What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-04-16 · 215 added, 151 removed, 389 unchanged (48% of the section changed)

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For a complete discussion of such risk factors, see the section in this report entitled “Risk Factors”.

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

Over the past 15 years, Caliber has grown into a leading diversified alternative asset management firm, with more than $2.9 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.

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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, not to exceed 6%.

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

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• 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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fund management, development, and brokerage.

During the three months ended December 31, 2023, the Company reevaluated its reportable segments, considering (i) the evolution of the Company after closing its initial public offering and how the Company’s chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, assesses performance and allocates resources, (ii) changes to the budgeting process and in key personnel driven by the Company’s growth initiatives, and (iii) how management reports ongoing company performance to the Board of Directors.

During the year ended December 31, 2023, the Company reevaluated its reportable segments, considering (i) the evolution of the Company after closing its initial public offering and how the Company’s chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, John C.

Loeffler, assesses performance and allocates resources, (ii) changes to the budgeting process and in key personnel driven by the Company’s growth initiatives, and (iii) how management reports ongoing company performance to the Board of Directors.

With the evolution and growth of the Company, the Company’s CODM assesses performance and resource allocation on an aggregate basis under the Company’s asset management Platform, and no longer reviews operating results for development or brokerage activity separately.

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any trend which increases or decreases the costs of execution on a real estate project, including materials pricing, labor pricing, access to materials, delays due to governmental action, and the general labor market, will affect Caliber’s ability to generate revenues.

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Our business depends in large part on our ability to raise capital for our funds from investors.

Since our inception, we have continued to successfully raise capital into our funds with our total capital raised through December 31, 2023 of approxi mately $660.0 million.

Since our inception, we have continued to successfully raise capital into our funds with our total capital raised through December 31, 2024 of $742.8 million.

Our success at raising new capital into our funds is impacted by the extent to which new investors see alternative assets as a viable option for capital appreciation and/or income generation.

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We have complemented these cycles with other newer funds that will maintain management fees while providing continued sources of activity.

In February 2023, we expanded our access to institutional capital by entering into an agreement with Skyway Capital Markets to serve as a managing broker-dealer for our primary investment products.

The agreement designates Skyway to assist us to raise capital primarily from third-party broker-dealers and registered investment advisors, many of which have an existing business relationship with Skyway.

Skyway will assist us in our efforts to hire, train and manage a national wholesaling team, secure selling agreements, and provide appropriate due diligence to advisors distributing our funds.

Our current managing broker-dealer will remain engaged with us to supervise and manage our existing private client sales team and to join Skyway as a selling group member.

Acquiring new assets includes being able to negotiate favorable loans on both a short and long-term basis.

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Business Environment

Global markets are experiencing significant volatility driven by concerns over inflation, rising interest rates, slowing economic growth and geopolitical uncertainty.

The annual inflation rate in the United States increased to 9.1% in June 2022, the highest rate since November 1981, but decreased to 3.4% in December 2023.

As a result, from January 1, 2022 through January 31, 2024, the Federal Reserve increased the federal funds rate by 525 basis points.

Global markets are experiencing significant volatility driven by concerns over inflation, elevated interest rates, slowing economic growth and geopolitical uncertainty.

The annual inflation rate in the United States increased to 9.1% in June 2022, the

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highest rate since November 1981, but decreased to 2.9% in December 2024.

As a result, from January 1, 2022 through September 18, 2024, the Federal Reserve increased the federal funds rate by 525 basis points.

Subsequently, the Federal Reserve decreased the federal funds rate by 50 basis points in September 2024, by 25 basis points in November 2024 and by 25 basis points in December 2024, resulting in a target rate range of 4.25% to 4.50% at December 31, 2024.

The rising interest rates, coupled with periods of significant equity and credit market volatility may potentially make it more difficult for us to find attractive opportunities for our funds to exit and realize value from their existing investments.

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Comparison of the Consolidated Results of Operations for the Years Ended December 31, 2024 and 2023

Our consolidated results of operations are impacted by the timing of consolidation, deconsolidation, and operating performance of our consolidated and previously consolidated funds.

Periods presented may not be comparable due to the consolidation or deconsolidation certain funds.

In particular, the Company deconsolidated Caliber Hospitality, LP, the Caliber Hospitality Trust, and their consolidated subsidiaries, Elliot, DT Mesa, and Caliber Fixed Income Fund III, during the year ended

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December 31, 2024.

The following table and discussion provide insight into our consolidated results of operations for the years ended December 31, 2024 and 2023 (in thousands):

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Consolidated funds - gain on sale of real estate investments — 4,976 (4,976) (100.0) %

Other income, net 374 326 48 14.7 %

Gain on extinguishment of debt — 1,421 (1,421) (100.0) %

Other (loss) income, net (3,093) 374 (3,467) (927.0) %

Interest income 360 350 10 2.9 %

Interest expense (5,424) (4,717) (707) 15.0 %

Net (loss) income before income taxes (27,594) 13,951 (41,545) (297.8) %

Net loss before income taxes (21,470) (27,594) 6,124 (22.2) %

Benefit from income taxes — — — 0.0 %

Net (loss) income (27,594) 13,951 (41,545) (297.8) %

Net (loss) income attributable to noncontrolling interests (14,891) 11,931 (26,822) (224.8) %

Net (loss) income attributable to CaliberCos Inc.

Net loss (21,470) (27,594) 6,124 (22.2) %

Net loss attributable to noncontrolling interests (1,693) (14,891) 13,198 (88.6) %

Net loss attributable to CaliberCos Inc.

