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What changed in CaliberCos Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CaliberCos Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+220 added−195 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-16)

Top changes in CaliberCos Inc.'s 2024 10-K

220 paragraphs added · 195 removed · 150 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

26 edited+17 added−5 removed37 unchanged
Biggest changeWe seek to retain and incentivize the performance of our employees through our compensation structure. We enter into non-competition and non-solicitation agreements with certain employees. 7 Table of Contents Compensation and Benefits Our compensation strategy is designed to attract qualified talent, retain team members, and stay competitive within the talent market.
Biggest changeCompensation and Benefits Our compensation strategy is designed to attract qualified talent, retain team members, and stay competitive within the talent market. Caliber continually evaluates our compensation structure to ensure it aligns with the market and continues to be an attractive component of joining our team.
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 $2.3 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.
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 $2.1 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 primarily focus on business and investment-friendly markets that have a long-term trend of population growth and income improvement, in particular focus on Alaska, Arizona, Colorado, and Texas . We generally avoid engaging in direct competition in over-regulated and saturated markets. • Structuring expertise and speed of execution.
We primarily focus on business and investment-friendly markets that have a long-term trend of population growth and income improvement, in particular focus on Alaska, Arizona, Colorado, Kansas, Texas, and Virginia. We generally avoid engaging in direct competition in over-regulated and saturated markets. • Structuring expertise and speed of execution.
Competition The asset management industry is intensely competitive. We compete primarily on a regional, industry and asset class basis. We face competition both in the pursuit of fund investors and investment opportunities. Generally, our competition varies across business lines, geographies, and financial markets.
Competition The real estate asset management industry is intensely competitive. We compete primarily on a regional, industry and asset class basis. We face competition both in the pursuit of fund investors and investment opportunities. Generally, our competition varies across business lines, geographies, and financial markets.
When evaluating investment opportunities, the investment committee may consider, without limitation and depending on the nature of the investment and its strategy, the quality of the asset in which the fund proposes to invest, likely exit strategies, factors that could reduce the value of the asset at exit, and a range of economic and interest rate environments, macroeconomic trends in the relevant geographic region or industry and the quality of the asset’s business operations.
When evaluating investment opportunities, the investment committee may consider, without limitation and depending on the nature of the investment and its strategy, the quality of the asset in which the fund proposes to invest, likely exit strategies, factors that could reduce the value of the asset at exit, and a range of economic and interest rate environments, macroeconomic trends in the relevant geographic region 5 Table of Con tents or industry and the quality of the asset’s business operations.
With respect to the Caliber Hospitality Trust (as defined in Note 3 – VIEs), the Company earns an fund management fee of 0.70% of the Caliber Hospitality Trust’s enterprise value and is reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust. • Financing fees are earned for services the Company performs in securing third-party financing on behalf of our private equity real estate funds.
With respect to the Caliber Hospitality Trust (as defined in Note 3 – VIEs), the Company earns a fund management fee of 0.7% of the Caliber Hospitality Trust’s enterprise value and is reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust. • Financing fees are earned for services the Company performs in securing third-party financing on behalf of our private equity real estate funds.
We have experience in a variety of investment strategies, including direct property investments, joint ventures, participating loans and investments in performing and non-performing mortgages with the objective of long-term ownership. 6 Table of Contents • Vertically integrated platform for operational enhancement.
We have experience in a variety of investment strategies, including direct property investments, joint ventures, participating loans and investments in performing and non-performing mortgages with the objective of long-term ownership. • Vertically integrated platform for operational enhancement.
Additional legislation, increasing regulatory oversight of fundraising activities, changes in rules promulgated by self-regulatory organizations or exchanges or changes in the interpretation or enforcement of existing laws and rules may directly affect our mode of operation and profitability.
Additional legislation, increasing regulatory oversight of fundraising activities, changes in 8 Table of Con tents rules promulgated by self-regulatory organizations or exchanges or changes in the interpretation or enforcement of existing laws and rules may directly affect our mode of operation and profitability.
We earn the following fees from providing these services under our asset management platform: • Fund set-up fees are a one-time fee for the initial formation, administration, and set-up of fund products we distribute and manage.
We earn the following fees from providing these services under our asset management platform (the “Platform”): Asset Management Revenues • Organizational & Offering (“O&O”) fees include fund set-up fees and are a one-time fee earned during the initial formation, administration, and set-up of fund products we distribute and manage.
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.
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. We have $2.9 billion in Managed Assets, which is comprised of AUM and Assets Under Development (“AUD”).
We will look for complementary products and vehicles that utilize our existing vertically integrated infrastructure to allow us to continue to capture attractive risk-adjusted returns. These areas of investment could include private debt, venture capital and private equity.
We will look for complementary products and vehicles that utilize our existing vertically integrated infrastructure to allow us to continue to capture attractive risk-adjusted returns. These areas of investment could include private debt, venture capital and private equity. We expect these new funds and platforms will attract new investors, in addition to leveraging our existing investor base. • UPREIT Strategies.
We provide opportunities for growth and development for our employees and support their personal and professional goals in an effort to retain the most talented individuals. We value diversity and inclusion on our team. The opportunities we provide in conjunction with our reputation is what we believe makes us an attractive employer.
We are focused on hiring, training, and developing the skills and careers of our people. We provide opportunities for growth and development for our employees and support their personal and professional goals in an effort to retain the most talented individuals. The opportunities we provide in conjunction with our reputation is what we believe makes us an attractive employer.
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. Investment Process and Risk Management We maintain a rigorous investment process across all our funds.
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.
We compete with respect to: • Competitive fee structures on our asset management services; and • Diversification of our revenue stream across the deal continuum, including asset management revenues which include brokerage fees on buying and selling assets, construction management fees on repositioning assets, fund set up fees for the initial formation, administration, and set-up of fund products we distribute and manage.
We compete with respect to: • Competitive fee structures on our asset management services; and • Diversification of our revenue stream across the deal continuum, including asset management revenues which include brokerage fees on buying and selling assets, construction management fees on repositioning assets, fund set up fees for the initial formation, administration, and set-up of fund products we distribute and manage. 6 Table of Con tents Strategy and Competitive Strengths We manage and administer investment vehicles that allow investors to diversify their holdings into asset classes that would not be readily accessible to them otherwise.
Caliber continually evaluates our compensation structure to ensure it aligns with the market and continues to be an attractive component of joining our team. Compensation includes incentives for individual performance as well as overall success in meeting the Company’s goals. We believe these additional incentives encourage team members to perform at a high level.
Compensation includes incentives for individual performance as well as overall success in meeting the Company’s goals. We believe these additional incentives encourage team members to perform at a high level.
During the construction period, development 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. 4 Table of Contents • 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.
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.
Our investment professionals are responsible for the full life cycle of an investment, from evaluation, through execution, to exit. Investment professionals generally submit investment opportunities for review and approval by our investment committee. The investment committee is comprised of executives and senior leaders of the Company.
An investment committee reviews and evaluates investment opportunities in a framework that includes a qualitative and quantitative assessment of the key opportunities and risks of investments. Our investment professionals are responsible for the full life cycle of an investment, from evaluation, through execution, to exit. Investment professionals generally submit investment opportunities for review and approval by our investment committee.
Our professionals have decades of institutional experience in commercial, real estate, capital markets, alternative investments, and mergers and acquisitions. We give our employees the opportunities to develop their skills and encourage them to collaborate to achieve success. As of December 31, 2023, we h ad 99 employees. None of our em ployees are currently covered by a collective bargaining agreement.
Our employees adhere to Caliber’s core principles leading to our continued success as an organization. Our professionals have decades of institutional experience in commercial, real estate, capital markets, alternative investments, and mergers and acquisitions. We give our employees the opportunities to develop their skills and encourage them to collaborate to achieve success.
Each fund has investment policies and procedures that generally contain investment parameters and requirements, such as limitations relating to the types of assets, industries or geographic regions in which the fund will invest. An investment committee reviews and evaluates investment opportunities in a framework that includes a qualitative and quantitative assessment of the key opportunities and risks of investments.
Investment Process and Risk Management We maintain a rigorous investment process across all our funds. Each fund has investment policies and procedures that generally contain investment parameters and requirements, such as limitations relating to the types of assets, industries or geographic regions in which the fund will invest.
Talent Acquisition, Development and Retention We face intense competition for qualified personnel. We believe the talent of our employees, in association with our rigorous investment process, has supported our growth and investment performance over the past decade. We are focused on hiring, training, and developing the skills and careers of our people.
As of December 31, 2024, we h ad 81 employees. None of our em ployees are currently covered by a collective bargaining agreement. Talent Acquisition, Development and Retention We face intense competition for qualified personnel. We believe the talent of our employees, in association with our rigorous investment process, has supported our growth and investment performance over the past decade.
Requests should be directed to the attention of the Corporate Secretary at our address on the cover page of this Form 10-K. We are an electronic filer. The SEC maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the SEC. 8 Table of Contents
The SEC maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, such as us, that file electronically with the SEC. 9 Table of Con tents
We determine whether to make general partner capital commitments to our funds in excess of the minimum required commitments based on, among other things, our anticipated liquidity, working capital and other capital needs. 5 Table of Contents Investors in many of our funds also receive the opportunity to make additional “co-investments” with the investment funds.
We determine whether to make general partner capital commitments to our funds in excess of the minimum required commitments based on, among other things, our anticipated liquidity, working capital and other capital needs. As of December 31, 2024, Caliber has $28.6 million invested alongside our Fund Investors in the form of equity positions, short term loans, and receivables.
Completing these development activities may ultimately result in income-producing assets, assets we may sell to third parties, or both. As of December 31, 2023, we are actively developing 2,986 multifamily units, 2,386 single family units, 2.8 million square feet of commercial and industrial, and 1.3 million square feet of office and retail.
As of December 31, 2024, we are actively developing 1,796 multifamily units, 697 single family units, 3.7 million square feet of commercial and industrial, and 3.5 million square feet of office and retail.
In addition, the Company earns fees for guarantying certain loans, representing a performance obligation that the Company satisfies over time. • Real estate development revenues are generally based on 4.0% of the total expected costs of the development or 4.0% of the total expected costs of the construction project for services performed as the principal developer, which include managing and supervising third-party developers and general contractors with respect to the development of the properties owned by the funds.
In addition, the Company earns fees for guaranteeing certain loans, representing a performance obligation that the Company satisfies over time. • Real estate development revenues are generally based on two fee-based contracts, which are up to 6% on a combined basis.
We expect these new funds and platforms will attract new investors, in addition to leveraging our existing investor base. • Accretive acquisitions . We plan to evaluate potential accretive acquisition opportunities to further grow our business. These acquisitions could include opportunities to expand our distribution capabilities, product offerings or geographic reach.
These acquisitions could include opportunities to expand our distribution capabilities, product offerings or geographic reach.
Item 1. Business General Over the past 15 years, Caliber has grown into a leading diversified alternative asset management firm, managing more than $3.1 billion in assets under management (“AUM”) and assets under development (“AUD”). Caliber’s primary goal is to enhance the wealth of accredited investors seeking to make investments in middle-market assets.
Item 1. Business General Over the past 16 years, Caliber has emerged as a leading real estate asset management firm, with more than $2.9 billion in Managed Assets. Caliber’s business is focused on a singular objective, to make money in all market conditions by managing and developing attractive multi-family residential, hospitality, and multi-tenant industrial assets.
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We strive to build wealth for our clients by creating, managing, and servicing middle-market investment funds, private syndications, and direct investments. Through our funds, we invest primarily in real estate, private equity, and debt facilities. We market and fundraise to private investors, family offices, and institutions (“Direct Channel”) and to registered investment advisers and independent broker-dealers (“Wholesale Channel”).
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Caliber serves financial professionals, family office investors, and high net worth investors, through its real estate fund products focused on generating value growth, income, and tax advantages. Caliber competes in the broad market for alternative investments, a fast-growing segment of the global investment market.
