interest expense		(191	)			(16	)			(175	)		1093.8	%
Net income	$	52			$	45			$	7			15.6	%

MANAGED CAPITAL (AMOUNTS IN THOUSANDS)
					Managed Capital
Balances as of December 31, 2022					$	383,189
Originations						12,050
Redemptions						(2,742	)
Balances as of March 31, 2023						392,497
Originations						11,227
Redemptions						(1,968	)
Balances as of June 30, 2023					$	401,756
	June 30, 2023				December 31, 2022
Real Estate
Hospitality	$	96,112			$	102,071
Residential		71,915				62,819
Commercial		144,123				128,210
Total Real Estate		312,150				293,100
Credit(1)		79,598				74,766
Other(2)		10,008				15,323
Total	$	401,756			$	383,189

___________________________________________
(1)		Credit managed capital represents loans made to Caliber's investment funds by our diversified credit fund.
(2)		Other managed capital represents undeployed capital held in our diversified funds.

FV AUM (AMOUNTS IN THOUSANDS)
					FV AUM
Balances as of December 31, 2022					$	745,514
Assets acquired(1)						28,604
Construction and net market appreciation						33,019
Assets sold or disposed						(5,820	)
Credit(2)						4,242
Other(3)						1,360
Balances as of March 31, 2023						806,919
Assets acquired(1)						-
Construction and net market appreciation						19,095
Assets sold or disposed						(595	)
Credit(2)						590
Other(3)						(703	)
Balances as of June 30, 2023					$	825,306
	June 30, 2023				December 31, 2022
Real Estate
Hospitality	$	312,600			$	319,300
Residential		143,300				86,900
Commercial		279,800				255,197
Total Real Estate		735,700				661,397
Credit(2)		79,598				74,766
Other(3)		10,008				9,351
Total	$	825,306			$	745,514

___________________________________________
(1)		Assets acquired during the six months ended June 30, 2023 include one development asset in Colorado, our headquarters office building, and one multi-family residential asset in Arizona.
(2)		Credit FV AUM represents loans made to Caliber's investment funds by our diversified credit fund.
(3)		Other FV AUM represents undeployed capital held in our diversified funds.

Contacts

Caliber:
Samantha Vrcic
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[e-mail]

Investor Relations:
Tamara Gonzalez, Financial Profiles
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Media Relations:
Kelly McAndrew, Financial Profiles
[phone]
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