Mail Stop 3233
September 20,
2018
Via E-mail
John C. Loeffler, II
Chief Executive Officer and Chairman of the Board
CaliberCos Inc.
8901 E. Mountain View Road
Suite 150
Scottsdale, AZ 85258
Re: CaliberCos Inc.
Draft Offering Statement on Form 1-A
Submitted August 24, 2018
CIK No. 0001627282
Dear Mr. Loeffler:
We have reviewed your draft offering statement and have the following
comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information
and either submitting
an amended draft offering statement or publicly filing your offering statement
on EDGAR.
Please refer to Rule 252(d) regarding the public filing requirements for
non-public submissions,
amendments and correspondence. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell us why
in your
response. After reviewing your amended draft offering statement or filed
offering statement and
the information you provide in response to these comments, we may have
additional comments.
General
1. We note that you intend to operate your business in a manner that will
permit you to
maintain an exemption from registration under the Investment Company Act
of 1940, as
amended. Please provide us with a supplemental detailed analysis of:
the specific exemption that you and each of your subsidiaries
intend to rely on; and
how your and each of your subsidiaries' investment strategy and
business model will
support that exemption.
Please ensure that the disclosure in your prospectus is consistent with
your supplemental
analysis. We will refer your response to the Division of Investment
Management for
further review.
John C. Loeffler, II
Chief Executive Officer and Chairman of the Board
CaliberCos Inc.
September 20, 2018
Page 2
2. Please provide us with a supplemental detailed analysis as to why you
believe you are not
required to register as an investment adviser under the Investment
Advisers Act of 1940.
Explain in your response how your current and planned business
operations and
investment strategy are consistent with your conclusion.
Cover page
3. Please revise the cover page to identify the disclosure format you are
following. Please
refer to Part II(a)(1)(ii) of Form 1-A.
Risk Factors, page 7
4. Please add risk factor disclosure regarding the exclusive forum
provision disclosed in
Article VII, section 4 of your bylaws. Please address, without
limitation, how the
exclusive forum provision may impact the rights of shareholders, the
reasons for adopting
the exclusive forum provision, and any questions as to enforceability of
the exclusive
forum provision under Delaware law. Please also state whether you intend
the exclusive
forum provision to apply to claims under the federal securities laws.
5. Please add risk factor disclosure to disclose, if true, that there is no
limit on the amount of
leverage you may incur.
6. We note that your officers and directors will exercise control over the
company. Please
add risk factor disclosure that your officers and directors will have
the ability to make
decisions regarding (i) making changes to your articles of incorporation
whether to issue
additional common stock and preferred stock, including to itself, (ii)
employment
decisions, including compensation arrangements; and (iii) whether to
enter into material
transactions with related parties.
7. Please add risk factor disclosure regarding conflicts of interest
between you and any
related parties.
Use of Proceeds, page 21
8. Please revise to reflect the no minimum nature of the offering. Describe
more
specifically what "key initiatives" may be delayed or cancelled in the
event you raise less
than the maximum amount offered. In addition, describe the material
terms of
indebtedness you intend to repay with proceeds of the offering. See
Instructions 3 and 6
to Item 6 of Form 1-A.
9. Please explain the phrase "to-be target redevelopment."
John C. Loeffler, II
Chief Executive Officer and Chairman of the Board
CaliberCos Inc.
September 20, 2018
Page 3
Business, page 23
Fund Management, page 24
10. We note you may receive 20%-35% of the cash distributions. Please
reconcile this with
your disclosure on page 52, which indicates you may receive 35% to 25%.
Additionally,
please clarify how the amount that you are entitled to receive from each
fund is
determined. In this regard, it is not clear what amount the funds owe as
priority preferred
returns and preferred capital contributions.
Our Fund Portfolio, page 25
11. We note your disclosure regarding the funds that you are involved in.
Please disclose
your percentage of ownership of each fund, if material. We may have
further comment.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Diversified, page 43
12. Please expand your explanation of the revenue and expense adjustments
made to arrive at
Adjusted Net Income (Loss) for the Diversified segment, and disclose the
reasons why
management believes Adjusted Net Income (Loss) provides useful
information to
investors.
Key Operating and Financial Metrics, page 44
13. Please disclose the methodologies used to fair value your real property
portfolio and the
significant assumptions used. Please provide this information by asset
class. In addition,
please tell us the underlying factors that led to the significant market
appreciation in the
current year.
Security Ownership of Management and Certain Stockholders, page 51
14. Please confirm that your table includes ownership of Common Stock and
Series A
Preferred Stock. In addition, ensure the table includes equity
securities each beneficial
owner has the right to acquire and include a footnote describing the
circumstances upon
which such securities may be acquired. See Item 12 of Form 1-A.
Interest of Management and Others in Certain Transactions, page 52
15. Please revise the first paragraph on page 52 to disclose the amount of
common and
preferred stock issued.
John C. Loeffler, II
Chief Executive Officer and Chairman of the Board
CaliberCos Inc.
September 20, 2018
Page 4
16. Please include the names of the related parties that have an interest in
each of the
transactions. For example, identify the member of executive management
that entered
into a promissory note with the Company in February 2015. See Item 13 of
Form 1-A.
17. To the extent the transactions described under the "Other" heading meet
the threshold for
disclosure under Item 13, please revise to provide the specific
disclosure required.
Consolidated Statements of Operations, page F-4
18. To the extent that you present a subtotal for the difference between
total revenues and
total (operating) expenses on your consolidated statements of
operations, please use a
caption other than Net Operating Income (Loss), as this label implies a
non-GAAP
measure.
Note 2 Summary of Significant Accounting Policies
Real Estate Sales, page F-15
19. Please provide us with an analysis of why you believe the proceeds from
all real estate
sales qualify as revenue, citing relevant accounting literature.
Note 12 Redeemable Preferred Stock
Series A Preferred Stock, page F-43
20. Given the mandatory redemption provisions disclosed on page F-43, please
tell us why
the Series A Preferred Stock has not been classified as a liability.
Cite relevant
accounting literature in your response.
Note 15 Segment Reporting, page F-45
21. Please include the reconciliations required by ASC 280-10-50-30 for the
segment data
provided on pages F-47 and F-48.
John C. Loeffler, II
Chief Executive Officer and Chairman of the Board
CaliberCos Inc.
September 20, 2018
Page 5
You may contact Kristi Marrone at (202)551-3429 or Kevin Woody,
Accounting Branch
Chief, at (202)551-3629 if you have questions regarding comments on the
financial statements
and related matters. Please contact Stacie Gorman at (202)551-3585 or me at
(202)551-3215
with any other questions.
Sincerely,
/s/ Kim McManus
Kim McManus
Senior Counsel
Office of Real Estate
and
Commodities
cc: Thomas Poletti, Esq. (via e-mail)