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We believe that we 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.
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For Multi-Family Residential & Multi-Tenant Industrial assets, Caliber is regionally focused on growth-oriented markets; namely Arizona, Colorado & Texas. For its Hospitality platform, Caliber is investing through the United States with a specific focus on markets that have experience population growth and job growth in the last 5 years.
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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.
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Our competitive advantage is driven by several elements of the Caliber platform: 1.) The combination of an institutional-grade investment management platform combined with boutique, middle-market fund sizes and real estate projects. 2.) Our in-house shared services group, which offers Caliber greater control over our real estate and visibility to find future investment opportunities 3.) Our in-house fundraising infrastructure, allowing Caliber to serve a broad range of investors and institutions.
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Strategy and Competitive Strengths We manage and administer investment vehicles that allow investors to diversify their holdings into asset classes that would not be readily accessible to them otherwise.
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Caliber defines middle-market in two ways. The first, by the size of the investments, We typically pursue – projects between $5.0 million and $50.0 million per asset. The second, by the size of the investment funds. We offer, typically $200.0 million for a multi-asset discretionary fund and $5.0 million to $20 million for a syndication.
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Human Capital Management Caliber’s core principles of accountability, respect, and transparency are at the heart of who we are and how we operate. Our employees are integral to Caliber’s culture of transparency, integrity, professionalism, and excellence. Our employees adhere to these core principles leading to our continued success as an organization.
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In addition, Caliber is building the Caliber Hospitality Trust (CHT), a middle-market hotel investment company utilizing the UPREIT strategy with expectations that CHT will become a listed company when its assets under management (“AUM”) exceeds $1.0 billion. As an alternative asset manager, we offer a full suite of support services and employ a vertically integrated approach to investment management.
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The first, a real estate development contract that provides for up to 4.0% of the total expected costs of the 4 Table of Con tents development and is paid for services performed by Caliber Development, LLC as the principal developer of Caliber projects. These services may include obtaining new entitlements or zoning changes and managing and supervising third-party developers.
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The second, a construction management contract that provides for up to 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.
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Performance Allocations • Performance allocations are an arrangement in which we are entitled to an allocation of investment returns, generated within the investment funds which we manage, based on a contractual formula.
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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 December 31, 2024, up through sale, we estimate the Company could earn $89.0 million in performance allocations.
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Similarly, there can be no assurance that performance allocations associated with our Managed Assets will be realized because our total costs to complete a project could change. In addition, the price we might obtain upon selling the investment at some point in the future could be different than our projections.
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The investment committee is comprised of executives and senior leaders of the Company.
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This represents 5.8% of Managed Capital of $492.5 million. Investors in many of our funds also receive the opportunity to make additional “co-investments” with the investment funds.
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We intend to utilize the UPREIT structure, starting with CHT, to grow our AUM through tax-efficient asset acquisitions which can be completed primarily in shares in the UPREIT we manage instead of traditional cash debt and equity.
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We expect to leverage the operating infrastructure of Caliber as an external advisor to the UPREIT entity(s) we manage to avoid duplicating costs of running additional public companies. 7 Table of Con tents • Accretive acquisitions . We plan to evaluate potential accretive acquisition opportunities to further grow our business.
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Human Capital Management Caliber is committed to operating according to our core principles: • Authenticity & Transparency • Vision & Agility • Compassion & Service Our employees are integral to Caliber’s culture and our primary real estate objective, to produce and manage real estate investments that Caliber insiders own and invest in.
Added
We seek to retain and incentivize the performance of our employees through our compensation structure. We enter into non-competition and non-solicitation agreements with certain employees. We believe Caliber offers a differentiated platform for employees to join our business as one of the only boutique, publicly listed real estate asset manages in the United States.
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Requests should be directed to the attention of the Corporate Secretary at our address on the cover page of this Form 10-K. We are an electronic filer.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

44 edited+14 added−6 removed219 unchanged
Biggest changeFor 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. Furthermore, third parties we do business with, such as developers and contractors, are also affected by inflation and the rising costs of goods and services used in their businesses.
Biggest changeFurthermore, third parties we do business with, such as developers and contractors, are also affected by inflation and the rising costs of goods and services used in their businesses. A significant and continued increase in interest rates and inflation would be expected to have a negative impact on their ability to do business with us, which would affect our profitability.
For example, it could: • require us to dedicate a substantial portion of our cash flows from operations to make payments on our debt, which would reduce the availability of our cash flows from operations to fund working capital, capital expenditures or other general corporate purposes; 12 Table of Contents • increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations; • place us at a competitive disadvantage to our competitors with proportionately less debt for their size; • limit our ability to refinance our existing debt or borrow additional funds in the future; • limit our flexibility in planning for, or reacting to, changing conditions in our business; and • limit our ability to react to competitive pressures or make it difficult for us to carry out capital spending that is necessary or important to our growth strategy.
For example, it could: • require us to dedicate a substantial portion of our cash flows from operations to make payments on our debt, which would reduce the availability of our cash flows from operations to fund working capital, capital expenditures or other general corporate purposes; • increase our vulnerability to general adverse economic and industry conditions, including interest rate fluctuations; • place us at a competitive disadvantage to our competitors with proportionately less debt for their size; • limit our ability to refinance our existing debt or borrow additional funds in the future; • limit our flexibility in planning for, or reacting to, changing conditions in our business; and • limit our ability to react to competitive pressures or make it difficult for us to carry out capital spending that is necessary or important to our growth strategy.
In addition, if our real estate funds acquire direct or indirect interests in undeveloped land or underdeveloped 15 Table of Contents real property, which may often be non-income producing, they will be subject to the risks normally associated with such assets and development activities, including risks relating to the availability and timely receipt of zoning and other regulatory or environmental approvals, the cost and timely completion of construction (including risks beyond the control of our fund, such as weather, labor conditions, or material shortages), and the availability of both construction and permanent financing with favorable terms.
In addition, if our real estate funds acquire direct or indirect interests in undeveloped land or underdeveloped real property, which may often be non-income producing, they will be subject to the risks normally associated with such assets and development activities, including risks relating to the availability and timely receipt of zoning and other regulatory or environmental approvals, the cost and timely completion of construction (including risks beyond the control of our fund, such as weather, labor conditions, or material shortages), and the availability of both construction and permanent financing with favorable terms.
In addition, the historical returns of our funds may not be indicative of any future returns of these or from any future funds we may raise due to several factors including: • market conditions during previous periods may have been more favorable for generating positive performance than the market conditions we may experience in the future; and 13 Table of Contents • our funds’ returns may have previously benefited from investment opportunities and general market conditions that may not recur, and we may not be able to achieve the same returns or profitable investment opportunities or deploy capital as quickly.
In addition, the historical returns of our funds may not be indicative of any future returns of these or from any future funds we may raise due to several factors including: • market conditions during previous periods may have been more favorable for generating positive performance than the market conditions we may experience in the future; and • our funds’ returns may have previously benefited from investment opportunities and general market conditions that may not recur, and we may not be able to achieve the same returns or profitable investment opportunities or deploy capital as quickly.
We compete for investment opportunities based on a variety of factors, including breadth of market coverage and relationships, access to capital, transaction execution skills, the range of products and services offered, innovation, and price. 17 Table of Contents We compete with real estate funds, specialized funds, hedge fund sponsors, financial institutions, private equity funds, corporate buyers, and other parties.
We compete for investment opportunities based on a variety of factors, including breadth of market coverage and relationships, access to capital, transaction execution skills, the range of products and services offered, innovation, and price. We compete with real estate funds, specialized funds, hedge fund sponsors, financial institutions, private equity funds, corporate buyers, and other parties.
To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. 20 Table of Contents Furthermore, unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended (the “Securities Act”), or the rules and regulations promulgated thereunder.
To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. 22 Table of Con tents Furthermore, unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended (the “Securities Act”), or the rules and regulations promulgated thereunder.
Further, we have experienced in the past, and may experience in the future, periodic interruptions, delays, and outages in service and availability with our Cloud Providers due to a variety of factors, including Internet connectivity failures, infrastructure changes, human or software errors, website hosting disruptions, and capacity constraints. 19 Table of Contents If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock may decline.
Further, we have experienced in the past, and may experience in the future, periodic interruptions, delays, and outages in service and availability with our Cloud Providers due to a variety of factors, including Internet connectivity failures, infrastructure changes, human or software errors, website hosting disruptions, and capacity constraints. 21 Table of Con tents If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock may decline.
The markets continue to be affected by inflation in the United States, global health pandemics, the imposition of sanctions and the escalation of hostilities between Russia and Ukraine, the Israel-Hamas conflict, and the recession in the United Kingdom.
The markets continue to be affected by inflation in the United States, global health pandemics, the imposition of sanctions and the escalation of hostilities between Russia and Ukraine and the Israel-Hamas conflict.
If we elected to rely on the “controlled company” exemptions, a majority of the members of our board of directors might not be independent directors, our nominating and corporate governance and compensation committees might not consist entirely of independent directors, and you would not have the same protection afforded to shareholders of companies that are subject to Nasdaq’s corporate governance rules. 25 Table of Contents If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.
If we elected to rely on the “controlled company” exemptions, a majority of the members of our board of directors might not be independent directors, our nominating and corporate governance and compensation committees might not consist entirely of independent directors, and you would not have the same protection afforded to shareholders of companies that are subject to Nasdaq’s corporate governance rules. 27 Table of Con tents If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.
Federal Reserve maintained the federal funds target range at 0.0% to 0.25% for much of 2020 and 2021. The Federal Reserve raised interest rates by an aggregate of 525 basis points from January 1, 2022 through January 31, 2024.
Federal Reserve maintained the federal funds target range at 0.0% to 0.25% for much of 2020 and 2021. The Federal Reserve raised interest rates by an aggregate of 525 basis points from January 1, 2022 through September 18, 2024.
Changes in relevant tax laws, regulations, treaties, or an adverse interpretation of these items by tax authorities could adversely impact our effective tax rate and tax liability. 14 Table of Contents Our effective tax rate and tax liability is based on the application of current income tax laws, regulations and treaties.
Changes in relevant tax laws, regulations, treaties, or an adverse interpretation of these items by tax authorities could adversely impact our effective tax rate and tax liability. Our effective tax rate and tax liability is based on the application of current income tax laws, regulations and treaties.
In addition, 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. 9 Table of Contents Interest rates remained at relatively low levels on a historical basis and the U.S.
In addition, 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. 10 Table of Con tents Interest rates remained at relatively low levels on a historical basis and the U.S.
As a result of the foregoing, there may be instances where any such conflicts are resolved in a manner which favors the interests of our funds and their investors over our stockholders. Risk management activities may adversely affect the return on our funds’ investments.
As a result of the foregoing, there may be instances where any such conflicts are resolved in a manner which favors the interests of our funds and their investors over our stockholders. 16 Table of Con tents Risk management activities may adversely affect the return on our funds’ investments.
The future market price of our common stock may be significantly affected by many risk factors listed in this section, and others beyond our control, including: • actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results; • overall conditions in our industry and the markets in which we operate or in the economy as a whole; • changes in laws or regulations applicable to our operations; • actual or anticipated changes in our growth rate relative to our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • additions or departures of key personnel; • issuance of new or updated research or reports by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • litigation matters; • announcement or expectation of additional financing efforts; • sales of our Class A common stock by us or our stockholders; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • the expiration of contractual lock-up agreements with our executive officers, directors and stockholders; and • general economic and market conditions.
