CaliberCos Inc.
11/13/2025 | Press release | Distributed by Public on 11/13/2025 16:07
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements (unaudited) and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from these forward-looking statements as a result of certain factors. For a complete discussion of such risk factors, see the section entitled "Risk Factors" in our Annual Report on Form 10-K filed with the SEC on March 31, 2025. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in the "Part I - Financial Information," including the related notes to the condensed consolidated financial statements contained therein.
Overview
Over the past 16 years, we have grown into a leading diversified alternative asset management firm, with more than $2.7 billion in Managed Assets, comprised of $0.8 billion of assets under management ("AUM") and $1.9 billion of assets under development ("AUD"). Our primary goal is to drive shareholder value by enhancing the wealth of accredited investor clients seeking to make investments in real and digital assets.
Digital Asset Platform
In August 2025, our Board of Directors approved a new digital asset treasury policy designed to enhance the Company's balance sheet strength, liquidity profile, and long-term growth potential. Under this policy, Caliber intends to allocate a portion of its corporate treasury to digital assets that demonstrate institutional utility and adoption potential, beginning with Chainlink (LINK).
Chainlink is the leading decentralized oracle network that enables smart contracts and traditional systems to securely interact with real-world data. The Company selected LINK as its inaugural digital asset because it represents core infrastructure within the blockchain ecosystem; supporting the growth of tokenization, decentralized finance, and real-world asset integration. Management believes that Chainlink's enterprise adoption, technology maturity, and network resilience make LINK an attractive long-term holding relative to other digital assets at similar stages of adoption.
Since adoption of the policy, Caliber has raised capital through equity issuances and deployed a portion of those proceeds to accumulate LINK tokens as a long-term reserve asset. These holdings are reflected on our balance sheet at fair value as of September 30, 2025. Changes in the fair value of our LINK tokens are reflected within net loss on our condensed consolidated statements of operations for the three and nine months ended September 30, 2025.
The Company has announced that it intends to stake a portion of its LINK holdings once operational and governance requirements are completed. Staking allows participants to commit LINK tokens to support the Chainlink network's data validation and security functions, earning a yield in the form of additional LINK tokens. Staking is a critical part of the Chainlink ecosystem and provides an opportunity for Caliber to generate passive yield on its holdings while contributing to the stability and reliability of the broader network. Management estimates it may earn a yield of 3% to 9% annualized, based upon internal estimates of the potential to Stake the Company's LINK treasury.
In parallel, Caliber is evaluating the potential to operate or participate in Chainlink validator nodes. Validator nodes play a central role in maintaining network consensus and facilitating data integrity. The Company may establish relationships with existing validator operators or develop internal capabilities to support validator participation in the future. Revenues generated from staking or validator operations, if any, would be reinvested to strengthen the Company's digital asset treasury and asset management platform business.
Caliber's movement into digital assets represents a strategic expansion of Caliber's role as an alternative asset manager. Historically focused on real estate and private credit strategies, Caliber now views itself as a diversified alternative asset manager investing in both real assets and digital assets. The Company intends to leverage its capital markets expertise and investment platform to create and sponsor new investment offerings and funds focused on digital assets and blockchain infrastructure. These future offerings could expand Caliber's assets under management (AUM) and generate recurring management and performance fees, consistent with the Company's existing real estate fund model.
Additionally, Caliber plans to utilize blockchain technology within its real estate investment platform to improve operational efficiency and investor accessibility. Specifically, the Company intends to tokenize real-world assets (RWAs), including real estate projects and fund interests, to enable fractional ownership, enhance liquidity, and streamline investor reporting and fund administration. Tokenized offerings could also serve as a new fundraising channel for Caliber, allowing the Company to reach a broader base of global investors through compliant, blockchain-enabled investment vehicles.
The Board and management team view the LINK strategy and broader blockchain initiatives as a natural evolution of Caliber's mission: to enhance the wealth of our accredited investor clients by making alternative investments more accessible, transparent, and profitable for investors. Through the integration of digital assets, blockchain infrastructure, and tokenization technology, Caliber seeks to position itself at the forefront of the convergence between traditional finance (TradFi) and decentralized finance (DeFi).
Private Equity Real Estate Platform
Caliber operates a Private Equity Real Estate (PERE) platform that creates, manages, and services middle-market investment funds, private syndications, and direct investments focused on real estate investment strategies. To build our funds, we market directly to high net worth (HNW) and ultra high net worth (UHNW) investors with Caliber's in-house fundraising team and to registered investment advisors (RIAs) and broker-dealers (BDs) with Caliber's in-house wholesaling team.
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. This category includes projects to be built on undeveloped land and projects to be built and constructed on undeveloped lands, some of which are on land owned by our funds or are under contract to purchase. Completing these development activities may ultimately result in income-producing assets, assets we may sell to third parties, or both.
As of September 30, 2025, we are actively developing 1,776 multifamily units, 697 single family units, 3.7 million square feet of commercial and industrial, and 3.6 million square feet of office and retail. If all of these projects are brought to completion, the total cost capitalized to these projects, which represents total current estimated costs to complete the development and construction of such projects by us or a third party, is $1.9 billion, which we expect would be funded through a combination of undeployed fund cash, third-party equity, project sales, tax credit financing and similar incentives, and secured debt financing.
We strive to 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.
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 the Platform:
Asset Management Revenues
•Organizational & Offering 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.
•Fund management fees are generally based on 1.0% to 1.5% of the unreturned capital contributions in a particular fund and include reimbursement for costs incurred on behalf of the fund, including an allocation of certain overhead costs. These customer contracts require us to provide management services, representing a performance obligation that we satisfy over time. With respect to the Caliber Hospitality Trust, we earn a fund management fee of 0.7% of the Caliber Hospitality Trust's enterprise value and are reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust.
•Financing fees are earned for services we perform 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, we earn fees for guaranteeing certain loans, representing a performance obligation that we satisfy over time.
•Real estate development revenues are generally based on two fee-based contracts, not to exceed 6.0%. 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 our 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, 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. We typically receive 15.0% to 35.0%, of all cash distributions from (i) the operating cash flow of each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of preferred capital contributions; and (ii) the cash flow resulting from the sale or refinance of any real estate assets held by each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of initial preferred capital contributions. Our funds' preferred returns range from 6.0% to 12.0%, typically 6.0% for common equity or 10.0% to 12.0% for preferred equity, which does not participate in profits. 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.
•Caliber were to complete all AUD at September 30, 2025, up through the planned sale of its Managed Assets, the Company estimates it could earn up to $90.5 million in performance allocations, which represents the portion of profits Caliber would be entitled to, presuming the results of each asset's business plan are achieved. These performance allocations, which are also commonly referred to as "carried interest" in the PERE industry, are not included in the Company's balance sheet or profit and loss statements until they are realized via the sale of the asset(s) within the fund Caliber manages and, as the fund's manager, Caliber is entitled to collect the performance allocations. Caliber provides an estimate of the value of the performance allocations as an important point of reference for investors seeking to understand the Company's estimated book value.
Segments
Our chief operating decision maker ("CODM") is the Company's Chief Executive Officer, John C. Loeffler. The CODM assesses revenue, operating expenses and key operating statistics to evaluate performance and allocate resources on a basis that eliminates the impact of the consolidated investment funds (intercompany eliminations required by U.S. GAAP) and noncontrolling interests. Management concluded that the consolidated investment funds do not meet the requirements in ASC 280, Segment Reporting, of operating segments, as our CODM does not review the operating results of these investment funds for the purposes of allocating resources, assessing performance or determining whether additional investments or advances will be made to these funds. The investment funds are consolidated based on the requirement in ASC 810, Consolidation, as we were determined to be the primary beneficiary of each of these variable interest entities since it has the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness that are significant to the individual investment funds.
We were originally founded as Caliber Companies, LLC, an Arizona limited liability company, organized under the laws of Arizona, and commenced operations in January 2009. In November 2014, we reorganized as a Nevada corporation and in June 2018, we reincorporated in the state of Delaware. On our website we make available, free of charge, information about the Company and its' investments. None of the information on our website is deemed to be part of this report.
Trends Affecting Our Business
Our business is driven by trends which affect the following:
1)Capital formation:any trend which increases or decreases investors' knowledge of alternative investments, desire to acquire them, access to acquire them, and knowledge and appreciation of us as a potential provider, will affect our ability to attract and raise new capital. Capital formation also drives investment acquisitions, which contribute to our revenues.
2)Investment acquisition:any trend which increases or decreases the supply of middle-market real estate projects or loans, the accessibility of developments or development incentives, or enhances or detracts from our ability to access those projects will affect our ability to generate revenue. Coincidentally, investment acquisitions, or the rights to acquire an investment, drive capital formation, which acts as a growth engine for the Platform which acts as a growth engine for the Platform.
3)Project execution: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 our ability to generate revenues.
