Joining Caliber’s CEO, Chris Loeffler, was George Pace who heads up Caliber’s wealth development department and Roy Bade, Caliber’s Chief Development Officer. The discussion revolved around Caliber’s path to a public debut, an update on its hotel assets, a discussion on its current projects in Mesa, AZ and The Ridge I & II in Colorado.
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Quick & Digestible Highlights
The Path to a Public Debut
- Chris kicked off the online meeting with an enthusiasm surrounding a public debut. He mentioned that Caliber is on a full-on hiring spree to build infrastructure that will support Caliber’s future growth and a public platform.
- Chris also reminded everyone about Caliber’s engagement with Goldman Sachs who is advising the Company on M&A activity. They’re actively seeking companies that would want to join forces with Caliber that would ideally be mutually beneficial to both parties.
- Increasing AUM will also be one of the key drivers.
Hotels and Caliber
Hotel REIT Structure
- Caliber is making progress on its REIT structure. The REIT is formed, and the strategy is put together – it entails 10 hotels to be rolled up into the REIT. Chris stated that this structure should create efficiencies of scale and could lead to better returns for investors. Roy added that a REIT structure allows caliber to efficiently expand the platform in an accretive way. Chris said added that there is a tremendous amount of interest.
- Additionally, investors could benefit more from a publicly traded REIT than in a private hotel real estate fund due to the tax-efficient structure and a prospective valuation methodology.
- Caliber is in active negotiations on a $1.5 billion deal that includes 50 hotels. Investors will be notified via email as soon as this comes to fruition. This expands the hotel portfolio and better positions it for a possible public offering.
Highgate Hotel Operator
- Roy brought up Caliber’s new hotel operator, Highgate, who has 380 hotels and pointing out that they have the size and to help Caliber expand its platform. Chris chimed in, stating that he believes Highgate could be one of the candidates to contribute their hotels in a combined structure. George added that bringing Yaron Ashkenazi onboard will continue to augment Highgate’s and Caliber’s efforts across the hotel portfolio.
Hotel Headwinds and Recovery
- On a side note, Chris mentioned that Arizona ranked #2 in economic performance for 2020. This is a good indicator for the state and bodes well for Caliber.
- Roy added a little color on the hospitality landscape from Caliber’s point of view, stating the hotels are definitely in a recovery mode. At the lowest point, the hotel portfolio was averaging 15% – 20% occupancy, currently, the portfolio is ranging around 70% on the weekends. Roy added that there are still some headwinds, but things are looking up.
- Chris announced that the Company has completed a loan modification on the three airport-centric hotels. In exchange for prepaying the interest and op expenses for the next 12 months, the loan maturity has been extended through Oct 2022 and puts the assets back in good standing. Chris also reassured that mortgage payments are being made and current across the hotel portfolio.
The ridge I & II – Colorado
Both are master-planned communities that are in various stages of development either by Caliber or another developer who has bought pieces of the communities and is developing them. The assets include single-family homes, multi-family units, industrial campuses as well as medical offices, retail and traditional offices.
Caliber owns nine retail assets comprised of 110,000 square feet of space. Chris was happy to say that all the buildings are leased at this time. There has been a lot of demand in this area for craft beer, distillers, and other adult libation shops. This adds another facet to Mesa’s music and art culture. As a result of the growing demand, Caliber is developing 144 apartment units and contributing $8 million in equity. This will be combined with HUD financing at 85% LTV at 3.3% for 40-year fixed amortization. Also leasing the Wells Fargo office building.
Chris, Roy and George concluded with a question-and-answer session. The audience focused on Ridge I and Ridge II in Colorado, as well as the pertinent issues with the development fund. The team was very optimistic about demand in the Johnstown, Colorado area and how the economic trends bolster demand for the various land parcel sales, which will be that catalyst for cash distributions. Chris estimated that a cash distribution from the fund could come around 2022, but it is predicated on how quickly they sell the various land parcels and subsequently pay off the construction loans.
Other questions surrounded CTAF distributions, which have been hindered by some assets that have been affected more by the pandemic. Caliber is still working on obtaining a bridge loan for the hotels, which he estimates should occur in approximately 60 days.
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