CaliberCos Inc. (CWD) Earnings Call Transcript

Hi, everyone, and thank you for being on this call to discuss Caliber's Q2 2026 financial results. Joining me are Chris Loeffler, our CEO and Co-Founder, and Michael Rosales, who is serving as Caliber's Acting Chief Financial Officer. We're glad all of you could make it. I want to point out that a quarterly earnings presentation is available, and it supplements the prepared remarks we're delivering today — you can find it in the investor relations area of our website, www.paliburco.com. Once management finishes its comments, we'll open up the line so you can ask questions. A quick reminder: some of what we say today might include forward-looking statements, and those come with risks and uncertainties. Words such as believe, expect, and anticipate represent our best estimates as of today's call, and there's no guarantee any of them will come to pass. Consequently, our actual future results may differ materially from those statements. Additional details about the company's risk factors appear in the quarterly and annual reports we file with the Securities and Exchange Commission. With that, I'm glad to hand things over to Chris. Please go ahead. Thanks, Elia. Good afternoon, everyone. In my comments today, I'll give you an update on our strategic expansion into digital assets and blockchain, talk about Caliber's financial position, and review our private equity real estate platform along with the activity around it. Before I get into those topics, let me give a brief summary of the quarter. Our second quarter numbers came in exactly as our 2026 plan anticipated. Platform revenue declined roughly 10% year over year, which stemmed from how the timing of revenue-generating activities fell across the two periods, yet platform-adjusted EBITDA swung to positive — an improvement of approximately $0.4 million — and we met our targets on both the capital formation and project-level financing sides of the revenue plan we set out at year-end. As of today, we're reaffirming our full year 2026 guidance, and Michael will take everyone through the financials later in this call. I'll begin my update with our digital asset strategy. This morning, I'm pleased to report that Calibre completed its first fund tokenization. Investors in pure pickleball and paddle can now choose to hold their stake as a digital token. While this marks our debut tokenization, work is already underway on a second one — our Steamboat Springs Hyatt Studios offering. Across Caliber's 17-year history, this deserves a moment of appreciation; it kicks off a tokenization initiative that, over time, we expect to extend to additional offerings, beginning with an initial group of roughly 100 million in managed assets. Now let me put our tokenization efforts in the context of the broader market. rwa.xyz tracks tokenized real-world assets, and according to that registry, the market's total stood at about 25.4 billion when 2025 ended. This week, that number is close to $38.4 billion. That means growth of approximately 51%, equivalent to roughly $13 billion in newly tokenized assets over the first seven and a half months of 2026. To put that in perspective, this represents roughly 0.5% of the market. Out of that $38.4 billion, real estate makes up only about $200 million — which works out to roughly half a percent of the entire market. When you set those two figures side by side, the conclusion is obvious: this market is expanding rapidly, and yet the real estate component within it is still essentially untouched. Real estate ranks among the largest asset classes on the planet, but hardly any of it has been tokenized. In our view, that gap is where the opportunity lies, and now that we've completed our first fund tokenization — supported by an initial group of managed assets worth approximately $100 million — Caliber ought to be strongly positioned as an early mover in tokenizing private real estate funds. Why tokenize at all? Applying tokenization to our existing real estate funds platform enhances capital formation, simplifies investment valuation, adds liquidity features for those who have invested in our funds, and reduces Caliber's operating costs through a more efficient investment management platform. For this tokenization initiative, we brought together best-in-class partners, with Chainlink's automated compliance engine taking care of investor verification, KYC and AML review, sanction screening and transfer controls, alongside leading identity, custody and fund infrastructure providers. Turning now to the Treasury, we ended the second quarter with 229,204 linked tokens on hand, with a fair value of $1.7 million. During that quarter, we sold approximately 278,357 linked tokens, generating proceeds of $2.5 million. Those funds get redeployed into our real estate platform, creating a corresponding increase in cash and other assets; we continue steering capital toward whatever produces the highest return for shareholders. The largest near-term revenue growth opportunity we foresee for 2026 sits in our real