CaliberCos Inc. (CWD) Earnings Call Transcript & Summary

Hello, everybody, and thanks for joining us this afternoon. This is Caliber's conference call covering the financial results for the first quarter of 2026, and I'm glad you could be here. Joining me on the line are Chris Loeffler, our Chief Executive Officer and Co-Founder, along with Jade Leung, who serves as Chief Financial Officer of Caliber. I want to point out that we've prepared a quarterly earnings presentation, and it will act as a supplement to the remarks we've prepared for today. That presentation can be found in the Investor Relations portion of our site, www.caliberco.com. Once management finishes its commentary, we'll take questions from callers. I'd also like to remind everyone that what we discuss today might contain forward-looking statements, which carry risks and uncertainties. Terms such as believe, expect and anticipates point to our best estimates as of this call, and we cannot guarantee that any of these will come to pass. Consequently, our actual future results may differ significantly from these statements. Additional details about the company's risk factors can be found in the company's quarterly and annual reports and filed with the Securities and Exchange Commission. At this point, I'm happy to hand things over to Chris. Please go ahead.

Thanks, Ilya, and good afternoon to all of you. There are a handful of items I want to cover in my remarks today. To begin, I'll give you an update on how our strategic push into digital assets and blockchain is progressing. After that, I'll share some thoughts regarding Caliber's financial position; then I'll discuss our private equity real estate platform and what's happening with related projects; and finally, I'll close with a refreshed view of our revenue and profitability outlook for 2026. Before I get into those topics, let me take a moment to frame the quarter. The results we posted for the first quarter matched the internal plan we had put together for 2026. Platform revenue was up almost 16% compared with the same period a year earlier, and our platform adjusted EBITDA loss shrank by roughly $1 million; on top of that, we delivered on both sides of the revenue plan we introduced at year-end, which meant driving capital formation as well as project-level financings. As of today, we are reaffirming the guidance we gave for the full year 2026, and Jade will take you through the financial specifics later on this call. I want to begin with our digital asset strategy, because in my view there is more about what we've spent the past 9 months building that the market needs to understand than what our share price currently reflects. Before I get into how Caliber is approaching this, it's worth laying out just how large the opportunity is that we're positioning ourselves for. A recent report from Pantera Capital tells us that the global tokenization market right now accounts for about $320 billion in tracked value spread across 593 tokenized assets, which is up from approximately $200 billion in 2024. When it comes to tokenized U.S. treasuries by themselves, they've gone from close to 0 in 2021 to roughly $12 billion at present. On the institutional side, participants these days include BlackRock, Franklin Templeton, JPMorgan, Apollo, WisdomTree, Fidelity, and every other major bank, each of which now has some kind of tokenization strategy. That's the market Caliber's digital asset strategy and our real estate tokenization efforts are designed to take part in over the years ahead. Back when we announced our digital asset treasury, or DAT, strategy in August of last year, we set out 3 priorities: first, to build a treasury position in digital assets — Link tokens in particular — so that Caliber and our shareholders gain exposure to the potential upside of the infrastructure technology we see as central to the future of tokenized finance. Second, to grow Caliber's asset management platform through digital asset-related products and investment vehicles, expanding our fee-generating AUM in that category along with digital asset-centric businesses, and lifting our earnings potential via accretive transactions; and third, to bring tokenization technology to our existing real estate funds platform so we can strengthen capital formation, add liquidity features for the investors in our funds, and lower operating costs through investment administration that runs more efficiently. Coming back to the DAT: during the 9-month stretch since we unveiled the strategy, conditions in the capital markets for digital asset treasury strategies have gotten considerably tougher. Link's price fell substantially, and access to capital for companies pursuing this type of strategy tightened throughout the marketplace. Given those conditions, we made a conscious choice to ease off the pace of treasury accumulation instead of continuing to put capital to work in a declining market. Our view is that this decision safeguarded our stake for our shareholders. Meanwhile, we picked up the pace on the strategy's remaining 2 pillars so that nothing stalled while we waited for the market to move in our favor. Across the last 9 months, we assembled the in-house staff and outside partnerships needed to bring tokenization to our real estate offerings, and right now we are hard at work tokenizing both our Steamboat Springs Hyatt Studios offering and our PURE Pickleball & Padel project — 2 of the earliest properties in our portfolio slated for tokenization. We strengthened ties with Chainlink, the protocol behind Link, and shared that the first piece of that collaboration had come to life: the rollout we are carrying out right now of Chainlink ACE, an automated compliance engine running on our tokenized