$ (19,777) $ (12,703) $ (7,074) 55.7 %

For the years ended December 31, 2023 and 2022, total revenues were $90.9 million and $84.0 million, respectively, representing a period-over-period increase of 8.3%.

This increase was primarily due to an increase in revenues in our consolidated fund hotel assets resulting from increased occupancy rates and higher average daily rates and from revenues from Hilton Tucson East, which became a consolidated entity during the year ended December 31, 2023, offset by a decrease in asset management revenues.

Asset management revenues consist of fees earned for fund set-up and formation, asset management, financing, development and construction, and brokerage services.

The decrease in asset management revenues was primarily due to fund set-up fees earned for services performed in conjunction with the formation of Caliber Tax Advantaged Opportunity Zone Fund II, LLC during the year ended December 31, 2022.

For the years ended December 31, 2023 and 2022, total expenses were $119.5 million and $92.4 million, respectively, representing a period-over-period increase of 29.3%.

The increase was primarily due to an increase in consolidated fund related expenses due to rising labor costs and variable costs associated with increased revenue, such as management and franchise fees and loyalty program costs, and from operating expenses from Hilton Tucson East, which became a consolidated entity during the year ended December 31, 2023.

In addition, there was an increase in operating costs from (i) 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, and (ii) an increase in stock compensation expense for restricted stock units that vested upon the closing of the Company’s initial public offering.

For the years ended December 31, 2024 and 2023, total revenues were $51.1 million and $90.9 million, respectively, representing a period-over-period decrease of 43.8%.

This decrease was primarily due to a decrease in consolidated fund revenues as a result of the deconsolidation of Caliber Hospitality, LP and Caliber Hospitality Trust in March 2024.

See the Segment Analysis section below in which revenues are presented on a basis that deconsolidates our consolidated funds.

As a result, Platform segment revenues are different than those presented on a consolidated basis in accordance with U.S.

GAAP, because these fees are eliminated in consolidation when they are derived from a consolidated fund.

For the years ended December 31, 2024 and 2023, total expenses were $64.4 million and $119.5 million, respectively, representing a period-over-period decrease of 46.1%.

The decrease was primarily due to a decrease in consolidated fund expenses which was primarily due to the deconsolidation of Caliber Hospitality, LP and Caliber Hospitality Trust in March 2024.

For the year ended December 31, 2023, consolidated funds – gain on sale of real estate investments includes the $5.0 million gain recognized on the sale of Northsight Crossing, a commercial property with a cost basis of $21.7 million.

For the year ended December 31, 2022, consolidated funds – gain on sale of real estate investments includes the $21.5 million gain recognized on the sale of GC Square Apartments, a multi-family property with a cost basis of $9.1 million.

For the year ended December 31, 2023, other income, net includes rental income of $1.6 million related to space leased to third parties in Caliber’s headquarters office building, offset by a $1.3 million loss of estimated amounts due to investors of the Caliber Residential Advantage Fund, LP (“CRAF”) upon redemption of their investment and payment of any accrued and unpaid preferred return related to the disposal of the last single-family residential home owned by the fund (“Loss on CRAF Investment Redemption”).

There was no comparable activity during the year ended December 31, 2022.

For the years ended December 31, 2023 and 2022, interest expense was $4.7 million and $1.1 million, respectively.

The increase was primarily due to the increase in corporate notes outstanding during the year ended December 31, 2023, as compared to the same period in 2022.

In addition, there was one real estate note outstanding during the year ended December 31, 2023 with no comparable real estate notes outstanding during the same period in 2022.

Comparison of the Unconsolidated Results of Operations for the Year Ended December 31, 2023 and 2022

The following table and discussion provide insight into our unconsolidated results of operations of the asset management platform for the year ended December 31, 2023 and 2022 (in thousands).

Unconsolidated revenues and expenses are presented on a basis that deconsolidates our consolidated funds (intercompany eliminations) and eliminates noncontrolling interest.

As a result, unconsolidated revenues are different than those presented on a consolidated basis in accordance with U.S.

GAAP because fee revenue is eliminated in consolidation when it is derived from a consolidated fund and due to the exclusion of the fund revenue recognized by the consolidated funds.

Furthermore, unconsolidated expenses are also different than those presented on a consolidated U.S.

GAAP basis due to the exclusion of fund expenses that are paid by the consolidated funds.

See the Non-GAAP Measures section below for reconciliations of the unconsolidated results to the most comparable U.S.

GAAP measure.

Year Ended December 31,

There were no real estate sales during the year ended December 31, 2024.

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Comparison of the Platform (Unconsolidated) Results of Operations for the Years Ended December 31, 2024 and 2023

The following table and discussion provide insight into our unconsolidated results of operations of the Platform for the years ended December 31, 2024 and 2023 (in thousands).

Years Ended December 31,

2024 2023 $ Change % Change

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Other income (loss), net (2,654) 649 $ (3,303) (508.9) %

Gain on extinguishment of debt — 1,421 (1,421) (100.0) %

Interest income 559 1,863 (1,304) (70.0) %

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Net (loss) income $ (19,647) $ (11,785) $ (7,862) 66.7 %

For the years ended December 31, 2023 and 2022, total revenues were $20.6 million and $24.1 million, respectively, representing a period-over-period decrease of 14.4%.

The table below compares the revenues earned for providing services under the Company’s asset management platform as described in the Revenue Recognition section of Note 2 – Summary of Significant Accounting Policies for the year ended December 31, 2023 to the revenues earned for the year ended December 31, 2022.

Year Ended December 31,

For the years ended December 31, 2024 and 2023, total revenues were $20.9 million and $20.6 million, respectively, representing a period-over-period increase of 1.5%.