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 September 30, 2025 of $758.1 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. Since our ability to raise new capital into our funds is dependent upon the availability and willingness of investors to direct their investment dollars into our products, our financial performance is sensitive in part to changes in overall economic conditions that affect investment behaviors. The demand from investors is dependent upon the type of asset, the type of return it will generate (current cash flow, long-term capital gains, or both) and the actual return earned by our fund investors relative to other comparable or substitute products. General economic factors and conditions, including the general interest rate environment and unemployment rates, may affect an investor's ability and desire to invest in real estate. For example, a significant interest rate increase could cause a projected rate of return to be insufficient after considering other risk exposures. Additionally, if weakness in the economy emerges and actual or expected default rates increase, investors in our funds may delay or reduce their investments; however, we believe our approach to investing and the capabilities that we manage throughout the deal cycle will continue to offer an attractive value proposition to investors.
While we have had historical successes, there can be no assurance that fundraising for our new and existing funds will experience similar success. If we were unable to raise such capital, we would be unable to deploy such capital into investments, which would materially reduce our revenues and cash flow and adversely affect our financial condition.
We remain confident about our ability to find, identify, and source new investment opportunities that meet the requirements and return profile of our investment funds despite headwinds associated with increased asset valuations, competition and increased overall cost of credit. We continue to identify strategic acquisitions on off-market terms and anticipate that this trend will continue. We are at a point in our investment cycle where some of our funds have begun to exit significant parts of their portfolios while other are approaching a potential harvesting phase. We have complemented these cycles with other newer funds that will maintain management fees while providing continued sources of activity.
Acquiring new assets includes being able to negotiate favorable loans on both a short and long-term basis. We strive to forecast and project our returns using assumptions about, among other things, the types of loans that we might expect the market to extend for a particular type of asset. This becomes more complex when the asset also requires construction financing. We may also need to refinance existing loans that are due to mature. Factors that affect these arrangements include the interest rate and economic environment, the estimated fair value of real property, and the profitability of the asset's historical operations. These capital market conditions may affect the renewal or replacement of our credit agreements, some of which have maturity dates occurring within the next 12 months. Obtaining such financing is not guaranteed and is largely dependent on market conditions and other factors.
The advancement of real estate investment-oriented technology, sometimes referred to as "proptech" offers us the benefit of new and innovative technologies to better execute on capital formation strategies, investment acquisition strategies, and investment management strategies. In recent years, we have added to our technology stack with systems that we believe lead the market in their specific ability to enhance execution on our projects. Several of these technologies seek to incorporate investments in artificial intelligence, which we believe will be a prevailing trend in helping us to enhance our project execution going forward.
Regional conflicts and instability, such as those in Israel and Ukraine, can have significant impacts on global markets and economies and investor perception and tolerance for risk. These conflicts could lead to increased volatility in financial markets, disrupt supply chains, and change investor appetite for investments in alternative assets.
Business Environment
Global markets are experiencing significant volatility driven by concerns over inflation, elevated interest rates, global tariffs, 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 3.0% in September 2025. 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, by 25 basis points in December 2024, and by 25 basis points in September 2025, resulting in a target rate range of 4.00% to 4.25% at September 30, 2025. 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. Historically, inflation has tended to favor new capital formation for our funds, as investors seek opportunities that can hedge against rising costs, such as real estate investments. In addition, the increase in interest rates has put pressure on owners of existing real estate to sell assets as their loans mature. Combined with a shrinking pool of buyers, the commercial and residential real estate markets in our favored geographies are moving away from a seller's market and closer to a buyer's market. It remains to be seen if a stressed or distressed market may emerge, similar to our early years of operations. In both a buyer's market and a stressed or distressed market, we expect our business model to outperform, as our direct access to investor capital and our ability to invest in a variety of asset classes allows us to move with the market and take advantage of potentially attractive prices. For project execution, inflation has increased the cost of nearly all building materials and labor types, increasing the cost of construction and renovation of our funds' assets.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted, resulting in significant and lasting changes to the Qualified Opportunity Zone ("QOZ") program. Most notably, the OBBBA eliminates the program's original sunset date of December 31, 2026, and extends the QOZ program indefinitely. This legislative change could potentially impact our real estate investment strategy, particularly for our funds with existing or future exposure to QOZ-designated assets.
We are actively evaluating the potential long-term implications of the OBBBA, including increased investor demand for QOZ-aligned strategies and shifts in capital deployment across target markets. However, the full scope and operational impact of these changes remain subject to further guidance. Accordingly, there can be no assurance that the legislative changes will lead to improved fund performance or investor outcomes. We will continue to monitor developments and adjust its strategies as appropriate to align with the evolving QOZ landscape.
Key Financial Measures and Indicators
Our key financial measures are discussed in the following pages. Additional information regarding these key financial measures and our other significant accounting policies can be found in Note 2 - Summary of Significant Accounting Policies in the notes to our accompanying condensed consolidated financial statements included herein.
Total Revenue
We generate the majority of our revenue in the form of asset management fee revenues and performance allocations. Included within our consolidated results, are the related revenues of certain consolidated VIEs.
Total Expenses
Total expenses include operating costs, general and administrative, marketing and advertising and depreciation and amortization. Included within our consolidated results, are the related expenses of consolidated VIEs.
Other (Loss) Income
Other (loss) income includes rental revenue, interest expense and interest income.
Results of Operations
Comparison of the Consolidated Results of Operations for the Three Months Ended September 30, 2025 and 2024
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 of certain funds. In particular, DoubleTree by Hilton Tucson Convention Center was not consolidated during the three months ended September 30, 2025. The following table and discussion provide insight into our consolidated results of operations for the three months ended September 30, 2025 and 2024 (in thousands):
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Asset management revenues | $ | 3,486 | $ | 6,530 | $ | (3,044) | (46.6) | % | |||||||||||||||
| Performance allocations | 2 | 175 | (173) | (98.9) | % | ||||||||||||||||||
| Consolidated funds - hospitality revenues | - | 2,494 | (2,494) | (100.0) | % | ||||||||||||||||||
| Consolidated funds - other revenues | 148 | 2,103 | (1,955) | (93.0) | % | ||||||||||||||||||
| Total revenues | 3,636 | 11,302 | (7,666) | (67.8) | % | ||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating costs | 3,251 | 4,592 | (1,341) | (29.2) | % | ||||||||||||||||||
| General and administrative | 1,471 | 1,441 | 30 | 2.1 | % | ||||||||||||||||||
| Marketing and advertising | 151 | 174 | (23) | (13.2) | % | ||||||||||||||||||
| Depreciation and amortization | 160 | 149 | 11 | 7.4 | % | ||||||||||||||||||
| Consolidated funds - hospitality expenses | - | 3,097 | (3,097) | (100.0) | % | ||||||||||||||||||
| Consolidated funds - other expenses | 467 | 975 | (508) | (52.1) | % | ||||||||||||||||||
| Total expenses | 5,500 | 10,428 | (4,928) | (47.3) | % | ||||||||||||||||||
| Change in fair value of digital assets | (677) | - | (677) | 100.0 | % | ||||||||||||||||||
| Other (loss) income, net | (324) | 425 | (749) | (176.2) | % | ||||||||||||||||||
| Interest income | 28 | 51 | (23) | (45.1) | % | ||||||||||||||||||
| Interest expense | (1,876) | (1,349) | (527) | (39.1) | % | ||||||||||||||||||
| Net (loss) income before income taxes | (4,713) | 1 | (4,714) | (471,400.0) | % | ||||||||||||||||||
| Benefit from income taxes | - | - | - | 0.0 | % | ||||||||||||||||||
| Net (loss) income | (4,713) | 1 | (4,714) | (471,400.0) | % | ||||||||||||||||||
| Net loss attributable to noncontrolling interests | (342) | (145) | (197) | (135.9) | % | ||||||||||||||||||
| Net (loss) income attributable to CaliberCos Inc. | $ | (4,371) | $ | 146 | $ | (4,517) | (3,093.8) | % | |||||||||||||||
For the three months ended September 30, 2025 and 2024, total revenues were $3.6 million and $11.3 million, respectively, representing a period-over-period decrease of 67.8%, which was primarily due to a decrease in consolidated fund revenues resulting from the deconsolidation of DT Mesa and CFIF III, which were deconsolidated during the year ended December 31, 2024 and TCC, which was deconsolidated during the three months ended June 30, 2025. The decrease was also due to a decrease in asset management revenues, primarily driven by an decrease in development and construction revenues and fund management revenues. See the Segment Analysis section below in which revenues are presented on a basis that deconsolidates our consolidated funds. As a result, 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 three months ended September 30, 2025 and 2024, total expenses were $5.5 million and $10.4 million, respectively, representing a period-over-period decrease of 47.3%. The decrease was primarily due to the decrease in consolidated fund revenues resulting from the deconsolidation of DT Mesa and CFIF III, which were deconsolidated during the year ended December 31, 2024 and TCC, which was deconsolidated during the three months ended June 30, 2025. The decrease was also due to a decrease in operating costs related to payroll and bonus expenses.
For the three months ended September 30, 2025, unrealized loss on digital assets was $0.7 million. During the three months ended September 30, 2025, we had investments in digital assets resulting in an unrealized loss. There was no comparable activity during the same period in 2024.
For the three months ended September 30, 2025, other loss, net was $0.3 million compared to other income, net of $0.4 million during the three months ended September 30, 2024, representing a period-over-period change of $0.7 million. The change was primarily due to a loss on extinguishment of debt related to the early repayment of a convertible debt agreement, investment impairment charges related to a real estate fund the Platform both invests in and manages, and credit losses related to certain of the Platform's investments during the three months ended September 30, 2025, with no comparable activity during the same period in 2024.
