On May 14, Caliber executives and investors gathered for the company’s monthly CEO call with Chris Loeffler and Senior Vice President of Business Development, Tom Bade. Together, they answered questions from the crowd, provided company updates and offered expert insight on real estate investing.
In case you missed it, here’s a recap:
Caliber and COVID-19
In response to the pandemic, Caliber has taken advantage of its flexible structure in order to adapt with turbulant conditions. No one knows yet the outcome of COVID-19 , but Caliber’s multiple types of asset classes allow the company to redirect investments into profitable sectors according to market conditions.
“With our more flexible structure,” Loeffler says, “we have the ability to say to our investors, “Hey guys, the market changed due to coronavirus. We thought we wanted to buy hotels. Now we want to buy apartment complexes.’ Our ability to be flexible and buy different types of assets on a discount is going to be a huge competitive advantage going forward.”
Caliber executives also recognize the importance of playing it safe and conserving capital to protect assets. The loan-to-value ratio is 50% or lower on Caliber-owned hotels. In addition, the company has conserved capital from years prior instead of distributing quarterly and received a PPP loan for each hotel. Each of these factors has contributed to Caliber’s success during the pandemic.
“We have more cash sitting in the bank than most of our competitors did when this whole thing started,” Loeffler says. “We have proper positioning with our loans, so we won’t have to face any technical defaults.”
Despite distress in the hospitality market, Bade says there are no plans to sell hotel assets in the near future. With the travel industry is still in flux, there is potential for a swingback as consumers decide to take more risk in the name of resuming normalcy. Business hotels, in particular, are uniquely positioned to serve professionals who need to resume travel out of necessity: “The people who have to travel are going to be the kind of people staying in our hotel assets,” Bade says. Business hotels offer attractive prices to companies who are cutting costs and peace of mind to guests, thanks to stringent sanitation practices. “Hilton has a partnership with Clorox and the Mayo Institute,” Loeffler says, “and they’re cleaning their hotels at a whole other level, inviting three or four layers of comfort and safety [so you know] when you walk into that room that it’s been sanitized. I think I’m going to pick that over an Airbnb.”
Residential Fund Transition
Caliber plans to rebrand its residential fund into a core plus fund, allowing the company to produce assets across a wider span. With 73 million baby boomers retiring, a core plus fund will give Caliber more flexibility to buy different types of income-producing real estate assets while also sending out monthly distributions. Investors can liquidate their investments if they decide not to move forward with the core plus fund. Caliber has no plans to change or modify any of its other funds.
The Ridge Johnstown Contracts
The company’s most profitable project to date, The Ridge Johnstown development, has moved forward with little to no difficulty. The property has not lost any contracts as of yet due to the pandemic and is uniquely positioned for success, thanks to its demographics and proximity to the freeway. Savvy investors are also not seemingly fazed by construction investments during the pandemic.
“Some pretty big buyers with ability to forecast in the future are aggressively continuing to build,” Loeffler says. “They think we’re going to be fine by the time we’re ready to sell these projects we’re building.”
Schedule K-1 Documents Update
Schedule K-1 documents have been issued for all funds except for the Caliber Distressed Real Estate Income Fund and Caliber’s Diversified Opportunity Fund. Both of these funds have more assets compared to the others and require returns for each. Loeffler expects both documents to be released sometime in June.
Reg A+ Offering Update
At the time of the webinar, the Reg A+ offering had raised a total of $790,000 from 94 different investors. With over 2,600 investors still involved in the investment process, Loeffler anticipates that somewhere between 40%-60% of them will buy at the end, bringing in another $4 million.
“We like making money for good people,” Loeffler says. “It’s motivating to know that, after this offering concludes, we’ll have 10,000 shareholders instead of 200. And instead of building the wealth for 800 private clients, we’ll be building the wealth for 11,000 people. That’s awesome. “
The total amount raised has since skyrocketed to more than $1.5 million—nearly double what it was a month ago at the time of the webinar.
Loeffler remains optimistic about Caliber’s continued success and cites the pandemic as an excuse for business professionals to slow down and meditate on creative ways to innovate in the future: “When you give smart people time to think, they can create really amazing things going forward.”