estate platform, and the Treasury helped make that execution possible. Once the real estate platform begins producing cash, we intend to hold our linked treasury steady while expanding the position strategically, consistent with the company's approach to capital allocation. Working closely with the Chainlink team has only strengthened our conviction about what they bring to tokenization, and about LINK's use case in powering decentralized finance's infrastructure layer. Moving to financial visibility, our 2026 priority is completing financings and converting our existing pipeline into realized revenue. As of the end of the second quarter, we've updated our platform performance supplement, giving investors a clear view of our operating business. Consolidated assets are excluded from this supplement, which instead focuses on the portion of our platform that most directly generates shareholder value. Our estimated performance allocations were $96 million at the close of the second quarter, down from $99 million in the prior quarter, but still above the $85 million reported in the same quarter a year ago. On fundraising, managed capital totaled $495 million at the end of the second quarter, compared with $489 million in the previous quarter and $498 million in the equivalent quarter last year. The sequential quarter's expansion was driven largely by bigger allocations to our residential and commercial holdings — including new money secured via DePere Pickleball and Paddle plus our Canyon Residential Project — as well as added support from our diversified funds. Through Q2, the foundational-level capital formation efforts we pursue remained aligned with our plan. With fresh fund offerings hitting the market, we expect managed capital to grow over the remainder of 2026. Production from advisors in our wholesale channels continues to broaden, and our roster of selling groups kept growing as well. In Q2, we added four advisors who are newly producing, drawn from three distinct firms — one of those firms began producing for the first time ever this quarter, signaling to us that output is reaching beyond the relationships on which we were founded. Meanwhile, we continue bringing the Hiatt Studios platform to the wholesale channel while building a real pipeline of interest at both the advisor and firm levels. Third party due diligence is underway right now. That is a customary step ahead of any strategy reaching advisors' desks, and we expect to complete it in time for a full channel launch around mid-Q3. From there, the task becomes turning our pipeline into committed dollars. I'm glad to report as well that during Q2 we experienced stronger direct raising from affluent private investors, lifting our overall fundraising totals; that signals promise, since Calibre's in-house marketing function generated better-quality prospects and stronger conversion rates, helping it forge valuable new connections. Our direct investment client base — exceeding 2,000 individuals at this point — keeps growing, and appetite for real estate investing looks to be building momentum as we move toward 2026. That represents roughly 0.5% of the market.

Now let's move on to what's happening with the assets under our management and how our managed real estate funds are performing. Hospitality, multifamily, and multi-tenant industrial real estate remain the areas where we concentrate our investing, since we think these give Caliber's investor clients the strongest openings in today's market conditions. Because we value your time every quarter, I cover the developments I consider most significant that took place during the quarter and after it closed, though I won't try to walk through each and every shift across each and every fund. Our Hyatt Studios projects are moving forward on schedule. In July, we held a groundbreaking for the Hyatt Studios Steamboat Springs project, and we acquired a 2.5 acre site for the Hyatt Studios TSMC project located in Phoenix, Arizona. At this point we hold control of a hotel development site just minutes from TSMC, a $265 billion commitment to semiconductor manufacturing on U.S. soil. Three of the four investor offerings that back our Hyatt Studios development platform have now been launched, and we anticipate launching the fourth once drafting and legal review are finished. All of these properties are designed so that, in time, they can be transitioned into long-term ownership beneath Caliber Hospitality Trust, Inc., or CHT. Our expectation is that CHT would employ an option agreement to acquire the properties once construction is finished and they have stabilized, which provides Hyatt Studios investors with a defined exit path, whether paid in cash or through shares of CHT. THT Investor represents a proprietary pipeline consisting of newly built, income-generating hotels. Turning to CHT, the fund at present concentrates on acquiring top-tier hotel properties at an attractive point of entry. This capitalizes on a significant pricing dislocation within the lodging sector, where chances arise to buy