Comparison of the Platform (Unconsolidated) Results of Operations for the Three Months Ended September 30, 2025 and 2024
The following table and discussion provide insight into our unconsolidated results of operations of the Platform for the three months ended September 30, 2025 and 2024 (in thousands). Unconsolidated Platform revenues and expenses are presented on a basis that deconsolidates our consolidated funds (intercompany eliminations) and eliminates noncontrolling interest. As a result, unconsolidated Platform 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 Platform 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 Platform results to the most comparable U.S. GAAP measure.
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Asset management revenues | $ | 3,514 | $ | 7,242 | $ | (3,728) | (51.5) | % | |||||||||||||||
| Performance allocations | 2 | 174 | (172) | (98.9) | % | ||||||||||||||||||
| Total revenues | 3,516 | 7,416 | (3,900) | (52.6) | % | ||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating costs | 3,408 | 4,727 | (1,319) | (27.9) | % | ||||||||||||||||||
| General and administrative | 1,481 | 1,450 | 31 | 2.1 | % | ||||||||||||||||||
| Marketing and advertising | 151 | 175 | (24) | (13.7) | % | ||||||||||||||||||
| Depreciation and amortization | 167 | 145 | 22 | 15.2 | % | ||||||||||||||||||
| Total expenses | 5,207 | 6,497 | (1,290) | (19.9) | % | ||||||||||||||||||
| Unrealized loss on digital assets | (677) | - | (677) | 100.0 | % | ||||||||||||||||||
| Other (loss) income, net | (230) | 526 | (756) | (143.7) | % | ||||||||||||||||||
| Interest income | 28 | 59 | (31) | (52.5) | % | ||||||||||||||||||
| Interest expense | (1,876) | (1,348) | (528) | (39.2) | % | ||||||||||||||||||
| Net (loss) income before income taxes | (4,446) | 156 | (4,602) | (2950.0) | % | ||||||||||||||||||
| Benefit from income taxes | - | - | - | 0.0 | % | ||||||||||||||||||
| Net (loss) income | $ | (4,446) | $ | 156 | $ | (4,602) | (2950.0) | % | |||||||||||||||
For the three months ended September 30, 2025 and 2024, total revenues were $3.5 million and $7.4 million, respectively, representing a period-over-period decrease of 52.6%. The table below (in thousands) compares the revenues earned for providing services under our asset management Platform as described in the Revenue Recognition section of Note 2 - Summary of Significant Accounting Policies for the three months ended September 30, 2025, to the revenues earned for the same period in 2024.
| Three Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | |||||||||||||||||||||||
| Fund management fees | $ | 2,782 | $ | 3,575 | $ | (793) | (22.2) | % | ||||||||||||||||||
| Financing fees | 207 | 464 | (257) | (55.4) | % | |||||||||||||||||||||
| Development and construction fees | 427 | 3,084 | (2,657) | (86.2) | % | |||||||||||||||||||||
| Brokerage fees | 98 | 119 | (21) | (17.6) | % | |||||||||||||||||||||
| Total asset management | 3,514 | 7,242 | (3,728) | (51.5) | % | |||||||||||||||||||||
| Performance allocations | 2 | 174 | (172) | (98.9) | % | |||||||||||||||||||||
| Total unconsolidated Platform revenue | $ | 3,516 | $ | 7,416 | $ | (3,900) | (52.6) | % | ||||||||||||||||||
The decrease in fund management fees is related to a decrease in fund-set up fees as there were no new funds set-up during the three months ended September 30, 2025, partially offset by an increase in asset management fees earned. Fund management fees are based on 1.0% to 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 development and construction fees is primarily due to an decrease in development fees related to fewer pre-construction milestones completed for development activities during the three months ended September 30, 2025 as compared to the same period in 2024.
For the three months ended September 30, 2025 and 2024, total expenses were $5.2 million and $6.5 million, respectively, representing a period-over-period decrease of 19.9%. The decrease was primarily due to a decrease in payroll and bonus expense due to a decrease in employee headcount.
For the three months ended September 30, 2025, unrealized loss on digital assets was $0.7 million. During the three months ended September 30, 2025, we had investments in digital assets resulting in an unrealized loss. There was no comparable activity during the same period in 2024.
During the three months ended September 30, 2025, other loss, net was $0.2 million compared to other income, net of $0.5 million during the three months ended September 30, 2024, representing a period-over-period change of $0.8 million. The change was primarily due to a loss on extinguishment of debt related to the early repayment of a convertible debt agreement, investment impairment charges related to a real estate fund the Platform both invests in and manages, and credit losses related to certain of the Platform's investments during the three months ended September 30, 2025, with comparable activity during the same period in 2024.
For the three months ended September 30, 2025 and 2024, interest expense was $1.9 million and $1.3 million, respectively. The increase was primarily due to an increase in expenses related to short-term operating loans during the three months ended September 30, 2025, as compared to the same period in 2024.
Comparison of the Consolidated Results of Operations for the Nine Months Ended September 30, 2025 and 2024
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 of certain funds. In particular, we deconsolidated DoubleTree by Hilton Tucson Convention Center during the nine months ended September 30, 2025. Additionally, we deconsolidated Caliber Hospitality, LP, the Caliber Hospitality Trust, and their consolidated subsidiaries, Elliot and DT Mesa during the nine months ended September 30, 2024. The following table and discussion provide insight into our consolidated results of operations for the nine months ended September 30, 2025 and 2024 (in thousands):
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Asset management revenues | $ | 10,428 | $ | 12,926 | $ | (2,498) | (19.3) | % | |||||||||||||||
| Performance allocations | 25 | 357 | (332) | (93.0) | % | ||||||||||||||||||
| Consolidated funds - hospitality revenues | 5,057 | 23,533 | (18,476) | (78.5) | % | ||||||||||||||||||
| Consolidated funds - other revenues | 460 | 5,616 | (5,156) | (91.8) | % | ||||||||||||||||||
| Total revenues | 15,970 | 42,432 | (26,462) | (62.4) | % | ||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating costs | 10,966 | 15,389 | (4,423) | (28.7) | % | ||||||||||||||||||
| General and administrative | 4,225 | 5,460 | (1,235) | (22.6) | % | ||||||||||||||||||
| Marketing and advertising | 463 | 507 | (44) | (8.7) | % | ||||||||||||||||||
| Depreciation and amortization | 483 | 439 | 44 | 10.0 | % | ||||||||||||||||||
| Consolidated funds - hospitality expenses | 4,743 | 23,191 | (18,448) | (79.5) | % | ||||||||||||||||||
| Consolidated funds - other expenses | 1,391 | 5,405 | (4,014) | (74.3) | % | ||||||||||||||||||
| Total expenses | 22,271 | 50,391 | (28,120) | (55.8) | % | ||||||||||||||||||
| Change in fair value of digital assets | (677) | - | (677) | 100.0 | % | ||||||||||||||||||
| Other (loss) income, net | (2,854) | 1,015 | (3,869) | (381.2) | % | ||||||||||||||||||
| Interest income | 90 | 325 | (235) | (72.3) | % | ||||||||||||||||||
| Interest expense | (5,225) | (3,958) | (1,267) | (32.0) | % | ||||||||||||||||||
| Net loss before income taxes | (14,967) | (10,577) | (4,390) | (41.5) | % | ||||||||||||||||||
| Benefit from income taxes | - | - | - | 0.0 | % | ||||||||||||||||||
| Net loss | (14,967) | (10,577) | (4,390) | (41.5) | % | ||||||||||||||||||
| Net loss attributable to noncontrolling interests | (890) | (2,188) | 1,298 | 59.3 | % | ||||||||||||||||||
| Net loss attributable to CaliberCos Inc. | $ | (14,077) | $ | (8,389) | $ | (5,688) | (67.8) | % | |||||||||||||||
For the nine months ended September 30, 2025 and 2024, total revenues were $16.0 million and $42.4 million, respectively, representing a period-over-period decrease of 62.4%, which was primarily due to a decrease in consolidated fund revenues resulting from the deconsolidation of Caliber Hospitality Trust and Caliber Hospitality, LP and its consolidated subsidiaries, Elliot, DT Mesa, and CFIF III, which were deconsolidated during the year ended December 31, 2024 and TCC, which was deconsolidated during the nine months ended September 30, 2025. See the Segment Analysis section below in which revenues are presented on a basis that deconsolidates our consolidated funds. As a result, 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 nine months ended September 30, 2025 and 2024, total expenses were $22.3 million and $50.4 million, respectively, representing a period-over-period decrease of 55.8%. The decrease was primarily due to a decrease in consolidated fund revenues resulting from the deconsolidation of Caliber Hospitality Trust and Caliber Hospitality, LP and its consolidated subsidiaries, Elliot, DT Mesa, and CFIF III, which were deconsolidated during the year ended December 31, 2024 and TCC, which was deconsolidated during the nine months ended September 30, 2025. The decrease was also related to a decrease in operating costs related to payroll and bonus expenses.