funds; we finished constructing a master staking agreement, which equips us to form direct staking arrangements with node operators as the treasury expands. That hands us a yield source on our treasury assets. On top of that, we keep assembling an active pipeline of potentially accretive strategic opportunities, among them possible acquisitions and joint venture partnerships capable of speeding up our standing and objectives for growth across the digital asset and tokenization arena. Now to the treasury itself. When the first quarter closed, we owned 507,560 Link tokens carrying a fair value of roughly $4.5 million. Across that quarter, we divested roughly 55,000 Link tokens, generating proceeds of $0.5 million, and put that capital back to work inside our real estate platform to help close project-level financings, among them our Hyatt Studios development in Steamboat Springs. That is precisely how we think a corporate treasury ought to operate within a diversified asset management business; it delivers the flexibility to direct capital toward wherever it earns the greatest return for shareholders. Our real estate platform is where we see the most immediate revenue growth opportunity in 2026, and the treasury enabled that execution. Looking ahead, we think the recent stabilization in Link's price signals market conditions that back our long-term thesis. With that in mind, we are weighing multiple routes to harvest capital from our real estate platform, among them the short-term cash positions Caliber holds within its expanding pipeline of new projects and developments, so we can once again grow our Link treasury position. We stay long-term investors in Link and long-term believers in the technology and the wider Chainlink ecosystem; we keep viewing digital assets and tokenizations as a meaningful long-term growth vector for Caliber, and we are positioning the platform today to seize that opportunity across the years ahead. Now to financial visibility. Our focus in 2026 is on executing financings and converting our existing pipeline into realized revenue; we've updated our platform performance supplement through March 31, 2026, which gives investors a clear view of our operating business. This supplement leaves out consolidated assets and concentrates on the portion of our platform that directly drives shareholder value. As the first quarter closed, our performance allocations were estimated at $99 million. That compares with $104 million during the quarter before, and it's higher than the $88 million recorded in the same quarter a year ago. Now on to fundraising. Managed capital stood at $490 million when the first quarter ended, versus $517 million the quarter prior and $495 million a year earlier. What drove the decline versus the preceding quarter was mainly asset dispositions, though new fundraising partly made up for it. Our capital formation activity underneath remained in line with what we planned during the first quarter, and as new fund offerings reach the market, we anticipate managed capital will increase across the remainder of 2026. Within the wholesale distribution channel during the first quarter, we deepened penetration among selling member firms already on our roster by bringing on 4 new producing advisory relationships, which lifted our total to 25 producing advisers. After the quarter closed, during April, we executed 2 more selling agreements with new firms, and those firms collectively account for 218 advisers now cleared to distribute offerings from Caliber, a meaningful widening of the adviser pool that can start producing for us across upcoming quarters. Momentum in the wholesale channel keeps building, and we believe those efforts will pay off during the second half of 2026.

Now let's go over our real estate platform. We're still committed to putting money into hospitality, multifamily, and multi-tenant industrial properties, since we think that's where Caliber's investor clients can find the strongest opportunities given today's market conditions. Next, I want to cover what's happening with the assets we manage and how our managed real estate funds are performing. These updates matter because our revenue depends directly on how these projects move forward, especially when they hit financing and development milestones. To respect your time, I'll highlight each quarter what I consider the most significant shifts that took place during and after the quarter's close, rather than trying to cover every change in every fund exhaustively. Let's begin with Hyatt Studios. Our Hyatt Studios projects keep advancing on schedule. Of the 4 investor offerings backing our Hyatt Studios developments, 3 are already underway, and the fourth will launch very soon. The Hyatt Studios Steamboat Springs Colorado deal wrapped up its acquisition and construction financing in April of 2026, and we anticipate breaking ground in the second quarter of 2026. Under our agreement with Hyatt, Steamboat is the first among 15 planned and 4 identified Hyatt Studios developments. Our following 2 projects, named Scottsdale and Georgetown, are at earlier development stages, and we received attention recently in our April 22 announcement about the platform. As projects move through site selection and entitlement, we look forward to sharing information about more locations. These assets are built to eventually become part of long-term ownership inside Caliber Hospitality Trust, which we anticipate would use an option agreement to buy the assets after they're constructed and stabilized, giving Hyatt Studios investors a clear exit and providing CHT investors with a proprietary pipeline of newly income-producing hotels. I should also mention that we're working on tokenizing our Steamboat offering, which