sound, cash flowing assets for less than both what they would inherently cost to construct and their longer term market values. We're pursuing these acquisitions through direct cash deals and tax-deferred contributions by way of CHT's upgrade structure, which gives existing hotel owners a tax-efficient path to roll their assets into a diversified portfolio. In this quarter, CHT grew its active acquisition pipeline to eight hotel assets sitting at various stages of underwriting, and one of those eight has moved to a fully executed letter of intent for purchase. We've also made a major change to CHD's hotel management approach; in 2025, Caliber moved to change management on one hotel asset, the Hampton Inn Suites in Scottsdale, Arizona, which has since produced improvements in gross operating profit against a relatively soft hotel revenue environment. During 2026, five more hotels left our legacy manager, and our team, working with our new management partner, moved in to establish an owner-centric model, just as we did with the Hampton Inn. Once the playbook is in place, we anticipate comparable gains in profitability throughout the portfolio, and we're eager to share our results. Finally, we're actively refinancing several existing CHC assets. These financings ought to support property-level upgrades, lower our overall borrowing costs, strengthen property-level liquidity, and add to Caliber's financing-related revenue during the third and fourth quarters of 2020. Our Pure Piccolo Wall and Paddel Project, situated in Scruffville, Arizona, will provide us with a world-class pickleball and paddle facility. The facility is set to include 48 courts. There's also a pro arena with 1,200 seats, a clubhouse offering full service, sports facilities, and a Performance and Recovery Center that Honor Health both sponsors and manages. Food and beverage operations will be run by Wolfgang Puck Catering. That includes an on-site restaurant, a grab-and-go market, an area for special events, a teaching kitchen, VIP space, arena confessions, and a rooftop patio. Peer has secured approval for its building permits and continues advancing toward shovel-ready status. The current focus is on finalizing construction financing and pulling together the overall capital structure, efforts that are actively in progress. Additionally, we're very excited that Pure marks our inaugural tokenized offering. The sport expanding more quickly than any other in America is pickleball, while paddle holds that same distinction worldwide. So by tokenizing this fund at this point, accredited investors no matter where they're located get an opportunity to invest in the expansion of both of those sports within the U.S. via this offering. Turning to Canyon Village — the sizable office-to-multifamily conversion we're doing in North Phoenix that supports the TSMC and Apple Fab Development Corridor — during the quarter our HUD construction loan application got the green light, and we'll be submitting our firm commitment application shortly, which puts us on track for a final close. Demolition is now complete, and the drawings for the building along with the garage are almost done as well. So at Encore, which is our land development project in northern Colorado, we're continuing to advance both the planning for site development and our commercial leasing efforts. With 7-Eleven, we currently have an active LOI, there's also an LOI in place for the apartment site, United Properties remains in escrow regarding the industrial site, and interest has been shown by two national big box users; as for project financing, we're continuing to make headway alongside the financing partner we chose, and we anticipate closing that financing soon. Project execution continues to depend on financing and infrastructure milestones, and we expect those to progress across the coming quarters. Caliber continues to build out its distinctive 1031 exchange program. Through it, someone looking to deploy a million dollars or more of 1031 exchange capital gets a straightforward way to co-invest with Caliper in the very same properties our funds are buying. This offering is built on a tenant in common, or TIC, format, under which a single investor is matched with Caliber and, at times, a handful of other investors who are aligned with Caliber. In this arrangement, Caliber serves as the administrator for the property as well as the associated TIC interest. Down the road, those who join via a TIC interest have the opportunity to move into our Core Plus real estate fund through a tax-deferred 721 exchange, which turns their stake into a fund position that is both diversified and professionally managed. A few factors make this program distinctive among 1031 options. To start, when investors join, they do so at the cost basis CalVER holds on the property being acquired, not at the inflated basis that bigger DFT sponsors usually apply. Secondly, when you compare this program's expenses to those of other 1031 choices on the market, it holds up favorably. Thirdly, the path toward a 721 exchange down