For the nine months ended September 30, 2025, unrealized loss on digital assets was $0.7 million. During the nine months ended September 30, 2025, we had investments in digital assets resulting in an unrealized loss. There was no comparable activity during the same period in 2024.
For the nine months ended September 30, 2025, other loss, net was $2.9 million compared to other income, net of $1.0 million during the nine months ended September 30, 2024, representing a period-over-period change of $3.9 million. The change was primarily due to a loss on extinguishment of debt related to the early repayment of a convertible debt agreement, investment impairment charges related to a real estate fund the Platform both invests in and manages, and credit losses related to certain of the Platform's investment during the nine months ended September 30, 2025, with no comparable activity during the same period in 2024.
Comparison of the Platform (Unconsolidated) Results of Operations for the Nine Months Ended September 30, 2025 and 2024
The following table and discussion provide insight into our unconsolidated results of operations of the Platform for the nine months ended September 30, 2025 and 2024 (in thousands). See the Non-GAAP Measures section below for reconciliations of the unconsolidated Platform results to the most comparable U.S. GAAP measure.
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Asset management revenues | $ | 11,159 | $ | 15,976 | $ | (4,817) | (30.2) | % | |||||||||||||||
| Performance allocations | 32 | 378 | (346) | (91.5) | % | ||||||||||||||||||
| Total revenues | 11,191 | 16,354 | (5,163) | (31.6) | % | ||||||||||||||||||
| check | |||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating costs | 11,417 | 15,971 | (4,554) | (28.5) | % | ||||||||||||||||||
| General and administrative | 4,256 | 5,490 | (1,234) | (22.5) | % | ||||||||||||||||||
| Marketing and advertising | 463 | 508 | (45) | (8.9) | % | ||||||||||||||||||
| Depreciation and amortization | 503 | 447 | 56 | 12.5 | % | ||||||||||||||||||
| Total expenses | 16,639 | 22,416 | (5,777) | (25.8) | % | ||||||||||||||||||
| Unrealized loss on digital assets | (677) | - | (677) | 100.0 | % | ||||||||||||||||||
| Other (loss) income, net | (2,238) | 1,468 | (3,706) | (252.5) | % | ||||||||||||||||||
| Interest income | 91 | 514 | (423) | (82.3) | % | ||||||||||||||||||
| Interest expense | (5,225) | (3,958) | (1,267) | (32.0) | % | ||||||||||||||||||
| Net loss before income taxes | (13,497) | (8,038) | (5,459) | (67.9) | % | ||||||||||||||||||
| Benefit from income taxes | - | - | - | 0.0 | % | ||||||||||||||||||
| Net loss | $ | (13,497) | $ | (8,038) | $ | (5,459) | (67.9) | % | |||||||||||||||
For the nine months ended September 30, 2025 and 2024, total revenues were $11.2 million and $16.4 million, respectively, representing a period-over-period decrease of 31.6%. The table below (in thousands) compares the revenues earned for providing services under our asset management Platform as described in the Revenue Recognition section of Note 2 - Summary of
Significant Accounting Policies for the nine months ended September 30, 2025, to the revenues earned for the same period in 2024.
| Nine Months Ended September 30, | ||||||||||||||||||||||||||
| 2025 | 2024 | $ Change | % Change | |||||||||||||||||||||||
| Fund management fees | $ | 8,265 | 9,474 | $ | (1,209) | (12.8) | % | |||||||||||||||||||
| Financing fees | 573 | 616 | (43) | (7.0) | % | |||||||||||||||||||||
| Development and construction fees | 1,934 | 5,066 | (3,132) | (61.8) | % | |||||||||||||||||||||
| Brokerage fees | 387 | 820 | (433) | (52.8) | % | |||||||||||||||||||||
| Total asset management | 11,159 | 15,976 | (4,817) | (30.2) | % | |||||||||||||||||||||
| Performance allocations | 32 | 378 | (346) | (91.5) | % | |||||||||||||||||||||
| Total unconsolidated Platform revenue | $ | 11,191 | $ | 16,354 | $ | (5,163) | (31.6) | % | ||||||||||||||||||
The decrease in fund management fees is related to a decrease in fund-set up fees as there were no new funds set-up during the nine months ended September 30, 2025, partially offset by an increase in asset management fees earned. Fund management fees are based on 1.0% to 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 development and construction fees is primarily due to a decrease in development fees related to fewer pre-construction milestones completed for development activities during the nine months ended September 30, 2025, as compared to the same period in 2024.
For the nine months ended September 30, 2025 and 2024, total expenses were $16.6 million and $22.4 million, respectively, representing a period-over-period decrease of 25.8%. The decrease was primarily due to a decrease in payroll and bonus expense due to a decrease in employee headcount.
For the nine months ended September 30, 2025, unrealized loss on digital assets was $0.7 million. During the nine months ended September 30, 2025, we had investments in digital assets resulting in an unrealized loss. There was no comparable activity during the same period in 2024.
During the nine months ended September 30, 2025, other loss, net was $2.2 million compared to other income, net of $1.5 million during the nine months ended September 30, 2024, representing a period-over-period change of $3.7 million. The change was primarily due to a loss on extinguishment of debt related to the early repayment of a convertible debt agreement, investment impairment charges related to a real estate fund the Platform both invests in and manages, and credit losses related to certain of the Platform's investment during the nine months ended September 30, 2025, with no comparable activity during the same period in 2024.
For the nine months ended September 30, 2025 and 2024, interest expense was $5.2 million and $4.0 million, respectively. The increase was primarily due to an increase in expenses related to short-term operating loans during the nine months ended September 30, 2025, as compared to the same period in 2024.
Balance Sheets - Asset Management Platform (Unconsolidated)
The following table and discussion provide insight into our unconsolidated balance sheets of the asset management Platform as of September 30, 2025 and December 31, 2024 (in thousands). 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 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.
| September 30, 2025 | December 31, 2024 | |||||||||||||
| (in thousands) | ||||||||||||||
| Assets | ||||||||||||||
| Cash | $ | 10,886 | $ | 1,766 | ||||||||||
| Restricted cash | 2,252 | 2,582 | ||||||||||||
| Real estate investments, net | 22,050 | 21,782 | ||||||||||||
| Digital assets | 9,965 | - | ||||||||||||
| Notes receivable - related parties | 2,605 | 230 | ||||||||||||
| Due from related parties | 8,725 | 11,143 | ||||||||||||
| Investments in unconsolidated entities | 11,928 | 16,061 | ||||||||||||
| Operating lease - right of use assets | 3,768 | 4,042 | ||||||||||||
| Other | 2,921 | (529) | ||||||||||||
| Total assets | $ | 75,100 | $ | 57,077 | ||||||||||
| Liabilities | ||||||||||||||
| Notes payable, net | $ | 48,678 | $ | 50,450 | ||||||||||
| Accounts payable and accrued expenses | 9,068 | 9,580 | ||||||||||||
| Redeemable preferred stock | 3,200 | - | ||||||||||||
| Due to related parties | 127 | 313 | ||||||||||||
| Operating lease liabilities | 4,188 | 4,360 | ||||||||||||
| Other | 931 | 818 | ||||||||||||
| Total liabilities | 66,192 | 65,521 | ||||||||||||
| Stockholders' (Deficit) Equity | ||||||||||||||
| Preferred stock - Series A | - | - | ||||||||||||
| Preferred stock - Series B | - | - | ||||||||||||
| Common stock | 5 | 1 | ||||||||||||
| Paid-in capital | 72,396 | 41,552 | ||||||||||||
| Accumulated deficit | (63,493) | (49,997) | ||||||||||||
| Total stockholders' (deficit) equity | 8,908 | (8,444) | ||||||||||||
| Total liabilities and stockholders' (deficit) equity | $ | 75,100 | $ | 57,077 | ||||||||||
Investment Valuations
The investments that are held by our funds are generally considered to be illiquid and have no readily ascertainable market value. 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 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. 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 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.
A unique feature of our funds is the discretion given to our management team to decide when to sell assets and when to hold them. We believe this discretion allows us to avoid selling properties that, while their business plan may have matured, the market will not pay an attractive price in the current environment. Avoiding selling at a time of disruption, such as all of 2020, is critical to preserving the value of our assets, our carried interest, our ongoing revenues, and our clients' capital. While this is management's expectation, there can be no assurance these outcomes will occur.
Assets Under Management
AUM refers to the assets we manage or sponsor. We monitor two types of information with regard to our AUM:
i.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. Our fund management fees are based on a percentage of managed capital or a percentage of assets under management, and monitoring the change and composition of managed capital provides relevant data points for our management to further calculate and predict future earnings.
ii.Fair Value ("FV") AUM - we define this as the aggregate fair value of the real estate assets we manage and from which we derive management fees, performance revenues and other fees and expense reimbursements. We estimate the value of these assets quarterly to help make sale and hold decisions and to evaluate whether an existing asset would benefit from refinancing or recapitalization. This also gives us insight into the value of our carried interest at any point in time. We also utilize FV AUM to predict the percentage of our portfolio which may need development services in a given year, fund management services (such as refinance), and brokerage services. As we control the decision to hire for these services, our service income is generally predictable based upon our current portfolio AUM and our expectations for AUM growth in the year forecasted. As of September 30, 2025, we had total FV AUM of approximately $797.0 million.