The table below (in thousands) compares the revenues earned for providing services under the Company’s asset management Platform as described in the Revenue Recognition section of Note 2 – Summary of Significant Accounting Policies for the year ended December 31, 2024, to the revenues earned for the same period in 2023.

Years Ended December 31,

2024 2023 $ Change % Change

Fund set-up fees $ 523 $ 6,160 $ (5,637) (91.5) %

Fund management fees 12,318 10,120 2,198 21.7 %

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Performance allocations 379 3,656 (3,277) (89.6) %

Total unconsolidated revenue $ 20,638 $ 24,118 $ (3,480) (14.4) %

The decrease in fund set-up fees relates to services performed in conjunction with the formation of Caliber Tax Advantaged Opportunity Zone Fund II, LLC during the year ended December 31, 2022.

In addition, the Company is transitioning from fund formation fees that are recognized as capital is raised into a fund to fund set-up fees that are a one-time fee not conditional on capital raise, resulting in a decrease in fund set-up fees of $0.9 million from the year ended December 31, 2022 to the year ended December 31, 2023.

The increase in development and construction fees is primarily due the execution of development agreements related to eight projects, partially offset by completing construction at three projects during the year ended December 31, 2023.

The decrease in brokerage fees is primarily due to a decrease in brokerage transactions, which were $57.8 million during the year ended December 31, 2023, as compared to $117.5 million in the same period in 2022.

For the year ended December 31, 2023 performance allocations were $3.7 million, which represents the carried interest earned related to the contribution of the hospitality assets to Caliber Hospitality, LP in March 2023, the disposition of one commercial property located in Scottsdale, Arizona, and 80 acres of land located in Johnstown, Colorado.

For the year ended December 31, 2022 performance allocations were $2.5 million, which represents the carried interest earned related to the sale of the GC Square Apartments multi-family property in March 2022.

Total Platform revenue $ 20,942 $ 20,638 $ 304 1.5 %

The increase in fund management fees is primarily due to an increase in capital raise fees and increase of managed capital and fees earned from the Caliber Hospitality Trust related to the acquisition of one hotel property.

Fund management fees were based

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on 1.0% and 1.5% of the unreturned capital contributions in each fund and a fund management fee of 0.7% of the Caliber Hospitality Trust’s enterprise value.

The decrease in performance allocations is due to the carried interest earned related to the contribution of the hospitality assets to Caliber Hospitality, LP in March 2023.

For the years ended December 31, 2024 and 2023, total expenses were $33.1 million and $30.2 million, respectively, representing a period-over-period increase of 9.4%.

The increase was primarily due to an increase in operating costs from (i) 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, and (ii) an increase in stock compensation expense for restricted stock units that vested upon the closing of the Company’s initial public offering.

The increase in depreciation and amortization was primarily due to the acquisition of the Company’s headquarters office building during the year ended December 31, 2023.

For the year ended December 31, 2023, other income, net includes rental income of $1.6 million related to space leased to third parties in Caliber’s headquarters office building, offset by a $1.3 million loss of estimated amounts due to investors of the Caliber Residential Advantage Fund, LP upon redemption of their investment and payment of any accrued and unpaid preferred return related to the disposal of the last single-family residential home owned by the fund.

There was no comparable activity during the year ended December 31, 2022.

The increase was primarily due to an increase in bad debt expense, partiallky offset by a decrease in operating costs related to payroll and payroll related expenses.

Other loss, net was $2.7 million for the year ended December 31, 2024, as compared to $0.6 million for the year ended December 31, 2023.

The decrease is primarily due to an increase in rental and reimbursement revenue from space leased at the Company’s corporate headquarters offset by a one-time impairment charge related to certain investments.

For the years ended December 31, 2024 and 2023, interest expense was $5.4 million and $4.7 million, respectively.

The increase was primarily due to the increase in corporate notes outstanding during the year ended December 31, 2023, as compared to the same period in 2022.

In addition, there was one real estate note outstanding during the year ended December 31, 2023 with no comparable real estate notes outstanding during the same period in 2022.

The increase was primarily due to an increase in short-term operating loans outstanding during the year ended December 31, 2024, as compared to the same period in 2023.

Balance Sheets - Platform (Unconsolidated)

The following table and discussion provide insight into our unconsolidated balance sheets of the asset management Platform for the years ended December 31, 2024 and 2023.

Unconsolidated assets, liabilities and stockholders’ equity are presented on a basis that deconsolidates our consolidated funds (intercompany eliminations).

Total assets, total liabilities, and total stockholders’ equity are different than those presented on a consolidated basis in accordance with U.S.

GAAP, because certain accounts (including notes receivable, due from/to related parties, and investments in unconsolidated entities) are eliminated in consolidation when they are due from/to consolidated funds.

Furthermore, we are required to add to this balance sheet, assets and

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liabilities and equity of the consolidated funds which are items that are not available to a shareholder of CWD.

See the Non-GAAP Measures section below for reconciliations of the unconsolidated results to the most comparable U.S.

GAAP measure.

December 31, 2024 December 31, 2023

(in thousands)

Cash $ 1,766 $ 940

Restricted cash 2,582 2,569

Real estate investments, net (1)

21,782 21,571

Notes receivable - related parties 230 8,510

Due from related parties 11,143 15,424

Investments in unconsolidated entities 16,061 18,377

Operating lease - right of use assets 4,042 4,348

Prepaid and other assets (529) 2,972

Total assets $ 57,077 $ 74,711

Notes payable, net $ 50,450 $ 53,799

Accounts payable and accrued expenses 9,580 8,886

Due to related parties 313 288

Operating lease liabilities 4,360 4,525

Other liabilities 818 557

Total liabilities 65,521 68,055

Stockholders’ (Deficit) Equity

Common stock 23 22

Paid-in capital 41,530 36,966

Accumulated deficit (49,997) (30,332)

Total stockholders’ (deficit) equity (8,444) 6,656

Total liabilities and stockholders’ (deficit) equity $ 57,077 $ 74,711

(1) Included in this balance is the Company’s corporate headquarters office building which had a $22.6 million fair value as of the year ended December 31, 2024.