the road into our Core Plus Real Estate Fund offers a solution for liquidity over the long haul that very few 1031 sponsors can match. At the moment, we're engaged on the second asset in this program — the Tonto Oaks apartment offering. This one is a 46-unit multifamily asset in Payson, Arizona, and it fits the value-add strategy. What we intend to do is complete a light renovation, and throughout that renovation cycle we want occupancy to stay at 90% or above. By doing that, we can raise the property's value while still generating cash flow for as long as we hold it. Caliber has a solid track record in the value-add multifamily space, and right now we're finding opportunities to acquire multifamily properties at pricing that looks more attractive than it has in years. In closing, Calibre's Q2 results landed right where we had planned. Looking ahead to the remainder of 2026, we anticipate it will be defined by three things: finalizing project-level financing arrangements throughout our current portfolio, continued capital raising via wholesale and direct channels, and fresh possibilities for revenue streams and expense reductions tied to tokenizing our real estate holdings. As of today, we are restating our 2026 outlook. Our view remains that 2026 revenues ought to fall between 18 and 22 million, generating positive adjusted EBITDA. I'll now hand things to Michael, who will walk through our financial results. Thanks, Chris. Good afternoon, everybody.

To begin, here's where things stand on our work to tackle the corporate note maturities and strengthen our corporate liquidity position. At the close of the second quarter, we held 148 individual unsecured notes carrying an aggregate principal balance of roughly $26 million, and $21 million of that total comes due over the next 12 months. Typically, each note carries a 12-month term and includes an option to extend. We keep carrying out the strategies laid out in our filings to handle these maturities — refinancing 12-month notes through our 36-month note program, converting notes into Class A common stock or Series AAA convertible preferred stock through our conversion program, and raising Series AA preferred stock under our regulation A-plus offering. As of August 13th, we have refinanced $6.4 million of notes into the 36-month program and converted roughly $5.3 million of notes into equity securities. On top of that, we are assessing further alternatives for retiring notes at Attractive Economics. The goal of these efforts is to bring down Caliber's near-term corporate debt, though how much of a reduction we'll achieve is still uncertain; we believe this work can lower Caliber's leverage, boost stockholders equity, and add financial flexibility as we carry out our plan to reach profitability in 2026. Now to our second quarter of 2026 results: platform revenue came in at $3.7 million for the quarter, versus $4.1 million in the same quarter last year. That decline mainly stems from lower development and construction fees tied to the timing of project financing, partly offset by growth in fund management fees. A number of financings we had expected to close during the second quarter slipped into later periods, which reflects a shift in timing rather than any slowdown in underlying activity. We still expect those financings to add to revenue in 2026. Total platform expenses for the second quarter reached $5.9 million, compared with $5.3 million a year earlier — a rise of roughly 11%. That increase came mostly from higher bad debt charges tied to additional reserves on certain development and construction fees being done collectible, partly offset by lower professional fees period over period. Platform adjusted EBITDA for the second quarter was about $0.3 million, against a loss of $0.1 million in the prior year quarter — an improvement of approximately $0.4 million as revenue strengthens and cost discipline continues across the business, and we remain on a steady path toward our 2026 profitability targets. Managed capital stood at $495.6 million at the end of the second quarter, down 0.6% from the prior year; regarding our outlook for 2026, we still expect total revenue in the range of $18 million to $22 million. We continue to expect approximately 60% of revenue growth to come from project-level financing across our existing portfolio, with the remaining 40% coming from capital formation and asset management activities. Given our current visibility into the pipeline and financing activity, we believe we are positioned to achieve adjusted EBITDA profitability in 2026. Thanks. Head over to www.caliberco.com and use the route meant for public shareholders. Once there, our financial supplement and presentation are available to download, and you can add yourself to the mailing list set up specifically for public investors. Should anything be unclear... just fill out the contact us form, and that way we can connect with you one-on-one. Appreciate your time on today's call, and enjoy the rest of your day.

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