The future market price of our common stock may be significantly affected by many risk factors listed in this section, and others beyond our control, including: • actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results; • overall conditions in our industry and the markets in which we operate or in the economy as a whole; • changes in laws or regulations applicable to our operations; • actual or anticipated changes in our growth rate relative to our competitors; • announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; • additions or departures of key personnel; • issuance of new or updated research or reports by securities analysts; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • litigation matters; • announcement or expectation of additional financing efforts; • sales of our Class A common stock by us or our stockholders; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • the expiration of contractual lock-up agreements with our executive officers, directors and stockholders; and • general economic and market conditions. 25 Table of Con tents Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
We do not believe that, based on current rules and interpretations, the equity interests in our wholly owned subsidiaries or the limited liability company member interests consolidated, or unconsolidated affiliated funds qualify as investment securities under the Investment Company Act. 21 Table of Contents The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies.
We do not believe that, based on current rules and interpretations, the equity interests in our wholly owned subsidiaries or the limited liability company member interests consolidated, or unconsolidated affiliated funds qualify as investment securities under the Investment Company Act. 23 Table of Con tents The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies.
Corporate buyers may be able to achieve synergistic cost savings with regard to an investment that may provide them with a competitive advantage in bidding for an investment. If we are unable to maintain and protect our intellectual property, or if third parties assert that we infringe their intellectual property rights, our business could suffer.
Corporate buyers may be able to achieve synergistic cost savings with regard to an investment that may provide them with a competitive advantage in bidding for an investment. 19 Table of Con tents If we are unable to maintain and protect our intellectual property, or if third parties assert that we infringe their intellectual property rights, our business could suffer.
The Company had individual corporate notes aggregating $36.4 million at December 31, 2023 for which the maturity dates of the majority of these notes are within the 12-month period subsequent to when the financial statements for the year ended December 31, 2023 were issued. We currently do not have sufficient cash on hand to satisfy such obligations.
The Company had individual corporate notes aggregating $32.8 million at December 31, 2024, for which the maturity dates of the majority of these notes are within the 12-month period subsequent to when the financial statements for the year ended December 31, 2024 were issued. We currently do not have sufficient cash on hand to satisfy such obligations.
This control may adversely affect the market price of our Class A common stock. 22 Table of Contents We may not be able to maintain a listing of our Class A common stock on Nasdaq. Our Class A common stock is listed on Nasdaq, and we must meet certain financial and liquidity criteria to maintain such listing.
This control may adversely affect the market price of our Class A common stock. 24 Table of Con tents We may not be able to maintain a listing of our Class A common stock on Nasdaq. Our Class A common stock is listed on Nasdaq, and we must meet certain financial and liquidity criteria to maintain such listing.
The lack of near term guidance may affect the expectations of public market analysts and could cause increased volatility in our Class A common stock price. We have incurred operating losses and negative operating cash flows for the year ended December 31, 2023, and may incur operating losses and negative cash flows in future periods.
The lack of near term guidance may affect the expectations of public market analysts and could cause increased volatility in our Class A common stock price. 12 Table of Con tents We have incurred operating losses and negative operating cash flows for the year ended December 31, 2024, and may incur operating losses and negative cash flows in future periods.
Investments by our investment funds may rank junior to investments made by others. In most cases, the companies in which our investment funds invest will have indebtedness or equity securities or may be permitted to incur indebtedness or to issue equity securities that rank senior to our investment.
In most cases, the companies in which our investment funds invest will have indebtedness or equity securities or may be permitted to incur indebtedness or to issue equity securities that rank senior to our investment.
In addition, as permitted by Section 145 of the DGCL, our amended and restated bylaws and our indemnification agreements that we have entered into with our directors and officers provide that: • we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law.
Our third amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. 28 Table of Con tents In addition, as permitted by Section 145 of the DGCL, our amended and restated bylaws and our indemnification agreements that we have entered into with our directors and officers provide that: • we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law.
Attempts to expand our businesses involve a number of special risks, including some or all of the following: • the required investment of capital and other resources; • the diversion of management’s attention from our core businesses; • the assumption of liabilities in any acquired business; • the disruption of our ongoing businesses; • entry into markets or lines of business in which we may have limited or no experience; • increasing demands on our operational and management systems and controls; • compliance with additional regulatory requirements; • potential increase in investor concentration; and • the broadening of our geographic footprint, increasing the risks associated with conducting operations in certain jurisdictions where we currently have no experience.
We may pursue growth through acquisitions of critical business partners or other strategic initiatives, which may include entering into new lines of business. 18 Table of Con tents Attempts to expand our businesses involve a number of special risks, including some or all of the following: • the required investment of capital and other resources; • the diversion of management’s attention from our core businesses; • the assumption of liabilities in any acquired business; • the disruption of our ongoing businesses; • entry into markets or lines of business in which we may have limited or no experience; • increasing demands on our operational and management systems and controls; • compliance with additional regulatory requirements; • potential increase in investor concentration; and • the broadening of our geographic footprint, increasing the risks associated with conducting operations in certain jurisdictions where we currently have no experience.
The annual inflation rate in the United States increased to 9.1% in June 2022, the highest rate since November 1981, but decreased to 3.4% in December 2023. As a result, from January 1, 2022 through January 31, 2024, the Federal Reserve increased the federal funds rate by 525 basis points.
The annual inflation rate in the United States increased to 9.1% in June 2022, the highest rate since November 1981, but decreased to 2.9% in December 2024. As a result, from January 1, 2022 through September 18, 2024, the Federal Reserve increased the federal funds rate by 525 basis points.
Our failure to sufficiently secure our business and services may result in unauthorized access to investor data, a negative impact on our investor attraction and retention, and significant liabilities.
Our failure to sufficiently secure our business and services may result in unauthorized access to 20 Table of Con tents investor data, a negative impact on our investor attraction and retention, and significant liabilities.
In addition, our real estate funds may also make investments in residential real estate projects and/or otherwise participate in financing opportunities relating to residential real estate assets or portfolios thereof from time to time, which may be more susceptible to adverse changes in prevailing economic and/or market conditions and present additional risks relative to the ownership and operation of commercial real estate assets.
In addition, our real estate funds may also make investments in residential real estate projects and/or otherwise participate in financing opportunities relating to residential real estate assets or portfolios thereof from time to time, which may be more susceptible to adverse changes in prevailing economic and/or market conditions and present additional risks relative to the ownership and operation of commercial real estate assets. 17 Table of Con tents Investments by our investment funds may rank junior to investments made by others.
Performance allocations depend on our funds’ performance and opportunities for realizing gains, which may be limited. Our cash flow may fluctuate significantly due to the fact that we receive performance allocations from our carry funds only when portfolio companies make distributions in excess of preferred return hurdles, or when investments are realized and achieve a minimum preferred return.
Our cash flow may fluctuate significantly due to the fact that we receive performance allocations from our carry funds only when portfolio companies make distributions in excess of preferred return hurdles, or when investments are realized and achieve a minimum preferred return.
Schrader currently exercise approximately 84.2% voting control over the Company as of December 31, 2023.
Schrader currently exercise approximately 84.5% voting control over the Company as of December 31, 2024.
Such investments may involve risks not otherwise present with other methods of investment, including: • that our co-venturer, or partner in an investment could become insolvent or bankrupt; • that such co-venturer, or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals; • that such co-venturer, or partner may be in a position to take action contrary to our instructions, requests or our policies or objectives; or • that disputes between us and our co-venturer, or partner, may result in litigation or arbitration that would increase expenses.
Such investments may involve risks not otherwise present with other methods of investment, including: • that our co-venturer, or partner in an investment could become insolvent or bankrupt; • that such co-venturer, or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals; • that such co-venturer, or partner may be in a position to take action contrary to our instructions, requests or our policies or objectives; or • that disputes between us and our co-venturer, or partner, may result in litigation or arbitration that would increase expenses. 15 Table of Con tents Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment.
These and other provisions in our third amended and restated certificate of incorporation and our amended and restated bylaws and under Delaware law, together with the voting control possessed by our founders, could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions. 26 Table of Contents Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
These and other provisions in our third amended and restated certificate of incorporation and our amended and restated bylaws and under Delaware law, together with the voting control possessed by our founders, could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.
The value of our investments can also be diminished by: • civil unrest, acts of war and terrorism and acts of God, including earthquakes, hurricanes, and other natural disasters (which may result in uninsured or underinsured losses); • the impact of present or future legislation (including environmental regulation, changes in laws concerning foreign ownership of property, changes in tax rates, changes in zoning laws and laws requiring upgrades to accommodate disabled persons) and the cost of compliance with these types of legislation; and • liabilities relating to claims, to the extent insurance is not available or is inadequate.
The value of our investments can also be diminished by: • civil unrest, acts of war and terrorism and acts of God, including earthquakes, hurricanes, and other natural disasters (which may result in uninsured or underinsured losses); • the impact of present or future legislation (including environmental regulation, changes in laws concerning foreign ownership of property, changes in tax rates, changes in zoning laws and laws requiring upgrades to accommodate disabled persons) and the cost of compliance with these types of legislation; and • liabilities relating to claims, to the extent insurance is not available or is inadequate. 13 Table of Con tents We have an amount of total liabilities which may be considered significant for a company of our size which could adversely affect our financial condition and our ability to react to changes in our business.
In response to these conditions, and the absence of sufficient cash to satisfy the debt obligations referenced below under “- We have an amount of total liabilities which may be considered significant for a company of our size which could adversely affect our financial condition and our ability to react to changes in our business”, management plans to i) negotiate extensions of such loans or refinance such debt, ii) obtain new financing, iii) reduce operating costs, iv) collect receivables and return investments from our Consolidated Funds, and/or v) increase capital raise through continued expansion of fundraising channels. 11 Table of Contents Our revenue, net income, and cash flows can all vary materially due to performance allocations (income earned with respect to our carried interest is recorded as performance allocations) in any fiscal period.
In response to these conditions, and the absence of sufficient cash to satisfy the debt obligations referenced below under the risk factor “We have an amount of total liabilities which may be considered significant for a company of our size which could adversely affect our financial condition and our ability to react to changes in our business”, management plans to i) negotiate extensions of such loans or refinance such debt, ii) obtain new financing, iii) reduce operating costs, iv) collect receivables and return investments from our Consolidated Funds, and/or v) increase capital raise through continued expansion of fundraising channels.
As of December 31, 2023 and 2022, total assets of our consolidated VIEs reflected in our consolidated balance sheets were $258.4 million and $254.8 million, respectively, and as of December 31, 2023 and 2022, total liabilities of our consolidated VIEs reflected in our consolidated balance sheets were $169.9 million and $166.0 million, respectively.
As of December 31, 2024 and 2023, total assets of our consolidated VIEs reflected in our consolidated balance sheets were $53.3 million and $258.4 million, respectively, and as of December 31, 2024 and 2023, total liabilities of our consolidated VIEs reflected in our consolidated balance sheets were $33.1 million and $169.9 million, respectively.
These broad market and industry fluctuations, as well as general economic, political, and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of our Class A common stock. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation.
These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political, and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of our Class A common stock.
Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment. Our reliance on third parties to operate and to develop certain of our properties may harm our business. In some instances, we rely on third-party property managers and hotel operators to manage our properties.
Our reliance on third parties to operate and to develop certain of our properties may harm our business. In some instances, we rely on third-party property managers and hotel operators to manage our properties.
From the date of our initial public offering in May 2023 to March 1, 2024, the high and low prices of our common stock as quoted on the Nasdaq Capital Market was $13.00 and $1.02, respectively.
The market price of our Class A common stock has in the past and could in the future be extremely volatile. From the date of our initial public offering in May 2023 to March 3, 2025, the high and low prices of our common stock as quoted on the Nasdaq Capital Market was $13.00 and $0.37, respectively.
In the future, our cash flows and capital resources may not be sufficient for payments of interest on and principal of our debt, and such alternative measures may not be successful and may not permit us to meet scheduled debt service obligations.
We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. 14 Table of Con tents In the future, our cash flows and capital resources may not be sufficient for payments of interest on and principal of our debt, and such alternative measures may not be successful and may not permit us to meet scheduled debt service obligations.
Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business. 23 Table of Contents Future sales and issuances of our Class A common stock or rights to purchase Class A common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause the stock price of our Class A common stock to decline.
Future sales and issuances of our Class A common stock or rights to purchase Class A common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause the stock price of our Class A common stock to decline.
As we continue to grow, our success will largely depend on our ability to attract and retain qualified personnel in all areas of business.
As we continue to grow, our success will largely depend on our ability to attract and retain qualified personnel in all areas of business. We may be unable to continue to hire and retain a sufficient number of qualified personnel to support or keep pace with our planned growth.
The delisting of our Class A common stock could significantly impair our ability to raise capital and the value of your investment. Our share price has in the past and may in the future fluctuate substantially. The market price of our Class A common stock has in the past and could in the future be extremely volatile.
The delisting of our Class A common stock could significantly impair our ability to raise capital and the value of your investment.
We intend, if market conditions warrant, to grow our businesses by increasing assets under management in existing businesses and expanding into new investment strategies, geographic markets and businesses. We may pursue growth through acquisitions of critical business partners or other strategic initiatives, which may include entering into new lines of business.
We may expand into new investment strategies, geographic markets and businesses, each of which may result in additional risks and uncertainties in our businesses. We intend, if market conditions warrant, to grow our businesses by increasing assets under management in existing businesses and expanding into new investment strategies, geographic markets and businesses.
Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations, and civil or criminal sanctions. 24 Table of Contents We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.
Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and 26 Table of Con tents subject us to potential delisting from the stock exchange on which we list, regulatory investigations, and civil or criminal sanctions.
We cannot guarantee that remote work environments and electronic connections to our work environment and information technology systems have the same security profile as those deployed in our physical offices. 18 Table of Contents Further, our ability to monitor the data security of our vendors is limited, and bad actors may successfully circumvent our vendors’ security measures, resulting in the unauthorized access to, or misuse, disclosure, loss, or destruction of our Company and/or our investor’s data.
Further, our ability to monitor the data security of our vendors is limited, and bad actors may successfully circumvent our vendors’ security measures, resulting in the unauthorized access to, or misuse, disclosure, loss, or destruction of our Company and/or our investor’s data.
A significant and continued increase in interest rates and inflation would be expected to have a negative impact on their ability to do business with us, which would affect our profitability. 10 Table of Contents Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.
However, there can be no assurance that we will be able to fully mitigate the impact of such tariffs or trade restrictions. 11 Table of Con tents Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.
We are an emerging growth company, as defined in the JOBS Act.
We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors. We are an emerging growth company, as defined in the JOBS Act.
Removed
We have an amount of total liabilities which may be considered significant for a company of our size which could adversely affect our financial condition and our ability to react to changes in our business.
Added
Subsequently, the Federal Reserve decreased the federal funds rate by 50 basis points in September 2024, by 25 basis points in November 2024 and by 25 basis points in December 2024, resulting in a target rate range of 4.25% to 4.50% at December 31, 2024.
Removed
We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
Added
Subsequently, the Federal Reserve decreased the federal funds rate by 50 basis points in September 2024, by 25 basis points in November 2024 and by 25 basis points in December 2024, resulting in a target rate range of 4.25% to 4.50% at December 31, 2024.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.
Removed
We may be unable to continue to hire and retain a sufficient number of qualified personnel to support or keep pace with our planned growth. 16 Table of Contents We may expand into new investment strategies, geographic markets and businesses, each of which may result in additional risks and uncertainties in our businesses.
Added
Changes in trade policies and tariffs imposed by the United States government and the governments of other nations may have a material adverse effect on our business and results of operations.
Removed
Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies.
Added
Effective March 4, 2025, the U.S. administration imposed a 20% tariff on all imports from China, a 25% tariff on all imports from Mexico, and a 25% tariff on most imports from Canada, with a 10% tariff on energy imports.
Removed
We may be the target of this type of litigation in the future.
Added
At this time, the overall impact on our business related to these tariffs remains uncertain and depends on multiple factors, including the duration and potential expansion of current tariffs, future changes to tariff rates, scope, or enforcement, retaliatory measures by impacted trade partners, inflationary effects and broader macroeconomic responses, and the effectiveness of our responses in managing these challenges.
Removed
Our third amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law.
Added
We cannot predict if, and to what extent, there will be changes to international trade agreements or the resulting impact of any such changes on our business operations. We are closely monitoring this evolving situation and evaluating our responses.
Added
Our revenue, net income, and cash flows can all vary materially due to performance allocations (income earned with respect to our carried interest is recorded as performance allocations) in any fiscal period. Performance allocations depend on our funds’ performance and opportunities for realizing gains, which may be limited.
Added
We cannot guarantee that remote work environments and electronic connections to our work environment and information technology systems have the same security profile as those deployed in our physical offices.
Added
On May 14, 2024, the Company received a notice from Nasdaq notifying the Company that, because the closing bid price for the Company’s Class A common stock had fallen below $1.00 per share for 30 consecutive business days, the Company no longer complies with the minimum bid price requirement for continued listing on the Nasdaq Capital Market under Rule 5550(a)(2) of Nasdaq Listing Rules.
Added
Nasdaq’s notice had no immediate effect on the listing of the Company’s Class A common stock on the Nasdaq Capital Market. The Company was provided an initial compliance period of 180 calendar days, or until November 11, 2024, to regain compliance with the minimum bid price requirement.
Added
The Company did not regain compliance with the minimum bid price requirement by November 11, 2024; however, on November 12, 2024, the Company received written notification from Nasdaq granting the Company’s request for a 180-day extension to regain compliance with Nasdaq Listing Rule 5550(a)(2).
Added
To regain compliance, the closing bid price of the Company’s Class A common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days prior to May 12, 2025. Our share price has in the past and may in the future fluctuate substantially.
Added
In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
Added
Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeEducation and Awareness Employees are regularly reminded of the importance of handling and protecting customer and Company data. Employees receive appropriate policies and annual privacy and security training to enhance awareness and reinforce desired behaviors. External Assessments Our cybersecurity policies, standards, processes and practices are regularly assessed by third-party business partners, consultants and external auditors.
Biggest changeEducation and Awareness Employees are regularly reminded of the importance of handling and protecting customer and Company data. Employees receive appropriate policies and annual privacy and security training to enhance awareness and reinforce desired behaviors. External Assessments Our cybersecurity policies, standards, processes and practices are regularly assessed by third-party business partners, consultants and cybersecurity information technology consultants.
Management’s Role Our Chief Operating Officer, who serves as the Company’s designated chief information security officer (“CISO”) and our Director of Technology have primary responsibility for managing the Company’s cybersecurity program on an ongoing basis. Our Director of Technology has served in various roles in information technology and information security for over 15 year.
Management’s Role Our Chief Operating Officer, who serves as the Company’s designated chief information security officer (“CISO”) and our Director of Technology have primary responsibility for managing the Company’s cybersecurity program on an ongoing basis. Our Director of Technology has served in various roles in information technology and information security for over 15 years.
We can provide no assurance that there will not be cybersecurity incidents in the future or that they will not materially affect us, including our business strategy, results of operations, or financial condition. 27 Table of Contents Risk Management and Strategy Our approach for assessing, identifying, and managing material risks from cybersecurity threats are integrated into our overall risk management strategy and are based on commonly accepted frameworks established by the International Organization for Standardization (“ISO”), the National Institute of Standards and Technology (“NIST”), and other applicable industry standards.
We can provide no assurance that there will not be cybersecurity incidents in the future or that they will not materially affect us, including our business strategy, results of operations, or financial condition. 29 Table of Con tents Risk Management and Strategy Our approach for assessing, identifying, and managing material risks from cybersecurity threats are integrated into our overall risk management strategy and are based on commonly accepted frameworks established by the International Organization for Standardization (“ISO”), the National Institute of Standards and Technology (“NIST”), and other applicable industry standards.
They contribute to risk assessments, help refine our security architecture, and provide valuable insights into industry best practices. 28 Table of Contents Governance Board Oversight Our Board, through the Audit Committee, has oversight of our cybersecurity risk management program.
They contribute to risk assessments, help refine our security architecture, and provide valuable insights into industry best practices. 30 Table of Con tents Governance Board Oversight Our Board, through the Audit Committee, has oversight of our cybersecurity risk management program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our principal executive offices are located in Scottsdale, Arizona, where we own our headquarters office building. We also lease office space in Bryan, Texas. We consider these facilities to be suitable and adequate for the management and operation of our business. Item 3.
Biggest changeItem 2. Properties Our principal executive offices are located in Scottsdale, Arizona, where we own our headquarters office building. We also lease office space in Bryan, Texas. We consider these facilities to be suitable and adequate for the management and operation of our business.
Removed
Legal Proceedings We are, from time to time, party to various claims and legal proceedings arising out of our ordinary course of business, but we do not believe that any of these claims or proceedings will have a material effect on our business, consolidated financial condition or results of operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
Item 3. Legal Proce eding s 29 Item 4. Mine Safety Disclosures 29 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 Item 6. Reserved 30 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 7A.
Added
Item 3. Legal Proceedings We are, from time to time, party to various claims and legal proceedings arising out of our ordinary course of business, but we do not believe that any of these claims or proceedings will have a material effect on our business, consolidated financial condition or results of operations.
Removed
Quantitative and Qualitative Disclosures About Market Risk 51 Item 8. Financial Statements and Supplementary Data 51 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures 51 Item 9A. Controls and Procedures 52

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs a result, capital appreciation, if any, of our shares of Class A common stock will be your sole source of gain for the foreseeable future. Unregistered Sales of Equity Securities and Use of Proceed s None. Share Repurchases None.
Biggest changeAs a result, capital appreciation, if any, of our shares of Class A common stock will be your sole source of gain for the foreseeable future.
Holders of Record As of March 21, 2024, there were 1,552 holders of record of our Class A common stock and two holders of record of our Class B common stock. This does not include the number of stockholders that hold shares in “street name” through brokers and other nominees.
Holders of Record As of March 27, 2025, there were 1,506 holders of record of our Class A common stock and three holders of record of our Class B common stock. This does not include the number of stockholders that hold shares in “street name” through brokers and other nominees.
Added
Unregistered Sales of Equity Securities and Use of Proceed s Recent Sales of Unregistered Securities During the year ended December 31, 2024, the Company issued 204,495 shares of Class A common stock with an aggregate fair value of approximately $0.2 million issued under a consulting agreement.
Added
The issuance of shares of Class A common stock were deemed to be exempt from registration under the Securities Act of 1933, as amended (the "Securities Act") in reliance upon Section 4(a)(2) of the Securities Act.