Although we believe we are utilizing generally accepted methodologies for our calculation of Managed Capital and FV AUM, it may differ from our competitors, thereby making these metrics non-comparable to our competitors.
Managed Capital
The table below summarizes the activity of the managed capital for the nine months ended September 30, 2025 (in thousands):
| Managed Capital | ||||||||
|
Balance as of December 31, 2024
|
$ | 492,542 | ||||||
| Originations | 2,990 | |||||||
| Return of capital | (315) | |||||||
|
Balance as of March 31, 2025
|
495,217 | |||||||
| Originations | 4,226 | |||||||
| Return of capital | (876) | |||||||
|
Balance as of June 30, 2025
|
498,567 | |||||||
| Originations | 8,086 | |||||||
| Return of capital | (664) | |||||||
|
Balances as of September 30, 2025
|
$ | 505,989 | ||||||
The table below summarizes the activity of the managed capital for the nine months ended September 30, 2024 (in thousands):
| Managed Capital | ||||||||
|
Balance as of December 31, 2023
|
$ | 437,625 | ||||||
| Originations | 19,099 | |||||||
| Return of capital | (2,819) | |||||||
|
Balance as of March 31, 2024
|
453,905 | |||||||
| Originations | 18,936 | |||||||
| Return of capital | (3,041) | |||||||
|
Balance as of June 30, 2024
|
469,800 | |||||||
| Originations | 23,372 | |||||||
| Return of capital | (7,900) | |||||||
|
Balances as of September 30, 2024
|
$ | 485,272 | ||||||
The following table summarizes managed capital for our investment fund portfolios as of September 30, 2025 and December 31, 2024 (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||
| Real Estate | |||||||||||
| Hospitality | $ | 49,289 | $ | 49,260 | |||||||
|
Caliber Hospitality Trust(1)
|
97,037 | 97,414 | |||||||||
| Residential | 101,912 | 96,687 | |||||||||
| Commercial | 178,018 | 170,858 | |||||||||
|
Total Real Estate(2)
|
426,256 | 414,219 | |||||||||
|
Credit(3)
|
75,691 | 72,351 | |||||||||
|
Other(4)
|
4,042 | 5,972 | |||||||||
| Total | $ | 505,989 | $ | 492,542 | |||||||
___________________________________________
(1)We earn a fund management fee of 0.70% of the Caliber Hospitality Trust's enterprise value and are reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust.
(2)Beginning during the year ended December 31, 2023, we include capital raised from our investors through corporate note issuances that was further invested in our funds in Managed Capital. As of September 30, 2025, and December 31, 2024, we had invested $11.9 million and $20.4 million, respectively, in our funds.
(3)Credit managed capital represents loans made to our investment funds by us and our diversified funds. As of September 30, 2025 and December 31, 2024, we had loaned $3.3 million to our funds.
(4)Other managed capital represents undeployed capital held in our diversified funds.
Managed capital activity for our hospitality investment funds and the Caliber Hospitality Trust was effectively flat for the nine months ended September 30, 2025.
Managed capital for our residential investment funds increased by $5.2 million during the nine months ended September 30, 2025, due to: (i) $4.8 million in capital raised into our residential assets, and (ii) $1.2 million contributed by our diversified funds offset by $0.8 million in return of capital.
Managed capital for our commercial investment funds increased by $7.2 million during the nine months ended September 30, 2025, due to: (i) $4.8 million in capital raised into our commercial assets offset by $0.2 million in return of capital and (ii) $3.2 million contributed by our diversified funds offset by $0.6 million in return of capital. The scope of investments included tenant improvements and land development.
During the nine months ended September 30, 2025, our diversified funds had $75.7 million invested in the form of notes receivable with our various real estate investments. We had $3.3 million deployed directly into our various real estate investments in the form of notes receivable.
As of September 30, 2025, we held $4.0 million of other managed capital, which included a $3.1 million private equity investment in a local start-up business and $1.0 million of undeployed cash and pursuit costs.
FV AUM
The table below details the activities that had an impact on our FV AUM, during the nine months ended September 30, 2025 (in thousands):
|
FV AUM
|
|||||
|
Balances as of December 31, 2024
|
$ | 794,923 | |||
|
Assets acquired
|
10,300 | ||||
| Construction and net market appreciation | 25,800 | ||||
|
Credit(2)
|
379 | ||||
|
Other(3)
|
(644) | ||||
|
Balances as of March 31, 2025
|
830,758 | ||||
| Construction and net market depreciation | (25,313) | ||||
| Assets sold | (1,487) | ||||
|
Credit(2)
|
627 | ||||
|
Other(3)
|
(1,409) | ||||
| Balances as of June 30, 2025 | 803,176 | ||||
| Construction and net market depreciation | (6,683) | ||||
| Assets sold | (1,917) | ||||
|
Credit(2)
|
2,334 | ||||
|
Other(3)
|
123 | ||||
| Balances as of September 30, 2025 | $ | 797,033 | |||
The table below details the activities that had an impact on our FV AUM, during the nine months ended September 30, 2024(in thousands):
|
FV AUM
|
|||||
| Balances as of December 31, 2023 | $ | 741,190 | |||
| CHT contribution | 29,900 | ||||
| Construction and net market appreciation | 10,971 | ||||
|
Assets sold(1)
|
(12,771) | ||||
|
Credit(2)
|
(781) | ||||
|
Other(3)
|
(1,771) | ||||
| Balances as of March 31, 2024 | 766,738 | ||||
|
Assets acquired(4)
|
14,000 | ||||
| Construction and net market appreciation | 27,994 | ||||
|
Assets sold or disposed(1)
|
(22,994) | ||||
|
Credit(2)
|
(12,835) | ||||
|
Other(3)
|
310 | ||||
| Balances as of June 30, 2024 | 773,213 | ||||
|
Assets acquired(1)
|
20,590 | ||||
| Construction and net market appreciation | 11,910 | ||||
|
Credit(2)
|
(431) | ||||
|
Other(3)
|
1,679 | ||||
| Balances as of September 30, 2024 | $ | 806,961 | |||
The following table summarizes FV AUM of our investment fund portfolios as of September 30, 2025 and December 31, 2024 (in thousands):
| September 30, 2025 | December 31, 2024 | ||||||||||
| Real Estate | |||||||||||
| Hospitality | $ | 65,400 | $ | 68,500 | |||||||
| Caliber Hospitality Trust | 203,500 | 236,800 | |||||||||
| Residential | 168,700 | 161,700 | |||||||||
| Commercial | 279,700 | 249,600 | |||||||||
| Total Real Estate | 717,300 | 716,600 | |||||||||
|
Credit(2)
|
75,691 | 72,351 | |||||||||
|
Other(3)
|
4,042 | 5,972 | |||||||||
| Total | $ | 797,033 | $ | 794,923 | |||||||
___________________________________________
(1)Assets sold during the nine months ended September 30, 2024 include a commercial asset, lot sales related to two development assets in Colorado, and one home from our residential fund.
(2)Credit FV AUM represents loans made to our investment funds by our diversified credit fund.
(3)Other FV AUM represents undeployed capital held in our diversified funds.
(4)Assets acquired during the nine months ended September 30, 2024 include land for one commercial asset in Colorado.
Assets Under Development
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. This category includes projects to be built on undeveloped land and projects to be built and constructed on undeveloped lands, which are not yet owned by our funds. Completing these development activities may ultimately result in income-producing assets, assets we may sell to third parties, or both. 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 September 30, 2025, up through sale, we estimate we could earn up to $90.5 million in performance allocations. As of September 30, 2025, we are actively developing 1,776 multifamily units, 697 single family units, 3.7 million square feet of commercial and industrial, and 3.6 million square feet of office and retail. If all of these projects are brought to completion, the total cost capitalized to these projects, which represents total current estimated costs to complete the development and
construction of such projects by us or a third party, is $1.9 billion, which we expect would be funded through a combination of undeployed fund cash, third-party equity, project sales, tax credit financing and similar incentives, and secured debt financing. We are under no obligation to complete these projects and may dispose of any such assets at any time. There can be no assurance that AUD will ultimately be developed or constructed because of the nature of the cost of the approval and development process and market demand for a particular use. In addition, the mix of residential and commercial assets under development may change prior to final development. The development of these assets will require significant additional financing or other sources of funding which may not be available.
Non-GAAP Measures
We use non-GAAP financial measures to evaluate operating performance, identify trends, formulate financial projections, make strategic decisions, and for other discretionary purposes. We believe that these measures enhance the understanding of ongoing operations and comparability of current results to prior periods and may be useful for investors to analyze our financial performance because theyprovide investors a view of the performance attributable to us. When analyzing our operating performance, investors should use these measures in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with U.S. GAAP. Our presentation of non-GAAP measures may not be comparable to similarly identified measures of other companies because not all companies use the same calculations. 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 our 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 us because it communicates performance of us that would be most useful for understanding the value of CWD.