Investment Valuations

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We value these investments based on our estimate of their fair value as of the date of determination.

We estimate the fair value of our fund’s investments based on a number of inputs built within forecasting models which are either developed by a third-party or by our internal finance team.

We estimate the fair value of our fund’s investments based on several inputs built within forecasting models.

The models generally rely on discounted cash flow analysis and other techniques and may include independently sourced market parameters.

The material estimates and assumptions used in these models include the timing and expected amounts of cash flows, income and expenses for the property, the appropriateness of discount rates used, overall capitalization rate, and, in some cases, the ability to execute, estimated proceeds and timing of expected sales and financings.

The majority of our assets utilize the income approach to value the property.

Most of our assets utilize the income approach to value the property.

Where appropriate, management may obtain additional supporting evidence of values from methods generally utilized in the real estate investment industry, such as appraisal reports and broker price opinion reports.

With respect to the underlying factors that led to the change in fair value in the current year, we identify assets that are undervalued and/or underperforming at the time of acquisition.

Such assets generally undergo some form of repositioning soon after our acquisition in order to help drive increased appreciation and operating performance.

With respect to the underlying factors that led to the change in fair value in the current year, we identify assets that are undervalued and/or underperforming as part of our acquisition strategy.

Such assets generally undergo some form of repositioning soon after our acquisition to help drive increased appreciation and operating performance.

Once the repositioning is complete, we focus on increasing the asset’s net operating income, thereby further increasing the value of the asset.

By making these below-market acquisitions, adding value through development activities, and increasing free cash flow with proper management all represent a material component to our core business model.

By making these below-

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market acquisitions, adding value through development activities, and increasing free cash flow with proper management all represent a material component to our core business model.

A unique feature of Caliber’s funds is the discretion given to Caliber’s management team to decide when to sell assets and when to hold them.

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Assets Under Management

Assets under management, or “AUM,” refers to the assets we manage or sponsor.

AUM refers to the assets we manage or sponsor.

We monitor two types of information with regard to our AUM:

Managed Capital – we define this as the total capital raised from investors and invested in our funds, including capital raised from investors in CaliberCos Inc.

through corporate note issuances that was further invested in or loaned to our funds.

Managed Capital – we define this as the total capital we fundraise from our customers as investments in our funds.

It also includes fundraising into our corporate note program, the proceeds of which were used, in part, to invest in or loan to our funds.

We use this information to monitor, among other things, the amount of ‘preferred return’ that would be paid at the time of a distribution and the potential to earn a performance fee over and above the preferred return at the time of the distribution.

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Managed Capital

The table below summarizes the activity of the managed capital for the year ended December 31, 2023 (in thousands):

The table below summarizes the activity of managed capital for the years ended December 31, 2024 and 2023 (in thousands):

Managed Capital

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Originations 74,857

Redemptions (9,284)

Return of capital (22,962)

Balances as of December 31, 2023

Originations 68,959

Redemptions (22,962)

Return of capital (14,042)

Balances as of December 31, 2024

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(1) Other represents the inclusion of an investment of one of our funds upon the completion of an equity swap during the year ended December 31, 2023.

The following table summarizes managed capital for our investment fund portfolios as of December 31, 2023 and December 31, 2022 (in thousands):

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The following table summarizes managed capital for our investment fund portfolios as of December 31, 2024 and 2023 (in thousands):

December 31, 2024 December 31, 2023

Hospitality $ 49,260 $ 43,660

Caliber Hospitality Trust (1)

97,414 70,747

Residential 96,687 74,224

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___________________________________________

(1) 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.

(2) Beginning during the year ended December 31, 2023, the Company includes capital raised from investors in CaliberCos Inc.

through corporate note issuances that was further invested in our funds in Managed Capital.

As of December 31, 2023 and December 31, 2022, the Company had invested $18.3 million and $5.4 million, respectively, in our funds.

As of December 31, 2024 and 2023, the Company had invested $20.4 million and $18.3 million, respectively, in our funds.

(3) Credit managed capital represents loans made to Caliber’s investment funds by the Company and our diversified credit fund.

As of December 31, 2023, the Company had loaned $8.5 million to our funds.

As of December 31, 2022, no amounts had been loaned to our funds from the Company.

As of December 31, 2024 and 2023, the Company had loaned $0.4 million and $8.5 million to our funds.

(4) Other managed capital represents undeployed capital held in our diversified funds.

Managed capital for our hospitality funds increased by $12.3 million during the year ended December 31, 2023, representing:

(i) the $6.7 million purchase of Caliber Hospitality Trust’s Class A non-voting preferred stock and (ii) $1.2 million purchase of Caliber Hospitality Trust’s Class B non-voting preferred stock, which was offset by (iii) a $6.0 million decrease when hotel operations ceased at the Four Points by Sheraton hotel, as the Company is converting the property into a multi-family residential asset.

The Company also invested $10.4 million into our hospitality funds through corporate notes.

Managed capital for our hospitality funds increased by $5.6 million during the year ended December 31, 2024, due to a $5.7 million related party note receivable bearing 12.0 % interest, issued to Caliber Hospitality Trust.

