In addition to discussing the forthcoming COVID-19 vaccine, the duo focused on current challenges and victories within the company’s hospitality portfolio, as well as an update on industrial, commercial, multi-family, medical office and other assets.
“It’s really a tale of two halves of our portfolio,” Loeffler says. “Multi-family and self-storage are doing better than 2019, and then you have hospitality and our hotels on the other side. We are selling off lots. Things are moving quickly, and the news from one month ago is not the same today.”
Hospitality Assets: A silver lining
A vaccine for the coronavirus should arrive in time for many of the Valley’s signature annual events, like Waste Management Phoenix Open, the Barrett Jackson Auto Auction and spring training baseball, which will have an impact on Caliber’s airport and other area hotels.
“What does the future look like? Are people going to embrace this vaccine?” Loeffler asked rhetorically. “People are definitely done with COVID and we can achieve herd immunity at 60-plus percent if people take the vaccine starting in February.”
Loeffler said the company has seen an uptick in regional business and leisure event bookings on short notice.
“There is a lot of pent-up demand after isolating for the past nine months,” he says, noting that Caliber’s Sky Harbor Airport properties are well-suited for having out-of-state company teams safely meet for a multi-day retreat. “Employees from California, Utah, and Texas can gather in Phoenix and have that personal interaction. We might book a meeting for 300 people with two weeks notice, and have the facilities to make it happen, while still observing safety protocols.”
On the flip side, the company requires approximately $1.5 million per month to operate and service the debt on its hotels. “If it takes until July (for herd immunity and vaccinations), then we draw from cash reserves instead of investing and seeking distressed properties and opportunities,” Loeffler says.
Fortunately, the company is in active talks with potential institutional investors regarding hospitality holdings, including its new management and investment partner, Highgate. The company expects to firm up details and report those soon.
Additional CEO Call Highlights:
- Caliber would like to see Congress provide liability protection and additional Paycheck Protection Program (PPP) funding as soon as possible. The delays hurt both companies and employees.
- Loeffler reminded investors that the deadline to roll capital gains into the Caliber Tax Advantage Opportunity Zone Fund LP, featuring Qualified Opportunity Zone assets, is Dec. 31, 2020.
- Caliber continues to buy land around its Johnstown, Colo., project before other investors discover the opportunity taking shape there. Caliber is buying at the bargain price of $1-$2 per square-foot.
- The company is steadily rebalancing its portfolio of assets as opportunities arise and reducing the influence of hotels within the overall business.
- Financing for the Tucson Convention Center property is in good shape with 4.4% interest on a 7-year loan.
- Caliber is still working to assume the loan of the Scottsdale Airpark Professional Building.
- Feedback from investors on the new abbreviated format of the call with a Q&A session at the end has been positive.