Fee-Related Earnings and Related Components
Fee-Related Earnings is a supplemental non-GAAP performance measure used to assess our ability to generate profits from fee-based revenues focusing on whether our core revenue streams are sufficient to cover our core operating expenses. Fee-Related Earnings represents our net income (loss) before income taxes adjusted to exclude depreciation and amortization, stock-based compensation, interest expense and extraordinary or non-recurring revenue and expenses, including performance allocation revenue and gain (loss) on extinguishment of debt, public registration direct costs related to aborted or delayed offerings and our Reg A+ offering, litigation settlements, and expenses recorded to earnings relating to investment deals which were abandoned or closed. Fee-Related Earnings is presented 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 CaliberCos Inc. and is consistent with performance models and analysis used by management.
Distributable Earnings
Distributable Earnings is a supplemental non-GAAP performance measure equal to Fee-Related Earnings plus performance allocation revenue and less interest expenses and provision for income taxes. We believe that Distributable Earnings can be useful as a supplemental performance measure to our U.S. GAAP results assessing the amount of earnings available for distribution.
Platform Earnings
Platform Earnings represents the performance of our 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 our Distributable Earnings adjusted for interest expense, 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.
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, 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.
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. 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.
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 EBITDAfor the three and nine months ended September 30, 2025 and 2024 (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net (loss) income attributable to CaliberCos Inc. | $ | (4,371) | $ | 146 | $ | (14,077) | $ | (8,389) | |||||||||||||||
| Net loss attributable to noncontrolling interests | (342) | (145) | (890) | (2,188) | |||||||||||||||||||
| Net (loss) income | (4,713) | 1 | (14,967) | (10,577) | |||||||||||||||||||
| Provision for income taxes | - | - | - | - | |||||||||||||||||||
| Net (loss) income before income taxes | (4,713) | 1 | (14,967) | (10,577) | |||||||||||||||||||
| Depreciation and amortization | 167 | 145 | 503 | 447 | |||||||||||||||||||
| Consolidated funds' impact on fee-related earnings | 173 | 45 | 853 | 1,897 | |||||||||||||||||||
| Stock-based compensation | 332 | 738 | 1,362 | 1,722 | |||||||||||||||||||
| Severance | 593 | 25 | 1,098 | 203 | |||||||||||||||||||
| Performance allocations | (2) | (175) | (25) | (357) | |||||||||||||||||||
| Other income, net | 94 | (425) | (323) | (1,015) | |||||||||||||||||||
| Investments impairment | 102 | - | 2,418 | - | |||||||||||||||||||
| Unrealized loss on digital assets | 677 | - | 677 | - | |||||||||||||||||||
| Bad debt expense | 35 | - | 144 | - | |||||||||||||||||||
| Interest expense, net | 1,848 | 1,289 | 5,134 | 3,444 | |||||||||||||||||||
| Fee-Related Earnings | (694) | 1,643 | (3,126) | (4,236) | |||||||||||||||||||
| Performance allocations | 2 | 175 | 25 | 357 | |||||||||||||||||||
| Interest expense, net | (1,848) | (1,289) | (5,134) | (3,444) | |||||||||||||||||||
| Provision for income taxes | - | - | - | - | |||||||||||||||||||
| Distributable Earnings | (2,540) | 529 | (8,235) | (7,323) | |||||||||||||||||||
| Interest expense | 1,876 | 1,349 | 5,225 | 3,958 | |||||||||||||||||||
| Other income, net | (94) | 425 | 323 | 1,015 | |||||||||||||||||||
| Provision for income taxes | - | - | - | - | |||||||||||||||||||
| Consolidated funds' impact on Caliber Adjusted EBITDA | 93 | 109 | 616 | 642 | |||||||||||||||||||
| Platform Adjusted EBITDA | (665) | 2,412 | (2,071) | (1,708) | |||||||||||||||||||
| Consolidated funds' EBITDA Adjustments | 201 | 1,836 | 1,522 | 7,177 | |||||||||||||||||||
| Consolidated Adjusted EBITDA | $ | (464) | $ | 4,248 | $ | (549) | $ | 5,469 | |||||||||||||||
All share and per share amounts in the Platform and Consolidated, basic and diluted earnings per share calculations below have been effected for the Reverse Stock Split, retroactively, for all periods presented.
The following tables present a reconciliation of Platform revenues, expenses and net income to the most comparable U.S. GAAP measure for the three and nine months ended September 30, 2025 and 2024 (in thousands):
| Three Months Ended September 30, 2025 | |||||||||||||||||
| Platform | Impact of Consolidated Funds | Consolidated | |||||||||||||||
| Revenues | |||||||||||||||||
| Asset management revenues | $ | 3,514 | $ | (28) | $ | 3,486 | |||||||||||
| Performance allocations | 2 | - | 2 | ||||||||||||||
| Consolidated funds - other revenues | - | 148 | 148 | ||||||||||||||
| Total revenues | 3,516 | 120 | 3,636 | ||||||||||||||
| Expenses | |||||||||||||||||
| Operating costs | 3,408 | (157) | 3,251 | ||||||||||||||
| General and administrative | 1,481 | (10) | 1,471 | ||||||||||||||
| Marketing and advertising | 151 | - | 151 | ||||||||||||||
| Depreciation and amortization | 167 | (7) | 160 | ||||||||||||||
|
Consolidated funds - other expenses
|
- | 467 | 467 | ||||||||||||||
| Total expenses | 5,207 | 293 | 5,500 | ||||||||||||||
| Unrealized loss on digital assets | (677) | - | (677) | ||||||||||||||
| Other loss, net | (230) | (94) | (324) | ||||||||||||||
| Interest income | 28 | - | 28 | ||||||||||||||
| Interest expense | (1,876) | - | (1,876) | ||||||||||||||
| Net loss before income taxes | (4,446) | (267) | (4,713) | ||||||||||||||
| Provision for income taxes | - | - | - | ||||||||||||||
| Net loss | (4,446) | (267) | (4,713) | ||||||||||||||
| Net loss attributable to noncontrolling interests | - | (342) | (342) | ||||||||||||||
| Net loss attributable to CaliberCos Inc. | $ | (4,446) | $ | 75 | $ | (4,371) | |||||||||||
| Basic and diluted Platform loss per share | $ | (1.70) | $ | (1.65) | |||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic and diluted | 2,615 | 2,615 | |||||||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||
| Platform | Impact of Consolidated Funds | Consolidated | |||||||||||||||
| Revenues | |||||||||||||||||
| Asset management revenues | $ | 11,159 | $ | (731) | $ | 10,428 | |||||||||||
| Performance allocations | 32 | (7) | 25 | ||||||||||||||
| Consolidated funds - hospitality revenues | - | 5,057 | 5,057 | ||||||||||||||
| Consolidated funds - other revenues | - | 460 | 460 | ||||||||||||||
| Total revenues | 11,191 | 4,779 | 15,970 | ||||||||||||||
| Expenses | |||||||||||||||||
| Operating costs | 11,417 | (451) | 10,966 | ||||||||||||||
| General and administrative | 4,256 | (31) | 4,225 | ||||||||||||||
| Marketing and advertising | 463 | - | 463 | ||||||||||||||
| Depreciation and amortization | 503 | (20) | 483 | ||||||||||||||
|
Consolidated funds - hospitality expenses
|
- | 4,743 | 4,743 | ||||||||||||||
|
Consolidated funds - other expenses
|
- | 1,391 | 1,391 | ||||||||||||||
| Total expenses | 16,639 | 5,632 | 22,271 | ||||||||||||||
| Unrealized loss on digital assets | (677) | - | (677) | ||||||||||||||
| Other loss, net | (2,238) | (616) | (2,854) | ||||||||||||||
| Interest income | 91 | (1) | 90 | ||||||||||||||
| Interest expense | (5,225) | - | (5,225) | ||||||||||||||
| Net loss before income taxes | (13,497) | (1,470) | (14,967) | ||||||||||||||
| Provision for income taxes | - | - | - | ||||||||||||||
| Net loss | (13,497) | (1,470) | (14,967) | ||||||||||||||
| Net loss attributable to noncontrolling interests | - | (890) | (890) | ||||||||||||||
| Net loss attributable to CaliberCos Inc. | $ | (13,497) | $ | (580) | $ | (14,077) | |||||||||||
| Basic and diluted Platform loss per share | $ | (8.01) | $ | (8.31) | |||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic and diluted | 1,685 | 1,685 | |||||||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||
| Platform | Impact of Consolidated Funds | Consolidated | |||||||||||||||
| Revenues | |||||||||||||||||
| Asset management | $ | 7,242 | $ | (712) | $ | 6,530 | |||||||||||
| Performance allocations | 174 | 1 | 175 | ||||||||||||||
| Consolidated funds - hospitality revenue | - | 2,494 | 2,494 | ||||||||||||||
| Consolidated funds - other revenue | - | 2,103 | 2,103 | ||||||||||||||
| Total revenues | 7,416 | 3,886 | 11,302 | ||||||||||||||
| Expenses | |||||||||||||||||
| Operating costs | 4,727 | (135) | 4,592 | ||||||||||||||
| General and administrative | 1,450 | (9) | 1,441 | ||||||||||||||
| Marketing and advertising | 175 | (1) | 174 | ||||||||||||||
| Depreciation and amortization | 145 | 4 | 149 | ||||||||||||||
| Consolidated funds - hospitality expenses | - | 3,097 | 3,097 | ||||||||||||||
| Consolidated funds - other expenses | - | 975 | 975 | ||||||||||||||
| Total expenses | 6,497 | 3,931 | 10,428 | ||||||||||||||
| Other income (loss), net | 526 | (101) | 425 | ||||||||||||||
| Interest income | 59 | (8) | 51 | ||||||||||||||
| Interest expense | (1,348) | (1) | (1,349) | ||||||||||||||
| Net income (loss) before income taxes | 156 | (155) | 1 | ||||||||||||||
| Provision for income taxes | - | - | - | ||||||||||||||
| Net income (loss) | 156 | (155) | 1 | ||||||||||||||
| Net loss attributable to noncontrolling interests | - | (145) | (145) | ||||||||||||||
| Net income (loss) attributable to CaliberCos Inc. | $ | 156 | $ | (10) | $ | 146 | |||||||||||
| Basic Platform income per share | $ | 0.14 | $ | 0.15 | |||||||||||||