Managed capital for the Caliber Hospitality trust increased by $26.7 million during the year ended December 31, 2024, primarily due to the issuance of $9.6 million of Caliber Hospitality, LP operating partnership units in exchange for the contribution of a hotel from L.T.D.

on March 7, 2024 and $17.1 million of investments in Caliber Hospitality Trusts’ non-voting preferred stock.

Managed capital for our residential investment funds increased by $22.5 million during the year ended December 31, 2024:

representing (i) $7.1 million in capital raised into our residential assets offset by $4.3 million of redemptions, and (ii) $5.1 million contributed by our diversified funds offset by $2.5 million of redemptions by diversified funds.

Additionally, there was an additional $6.0 million due to the planned conversion of the Four Points by Sheraton hotel discussed above.

Managed capital for our commercial investment funds increased $26.8 million during the year ended December 31, 2023, representing:

(i) $10.7 million in capital raised into our commercial assets offset by $9.8 million of redemptions, (ii) $2.5 million due to the inclusion of an investment of one of our funds upon the completion of an equity swap, and (iii) $25.7 million contributed by our diversified funds offset by $2.3 million of redemptions, to support four commercial ground-up builds and acquisitions in Arizona and one commercial ground-up build and acquisition in Colorado.

representing (i) $9.6 million in capital raised into our residential assets offset by $8.3 million of capital returns, and (ii) $21.2 million contributed by our diversified funds.

Managed capital for our commercial investment funds increased by $15.9 million during the year ended December 31, 2024, representing:

(i) $11.0 million in capital raised into our commercial assets offset by $3.2 million of capital returns, and (ii) $10.6 million contributed by our diversified funds offset by $2.5 million return of capital.

The scope of investments included tenant improvements, land development, and acquiring existing operating commercial properties.

During the year ended December 31, 2023, we raised $21.0 million of new capital into Caliber Fixed Income Fund III, LP (“CFIF III”) and deployed it into our various real estate investments, which was offset by $19.4 million of repayments of the notes receivable.

We also deployed $24.8 million directly into new investments in the form of notes receivable, which was offset by $16.6 million of repayments of the notes receivable.

As of December 31, 2023, we held $9.4 million of other managed capital, which included a $3.2 million private equity investment in a local start-up business and $5.3 million of undeployed cash and pursuit costs, compared to $15.3 million of other managed capital, which included a $6.2 million private equity investment in a local start-up business and $12.1 million of undeployed cash and pursuit costs held as of December 31, 2022.

During the year ended December 31, 2024, our diversified funds deployed $12.9 million into our various real estate investments, which was offset by $25.2 million of repayments of outstanding notes receivable.

As of December 31, 2024, other managed capital decreased $3.4 million, due to a decrease in funds not yet deployed and pursuit costs.

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Our fair value AUM decreased primarily due to asset sales, partially offset by asset purchases.

T he table below details the activities that had an impact on our FV AUM, during the year ended December 31, 2023 (in thousands).

T he table below details the activities that had an impact on our FV AUM, during the years ended December 31, 2024 and 2023 (in thousands).

Balances as of December 31, 2022

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Balances as of December 31, 2023

CHT contribution 29,900

Assets acquired (1)

Construction and net market appreciation 40,675

Assets sold or disposed (2)

Balances as of December 31, 2024

The following table summarizes FV AUM of our investment fund portfolios as of December 31, 2024 and 2023 (in thousands):

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Hospitality $ 68,500 $ 67,200

Caliber Hospitality Trust 236,800 201,600

Residential 161,700 138,000

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___________________________________________

(1) Assets acquired during the year ended December 31, 2024 include West Ridge, a 133 acre mixed-use land development in Colorado and Canyon, an office building conversion to multi-family residential.

Assets acquired during the year ended December 31, 2023 include one development asset in Colorado, our headquarters office building, and two multi-family residential assets in Arizona.

(2) Assets sold during the year ended December 31, 2024 include a commercial asset, lot sales related to two development assets in Colorado, and one home from our residential fund.

Assets sold during the year ended December 31, 2023 include lot sales related to a development asset in Colorado, one development asset in Colorado, nine homes from our residential fund, and one commercial asset in Arizona.

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(4) Other FV AUM represents undeployed capital held in our diversified funds.

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Non-GAAP Measures

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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.

Asset Management Platform or Platform

Platform refers to the performance of the Caliber asset management platform segment, which generates revenues and expenses from managing our investment portfolio, which does not include any consolidated assets or funds.

These activities include asset management, transaction services, and performance allocations.

Management believes that this is an important view of the Company because it communicates performance of the Company that would be most useful for understanding the value of CWD.

Fee-Related Earnings and Related Components

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We believe that Distributable Earnings can be useful as a supplemental performance measure to our GAAP results assessing the amount of earnings available for distribution.

Caliber Adjusted EBITDA

Caliber Adjusted EBITDA represents the Company’s Distributable Earnings adjusted for interest expense, the share repurchase costs related to the Company’s Buyback Program, other income (expense), and provision for income taxes on a basis that deconsolidates our consolidated funds (intercompany eliminations), Loss on CRAF Investment Redemption, Gain on extinguishment of Payroll Protection Program loans, 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.

P latform Earnings

Platform Earnings represents the performance of the Caliber asset management platform segment, which generates revenues and expenses from managing our investment portfolio, excluding any consolidated assets or funds.

Platform Earnings per Share

Platform Earnings per Share is calculated as Platform Earnings divided by weighted average CWD common shares outstanding.