Added
A legend restricting the sale, transfer, or other disposition of the shares of restricted Class A common stock other than in compliance with the Securities Act was placed on the shares of restricted Class A common stock issued in the foregoing transaction. Share Repurchases None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeConsolidated Adjusted EBITDA Consolidated Adjusted EBITDA represents the Company’s and the consolidated funds’ earnings before net interest expense, income taxes, depreciation and amortization, further adjusted to exclude stock-based compensation, transaction fees, expenses and other public registration direct costs related to aborted or delayed offerings and our Reg A+ offering, the share repurchase costs related to the Company’s Buyback Program, litigation settlements, expenses recorded to earnings relating to investment deals which were abandoned or closed, any other non-cash expenses or losses, as further adjusted for extraordinary or non-recurring items. 42 Table of Contents The following table presents a reconciliation of net (loss) income attributable to CaliberCos Inc. to Fee-Related Earnings, Distributable Earnings, Caliber Adjusted EBITDA, and Consolidated Adjusted EBITDA for the years ended December 31, 2023 and 2022 (in thousands): Years Ended December 31, 2023 2022 Net (loss) income attributable to CaliberCos Inc. $ (12,703) $ 2,020 Net (loss) income attributable to noncontrolling interests (14,891) 11,931 Net (loss) income (27,594) 13,951 Provision for income taxes — — Net (loss) income before income taxes (27,594) 13,951 Depreciation and amortization 551 58 Consolidated funds’ impact on fee-related earnings 14,020 (11,551) Stock-based compensation 3,726 460 Severance 19 — Legal costs — 525 Public registration costs — 779 Performance allocations (3,639) (2,543) Other income, net (374) (326) Gain on extinguishment of debt — (1,421) Interest expense, net 4,367 877 Fee-Related Earnings (8,924) 809 Performance allocations 3,639 2,543 Interest expense, net (4,367) (877) Provision for income taxes — — Distributable Earnings (9,652) 2,475 Interest expense 4,717 1,055 Share buy-back 183 313 Other income, net 374 326 Provision for income taxes — — Loss on CRAF Investment Redemption 1,339 — Gain on extinguishment of Payroll Protection Program loans — 1,421 Consolidated funds’ impact on Caliber Adjusted EBITDA 1,788 (71) Caliber Adjusted EBITDA (1,251) 5,519 Consolidated funds' EBITDA Adjustments 11,419 31,220 Consolidated Adjusted EBITDA $ 10,168 $ 36,739 43 Table of Contents The following tables present a reconciliation of unconsolidated revenues, expenses and net income to the most comparable GAAP measure for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, 2023 Unconsolidated Impact of Consolidated Funds Consolidated Revenues Asset management $ 16,982 $ (6,411) $ 10,571 Performance allocations 3,656 (17) 3,639 Consolidated funds – hospitality revenue — 68,905 68,905 Consolidated funds – other revenue — 7,822 7,822 Total revenues 20,638 70,299 90,937 Expenses Operating costs 21,808 (497) $ 21,311 General and administrative 6,807 (37) 6,770 Marketing and advertising 1,053 (1) 1,052 Depreciation and amortization 551 (1) 550 Consolidated funds – hospitality expenses — 80,669 80,669 Consolidated funds – other expenses — 9,162 9,162 Total expenses 30,219 89,295 119,514 Consolidated funds – gain on sale of real estate investments — 4,976 $ 4,976 Other income (loss), net 649 (275) $ 374 Gain on extinguishment of debt — — — Interest income 1,863 (1,513) 350 Interest expense (4,716) (1) (4,717) Net loss before income taxes (11,785) (15,809) (27,594) Provision for income taxes — — — Net loss (11,785) (15,809) (27,594) Net loss attributable to noncontrolling interests — (14,891) (14,891) Net (loss) income attributable to CaliberCos Inc. $ (11,785) $ (918) $ (12,703) 44 Table of Contents Year Ended December 31, 2022 Unconsolidated Impact of Consolidated Funds Consolidated Revenues Asset management $ 21,575 $ (6,231) $ 15,344 Performance allocations 2,543 — 2,543 Consolidated funds – hospitality revenue — 59,564 59,564 Consolidated funds – other revenue — 6,505 6,505 Total revenues 24,118 59,838 83,956 Expenses Operating costs 14,609 — 14,609 General and administrative 6,742 (63) 6,679 Marketing and advertising 1,179 — 1,179 Depreciation and amortization 44 14 58 Consolidated funds – hospitality expenses — 60,667 60,667 Consolidated funds – other expenses — 9,213 9,213 Total expenses 22,574 69,831 92,405 Consolidated funds – gain on sale of real estate investments — 21,530 21,530 Other income, net 256 70 326 Gain on extinguishment of debt 1,421 — 1,421 Interest income 177 1 178 Interest expense (1,056) 1 (1,055) Net income before income taxes 2,342 11,609 13,951 Provision for income taxes — — — Net income 2,342 11,609 13,951 Net income attributable to noncontrolling interests — 11,931 11,931 Net income (loss) attributable to CaliberCos Inc. $ 2,342 $ (322) $ 2,020 Liquidity and Capital Resources We have incurred operating losses and negative operating cash flows for the year ended December 31, 2023, and may incur operating losses and negative cash flows in future periods.
Biggest changeThe following table presents a reconciliation of net loss attributable to CaliberCos Inc. to Fee-Related Earnings, Distributable Earnings, Platform Adjusted EBITDA, and Consolidated Adjusted EBITDA for the years ended December 31, 2024 and 2023 (in thousands): Years Ended December 31, 2024 2023 Net loss attributable to CaliberCos Inc. $ (19,777) $ (12,703) Net loss attributable to noncontrolling interests (1,693) (14,891) Net loss (21,470) (27,594) Provision for income taxes — — Net loss before income taxes (21,470) (27,594) Depreciation and amortization 598 551 Consolidated funds’ impact on fee-related earnings 1,185 14,020 Stock-based compensation 2,378 3,726 Severance 244 19 Performance allocations (358) (3,639) Other income, net (1,211) (374) Notes receivable impairment 4,304 — Bad debt expense 4,079 — Interest expense, net 4,865 4,367 Fee-Related Earnings (5,386) (8,924) Performance allocations 358 3,639 Interest expense, net (4,865) (4,367) Provision for income taxes — — Distributable Earnings (9,893) (9,652) Interest expense 5,424 4,717 Share buy-back — 183 Other income, net 1,211 374 Provision for income taxes — — Loss on CRAF Investment — 1,339 Consolidated funds’ impact on Caliber Adjusted EBITDA 548 1,788 Platform Adjusted EBITDA Loss (2,710) (1,251) Consolidated funds' EBITDA Adjustments 9,694 11,419 Consolidated Adjusted EBITDA $ 6,984 $ 10,168 The following tables present a reconciliation of Platform revenues, expenses and net income to the most comparable GAAP measure for the years ended December 31, 2024 and 2023 (in thousands): 45 Table of Con tents Year Ended December 31, 2024 Platform Impact of Consolidated Funds Consolidated Revenues Asset management $ 20,563 $ (3,684) $ 16,879 Performance allocations 379 (21) 358 Consolidated funds – hospitality revenue — 26,476 26,476 Consolidated funds – other revenue — 7,406 7,406 Total revenues 20,942 30,177 51,119 Expenses Operating costs 7,136 (964) 6,172 Payroll and payroll related costs 17,768 (1) 17,767 General and administrative 6,817 (41) 6,776 Marketing and advertising 751 — 751 Depreciation and amortization 598 (5) 593 Consolidated funds – hospitality expenses — 26,503 26,503 Consolidated funds – other expenses — 5,870 5,870 Total expenses 33,070 31,362 64,432 Other income (loss), net (2,654) (439) (3,093) Interest income 559 (199) 360 Interest expense (5,424) — (5,424) Net loss before income taxes (19,647) (1,823) (21,470) Provision for income taxes — — — Net loss (19,647) (1,823) (21,470) Net loss attributable to noncontrolling interests — (1,693) (1,693) Net loss attributable to CaliberCos Inc. $ (19,647) $ (130) $ (19,777) 46 Table of Con tents Year Ended December 31, 2023 Platform Impact of Consolidated Funds Consolidated Revenues Asset management $ 16,982 $ (6,411) $ 10,571 Performance allocations 3,656 (17) 3,639 Consolidated funds – hospitality revenue — 68,905 68,905 Consolidated funds – other revenue — 7,822 7,822 Total revenues 20,638 70,299 90,937 Expenses Operating costs 2,387 (497) 1,890 Payroll and payroll related costs 19,421 — 19,421 General and administrative 6,807 (37) 6,770 Marketing and advertising 1,053 (1) 1,052 Depreciation and amortization 551 (1) 550 Consolidated funds – hospitality expenses — 80,669 80,669 Consolidated funds – other expenses — 9,162 9,162 Total expenses 30,219 89,295 119,514 Consolidated funds – gain on sale of real estate investments — 4,976 4,976 Other income, net 649 (275) 374 Interest income 1,863 (1,513) 350 Interest expense (4,716) (1) (4,717) Net loss before income taxes (11,785) (15,809) (27,594) Provision for income taxes — — — Net loss (11,785) (15,809) (27,594) Net loss attributable to noncontrolling interests — (14,891) (14,891) Net loss attributable to CaliberCos Inc. $ (11,785) $ (918) $ (12,703) Liquidity and Capital Resources The accompanying consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
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.
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.
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.
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.
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.
(2) Assets sold during the year ended December 31, 2023 include lot sales related to a development asset in Colorado, one development asset in Colorado, nine homes from our residential fund, and one commercial asset in Arizona. (3) Credit FV AUM represents loans made to Caliber’s investment funds by our diversified credit fund.
Assets sold during the year ended December 31, 2023 include lot sales related to a development asset in Colorado, one development asset in Colorado, nine homes from our residential fund, and one commercial asset in Arizona. (3) Credit FV AUM represents loans made to Caliber’s investment funds by our diversified credit fund.
These revenues are included in asset management revenues in the accompanying 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 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 consolidated statements of operations.
The majority 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.
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.
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. 49 Table of Contents 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.
Accounting Policies and Estimates of Consolidated Funds We believe the following critical accounting policies affect the consolidated funds’ more significant estimates and judgements used in the preparation of our consolidated financial statements. 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.
Coincidentally, investment acquisitions, or the rights to acquire an investment, drive capital formation – creating a flywheel effect for Caliber. 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 Caliber’s ability to generate revenues. 32 Table of Contents Our business depends in large part on our ability to raise capital for our funds from investors.
Coincidentally, investment acquisitions, or the rights to acquire an investment, drive capital formation – creating a flywheel effect for Caliber. 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 Caliber’s ability to generate revenues. 34 Table of Con tents Our business depends in large part on our ability to raise capital for our funds from investors.
With respect to the Caliber Hospitality Trust (as defined in Note 3 – VIEs), the Company earns an fund management fee of 0.70% of the Caliber Hospitality Trust’s enterprise value and is reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust. • Financing fees are earned for services the Company performs in securing third-party financing on behalf of our private equity real estate funds.
With respect to the Caliber Hospitality Trust (as defined in Note 3 – VIEs ), the Company earns a fund management fee of 0.7% of the Caliber Hospitality Trust’s enterprise value and is reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust. • Financing fees are earned for services the Company performs in securing third-party financing on behalf of our private equity real estate funds.
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.
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- 40 Table of Con tents 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.
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. 50 Table of Contents
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.
The purpose of this financing program is to provide the Company with flexible, short-term capital to be used to grow its assets under management and assist funds in a fast-moving acquisition or investment, as well as general corporate purposes. Additionally, the program provides customers of Caliber’s funds access to a short-term lending opportunity.
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.
Actual results could differ from those estimates, perhaps in adverse ways, and those estimates could be different under different assumptions or conditions. Accounting Estimates of the Company We believe the following critical accounting policies affect the Company’s more significant estimates and judgements used in the preparation of our consolidated financial statements.
Actual results could differ from those estimates, perhaps in adverse ways, and those estimates could be different under different assumptions or conditions. 49 Table of Con tents Accounting Policies and Estimates of the Company We believe the following critical accounting policies affect the Company’s more significant estimates and judgements used in the preparation of our consolidated financial statements.
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.
These fees are generally payable at the time the hotel 51 Table of Con tents 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.
The increase in net cash flows used in operating activities of the consolidated funds during the year ended December 31, 2023, as compared to the net cash flows provided by operating activities during the same period in 2022, was primarily due to increased interest payments related to the consolidated funds notes payable.
The increase in net cash flows provided by operating activities of the consolidated funds during the year ended December 31, 2024, as compared to the net cash flows used in operating activities during the same period in 2023, was primarily due to decreased interest payments related to the consolidated funds notes payable.
The table below compares the revenues earned for providing services under the Company’s asset management platform as described in the Revenue Recognition section of Note 2 – Summary of Significant Accounting Policies for the year ended December 31, 2023 to the revenues earned for the year ended December 31, 2022.
The table below (in thousands) compares the revenues earned for providing services under the Company’s asset management Platform as described in the Revenue Recognition section of Note 2 – Summary of Significant Accounting Policies for the year ended December 31, 2024, to the revenues earned for the same period in 2023.