| Diluted Platform income per share | $ | 0.11 | $ | 0.12 | |||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 1,107 | 1,107 | |||||||||||||||
| Diluted | 1,404 | 1,404 | |||||||||||||||
| Nine Months Ended September 30, 2024 | |||||||||||||||||
| Platform | Impact of Consolidated Funds | Consolidated | |||||||||||||||
| Revenues | |||||||||||||||||
| Asset management | $ | 15,976 | $ | (3,050) | $ | 12,926 | |||||||||||
| Performance allocations | 378 | (21) | 357 | ||||||||||||||
| Consolidated funds - hospitality revenue | - | 23,533 | 23,533 | ||||||||||||||
| Consolidated funds - other revenue | - | 5,616 | 5,616 | ||||||||||||||
| Total revenues | 16,354 | 26,078 | 42,432 | ||||||||||||||
| Expenses | |||||||||||||||||
| Operating costs | 15,971 | (582) | 15,389 | ||||||||||||||
| General and administrative | 5,490 | (30) | 5,460 | ||||||||||||||
| Marketing and advertising | 508 | (1) | 507 | ||||||||||||||
| Depreciation and amortization | 447 | (8) | 439 | ||||||||||||||
| Consolidated funds - hospitality expenses | - | 23,191 | 23,191 | ||||||||||||||
| Consolidated funds - other expenses | - | 5,405 | 5,405 | ||||||||||||||
| Total expenses | 22,416 | 27,975 | 50,391 | ||||||||||||||
| Other income (loss), net | 1,468 | (453) | 1,015 | ||||||||||||||
| Interest income | 514 | (189) | 325 | ||||||||||||||
| Interest expense | (3,958) | - | (3,958) | ||||||||||||||
| Net loss before income taxes | (8,038) | (2,539) | (10,577) | ||||||||||||||
| Provision for income taxes | - | - | - | ||||||||||||||
| Net loss | (8,038) | (2,539) | (10,577) | ||||||||||||||
| Net loss attributable to noncontrolling interests | - | (2,188) | (2,188) | ||||||||||||||
| Net loss attributable to CaliberCos Inc. | $ | (8,038) | $ | (351) | $ | (8,389) | |||||||||||
| Basic and diluted Platform loss per share | $ | (7.36) | $ | (7.62) | |||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic and diluted | 1,092 | 1,092 | |||||||||||||||
Liquidity and Capital Resources
At September 30, 2025, we had a portfolio of corporate notes, whose composition and characteristics are similar to those reported in prior periods. At September 30, 2025, the portfolio consists of 194 unsecured notes with an aggregate principal balance of $31.5 million. As of November 13, 2025, an aggregate of $24.4 million of corporate and convertible notes mature within the 12-month period subsequent to when these financial statements were issued. The notes generally have 12-month or 36-month terms, with the 12-month note holders having the option to extend for an additional 12-month term.
Because we incurred recurring 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 we do 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 our ability to continue as a going concern. In response to these conditions, management considered the impact of these near-term maturities on us.
Management evaluated the impact a default of one or many of these notes might have on us. 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 us adversely in the normal course of business, as the terms lack provisions for rights or claims against our assets, nor is there a scenario where a default could force liquidation of us. Management believes that even in the event of default of one or many of these notes, we 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, we intend to execute the following strategies:
i.Raise $20.0 million of preferred stock series AA financing through its Reg A+ offering, which was qualified on March 12, 2025.
ii.Refinance existing 12-month term notes into its new 36-month term corporate note program. Year to date through November 13, 2025, we have successfully refinanced $4.8 million of 12-month term corporate notes into its new 36-month term corporate note program.
iii.Convert corporate notes into shares of Caliber common stock. In October 2025, the Company launched its note conversion program (the "Program") whereby holders (the "Note Holders") of outstanding promissory notes (the "Notes") will convert and cancel all or part of the Note Holders' Notes in exchange for shares of Class A common stock, par value $0.001 at a per share conversion price equaling the lower of (i) the average closing price of the Company's Class A common stock over the five trading days prior to the execution of the respective Conversion Agreement, or the (ii) closing bid price of the Company's Class A common stock the business day preceding the execution of the respective Conversion Agreement (the "Conversion Prices"). Through November 13, 2025 we have successfully converted $1.9 million of corporate notes into 561,747 shares of common stock. The Conversion Prices ranged from $3.14 to $3.72 per share.
iv.Raise equity in support of our LINK strategy using our approved ELOC or ATM facilities. Some of those proceeds will be used for general operating purposes. Through November 13, 2025, we have raised $34.5 million in cash through the issuance of new equity.
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 reporting periods, management plans to continue to (or in some cases has successfully implemented plans to) i) reduce operating costs, ii) collect all or part of its $9.3 million in receivables, iii) collect all or part of its $11.9 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.
During the nine months ended September 30, 2025, as part of the execution of our aforementioned plans, we raised $31.8 million in new equity in support of the Company's LINK strategy investing $10.6 million in LINK and maintaining $10.9 million in unrestricted cash on hand. We collected $1.1 million in notes receivable, $10.3 million in accounts receivable, and $2.0 million in redemptions of investments from its managed funds. In addition, we have implemented broad-based costs reductions, most notably being further workforce reductions, which are expected to result in annualized cost savings of $3.9 million in compensation and employee benefit expenses.
After consideration of the implemented and planned actions, management concluded these plans are not within our control and therefore cannot be deemed probable. As a result, we have concluded that management's plans do not alleviate substantial doubt about our 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 us for services performed by us.
Corporate Debt
As of September 30, 2025, we have issued and outstanding unsecured promissory notes of $31.5 million with an average outstanding principal balance of $0.2 million, a weighted average interest rate of 11.14%, and maturity dates ranging from January 2024 to March 2028. 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. This outstanding debt resulted in interest expense of $0.9 million and $2.7 million for the three and nine months ended September 30, 2025, respectively, and $1.0 million and $3.0 million for the three and nine months ended September 30, 2024, respectively.
Cash Flows Analysis
The section below discusses in more detail our primary sources and uses of cash and primary drivers of cash flows within the our condensed consolidated statements of cash flows (in thousands):
| Nine Months Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | $ Change | ||||||||||||||||||
| Net cash provided by (used in): | ||||||||||||||||||||
| Operating activities | $ | (7,523) | $ | (199) | $ | (7,324) | ||||||||||||||
| Investing activities | (17,098) | (14,364) | (2,734) | |||||||||||||||||
| Financing activities | 33,112 | 1,026 | 32,086 | |||||||||||||||||
| Net change in cash and cash equivalents | $ | 8,491 | $ | (13,537) | $ | 22,028 | ||||||||||||||
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. The table below summarizes our condensed consolidated statements of cash flow by activity attributable to us and to our consolidated funds (in thousands):
| Nine Months Ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | $ Change | ||||||||||||||||||
| Net cash used in the Company's operating activities | $ | (8,178) | $ | (5,078) | $ | (3,100) | ||||||||||||||
| Net cash provided by the consolidated funds' operating activities | 655 | 4,879 | (4,224) | |||||||||||||||||
| Net cash used in the Company's operating activities | (7,523) | (199) | (7,324) | |||||||||||||||||
| Net cash (used in) provided by the Company's investing activities | (12,945) | 6,628 | (19,573) | |||||||||||||||||
| Net cash used in the consolidated funds' investing activities | (4,153) | (20,992) | 16,839 | |||||||||||||||||
| Net cash used in the Company's investing activities | (17,098) | (14,364) | (2,734) | |||||||||||||||||
| Net cash provided by (used in) the Company's financing activities | 29,487 | (4,173) | 33,660 | |||||||||||||||||
| Net cash provided by the consolidated funds' financing activities | 3,625 | 5,199 | (1,574) | |||||||||||||||||
| Net cash provided by the Company's financing activities | 33,112 | 1,026 | 32,086 | |||||||||||||||||
| Net change in cash and cash equivalents | $ | 8,491 | $ | (13,537) | $ | 22,028 | ||||||||||||||
Operating Activities
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. Net cash flows used in operating activities of the Company increased during the nine months ended September 30, 2025 as compared to the same period in 2024, which was primarily related to a decrease in asset management revenues, development and construction fees and fund management fees specifically, and an increase in related party receivables. Net cash flows provided by operating activities of the consolidated funds decreased during the nine months ended September 30, 2025, as compared to the same period in 2024, which was primarily related to the deconsolidation of VIEs.