Platform Adjusted EBITDA

Platform Adjusted EBITDA represents the Company’s Distributable Earnings adjusted for interest expense, the share repurchase costs related to the Company’s Buyback Program, other income (expense), and provision for income taxes 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 the Platform and is consistent with performance models and analysis used by management.

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Consolidated Adjusted EBITDA

Consolidated Adjusted EBITDA represents the Company’s and the consolidated funds’ earnings before net interest expense, income taxes, depreciation and amortization, 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.

The following table presents a reconciliation of net (loss) income attributable to CaliberCos Inc.

to Fee-Related Earnings, Distributable Earnings, Caliber Adjusted EBITDA, and Consolidated Adjusted EBITDA for the years ended December 31, 2023 and 2022 (in thousands):

Platform Basic and Diluted Earnings Per Share (“EPS”)

Platform Basic and Diluted EPS represents earnings per share generated by the Platform, without reflecting the impact of consolidation.

The following table presents a reconciliation of net loss attributable to CaliberCos Inc.

to Fee-Related Earnings, Distributable Earnings, Platform Adjusted EBITDA, and Consolidated Adjusted EBITDA for the years ended December 31, 2024 and 2023 (in thousands):

Years Ended December 31,

Net (loss) income attributable to CaliberCos Inc.

Net loss attributable to CaliberCos Inc.

$ (19,777) $ (12,703)

Net (loss) income attributable to noncontrolling interests (14,891) 11,931

Net (loss) income (27,594) 13,951

Net loss attributable to noncontrolling interests (1,693) (14,891)

Net loss (21,470) (27,594)

Provision for income taxes — —

Net (loss) income before income taxes (27,594) 13,951

Net loss before income taxes (21,470) (27,594)

Depreciation and amortization 598 551

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Severance 244 19

Legal costs — 525

Public registration costs — 779

Performance allocations (358) (3,639)

Other income, net (1,211) (374)

Gain on extinguishment of debt — (1,421)

Notes receivable impairment 4,304 —

Bad debt expense 4,079 —

Interest expense, net 4,865 4,367

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Provision for income taxes — —

Loss on CRAF Investment Redemption 1,339 —

Gain on extinguishment of Payroll Protection Program loans — 1,421

Loss on CRAF Investment — 1,339

Consolidated funds’ impact on Caliber Adjusted EBITDA 548 1,788

Caliber Adjusted EBITDA (1,251) 5,519

Platform Adjusted EBITDA Loss (2,710) (1,251)

Consolidated funds' EBITDA Adjustments 9,694 11,419

Consolidated Adjusted EBITDA $ 6,984 $ 10,168

The following tables present a reconciliation of unconsolidated revenues, expenses and net income to the most comparable GAAP measure for the years ended December 31, 2023 and 2022 (in thousands):

The following tables present a reconciliation of Platform revenues, expenses and net income to the most comparable GAAP measure for the years ended December 31, 2024 and 2023 (in thousands):

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Year Ended December 31, 2024

Unconsolidated Impact of Consolidated Funds Consolidated

Platform Impact of Consolidated Funds Consolidated

Asset management $ 20,563 $ (3,684) $ 16,879

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Operating costs 7,136 (964) 6,172

Payroll and payroll related costs 17,768 (1) 17,767

General and administrative 6,817 (41) 6,776

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Total expenses 33,070 31,362 64,432

Consolidated funds – gain on sale of real estate investments — 4,976 $ 4,976

Other income (loss), net (2,654) (439) (3,093)

Gain on extinguishment of debt — — —

Interest income 559 (199) 360

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Net loss attributable to noncontrolling interests — (1,693) (1,693)

Net (loss) income attributable to CaliberCos Inc.

Net loss attributable to CaliberCos Inc.

$ (19,647) $ (130) $ (19,777)

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Year Ended December 31, 2023

Unconsolidated Impact of Consolidated Funds Consolidated

Platform Impact of Consolidated Funds Consolidated

Asset management $ 16,982 $ (6,411) $ 10,571

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Operating costs 2,387 (497) 1,890

Payroll and payroll related costs 19,421 — 19,421

General and administrative 6,807 (37) 6,770

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Other income, net 649 (275) 374

Gain on extinguishment of debt 1,421 — 1,421

Interest income 1,863 (1,513) 350

Interest expense (4,716) (1) (4,717)

Net income before income taxes 2,342 11,609 13,951

Net loss before income taxes (11,785) (15,809) (27,594)

Provision for income taxes — — —

Net income 2,342 11,609 13,951

Net income attributable to noncontrolling interests — 11,931 11,931

Net income (loss) attributable to CaliberCos Inc.

Net loss (11,785) (15,809) (27,594)

Net loss attributable to noncontrolling interests — (14,891) (14,891)

Net loss attributable to CaliberCos Inc.

$ (11,785) $ (918) $ (12,703)

Liquidity and Capital Resources

We have incurred operating losses and negative operating cash flows for the year ended December 31, 2023, and may incur operating losses and negative cash flows in future periods.

We had individual corporate notes aggregating $36.4 million at December 31, 2023 for which the maturity dates of the majority of these notes are within the 12-month period subsequent to when the financial statements for the year ended December 31, 2023 were issued.

In response to these conditions, and the absence of sufficient funds to satisfy the debt obligations referenced above, management plans to i) negotiate extensions of such loans or refinance such debt, ii) obtain new financing, iii) reduce operating costs, iv) collect receivables and return investments from the Consolidated Funds, and/or v) increase capital raise through continued expansion of fundraising channels.

The Company has commenced discussions with the various lenders in pursuit of extending or refinancing its loans.

