Real estate investor CaliberCos loses third of market value after public offering

Quotes on CaliberCos Inc., which invests in real estate, plummeted more than 33% yesterday, April 17, before paring some of the losses in after-hours trading. The plunge was triggered by the announced terms of a $900,000 stock offering, which was priced at a steep discount, signaling an urgent need for capital and potential dilution for existing shareholders.

Yesterday, CaliberCos dropped more than 33% on the Nasdaq to $0.30 per share, its lowest closing price ever (the company went public in May 2023), before clawing back almost 19% in after-hours trading to $0.35 per share.

The plunge was triggered by Caliber’s announcement of a new public share offering of 2.4 million units at $0.375 apiece. Each unit consists of one Class A common share and the right to receive one fifth of a share upon the closing price being at least $1.25 per share on three consecutive trading days. The company also announced it would issue warrants to buy additional shares equal to 8% of the total number of units sold.

Caliber expects to raise $900,000 from the offering, set to close on April 21, with proceeds going toward debt repayment, working capital, and general corporate purposes. According to its 2024 earnings, released in late March, the company’s debt exceeds $80 million.

Caliber offered the units at a 17% discount to the last (April 16) closing price. Stock Titan points out that for a micro-cap company with a market capitalization of just $6.99 million, raising less than $900,000 on such unfavorable terms signals the unavailability of financing alternatives and/or urgent capital needs. The offering will dilute existing shareholders, with potential for further dilution if the rights to acquire fifths of shares are exercised. “This complex unit structure typically indicates difficulty attracting capital through straightforward equity offerings,” Stock Titan adds.

Like many small caps, Caliber is having a rough 2025 — its stock has fallen 57% since the beginning of the year. As a company focused on real estate investments, Caliber is particularly sensitive to high interest rates and inflation. In its latest earnings, the company notes that inflation has raised the cost of nearly all types of building materials and labor, meaning a higher cost of construction and renovation of its funds’ assets. Moreover, inflation and the rising costs of goods and services are also weighing on the developers and contractors that Caliber works with. Caliber warns that a significant and prolonged rise in interest rates and inflation is likely to have a negative impact on profitability.

According to MarketWatch, the single analyst covering Caliber has a “buy” recommendation with a target price of $4 per share, more than eight times the current market price.

Caliber is a real estate investment company that has operated for 15 years, specializing in construction, acquisition, renovation, and management of middle-market commercial properties to grow its clients’ wealth. Its core sectors include hospitality, multifamily residential, and industrial real estate.

According to its most recent earnings, as of the end of 2024, Caliber had managed capital of $492.5 million. In late March, the company announced the launch of Caliber 1031 Exchange, a platform that offers accredited investors access to highly curated real estate investment opportunities.