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Item 1. Business

2025-03-31 compared with 2024-04-16 · 56 added, 21 removed, 131 unchanged (37% of the section changed)

Over the past 15 years, Caliber has grown into a leading diversified alternative asset management firm, managing more than $3.1 billion in assets under management (“AUM”) and assets under development (“AUD”).

Caliber’s primary goal is to enhance the wealth of accredited investors seeking to make investments in middle-market assets.

We strive to build wealth for our clients by creating, managing, and servicing middle-market investment funds, private syndications, and direct investments.

Through our funds, we invest primarily in real estate, private equity, and debt facilities.

We market and fundraise to private investors, family offices, and institutions (“Direct Channel”) and to registered investment advisers and independent broker-dealers (“Wholesale Channel”).

We believe that we provide investors attractive risk-adjusted returns by offering a balance of (i) structured offerings and ease of ownership, (ii) a pipeline of investment opportunities, primarily projects that range in value between $5.0 million and $50.0 million, and (iii) an integrated execution and processing platform.

Our investment strategy leverages the local market intelligence and real-time data we gain from our operations to evaluate current investments, generate proprietary transaction flow, and implement various asset management strategies.

Over the past 16 years, Caliber has emerged as a leading real estate asset management firm, with more than $2.9 billion in Managed Assets.

Caliber’s business is focused on a singular objective, to make money in all market conditions by managing and developing attractive multi-family residential, hospitality, and multi-tenant industrial assets.

Caliber serves financial professionals, family office investors, and high net worth investors, through its real estate fund products focused on generating value growth, income, and tax advantages.

Caliber competes in the broad market for alternative investments, a fast-growing segment of the global investment market.

For Multi-Family Residential & Multi-Tenant Industrial assets, Caliber is regionally focused on growth-oriented markets;

namely Arizona, Colorado & Texas.

For its Hospitality platform, Caliber is investing through the United States with a specific focus on markets that have experience population growth and job growth in the last 5 years.

Our competitive advantage is driven by several elements of the Caliber platform:

1.) The combination of an institutional-grade investment management platform combined with boutique, middle-market fund sizes and real estate projects.

2.) Our in-house shared services group, which offers Caliber greater control over our real estate and visibility to find future investment opportunities

3.) Our in-house fundraising infrastructure, allowing Caliber to serve a broad range of investors and institutions.

Caliber defines middle-market in two ways.

The first, by the size of the investments, We typically pursue – projects between $5.0 million and $50.0 million per asset.

The second, by the size of the investment funds.

We offer, typically $200.0 million for a multi-asset discretionary fund and $5.0 million to $20 million for a syndication.

In addition, Caliber is building the Caliber Hospitality Trust (CHT), a middle-market hotel investment company utilizing the UPREIT strategy with expectations that CHT will become a listed company when its assets under management (“AUM”) exceeds $1.0 billion.

As an alternative asset manager, we offer a full suite of support services and employ a vertically integrated approach to investment management.

Our asset management activities are complemented with transaction and advisory services including development and construction management, acquisition and disposition expertise, and fund formation, which we believe differentiate us from other asset management firms.

We earn the following fees from providing these services under our asset management platform:

• Fund set-up fees are a one-time fee for the initial formation, administration, and set-up of fund products we distribute and manage.

We earn the following fees from providing these services under our asset management platform (the “Platform”):

Asset Management Revenues

• Organizational & Offering (“O&O”) fees include fund set-up fees and are a one-time fee earned during the initial formation, administration, and set-up of fund products we distribute and manage.

These fees are recognized at the point in time when the performance under the contract is complete.

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These customer contracts require the Company to provide management services, representing a performance obligation that the Company satisfies over time.

With respect to the Caliber Hospitality Trust (as defined in Note 3 – VIEs), the Company earns an fund management fee of 0.70% of the Caliber Hospitality Trust’s enterprise value and is reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust.

With respect to the Caliber Hospitality Trust (as defined in Note 3 – VIEs), the Company earns a fund management fee of 0.7% of the Caliber Hospitality Trust’s enterprise value and is reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust.

• Financing fees are earned for services the Company performs in securing third-party financing on behalf of our private equity real estate funds.

These fees are recognized at the point in time when the performance under the contract is complete, which is essentially upon closing of a loan.

In addition, the Company earns fees for guarantying certain loans, representing a performance obligation that the Company satisfies over time.

• Real estate development revenues are generally based on 4.0% of the total expected costs of the development or 4.0% of the total expected costs of the construction project for services performed as the principal developer, which include managing and supervising third-party developers and general contractors with respect to the development of the properties owned by the funds.

In addition, the Company earns fees for guaranteeing certain loans, representing a performance obligation that the Company satisfies over time.

• Real estate development revenues are generally based on two fee-based contracts, which are up to 6% on a combined basis.

The first, a real estate development contract that provides for up to 4.0% of the total expected costs of the

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development and is paid for services performed by Caliber Development, LLC as the principal developer of Caliber projects.

These services may include obtaining new entitlements or zoning changes and managing and supervising third-party developers.

The second, a construction management contract that provides for up to to 4.0% of the total expected costs of the construction project for services provided managing general contractors with respect to the construction of the properties owned by the funds.

Prior to the commencement of construction, development fee revenue is recognized at a point in time as the related performance obligations are satisfied and the customer obtains control of the promised service, including negotiation, due diligence, entitlements, planning, and design activities.

During the construction period, development fee revenue is recognized over time as the performance obligations are satisfied.

During the construction period, construction management fee revenue is recognized over time as the performance obligations are satisfied.

• Brokerage fees are earned at a point in time at fixed rates for services performed related to acquisitions, dispositions, leasing, and financing transactions.