Investing Activities
Net cash flows used in investing activities of the Company increased during the nine months ended September 30, 2025, as compared to the net cash flows provided by investing activities during the same period in 2024. The increase primarily related to the investment in digital assets during the nine months ended September 30, 2025, with no comparable investments during the same period in 2024, and a decrease in net proceeds from notes receivable - related parties. The decrease in net cash flows used in investing activities of the consolidated funds during the nine months ended September 30, 2025, as compared to the same period in 2024, is primarily due to the deconsolidation of VIEs and a decrease in investments in real estate assets.
Financing Activities
Net cash flows provided by financing activities of the Company increased during the nine months ended September 30, 2025 as compared to the net cash flows used in financing activities of the Company for the same period in 2024. The increase was primarily due to an increase in the net proceeds from the issuance of preferred stock, common stock and redeemable common stock, and a decrease of $2.4 million of net repayments on notes payable. The decrease in net cash flows provided by financing activities of the consolidated funds during the nine months ended September 30, 2025, as compared to the same period in 2024, is
primarily due to a decrease in contributions from noncontrolling interest holders of $14.7 million, offset by an increase of $5.5 million of net proceeds on notes payable and a decrease in distributions to noncontrolling interest holders of $4.8 million .
Critical Accounting Policies and Estimates
The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These estimates are made and evaluated on an ongoing basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates, perhaps in adverse ways, and those estimates could be different under different assumptions or conditions.
Accounting Policies and Estimates of the Company
We believe the following critical accounting policies affect our more significant estimates and judgments used in the preparation of our condensed consolidated financial statements.
Revenue Recognition
In accordance with the Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), management applies the five-step framework in determining the timing and amount of revenue to recognize. This framework requires an entity to: (i) identify the contract(s) with customers, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation.
Revenues from contracts with customers includes fixed fee arrangements with related party affiliates to provide certain associated activities which are ancillary to and generally add value to the assets we manage, such as set-up and fund formation services associated with marketing, soliciting, and selling member interests in the affiliated limited partnerships, brokerage services, construction and development management services, loan placement and guarantees. The recognition and measurement of revenue is based on the assessment of individual contract terms. For performance obligations satisfied at a point in time, there are no significant judgments made in evaluating when the customer obtains control of the promised service.
For performance obligations satisfied over time, significant judgment is required to determine how to allocate transaction prices where multiple performance obligations are identified; when to recognize revenue based on appropriate measurement of our progress under the contract; and whether constraints on variable consideration should be applied due to uncertain future events. Transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Variable consideration is included in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based largely on an assessment of its anticipated performance and all information that is reasonably available to us. Revenues are recognized when control of the promised services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
The following describes revenue recognition for the fees we earn from providing services under our asset management Platform:
Fund set-up fees are a one-time fee for the initial formation, administration, and set-up of the private equity real estate fund. These fees are recognized at the point in time when the performance under the contract is complete and are included in asset management revenues in the accompanying consolidated statements of operations. Fund set-up fees replaced fund formation fees that are earned at a point in time at a fixed rate based on the amount of capital raised into certain managed funds.
Fund management fees are generally based on 1.0% to 1.5% of the unreturned capital contributions in a particular fund and include reimbursement for costs incurred on behalf of the fund, including an allocation of certain overhead costs. These customer contracts require us to provide management services, representing a performance obligation that we satisfy over time. With respect to the Caliber Hospitality Trust, we earns a fund management fee of 0.7% of the Caliber Hospitality Trust's enterprise value and are reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust. These revenues are included in asset management revenues in the accompanying condensed consolidated statements of operations.
Financing fees are earned for services we perform 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, we earn fees for guaranteeing certain loans, representing a performance obligation that we satisfy over time. These revenues are included in asset management revenues in the accompanying condensed consolidated statements of operations.
Development and construction revenues from contracts with customers include fixed fee arrangements with related party affiliates to provide real estate development services as their 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. 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 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. These revenues are included in asset management revenues in the accompanying condensed consolidated statements of operations.
Brokerage fees are earned at a point in time at fixed rates for services performed related to acquisitions, dispositions, leasing, and financing transaction, and are included in asset management revenues in the accompanying condensed consolidated statements of operations.
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. We typically receive 15.0% to 35.0% of all cash distributions from (i) the operating cash flow of each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of preferred capital contributions; and (ii) the cash flow resulting from the sale or refinance of any real estate assets held by each fund, after payment to the related fund investors of any accumulated and unpaid priority preferred returns and repayment of initial preferred capital contributions. Our funds' preferred returns range from 6.0% to 12.0%, typically 6.0% for common equity or 10.0% to 12.0% for preferred equity, which does not participate in profits. 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. These revenues are included in performance allocations in the accompanying condensed consolidated statements of operations.
Digital Assets
We account for our digital assets in accordance with ASU 2023-08, Accounting for and Disclosure of Crypto Assets. ASU 2023-08 requires in-scope crypto assets (including the Company's bitcoin holdings) to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard. The Company adopted this guidance effective September 9, 2025, upon the completion of its initial purchase of Chainlink ("LINK") tokens as part of the inauguration of its digital asset treasury ("DAT") strategy.
The Company initially records its LINK purchases at cost, with any subsequent changes in fair value recognized as incurred in the company's condensed consolidated statements of operations. The fair value of the Company's LINK is adjusted and disclosed within the company's condensed consolidated balance sheets at the end of each reporting period. The Company determines the fair value of its LINK holdings in accordance with ASC 820, Fair Value Measurement, based on quoted (unadjusted) prices on the Coinbase exchange, the active exchange that the Company has determined is its principal market for LINK (Level 1 inputs). In the event of a sale the Company will calculate the gain (loss) to be recognized as the difference between the sales price, net of transaction costs, and carrying value of the LINK tokens sold immediately prior to sale. The Company uses the first-in, first-out cost basis method when calculating the gain (loss) on sale.
Income Taxes
We account for income taxes under the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured by applying enacted tax rates and laws and are released in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are provided against deferred tax assets when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.
A valuation allowance is required to reduce the balance of a deferred tax asset if it is determined that it is more-likely-than-not that all or some portion of the deferred tax asset will not be realized due to the lack of sufficient taxable income or other limitation on our ability to utilize the loss carryforward.
We recognize the impact of an income tax position, if that position is more-likely-than-not of being sustained on audit, based on the technical merits of the position. Related interest and penalties are classified as income taxes in the financial statements.
Accounting 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.
Consolidated Fund Revenues
In accordance with ASC 606, our consolidated funds apply the five-step framework in determining the timing and amount of revenue to recognize. This framework requires an entity to: (i) identify the contract(s) with customers, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when or as the entity satisfies a performance obligation. Our consolidated funds' revenues primarily consist of hospitality revenues, rental income and interest income.
Consolidated funds - hospitality revenue
Hospitality revenues are comprised of charges for room rentals, food and beverage sales, and other hotel operating activities. Revenues are recognized as earned, which is defined as the date upon which a guest occupies a room or utilizes the hotel's services. Revenues are recorded net of sales tax.
Our consolidated funds have performance obligations to provide accommodations and other ancillary services to hotel guests. 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. 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.
For food and beverage, revenue is recognized upon transfer of promised products or services to customers in an amount that reflects the consideration the consolidated funds received in exchange for those services, which is generally when payment is tendered at the time of sale.
The consolidated funds receive deposits for events and rooms. Such deposits are deferred and included in other liabilities on the accompanying consolidated balance sheets. The deposits are credited to consolidated funds - hospitality revenue when the specific event takes place.
Consolidated funds - other revenue
Consolidated funds - other revenue primarily consists of rental revenue of $0.1 million and $0.5 million for the three and nine months ended September 30, 2025, respectively, and $0.4 million and $1.3 million during the three and nine months ended September 30, 2024, 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.
In addition, consolidated funds - other revenue includes interest income, which is generated by a consolidated fund's lending activity. There was no interest income for the three and nine months ended September 30, 2025. For the three and nine months ended September 30, 2024, there was $1.7 million and $4.3 million, respectively, of interest income. Interest income is recognized on the accrual basis of accounting in accordance with the lending agreements over the term of the respective loan agreement.
Consolidated Fund Expenses
Consolidated fund expenses consist primarily of costs, expenses and fees that are incurred by, or arise out of the operation and activities of or otherwise related to, our consolidated funds, including, without limitation, operating costs, depreciation and amortization, interest expense on debt held by our consolidated funds, gain on extinguishment of debt, gain on derivative instruments, insurance expenses, professional fees and other costs associated with administering and supporting those funds.
Fair Value of Financial Instruments
The fair value of financial instruments is disclosed in accordance with ASC 825, Financial Instruments. The fair value of the consolidated funds financial instruments is estimated using available market information and established valuation methodologies. The estimates of fair value are not necessarily indicative of the amounts the consolidated funds could realize on disposition of the financial instruments. The use of different market assumptions and/or valuation methodologies may have a material effect on the estimated fair value amounts.
CaliberCos Inc. published this content on November 13, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 13, 2025 at 22:08 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]