(4) Other FV AUM represents undeployed capital held in our diversified funds. 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.
(4) Other FV AUM represents undeployed capital held in our diversified funds. 43 Table of Con tents 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.
With respect to the underlying factors that led to the change in fair value in the current year, we identify assets that are undervalued and/or underperforming at the time of acquisition. Such assets generally undergo some form of repositioning soon after our acquisition in order to help drive increased appreciation and operating performance.
With respect to the underlying factors that led to the change in fair value in the current year, we identify assets that are undervalued and/or underperforming as part of our acquisition strategy. Such assets generally undergo some form of repositioning soon after our acquisition to help drive increased appreciation and operating performance.
As a result, from January 1, 2022 through January 31, 2024, the Federal Reserve increased the federal funds rate by 525 basis points.
As a result, from January 1, 2022 through September 18, 2024, the Federal Reserve increased the federal funds rate by 525 basis points.
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.
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 Income (Expenses) Other income (expenses) include interest expense and interest income.
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 December 31, 2023, we had total FV AUM of approximately $741.2 million.
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 December 31, 2024, we had total FV AUM of approximately $794.9 million.
This outstanding debt resulted in $4.0 million and $1.0 million of interest expense for the year ended December 31, 2023 and 2022. Cash Flows Analysis The section below discusses in more detail the Company’s primary sources and uses of cash and primary drivers of cash flows within the Company’s consolidated statements of cash flows (in thousands).
This outstanding debt resulted in $4.0 million of interest expense for each of the years ended December 31, 2024 and 2023. Cash Flows Analysis The section below discusses in more detail the Company’s primary sources and uses of cash and primary drivers of cash flows within the Company’s consolidated statements of cash flows (in thousands).
Since our inception, we have continued to successfully raise capital into our funds with our total capital raised through December 31, 2023 of approxi mately $660.0 million. 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 inception, we have continued to successfully raise capital into our funds with our total capital raised through December 31, 2024 of $742.8 million. Our success at raising new capital into our funds is impacted by the extent to which new investors see alternative assets as a viable option for capital appreciation and/or income generation.
T he table below details the activities that had an impact on our FV AUM, during the year ended December 31, 2023 (in thousands).
T he table below details the activities that had an impact on our FV AUM, during the years ended December 31, 2024 and 2023 (in thousands).
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.
Prior to the commencement of construction, development fee revenue is recognized at a point in time as the related 50 Table of Con tents performance obligations are satisfied and the customer obtains control of the promised service, including negotiation, due diligence, entitlements, planning, and design activities.
Corporate Debt As of December 31, 2023, we have issued and outstanding unsecured promissory notes of $37.8 million with an average outstanding principal balance of $0.2 million, a weighted average interest rate of 11.42%, and maturity dates ranging from January 2024 to March 2025.
Corporate Debt As of December 31, 2024, we have issued and outstanding unsecured promissory notes of $32.8 million with an average outstanding principal balance of $0.2 million, a weighted average interest rate of 11.30%, and maturity dates ranging from April 2023 to December 2027.
Business Environment Global markets are experiencing significant volatility driven by concerns over inflation, rising interest rates, slowing economic growth and geopolitical uncertainty. The annual inflation rate in the United States increased to 9.1% in June 2022, the highest rate since November 1981, but decreased to 3.4% in December 2023.
Business Environment Global markets are experiencing significant volatility driven by concerns over inflation, elevated interest rates, slowing economic growth and geopolitical uncertainty. The annual inflation rate in the United States increased to 9.1% in June 2022, the 35 Table of Con tents highest rate since November 1981, but decreased to 2.9% in December 2024.
The decrease in net cash flows used in investing activities of the consolidated funds is primarily due to the decrease in the acquisition of real estate assets and the net impact of the consolidation and deconsolidation of VIEs, offset by a decrease in proceeds from the sale of real estate investments.
The increase in net cash flows used in investing activities of the consolidated funds is primarily due to a decrease sales proceeds from the sale of real estate assets and the net impact of the consolidation and deconsolidation of VIEs, offset by an increase in the payments received on related party notes receivable, a decrease in investments in real estate assets and a decrease in the acquisition of real estate assets.
Overview Over the past 15 years, Caliber has grown into a leading diversified alternative asset management firm, managing more than $3.1 billion in AUM and AUD. Caliber’s primary goal is to enhance the wealth of accredited investors seeking to make investments in middle-market assets.
Overview Over the past 15 years, Caliber has grown into a leading diversified alternative asset management firm, with more than $2.9 billion in assets under management (“AUM”) and assets under development (“AUD”). Caliber’s primary goal is to enhance the wealth of accredited investors seeking to make investments in middle-market assets.
We earn the following fees from providing these services under our asset management platform: • Fund set-up fees are a one-time fee for the initial formation, administration, and set-up of fund products we distribute and manage.
We earn the following fees from providing these services under our asset management platform (the “Platform”): Asset Management Revenues • Organizational & Offering (“O&O”) fees include fund set-up fees and are a one-time fee earned during the initial formation, administration, and set-up of fund products we distribute and manage.
As of December 31, 2023 and December 31, 2022, the Company had invested $18.3 million and $5.4 million, respectively, in our funds. (2) Credit managed capital represents loans made to Caliber’s investment funds by the Company and our diversified credit fund. As of December 31, 2023, the Company had loaned $8.5 million to our funds.
(3) Credit managed capital represents loans made to Caliber’s investment funds by the Company and our diversified credit fund. As of December 31, 2024 and 2023, the Company had loaned $0.4 million and $8.5 million to our funds. (4) Other managed capital represents undeployed capital held in our diversified funds.
With respect to the Caliber Hospitality Trust (as defined in Note 3 – VIEs), the Company earns a fund management fee of 0.70% of the Caliber Hospitality Trust’s enterprise value and is reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust.
With respect to the Caliber Hospitality Trust (as defined in Note 3 – VIEs), the Company earns a fund management fee of 0.7% of the Caliber Hospitality Trust’s enterprise value and is reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust. These revenues are included in asset management revenues in the accompanying consolidated statements of operations.
Caliber Adjusted EBITDA Caliber Adjusted EBITDA represents the Company’s Distributable Earnings adjusted for interest expense, the share repurchase costs related to the Company’s Buyback Program, other income (expense), and provision for income taxes on a basis that deconsolidates our consolidated funds (intercompany eliminations), Loss on CRAF Investment Redemption, Gain on extinguishment of Payroll Protection Program loans, and eliminates noncontrolling interest.
Platform Adjusted EBITDA Platform Adjusted EBITDA represents the Company’s Distributable Earnings adjusted for interest expense, the share repurchase costs related to the Company’s Buyback Program, other income (expense), and provision for income taxes on a basis that deconsolidates our consolidated funds (intercompany eliminations), and eliminates noncontrolling interest.
Managed capital for our residential investment funds increased by $11.4 million during the year ended December 31, 2023: representing (i) $7.1 million in capital raised into our residential assets offset by $4.3 million of redemptions, and (ii) $5.1 million contributed by our diversified funds offset by $2.5 million of redemptions by diversified funds.
Managed capital for our residential investment funds increased by $22.5 million during the year ended December 31, 2024: representing (i) $9.6 million in capital raised into our residential assets offset by $8.3 million of capital returns, and (ii) $21.2 million contributed by our diversified funds.
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.
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.
Obtaining such financing is not guaranteed and is largely dependent on market conditions and other factors. 33 Table of Contents The advancement of real estate investment-oriented technology, sometimes referred to as “proptech”, offers Caliber the benefit of new and innovative technologies to better execute on capital formation strategies, investment acquisition strategies, and investment management strategies.
The advancement of real estate investment-oriented technology, sometimes referred to as “proptech”, offers Caliber the benefit of new and innovative technologies to better execute on capital formation strategies, investment acquisition strategies, and investment management strategies.
Investing Activities The increase in net cash flows used in investing activities of the Company for the year ended December 31, 2023, as compared to the same period in 2022, primarily relates to an increase in the acquisition of real estate assets.
Investing Activities The increase in net cash flows provided by investing activities of the Company for the year ended December 31, 2024, as compared to net cash flows used in investing activities of the Company the same period in 2023, primarily relates to payments received on related party notes receivable and a decrease in the acquisition of real estate assets.
These fees are recognized at the point in time when the performance under the contract is complete, which is essentially upon closing of a loan. In addition, the Company earns fees for guarantying certain loans, representing a performance obligation that the Company satisfies over time. These revenues are included in asset management revenues in the accompanying consolidated statements of operations.
In addition, the Company earns fees for guaranteeing certain loans, representing a performance obligation that the Company satisfies over time. These revenues are included in asset management revenues in the accompanying consolidated statements of operations.
Unconsolidated revenues and expenses are presented on a basis that deconsolidates our consolidated funds (intercompany eliminations) and eliminates noncontrolling interest. As a result, unconsolidated revenues are different than those presented on a consolidated basis in accordance with U.S.
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.
Years Ended December 31, 2023 2022 $ Change Net cash provided by (used in): Operating activities $ (18,720) $ (7,429) $ (11,291) Investing activities (5,364) (31,752) 26,388 Financing activities 25,790 38,583 (12,793) Net change in cash and cash equivalents $ 1,706 $ (598) $ 2,304 46 Table of Contents 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.
Years Ended December 31, 2024 2023 $ Change Net cash provided by (used in): Operating activities $ 555 $ (18,720) $ 19,275 Investing activities (19,629) (5,364) (14,265) Financing activities 6,331 25,790 (19,459) Net change in cash and cash equivalents $ (12,743) $ 1,706 $ (14,449) 48 Table of Con tents 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.
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. 41 Table of Contents 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.
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.
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.
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.
Financing Activities The increase in net cash flows provided by financing activities of the Company for the year ended December 31, 2023, as compared to the same period in 2022, was primarily due to an increase of $13.7 million of net proceeds on notes payable and an increase of $2.6 million in proceeds from the issuance of common stock, net of equity issuance costs during the year ended December 31, 2023 as compared to the same period in 2022.
Financing Activities The increase in net cash flows used in financing activities of the Company for the year ended December 31, 2024, as compared to the net cash flows provided by in the same period in 2023, was primarily due to a decrease of $26.0 million of net proceeds on notes payable.
During the construction period, development 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. 31 Table of Contents • 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.
During the construction period, construction management fee revenue is recognized over time as the performance obligations are satisfied. 33 Table of Con tents • Brokerage fees are earned at a point in time at fixed rates for services performed related to acquisitions, dispositions, leasing, and financing transactions.
Comparison of the Unconsolidated Results of Operations for the Year Ended December 31, 2023 and 2022 The following table and discussion provide insight into our unconsolidated results of operations of the asset management platform for the year ended December 31, 2023 and 2022 (in thousands).
There were no real estate sales during the year ended December 31, 2024. 37 Table of Con tents Comparison of the Platform (Unconsolidated) Results of Operations for the Years Ended December 31, 2024 and 2023 The following table and discussion provide insight into our unconsolidated results of operations of the Platform for the years ended December 31, 2024 and 2023 (in thousands).
The increase in net cash flows used in operating activities of the Company during the year ended December 31, 2023, as compared to the same period in 2022, was primarily related to increased interest payments related to the Company’s corporate notes.
Net cash flows used in operating activities of the Company during the year ended December 31, 2024 remained relatively consistent as compared to the same period in 2023.
Balances as of December 31, 2022 $ 745,514 Assets acquired (1) 29,384 Construction and net market appreciation 9,129 Assets sold or disposed (2) (52,710) Credit (3) 9,822 Other (4) 51 Balances as of December 31, 2023 $ 741,190 The following table summarizes FV AUM of our investment fund portfolios as of December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Real Estate Hospitality $ 268,800 $ 319,300 Residential 138,000 86,900 Commercial 240,400 255,197 Total Real Estate 647,200 661,397 Credit (2) 84,588 74,766 Other (3) 9,402 9,351 Total $ 741,190 $ 745,514 ___________________________________________ (1) Assets acquired during the year ended December 31, 2023 include one development asset in Colorado, our headquarters office building, and two multi-family residential assets in Arizona.