Performance Allocations

• Performance allocations are an arrangement in which we are entitled to an allocation of investment returns, generated within the investment funds which we manage, based on a contractual formula.

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Performance allocations are related to services which have been provided and are recognized when it is determined that they are no longer probable of significant reversal, which is generally satisfied when an underlying fund investment is realized or sold.

We have $2.9 billion in Managed Assets, which is comprised of AUM and Assets Under Development (“AUD”).

We have a number of development, redevelopment, construction, and entitlement projects that are underway or are in the planning stages, which we define as AUD.

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Completing these development activities may ultimately result in income-producing assets, assets we may sell to third parties, or both.

If we complete all AUD at December 31, 2024, up through sale, we estimate the Company could earn $89.0 million in performance allocations.

As of December 31, 2024, we are actively developing 1,796 multifamily units, 697 single family units, 3.7 million square feet of commercial and industrial, and 3.5 million square feet of office and retail.

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The development of these assets will require significant additional financing or other sources of funding, which may not be available.

Similarly, there can be no assurance that performance allocations associated with our Managed Assets will be realized because our total costs to complete a project could change.

In addition, the price we might obtain upon selling the investment at some point in the future could be different than our projections.

Investment Process and Risk Management

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The investment committee is comprised of executives and senior leaders of the Company.

When evaluating investment opportunities, the investment committee may consider, without limitation and depending on the nature of the investment and its strategy, the quality of the asset in which the fund proposes to invest, likely exit strategies, factors that could reduce the value of the asset at exit, and a range of economic and interest rate environments, macroeconomic trends in the relevant geographic region or industry and the quality of the asset’s business operations.

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or industry and the quality of the asset’s business operations.

Our investment committee also incorporates, to the extent appropriate, environmental, social and governance (“ESG”) factors into the investment decision-making process.

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We determine whether to make general partner capital commitments to our funds in excess of the minimum required commitments based on, among other things, our anticipated liquidity, working capital and other capital needs.

As of December 31, 2024, Caliber has $28.6 million invested alongside our Fund Investors in the form of equity positions, short term loans, and receivables.

This represents 5.8% of Managed Capital of $492.5 million.

Investors in many of our funds also receive the opportunity to make additional “co-investments” with the investment funds.

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In certain cases, limited partner investors may pay additional management fees or carried interest in connection with such co-investments.

The asset management industry is intensely competitive.

The real estate asset management industry is intensely competitive.

We compete primarily on a regional, industry and asset class basis.

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• Diversification of our revenue stream across the deal continuum, including asset management revenues which include brokerage fees on buying and selling assets, construction management fees on repositioning assets, fund set up fees for the initial formation, administration, and set-up of fund products we distribute and manage.

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Strategy and Competitive Strengths

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• Targeted market opportunities.

We primarily focus on business and investment-friendly markets that have a long-term trend of population growth and income improvement, in particular focus on Alaska, Arizona, Colorado, and Texas .

We primarily focus on business and investment-friendly markets that have a long-term trend of population growth and income improvement, in particular focus on Alaska, Arizona, Colorado, Kansas, Texas, and Virginia.

We generally avoid engaging in direct competition in over-regulated and saturated markets.

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We expect these new funds and platforms will attract new investors, in addition to leveraging our existing investor base.

• UPREIT Strategies.

We intend to utilize the UPREIT structure, starting with CHT, to grow our AUM through tax-efficient asset acquisitions which can be completed primarily in shares in the UPREIT we manage instead of traditional cash debt and equity.

We expect to leverage the operating infrastructure of Caliber as an external advisor to the UPREIT entity(s) we manage to avoid duplicating costs of running additional public companies.

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• Accretive acquisitions .

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Human Capital Management

Caliber’s core principles of accountability, respect, and transparency are at the heart of who we are and how we operate.

Our employees are integral to Caliber’s culture of transparency, integrity, professionalism, and excellence.

Our employees adhere to these core principles leading to our continued success as an organization.

Caliber is committed to operating according to our core principles:

• Authenticity & Transparency

• Vision & Agility

• Compassion & Service

Our employees are integral to Caliber’s culture and our primary real estate objective, to produce and manage real estate investments that Caliber insiders own and invest in.

Our employees adhere to Caliber’s core principles leading to our continued success as an organization.

Our professionals have decades of institutional experience in commercial, real estate, capital markets, alternative investments, and mergers and acquisitions.

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We provide opportunities for growth and development for our employees and support their personal and professional goals in an effort to retain the most talented individuals.

We value diversity and inclusion on our team.

The opportunities we provide in conjunction with our reputation is what we believe makes us an attractive employer.

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We enter into non-competition and non-solicitation agreements with certain employees.

We believe Caliber offers a differentiated platform for employees to join our business as one of the only boutique, publicly listed real estate asset manages in the United States.

Compensation and Benefits

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The SEC and various self-regulatory organizations, state securities regulators, and international securities regulators have in recent years increased their regulatory activities, including regulation, examination, and enforcement in respect of asset management firms.

Additional legislation, increasing regulatory oversight of fundraising activities, changes in rules promulgated by self-regulatory organizations or exchanges or changes in the interpretation or enforcement of existing laws and rules may directly affect our mode of operation and profitability.

Additional legislation, increasing regulatory oversight of fundraising activities, changes in

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rules promulgated by self-regulatory organizations or exchanges or changes in the interpretation or enforcement of existing laws and rules may directly affect our mode of operation and profitability.

We intend to continue to conduct our operations so that neither we nor any subsidiaries we own nor ones we may establish will be required to register as an investment company under the Investment Company Act of 1940, as amended (“Investment Company Act”).

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The SEC maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the SEC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business