will be among the first offerings we tokenize. Now to Caliber Hospitality Trust, or CHT, our private REIT vehicle for buying and holding cash flowing hotel assets. CHT right now is concentrating on purchasing high-quality hotel properties at an appealing entry price, capitalizing on a significant price dislocation in the hotel sector, where we see chances to acquire high-quality cash flowing assets below both their inherent construction cost and their longer-term market values. We're going after these acquisitions via direct cash transactions as well as tax deferred contributions utilizing CHT's UPREIT structure, which provides existing hotel owners a tax-efficient way to move their assets into a diversified portfolio. There were a few notable CHT developments this quarter. In February, we announced the sale of the Holiday Inn Ocotillo in the Phoenix Chandler submarket for $13 million. Money from that sale is being redeployed toward debt reduction and to back CHT's growth initiatives. We've also implemented a major shift in how CHT's hotels are managed. A new hotel management company has been brought on to run 5 of the 6 assets currently in the trust. Several months back, we kicked off a management change at the Hampton Inn & Suites, and that move is already paying off. Even with top line revenue holding at comparable levels in a fairly soft hotel revenue climate, gross operating profit margins rose sharply, going from 46% to 54%. On June 9, the other 4 assets shifted over to new management, and as the new operators' playbook gets rolled out, we anticipate comparable profitability gains throughout the portfolio. Last but not least, our pipeline of CHT acquisition opportunities expanded during the past quarter. Right now we're busy pursuing refinancings on a number of existing CHT assets, and we anticipate those will fund property level improvements and add to our financing related revenue in the second and third quarters of 2026; once closing time lines solidify, we're eager to announce further CHT acquisitions and refinancings. Next, our PURE Pickleball and Paddle project at Riverwalk in Scottsdale, Arizona is set to deliver a world-class facility with 50 courts, a full-service clubhouse, a fitness center sponsored by Honor Health and catering by Wolfgang Puck. Following approval of PURE's building permits in the first quarter, PURE keeps moving toward shovel-ready status. At this point the emphasis is on locking down construction financing and completing the overall capital structure, work that is actively underway; we're additionally pursuing tokenization of this offering and are enthusiastic about the opportunities it will create once finished. Now to Canyon, our large-scale mixed-use project in North Phoenix in the TSMC and Apple Fab development quarter. This quarter, the HUD construction loan application won approval, and we will submit our firm application soon. Phase 1 demolition is finished now. In addition, all drawings for the first building are being resubmitted, and the garage is nearly ready to file its drawings too. Shifting to Encore. We keep pushing forward on site development and planning as well as the commercial leasing activity underway. We hold an active LOI with 7-Eleven, plus an LOI on the apartment site. United Properties is still in escrow on the industrial side, and we're seeing interest from 2 major big box users for the retail site. Regarding project financing, we continue making headway with our chosen financing partner and expect to close on the financing in the near term. Project execution stays tied to financing and infrastructure milestones, which we expect to move forward over the quarters ahead. Caliber keeps advancing its differentiated 1031 exchange offering, giving investors who want to place $1 million or more in 1031 exchange capital a direct route to invest alongside Caliber in the very same real estate acquisitions we're pursuing through our funds. The program is new, and it relies on a tenant in common or TIC structure that pairs one investor with Caliber and in certain cases, with a small number of other Caliber aligned investors. Caliber acts as the administrator for the assets, the associated TIC interest, and the investors who come in via a TIC, and those investors can eventually complete a 721 exchange into our Core+ real estate fund, which lets them convert their interest into a diversified, professionally managed fund on a tax-deferred basis. Several factors make this program stand out within the 1031 marketplace. First, investors enter at Caliber's cost basis on the underlying acquisition, not at the marked-up basis that larger DST sponsors typically use. Second, the program's cost structure stacks up well against other 1031 offerings available in the market; and third, the eventual 721 exchange path into our core real estate fund delivers a long-term liquidity solution that only a handful of 1031 sponsors are able to provide. Right now we are pursuing the second asset in this program, the Tonto offering. Tonto is a 46-unit value-add multifamily project located in Payson, Arizona, and there we intend to finish a light renovation while keeping occupancy at 90% or greater through the entire renovation cycle. The strategy is to raise the asset's value and keep producing cash flow during the whole period. Value-add multifamily is a category Caliber has historically performed well in, and we are finding opportunities to buy multifamily assets at entry points more attractive today than anything we have seen in years. The Tonto opportunity exemplifies these kinds of acquisitions, and we expect to pursue more going forward through this type of program. We expect to announce additional 1031 exchange investments as they enter the pipeline.

