Micro-cap real estate investor, developer, and manager Caliber has reached an agreement with the investment management firm Satori Collective in which Satori will contribute seven hotels to Caliber. The hotels, located in the Midwestern and Southern U.S., operate under global brands such as Marriott, Hilton, and IHG. The deal will more than double Caliber’s assets under management (AUM). On Tuesday, October 8, the day of the announcement, Caliber shares slid over 11%. Meanwhile, analysts see potential for a sixfold increase in the share price.
Details
Satori Collective will contribute seven U.S. hotel properties from its portfolio to Caliber’s subsidiary, Caliber Hospitality Trust (CHT), a private hospitality corporation. The total portfolio value of the hotels is approximately $120 million.
The parties aim to close the deal in early 2025. If successful, the number of hotels owned by CHT will rise to 22, with AUM growing 126% to $530 million, according to the press release. Caliber’s asset management revenue run rate is expected to increase $2.4 million (42%).
“Many hotel owners across the U.S. are seeking alternatives to traditional asset sales to gain liquidity, manage debt, fund property improvements, or secure well-priced capital for growth,” said Caliber CEO Chris Loeffler, as cited in the press release.
About the deal
Satori Collective, founded in 2013 and formerly known as Banyan Investment Group, is an investment management firm focusing on hotels as a class of real estate. The company’s website lists seven hotels under the brands Holiday Inn Express, Kimpton, Aloft by Marriott, and Hampton Inn & Suites as examples of its successful investments.
Caliber Hospitality Trust describes itself as an externally advised private hospitality corporation with a structure similar to an umbrella partnership real estate investment trust (UPREIT). This is a type of REIT that allows property owners to exchange their property for share ownership in the trust while gaining tax benefits.
Founded in 2009, Caliber says it was “forged in distress, born of the financial crisis.” Initially, the company bought up distressed assets. Today, besides CHT, it offers qualified investors five other funds specializing in various real estate assets. According to Caliber estimates, it manages and develops nearly $2.9 billion in assets. In the second quarter of 2024, revenue came in at $8.2 million, a 60% drop compared to the previous-year period, reflecting the deconsolidation of certain assets.
Analyst insights
On Tuesday, October 8, the day the Satori deal was announced, Caliber shares dropped 11.5% to $0.52 per share. Since the start of 2024, the stock has lost almost 60% of its value.
According to MarketWatch, the single analyst currently tracking the company has a buy recommendation with a target price of $3.50 per share, while Freedom Broker targets $3.00 per share. This implies upside of at least 475% versus the latest closing price.