Balances as of December 31, 2022 $ 745,514 Assets acquired (1) 29,384 Construction and net market appreciation 9,129 Assets sold or disposed (2) (52,710) Credit (3) 9,822 Other (4) 51 Balances as of December 31, 2023 741,190 CHT contribution 29,900 Assets acquired (1) 34,590 Construction and net market appreciation 40,675 Assets sold or disposed (2) (35,765) Credit (3) (12,237) Other (4) (3,430) Balances as of December 31, 2024 $ 794,923 The following table summarizes FV AUM of our investment fund portfolios as of December 31, 2024 and 2023 (in thousands): December 31, 2024 December 31, 2023 Real Estate Hospitality $ 68,500 $ 67,200 Caliber Hospitality Trust 236,800 201,600 Residential 161,700 138,000 Commercial 249,600 240,400 Total Real Estate 716,600 647,200 Credit (3) 72,351 84,588 Other (4) 5,972 9,402 Total $ 794,923 $ 741,190 ___________________________________________ (1) Assets acquired during the year ended December 31, 2024 include West Ridge, a 133 acre mixed-use land development in Colorado and Canyon, an office building conversion to multi-family residential.
Consolidated funds – other revenue Consolidated funds – other revenue primarily consists of rental revenue of $4.0 million and $3.6 million for the years ended December 31, 2023 and 2022, respectively. 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.
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.
The scope of investments included tenant improvements, land development, and acquiring existing operating commercial properties. During the year ended December 31, 2023, we raised $21.0 million of new capital into Caliber Fixed Income Fund III, LP (“CFIF III”) and deployed it into our various real estate investments, which was offset by $19.4 million of repayments of the notes receivable.
The scope of investments included tenant improvements, land development, and acquiring existing operating commercial properties. During the year ended December 31, 2024, our diversified funds deployed $12.9 million into our various real estate investments, which was offset by $25.2 million of repayments of outstanding notes receivable.
For the year ended December 31, 2022 performance allocations were $2.5 million, which represents the carried interest earned related to the sale of the GC Square Apartments multi-family property in March 2022. For the years ended December 31, 2023 and 2022, total expenses were $30.2 million and $22.6 million, respectively, representing a period-over-period increase of 33.9%.
The decrease in performance allocations is due to the carried interest earned related to the contribution of the hospitality assets to Caliber Hospitality, LP in March 2023. For the years ended December 31, 2024 and 2023, total expenses were $33.1 million and $30.2 million, respectively, representing a period-over-period increase of 9.4%.
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.
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.
Years Ended December 31, 2023 2022 $ Change Net cash used in the Company's operating activities $ (7,153) $ (5,435) $ (1,718) Net cash used in the consolidated funds' operating activities (11,567) (1,994) (9,573) Net cash used in the Company's operating activities (18,720) (7,429) (11,291) Net cash used in the Company's investing activities (3,487) (810) (2,677) Net cash used in the consolidated funds' investing activities (1,877) (30,942) 29,065 Net cash used in the Company's investing activities (5,364) (31,752) 26,388 Net cash provided by the Company's financing activities 24,706 8,452 16,254 Net cash provided by the consolidated funds' financing activities 1,084 30,131 (29,047) Net cash provided by the Company's financing activities 25,790 38,583 (12,793) Net change in cash and cash equivalents $ 1,706 $ (598) $ 2,304 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.
Years Ended December 31, 2024 2023 $ Change Net cash used in the Company's operating activities $ (4,626) $ (7,153) $ 2,527 Net cash provided by (used in) the consolidated funds' operating activities 5,181 (11,567) 16,748 Net cash provided by (used in) the Company's operating activities 555 (18,720) 19,275 Net cash provided by (used in) the Company's investing activities 4,911 (3,487) 8,398 Net cash used in the consolidated funds' investing activities (24,540) (1,877) (22,663) Net cash used in the Company's investing activities (19,629) (5,364) (14,265) Net cash (used in) provided by the Company's financing activities (1,217) 24,706 (25,923) Net cash provided by the consolidated funds' financing activities 7,548 1,084 6,464 Net cash provided by the Company's financing activities 6,331 25,790 (19,459) Net change in cash and cash equivalents $ (12,743) $ 1,706 $ (14,449) 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.
The decrease in net cash flows provided by financing activities of the consolidated funds is primarily due to a decrease in the net proceeds from notes payable and notes payable – related parties of our consolidated funds of $12.9 million, an increase in deferred financing costs paid of $2.3 million, and an increase in distributions to noncontrolling interest holders of $5.7 million during the year ended December 31, 2023 as compared to the same period in 2022. 47 Table of Contents Critical Accounting Estimates The preparation of our consolidated financial statements in conformity with U.S.
The increase in net cash flows provided by financing activities of the consolidated funds is primarily due to a decrease in redemptions and distributions to noncontrolling interest holders of $13.2 million, offset by a decrease in contributions to noncontrolling interest holders of $9.5 million. Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in conformity with U.S.
During the three months ended December 31, 2023, the Company reevaluated its reportable segments, considering (i) the evolution of the Company after closing its initial public offering and how the Company’s chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, assesses performance and allocates resources, (ii) changes to the budgeting process and in key personnel driven by the Company’s growth initiatives, and (iii) how management reports ongoing company performance to the Board of Directors.
During the year ended December 31, 2023, the Company reevaluated its reportable segments, considering (i) the evolution of the Company after closing its initial public offering and how the Company’s chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, John C.
Other Income (Expenses) Other income (expenses) include interest expense and interest income. 34 Table of Contents Results of Operations Comparison of the Consolidated Results of Operations for the Years Ended December 31, 2023 and 2022 The following table and discussion provide insight into our consolidated results of operations for the years ended December 31, 2023 and 2022 (in thousands): Years Ended December 31, 2023 2022 $ Change % Change Revenues Asset management revenues $ 10,571 $ 15,344 $ (4,773) (31.1) % Performance allocations 3,639 2,543 1,096 43.1 % Consolidated funds – hospitality revenues 68,905 59,564 9,341 15.7 % Consolidated funds – other revenues 7,822 6,505 1,317 20.2 % Total revenues 90,937 83,956 6,981 8.3 % Expenses Operating costs 21,311 14,609 6,702 45.9 % General and administrative 6,770 6,679 91 1.4 % Marketing and advertising 1,052 1,179 (127) (10.8) % Depreciation and amortization 550 58 492 848.3 % Consolidated funds – hospitality expenses 80,669 60,667 20,002 33.0 % Consolidated funds – other expenses 9,162 9,213 (51) (0.6) % Total expenses 119,514 92,405 27,109 29.3 % Consolidated funds - gain on sale of real estate investments 4,976 21,530 (16,554) (76.9) % Other income, net 374 326 48 14.7 % Gain on extinguishment of debt — 1,421 (1,421) (100.0) % Interest income 350 178 172 96.6 % Interest expense (4,717) (1,055) (3,662) 347.1 % Net (loss) income before income taxes (27,594) 13,951 (41,545) (297.8) % Benefit from income taxes — — — 0.0 % Net (loss) income (27,594) 13,951 (41,545) (297.8) % Net (loss) income attributable to noncontrolling interests (14,891) 11,931 (26,822) (224.8) % Net (loss) income attributable to CaliberCos Inc. $ (12,703) $ 2,020 $ (14,723) (728.9) % For the years ended December 31, 2023 and 2022, total revenues were $90.9 million and $84.0 million, respectively, representing a period-over-period increase of 8.3%.
The following table and discussion provide insight into our consolidated results of operations for the years ended December 31, 2024 and 2023 (in thousands): Years Ended December 31, 2024 2023 $ Change % Change Revenues Asset management revenues $ 16,879 $ 10,571 $ 6,308 59.7 % Performance allocations 358 3,639 (3,281) (90.2) % Consolidated funds – hospitality revenues 26,476 68,905 (42,429) (61.6) % Consolidated funds – other revenues 7,406 7,822 (416) (5.3) % Total revenues 51,119 90,937 (39,818) (43.8) % Expenses Operating costs 23,939 21,311 2,628 12.3 % General and administrative 6,776 6,770 6 0.1 % Marketing and advertising 751 1,052 (301) (28.6) % Depreciation and amortization 593 550 43 7.8 % Consolidated funds – hospitality expenses 26,503 80,669 (54,166) (67.1) % Consolidated funds – other expenses 5,870 9,162 (3,292) (35.9) % Total expenses 64,432 119,514 (55,082) (46.1) % Consolidated funds - gain on sale of real estate investments — 4,976 (4,976) (100.0) % Other (loss) income, net (3,093) 374 (3,467) (927.0) % Interest income 360 350 10 2.9 % Interest expense (5,424) (4,717) (707) 15.0 % Net loss before income taxes (21,470) (27,594) 6,124 (22.2) % Benefit from income taxes — — — 0.0 % Net loss (21,470) (27,594) 6,124 (22.2) % Net loss attributable to noncontrolling interests (1,693) (14,891) 13,198 (88.6) % Net loss attributable to CaliberCos Inc. $ (19,777) $ (12,703) $ (7,074) 55.7 % For the years ended December 31, 2024 and 2023, total revenues were $51.1 million and $90.9 million, respectively, representing a period-over-period decrease of 43.8%.
Managed capital for our commercial investment funds increased $26.8 million during the year ended December 31, 2023, representing: (i) $10.7 million in capital raised into our commercial assets offset by $9.8 million of redemptions, (ii) $2.5 million due to the inclusion of an investment of one of our funds upon the completion of an equity swap, and (iii) $25.7 million contributed by our diversified funds offset by $2.3 million of redemptions, to support four commercial ground-up builds and acquisitions in Arizona and one commercial ground-up build and acquisition in Colorado.
Managed capital for our commercial investment funds increased by $15.9 million during the year ended December 31, 2024, representing: (i) $11.0 million in capital raised into our commercial assets offset by $3.2 million of capital returns, and (ii) $10.6 million contributed by our diversified funds offset by $2.5 million return of capital.
GAAP measure. 36 Table of Contents Year Ended December 31, 2023 2022 $ Change % Change Revenues Asset management revenues $ 16,982 $ 21,575 $ (4,593) (21.3) % Performance allocations 3,656 2,543 1,113 43.8 % Total revenues 20,638 24,118 (3,480) (14.4) % Expenses Operating costs 21,808 14,609 $ 7,199 49.3 % General and administrative 6,807 6,742 65 1.0 % Marketing and advertising 1,053 1,179 (126) (10.7) % Depreciation and amortization 551 44 507 1,152.3 % Total expenses 30,219 22,574 7,645 33.9 % Other income (loss), net 649 256 $ 393 153.5 % Gain on extinguishment of debt — 1,421 (1,421) (100.0) % Interest income 1,863 177 1,686 952.5 % Interest expense (4,716) (1,056) (3,660) 346.6 % Net (loss) income before income taxes (11,785) 2,342 (14,127) (603.2) % Provision for income taxes — — — 0.0 % Net (loss) income $ (11,785) $ 2,342 $ (14,127) (603.2) % For the years ended December 31, 2023 and 2022, total revenues were $20.6 million and $24.1 million, respectively, representing a period-over-period decrease of 14.4%.