To wrap up, Q1 went just as we had planned. As we look at the rest of 2026, we anticipate it will be shaped by finalizing project-level financings throughout our current portfolio, ongoing capital formation via fundraising, and chances for fresh revenue streams plus expense reductions stemming from tokenizing our real estate holdings and Caliber's broader digital asset approach. During the prior quarter, we provided 2026 revenue and profitability guidance for the very first time. As of today, we're confirming those figures. Our view remains that 2026 revenues ought to land somewhere between $18 million and $22 million, while both our adjusted EBITDA and net operating income turn positive. Having said that, I'll hand things over to Jade so she can walk through our financial results.

Thanks, Chris. Good afternoon, everybody. I want to begin by giving you an update on what we're doing about our corporate note maturities as we work to strengthen the company's liquidity. At the close of Q1, we held 148 separate unsecured notes, with a total principal amount of roughly $26.2 million, and $24.5 million of that is due to come due over the coming 12 months. Typically each note carries a 12-month term and includes an extension option; alongside our wider plans and actions targeting the business's near-term liquidity, we've introduced one more initiative. In Q1, Caliber's Board of Directors gave the green light to a Note Holder Conversion Program, which permits holders of Caliber's unsecured corporate notes to swap those notes for Series AAA convertible perpetual preferred stock. One-third of that Series AAA convertible perpetual preferred stock converts at $2.50 per share of common stock, another third converts at $3.50 per share of common stock, and the remaining third converts at $4.50 per share of common stock. Management's view is that the perpetual preferred stock structure benefits all shareholders, since notes that get converted would move out of debt and into equity. This initiative builds on the Caliber Common Stock Conversion Program we announced earlier. Since the program started, roughly $1.5 million of notes have been converted into Series AAA convertible preferred stock. On top of that, about $1.9 million of unsecured corporate notes were exchanged for shares of Caliber's Class A common stock through a voluntary conversion program that individual note holders opted into during Q1. Taken together, these moves have cut Caliber's corporate debt by about $3.4 million in this round of the program, and by roughly $5.3 million overall since the program launched in October of 2025. Taking part in the common stock conversion program is voluntary as well, with terms set up to comply with NASDAQ rules governing at-the-market transactions. Our belief remains that these two programs can bring down Caliber's leverage, boost stockholders' equity, and add financial flexibility as we carry out our plan to reach profitability in 2026. Across the last 12 months, we've achieved meaningful progress on our near-term liquidity, and we anticipate continuing to make headway via a mix of capital initiatives and operational execution. Now to our results for Q1 of 2026. Platform revenue came in at $4.1 million for the first quarter, versus $3.5 million in the same quarter a year earlier. Fund management fees rose 3.7% year-over-year, while construction and development revenue fell, largely because of the timing of project financings. A number of financings we had expected to close in Q1 have slipped, which reflects a timing shift rather than less underlying activity, and we expect those financings to add to revenue in 2026. Total platform expenses for Q1 were $5.4 million, compared with $6.1 million in the year-ago quarter, an 11% decline versus the prior year, mainly from lower payroll and related expenses. Our average headcount went down 31% between the first quarter of 2025 and the first quarter of 2026. That reflects the broad cost-cutting work we keep pursuing so Caliber can get back to profitability. Because of it, total employees stood at 51 at the close of the first quarter, down from 74. Platform adjusted EBITDA in the first quarter came in as a loss under $0.5 million, versus a loss of $1.4 million in the same quarter a year earlier — that's a 75.9% gain. With revenue still getting stronger and cost discipline better throughout the company, we're moving along a set, steady route back to profitability in 2026. Turning to what we see for 2026, we still anticipate total revenue somewhere between $18 million and $22 million. Roughly 60% of the growth in revenue should come from project level financings within our current portfolio, while the other 40% comes from capital formation and asset management activities. Given what we can currently see in the pipeline and in financing activity, we think we're in position to reach adjusted EBITDA profitability and positive net operating income in 2026. I'll hand it back to the operator now for your questions.