As of the date of these financial statements, management was able to extend $12.3 million of corporate notes for an additional 13 months (see Note 6 – Notes Payable).

Management’s plans include timely collection on the Company’s outstanding accounts and notes receivable from affiliated entities for which management has influence and control and implementing strategies to reduce costs.

As a result, the Company has concluded that management’s plans are probable of being achieved to alleviate substantial doubt about the Company’s ability to continue as a going concern.

Each of our funds and the related assets that are acquired or own equity interest in those funds are established as separate legal entities with limited liability.

Therefore, the cash flows generated by these entities, whether through operations or financing, are unavailable for general corporate purposes, except as payment to the Company for services performed by the Company.

We have historically financed our operations primarily through a combination of operating cash flows, private offerings of our equity securities, and secured and unsecured debt.

In addition, due to the consolidation of CFIF III, we recognize a revolving line of credit with a maximum borrowing amount of $4.5 million.

We hold our excess unrestricted cash in bank accounts with several high-quality financial institutions.

Equity Financing

On May 19, 2023, the Company closed its initial public offering of 1,200,000 shares of Class A common stock at a public offering price of $4.00 per share, for aggregate gross proceeds of $4.8 million before deducting underwriting discounts, commissions, and other offering expenses.

The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

At December 31, 2024, the Company had a portfolio of corporate notes, whose composition and characteristics are similar to those reported in prior periods.

At December 31, 2024, the portfolio consisted of 202 unsecured notes with an aggregate principal balance of $32.8 million.

As of March 31, 2025, $26.6 million of the corporate notes have matured or will mature within the 12-month period subsequent to March 31, 2025.

Each note generally has a 12-month period with an option to extend for an additional 12-months.

Because the Company incurred operating losses and negative cash flow from operations and could experience additional future operating losses and negative cash flow in the near term, combined with the fact that the Company does not have sufficient cash on hand to satisfy the total of the notes that mature within the next 12 months, these conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions, management considered the impact of these near-term maturities on the Company.

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Management evaluated the impact a default of one or many of these notes might have on the Company.

As these notes are unsecured, the terms in the agreements do not afford the note holder avenues of recourse in a default that could or would impact the Company adversely in the normal course of business, as the terms lack provisions for rights or claims against the Company’s assets, nor is there a scenario where a default could force liquidation of the Company.

Management believes that even in the event of default of one or many of these notes, the Company would be able to negotiate a waiver of the default either through an extension of the maturity or principal repayment schedule.

To satisfy the maturity of these corporate notes, the Company intends to raise $20 million of preferred stock series AA financing through its Reg A+ offering, which was qualified on March 12, 2024, and refinance existing 12-month term notes into a new 36-month term corporate note program.

From the balance sheet date through March 31, 2025, the Company has successfully refinanced $2.7 million of 12-month term corporate notes into the 36-month term corporate note program.

In addition to the financing actions noted, management continues to execute various plans implemented in the year to address operating losses and near-term maturities or demands for repayment of its notes.

Consistent with reported actions taken in prior fiscal periods, management plans to continue to i) reduce operating costs, ii) collect all or part of its $7.7 million in receivables, iii) collect all or part of its $16.1 million in investments from its managed funds, iv) increase capital raise through continued expansion of fundraising channels, v) sell or accept investment into its corporate headquarters, vi) place debt on unencumbered assets, and/or vii) generate planned cash from operations.

After consideration of the implemented and planned actions, management concluded these plans are not within the Company’s control and therefore cannot be deemed probable.

As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.

Corporate Debt

As of December 31, 2023, we have issued and outstanding unsecured promissory notes of $37.8 million with an average outstanding principal balance of $0.2 million, a weighted average interest rate of 11.42%, and maturity dates ranging from January 2024 to March 2025.

The purpose of this financing program is to provide the Company with flexible, short-term capital to be used to grow its assets under management and assist funds in a fast-moving acquisition or investment, as well as general corporate purposes.

Additionally, the program provides customers of Caliber’s funds access to a short-term lending opportunity.

As of December 31, 2024, we have issued and outstanding unsecured promissory notes of $32.8 million with an average outstanding principal balance of $0.2 million, a weighted average interest rate of 11.30%, and maturity dates ranging from April 2023 to December 2027.

The purpose of this financing program is to provide us with flexible, short-term capital to be used to grow its assets under management and assist funds in a fast-moving acquisition or investment, as well as general corporate purposes.

Additionally, the program provides customers of our funds access to a short-term lending opportunity.

Management actively manages each relationship to determine if the respective customer would like to redeem upon maturity or extend for an additional period of time.

Management has historically been successful at extending these note programs and, as a result, continues to expect similar outcomes.

This outstanding debt resulted in $4.0 million and $1.0 million of interest expense for the year ended December 31, 2023 and 2022.

This outstanding debt resulted in $4.0 million of interest expense for each of the years ended December 31, 2024 and 2023.

Cash Flows Analysis

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Net change in cash and cash equivalents $ (12,743) $ 1,706 $ (14,449)

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The assets of our consolidated funds, on a gross basis, can be substantially larger than the assets of our core business and, accordingly could have a substantial effect on the accompanying statements of cash flows.