Years Ended December 31, 2024 2023 $ Change % Change Revenues Asset management revenues $ 20,563 $ 16,982 $ 3,581 21.1 % Performance allocations 379 3,656 (3,277) (89.6) % Total revenues 20,942 20,638 304 1.5 % Expenses Operating costs 24,904 21,808 $ 3,096 14.2 % General and administrative 6,817 6,807 10 0.1 % Marketing and advertising 751 1,053 (302) (28.7) % Depreciation and amortization 598 551 47 8.5 % Total expenses 33,070 30,219 2,851 9.4 % Other income (loss), net (2,654) 649 $ (3,303) (508.9) % Interest income 559 1,863 (1,304) (70.0) % Interest expense (5,424) (4,716) (708) 15.0 % Net (loss) income before income taxes (19,647) (11,785) (7,862) 66.7 % Provision for income taxes — — — 0.0 % Net (loss) income $ (19,647) $ (11,785) $ (7,862) 66.7 % For the years ended December 31, 2024 and 2023, total revenues were $20.9 million and $20.6 million, respectively, representing a period-over-period increase of 1.5%.
As of December 31, 2023, we held $9.4 million of other managed capital, which included a $3.2 million private equity investment in a local start-up business and $5.3 million of undeployed cash and pursuit costs, compared to $15.3 million of other managed capital, which included a $6.2 million private equity investment in a local start-up business and $12.1 million of undeployed cash and pursuit costs held as of December 31, 2022. 40 Table of Contents FV AUM Our fair value AUM decreased primarily due to asset sales, partially offset by asset purchases.
As of December 31, 2024, other managed capital decreased $3.4 million, due to a decrease in funds not yet deployed and pursuit costs. 42 Table of Con tents FV AUM Our fair value AUM decreased primarily due to asset sales, partially offset by asset purchases.
These revenues are included in asset management revenues in the accompanying consolidated statements of operations. 48 Table of Contents Financing fees are earned for services the Company performs in securing third-party financing on behalf of our private equity real estate funds.
Financing fees are earned for services the Company performs in securing third-party financing on behalf of our private equity real estate funds. These fees are recognized at the point in time when the performance under the contract is complete, which is essentially upon closing of a loan.
We value these investments based on our estimate of their fair value as of the date of determination. We estimate the fair value of our fund’s investments based on a number of inputs built within forecasting models which are either developed by a third-party or by our internal finance team.
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.
Management’s plans include timely collection on the Company’s outstanding accounts and notes receivable from affiliated entities for which management has influence and control and implementing strategies to reduce costs. As a result, the Company has concluded that management’s plans are probable of being achieved to alleviate substantial doubt about the Company’s ability to continue as a going concern.
After consideration of the implemented and planned actions, management concluded these plans are not within the Company’s control and therefore cannot be deemed probable. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue as a going concern.
Managed Capital – we define this as the total capital raised from investors and invested in our funds, including capital raised from investors in CaliberCos Inc. through corporate note issuances that was further invested in or loaned to our funds.
(2) Beginning during the year ended December 31, 2023, the Company includes capital raised from investors in CaliberCos Inc. through corporate note issuances that was further invested in our funds in Managed Capital. As of December 31, 2024 and 2023, the Company had invested $20.4 million and $18.3 million, respectively, in our funds.
Managed Capital The table below summarizes the activity of the managed capital for the year ended December 31, 2023 (in thousands): Managed Capital Balances as of December 31, 2021 $ 306,899 Originations 85,574 Redemptions (9,284) Balances as of December 31, 2022 383,189 Originations 74,857 Redemptions (22,962) Other (1) 2,541 Balances as of December 31, 2023 $ 437,625 ___________________________________________ (1) Other represents the inclusion of an investment of one of our funds upon the completion of an equity swap during the year ended December 31, 2023. 39 Table of Contents The following table summarizes managed capital for our investment fund portfolios as of December 31, 2023 and December 31, 2022 (in thousands): December 31, 2023 December 31, 2022 Real Estate Hospitality $ 114,407 $ 102,071 Residential 74,224 62,819 Commercial 155,004 128,210 Total Real Estate (1) 343,635 293,100 Credit (2) 84,588 74,766 Other (3) 9,402 15,323 Total $ 437,625 $ 383,189 ___________________________________________ (1) Beginning during the year ended December 31, 2023, the Company includes capital raised from investors in CaliberCos Inc. through corporate note issuances that was further invested in our funds in Managed Capital.
Managed Capital The table below summarizes the activity of managed capital for the years ended December 31, 2024 and 2023 (in thousands): Managed Capital Balances as of December 31, 2022 $ 383,189 Originations 74,857 Return of capital (22,962) Other (1) 2,541 Balances as of December 31, 2023 437,625 Originations 68,959 Return of capital (14,042) Balances as of December 31, 2024 $ 492,542 ___________________________________________ (1) Other represents the inclusion of an investment of one of our funds upon the completion of an equity swap during the year ended December 31, 2023. 41 Table of Con tents The following table summarizes managed capital for our investment fund portfolios as of December 31, 2024 and 2023 (in thousands): December 31, 2024 December 31, 2023 Real Estate Hospitality $ 49,260 $ 43,660 Caliber Hospitality Trust (1) 97,414 70,747 Residential 96,687 74,224 Commercial 170,858 155,004 Total Real Estate (2) 414,219 343,635 Credit (3) 72,351 84,588 Other (4) 5,972 9,402 Total $ 492,542 $ 437,625 ___________________________________________ (1) The Company earns a fund management fee of 0.7% of the Caliber Hospitality Trust’s enterprise value and is reimbursed for certain costs incurred on behalf of the Caliber Hospitality Trust.
In addition, the Company earns fees for guarantying certain loans, representing a performance obligation that the Company satisfies over time. • Real estate development revenues are generally based on 4.0% of the total expected costs of the development or 4.0% of the total expected costs of the construction project for services performed as the principal developer, which include managing and supervising third-party developers and general contractors with respect to the development of the properties owned by the funds.
In addition, the Company earns fees for guaranteeing certain loans, representing a performance obligation that the Company satisfies over time. • Real estate development revenues are generally based on two fee-based contracts, not to exceed 6%.
See the Non-GAAP Measures section below for reconciliations of the unconsolidated results to the most comparable U.S.
Furthermore, we are required to add to this balance sheet, assets and 39 Table of Con tents 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.
There was no comparable activity during the year ended December 31, 2022. For the years ended December 31, 2023 and 2022, interest expense was $4.7 million and $1.1 million, respectively. The increase was primarily due to the increase in corporate notes outstanding during the year ended December 31, 2023, as compared to the same period in 2022.
The increase was primarily due to an increase in short-term operating loans outstanding during the year ended December 31, 2024, as compared to the same period in 2023. Balance Sheets - Platform (Unconsolidated) The following table and discussion provide insight into our unconsolidated balance sheets of the asset management Platform for the years ended December 31, 2024 and 2023.
There was no comparable activity during the year ended December 31, 2022. For the years ended December 31, 2023 and 2022, interest expense was $4.7 million and $1.1 million, respectively. The increase was primarily due to the increase in corporate notes outstanding during the year ended December 31, 2023, as compared to the same period in 2022.
The decrease is primarily due to an increase in rental and reimbursement revenue from space leased at the Company’s corporate headquarters offset by a one-time impairment charge related to certain investments. For the years ended December 31, 2024 and 2023, interest expense was $5.4 million and $4.7 million, respectively.
In response to these conditions, and the absence of sufficient funds to satisfy the debt obligations referenced above, management plans to i) negotiate extensions of such loans or refinance such debt, ii) obtain new financing, iii) reduce operating costs, iv) collect receivables and return investments from the Consolidated Funds, and/or v) increase capital raise through continued expansion of fundraising channels.
Consistent with reported actions taken in prior fiscal periods, management plans to continue to i) reduce operating costs, ii) collect all or part of its $7.7 million in receivables, iii) collect all or part of its $16.1 million in investments from its managed funds, iv) increase capital raise through continued expansion of fundraising channels, v) sell or accept investment into its corporate headquarters, vi) place debt on unencumbered assets, and/or vii) generate planned cash from operations.
Removed
In February 2023, we expanded our access to institutional capital by entering into an agreement with Skyway Capital Markets to serve as a managing broker-dealer for our primary investment products. The agreement designates Skyway to assist us to raise capital primarily from third-party broker-dealers and registered investment advisors, many of which have an existing business relationship with Skyway.
Added
The first, a real estate development contract that provides for up to 4.0% of the total expected costs of the development and is paid for services performed by Caliber Development, LLC as the principal developer of Caliber projects. These services may include obtaining new entitlements or zoning changes and managing and supervising third-party developers.
Removed
Skyway will assist us in our efforts to hire, train and manage a national wholesaling team, secure selling agreements, and provide appropriate due diligence to advisors distributing our funds. Our current managing broker-dealer will remain engaged with us to supervise and manage our existing private client sales team and to join Skyway as a selling group member.
Added
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.
Removed
This increase was primarily due to an increase in revenues in our consolidated fund hotel assets resulting from increased occupancy rates and higher average daily rates and from revenues from Hilton Tucson East, which became a consolidated entity during the year ended December 31, 2023, offset by a decrease in asset management revenues.
Added
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.
Removed
Asset management revenues consist of fees earned for fund set-up and formation, asset management, financing, development and construction, and brokerage services.
Added
Loeffler, assesses performance and allocates resources, (ii) changes to the budgeting process and in key personnel driven by the Company’s growth initiatives, and (iii) how management reports ongoing company performance to the Board of Directors.
Removed
The decrease in asset management revenues was primarily due to fund set-up fees earned for services performed in conjunction with the formation of Caliber Tax Advantaged Opportunity Zone Fund II, LLC during the year ended December 31, 2022. 35 Table of Contents For the years ended December 31, 2023 and 2022, total expenses were $119.5 million and $92.4 million, respectively, representing a period-over-period increase of 29.3%.
Added
Subsequently, the Federal Reserve decreased the federal funds rate by 50 basis points in September 2024, by 25 basis points in November 2024 and by 25 basis points in December 2024, resulting in a target rate range of 4.25% to 4.50% at December 31, 2024.
Removed
The increase was primarily due to an increase in consolidated fund related expenses due to rising labor costs and variable costs associated with increased revenue, such as management and franchise fees and loyalty program costs, and from operating expenses from Hilton Tucson East, which became a consolidated entity during the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed4 unchanged
Biggest changeThe sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from their December 31, 2023 levels, with all other variables held constant. A 100 basis point increase or decrease in variable interest rates on our variable-rate debt would increase or decrease our interest expense by $0.8 million annually.
Biggest changeThe sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from their 52 Table of Con tents December 31, 2024 levels, with all other variables held constant.
For instance, if interest rates rise 100 basis points, and the fixed rate debt balance remains constant, we expect the fair value of our debt to decrease, the same way the price of a bond declines as interest rates rise. As of December 31, 2023, our debt included variable-rate debt with a fair value and carrying value of $81.6 million.
For instance, if interest rates rise 100 basis points, and the fixed rate debt balance remains constant, we expect the fair value of our debt to decrease, the same way the price of a bond declines as interest rates rise. As of December 31, 2024, our debt included variable-rate debt with a fair value and carrying value of $18.0 million.
Interest Rate Risk As of December 31, 2023, our debt included fixed-rate debt with a fair value and carrying value of $96.0 million and $103.9 million, respectively. Changes in market interest rates on our fixed rate debt impact the fair value of the debt, but they have no impact on interest incurred or cash flow.
Interest Rate Risk As of December 31, 2024, our debt included fixed-rate debt with a fair value and carrying value of $57.9 million and $62.1 million, respectively. Changes in market interest rates on our fixed rate debt impact the fair value of the debt, but they have no impact on interest incurred or cash flow.
Credit Risk Substantially all of the Company’s revenues are generated from the management, ownership and/or operations of real estate assets located in Alaska, Arizona, Colorado, and Texas .
A 100 basis point increase or decrease in variable interest rates on our variable-rate debt would increase or decrease our interest expense by $0.2 million annually. Credit Risk Substantially all of the Company’s revenues are generated from the management, ownership and/or operations of real estate assets located in Alaska, Arizona, Colorado, Kansas, Texas, and Virginia.

Other CWD 10-K year-over-year comparisons