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Net cash used in the Company's operating activities $ (4,626) $ (7,153) $ 2,527

Net cash used in the consolidated funds' operating activities (11,567) (1,994) (9,573)

Net cash used in the Company's operating activities (18,720) (7,429) (11,291)

Net cash used in the Company's investing activities (3,487) (810) (2,677)

Net cash provided by (used in) the consolidated funds' operating activities 5,181 (11,567) 16,748

Net cash provided by (used in) the Company's operating activities 555 (18,720) 19,275

Net cash provided by (used in) the Company's investing activities 4,911 (3,487) 8,398

Net cash used in the consolidated funds' investing activities (24,540) (1,877) (22,663)

Net cash used in the Company's investing activities (19,629) (5,364) (14,265)

Net cash provided by the Company's financing activities 24,706 8,452 16,254

Net cash (used in) provided by the Company's financing activities (1,217) 24,706 (25,923)

Net cash provided by the consolidated funds' financing activities 7,548 1,084 6,464

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Our net cash flows from operating activities are generally comprised of asset management revenues and performance allocations, less cash used for operating expenses, including interest paid on our debt obligations.

The increase in net cash flows used in operating activities of the Company during the year ended December 31, 2023, as compared to the same period in 2022, was primarily related to increased interest payments related to the Company’s corporate notes.

The increase in net cash flows used in operating activities of the consolidated funds during the year ended December 31, 2023, as compared to the net cash flows provided by operating activities during the same period in 2022, was primarily due to increased interest payments related to the consolidated funds notes payable.

Net cash flows used in operating activities of the Company during the year ended December 31, 2024 remained relatively consistent as compared to the same period in 2023.

The increase in net cash flows provided by operating activities of the consolidated funds during the year ended December 31, 2024, as compared to the net cash flows used in operating activities during the same period in 2023, was primarily due to decreased interest payments related to the consolidated funds notes payable.

Investing Activities

The increase in net cash flows used in investing activities of the Company for the year ended December 31, 2023, as compared to the same period in 2022, primarily relates to an increase in the acquisition of real estate assets.

The decrease in net cash flows used in investing activities of the consolidated funds is primarily due to the decrease in the acquisition of real estate assets and the net impact of the consolidation and deconsolidation of VIEs, offset by a decrease in proceeds from the sale of real estate investments.

The increase in net cash flows provided by investing activities of the Company for the year ended December 31, 2024, as compared to net cash flows used in investing activities of the Company the same period in 2023, primarily relates to payments received on related party notes receivable and a decrease in the acquisition of real estate assets.

The increase in net cash flows used in investing activities of the consolidated funds is primarily due to a decrease sales proceeds from the sale of real estate assets and the net impact of the consolidation and deconsolidation of VIEs, offset by an increase in the payments received on related party notes receivable, a decrease in investments in real estate assets and a decrease in the acquisition of real estate assets.

Financing Activities

The increase in net cash flows provided by financing activities of the Company for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to an increase of $13.7 million of net proceeds on notes payable and an increase of $2.6 million in proceeds from the issuance of common stock, net of equity issuance costs during the year ended December 31, 2023 as compared to the same period in 2022.

The decrease in net cash flows provided by financing activities of the consolidated funds is primarily due to a decrease in the net proceeds from notes payable and notes payable – related parties of our consolidated funds of $12.9 million, an increase in deferred financing costs paid of $2.3 million, and an increase in distributions to noncontrolling interest holders of $5.7 million during the year ended December 31, 2023 as compared to the same period in 2022.

Critical Accounting Estimates

The increase in net cash flows used in financing activities of the Company for the year ended December 31, 2024, as compared to the net cash flows provided by in the same period in 2023, was primarily due to a decrease of $26.0 million of net proceeds on notes payable.

The increase in net cash flows provided by financing activities of the consolidated funds is primarily due to a decrease in redemptions and distributions to noncontrolling interest holders of $13.2 million, offset by a decrease in contributions to noncontrolling interest holders of $9.5 million.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with U.S.

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Actual results could differ from those estimates, perhaps in adverse ways, and those estimates could be different under different assumptions or conditions.

Accounting Estimates of the Company

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Accounting Policies and Estimates of the Company

We believe the following critical accounting policies affect the Company’s more significant estimates and judgements used in the preparation of our consolidated financial statements.

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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.

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

These revenues are included in asset management revenues in the accompanying consolidated statements of operations.

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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.

Prior to the commencement of construction, development fee revenue is recognized at a point in time as the related

Table of Con tents

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.

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Related interest and penalties are classified as income taxes in the financial statements.

Accounting Estimates of Consolidated Funds

Accounting Policies and Estimates of Consolidated Funds

We believe the following critical accounting policies affect the consolidated funds’ more significant estimates and judgements used in the preparation of our consolidated financial statements.

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As compensation for such goods and services, the consolidated funds are typically entitled to a fixed nightly fee for an agreed upon period and additional fixed fees for any ancillary services purchased.

These fees are generally payable at the time the hotel guest checks out of the hotel.

These fees are generally payable at the time the hotel

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guest checks out of the hotel.

The consolidated funds generally satisfy the performance obligations over time and recognize the revenue from room sales and from other ancillary guest services on a daily basis, as the rooms are occupied, and the services have been rendered.

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Consolidated funds – other revenue

Consolidated funds – other revenue primarily consists of rental revenue of $4.0 million and $3.6 million for the years ended December 31, 2023 and 2022, respectively.

Consolidated funds – other revenue primarily consists of interest income of $5.9 million and $3.7 million for the years ended December 31, 2024 and 2023, respectively, which is generated by a consolidated fund’s lending activity.

Interest income is recognized on the accrual basis of accounting in accordance with the lending agreements over the term of the respective loan agreement.

In addition, consolidated funds - other revenue includes rental revenue of $1.4 million and $4.0 million for the years ended December 31, 2024 and 2023, respectively.

Rental revenue includes the revenues generated primarily by the rental operations of the residential (multi-family and single-family) and commercial properties of our consolidated funds.

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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 7. Management’s Discussion and Analysis