Caliber to Begin Construction on New Housing Development in Ahwatukee, Arizona

Rhea-AI Summary

Caliber (NASDAQ: CWD) has announced the commencement of the first phase of its SP10 project in Ahwatukee, South Phoenix. The project involves converting a 160-room hotel into 104 apartment units and constructing 88 townhouse-style units. This development aims to meet the high demand for rental housing in the area, which has been exacerbated by high homeownership costs and interest rates. The location is strategically situated near major highways, the Intel semiconductor plant expansion, and other key business districts. The first phase is fully funded, combining investor equity and a construction loan. The project is expected to provide attractive returns for investors and is part of a single-asset syndication that is still open to new investors.

Positive

• Caliber has fully funded the first phase of its SP10 project.
• The project aims to address the high demand for rental housing in Phoenix.
• Conversion and construction will provide 192 new housing units.
• Strategic location near major highways and business districts.
• The project is expected to offer long-term attractive returns for investors.

Negative

• The project originally acquired in 2018 was negatively impacted by the pandemic.

Financial Analyst

The announced development project by Caliber (NASDAQ: CWD) holds significant implications for the company and its investors. Firstly, the conversion of a 160-room hotel into 104 apartment units with Class A amenities represents a strategic reuse of an underperforming asset. This move not only maximizes the utility of existing real estate but also caters to the high demand for rental housing in the Phoenix area. Given the current high interest rates and the gap between mortgage payments and monthly rents, this focus on rental properties is well-aligned with market trends.

From a financial perspective, the completion of funding for the first phase through a mix of investor equity and a construction loan demonstrates sound financial planning. This ensures that the project is not overly reliant on debt, which could be risky in a fluctuating economic environment. The project's location near key business hubs and amenities, such as the new Intel semiconductor plant expansion, enhances its attractiveness to potential renters, potentially ensuring high occupancy rates and stable rental income.

However, investors should also consider the costs and risks associated with the redevelopment and construction. Market volatility and potential delays could impact returns. Additionally, the reliance on future phases for full project completion means sustained investor interest is crucial. Overall, the successful execution of this project could significantly enhance Caliber’s portfolio value and revenue streams.

Market Research Analyst

The demand for housing in the metro Phoenix area is notably high, driven by the widening gap between mortgage payments and monthly rents. Caliber's new development directly addresses this gap, providing both apartment and townhouse-style units to a market with a pressing need for rental options. The strategic location near major highways and business districts, including the new Intel semiconductor plant, positions the development as attractive to a broad demographic range, from young professionals to corporate housing seekers.

Demographic trends support this initiative. Phoenix's reputation as a desirable place to live, combined with its growing business environment, suggests strong demand for such housing solutions. The inclusion of Class A amenities and a focus on co-working spaces caters to the increasing number of work-from-home professionals, enhancing the project's appeal.

Nonetheless, competition in the real estate development sector is fierce. While Caliber’s approach of converting underperforming assets into valuable properties is innovative, it is important to remain adaptive to market shifts. The project's success will depend on continuous market research and adjustments to meet tenant expectations and preferences.

Real Estate Development Expert

The transformation of a distressed hotel asset into a residential complex is an excellent example of adaptive reuse in real estate development. This approach not only revitalizes underutilized properties but also meets community needs, particularly in areas with high housing demand like South Phoenix. The project's phased approach and careful funding strategy mitigate some risks commonly associated with large-scale developments.

From a development perspective, the project's success will hinge on several factors. The demolition and construction processes must progress smoothly to avoid cost overruns and delays. Moreover, the integration of amenities tailored to the target demographic, such as work-from-home spaces and recreational facilities, is essential for attracting and retaining tenants.

However, potential challenges include navigating the regulatory landscape and potential community opposition. Ensuring compliance with local zoning laws and maintaining good relations with the community are paramount. If managed well, this project could serve as a model for similar adaptive reuse projects in other high-demand urban areas.

Hotel conversion and property expansion to bring 104 new apartments and 88 townhouse-style units to prime South Phoenix location

SCOTTSDALE, Ariz.--(BUSINESS WIRE)-- Caliber (NASDAQ: CWD), a real estate investor, developer, and manager, today announced completion of the funding for the first phase of the Company’s SP10 project, which will bring much needed new housing units to the Ahwatukee Foothills neighborhood in South Phoenix. The project will begin with the conversion of an existing 160-room hotel to 104 apartment units with Class A amenities. This will be followed by the construction of 44 low-density townhouse units in back of the tower complex and 40 similar units on acreage recently acquired by Caliber in front of the tower. The entire complex of single-family rentals (SFR) will share access to a full suite of amenities designed to appeal to young professionals and families, work-from-home professionals, and corporate housing. Demolition on the interior of the tower began in May.

Caliber begins hotel conversion and property expansion to bring 104 new apartments and 88 townhouse-style units to prime South Phoenix location in Ahwatukee Foothills neighborhood. (Graphic: Business Wire)

Demand for housing rental options across the metro Phoenix area remains high as the cost of home ownership continues to be out of reach for many, with high interest rates only exacerbating the situation. According to a report by Realtor.com, the Phoenix area has the third widest gap between mortgage payments and monthly rent in the nation. Yet Arizona ranks as the 12th most expensive state for home and apartment rents.

Located at the southwest corner of East Elliot and 51^st Street, Caliber’s new housing complex is ideally situated adjacent to the I-10 Highway, providing convenient access to the new $20 billion Intel semiconductor plant expansion in Chandler as well as neighboring Tempe, Mesa and the Central Phoenix business district. Less than four miles from Sky Harbor Airport, the location will also appeal to frequent business travelers. Ahwatukee was rated number one in Niche’s “Best places to live in Phoenix.” The area boasts close access to numerous hiking and biking trails, along with multiple parks catering to the outdoors lifestyle.

Chris Loeffler, CEO of Caliber, said, “Funding this project initiates the turnaround of a hotel asset we acquired in 2018 that was negatively impacted by the pandemic. Through the combination of investor equity and a new construction loan, we have fully capitalized the first phase of this built-for-purpose housing complex that will meet the growing housing needs of this vibrant community.”

“Our team continues to see a growing number of distressed or abandoned assets across the marketplace. In this case, we developed and are executing our own solution to an underperforming asset that we expect to provide a long-term, attractive return for our investors and partners,” Loeffler concluded.

The SP10 project is part of a Caliber-sponsored single asset syndication, which is continuing to accept new investors.

With panoramic views of South Mountain Park, the 104 apartments will include 23 studio, 80 one-bedroom and one two-bedroom units. Each apartment will have a full kitchen and washer/dryer units. The ground floor will feature Class A amenities with a focus on co-working space and club amenities designed for work-from-home residents. The 88 low-density townhome-style units surrounding the tower will average just over 1,200 square feet in size and some will include direct access to a garage.

Caliber expects to begin construction on the tower phase of this complex in the fall.

Editors Note: Additional renderings are available upon request.

About Caliber (CaliberCos Inc.) (NASDAQ: CWD)

With more than $2.9 billion of managed assets, including estimated costs to complete assets under development, Caliber’s 15-year track record of managing and developing real estate is built on a singular goal: make money in all market conditions. Our growth is fueled by our performance and our competitive advantage: we invest in projects, strategies, and geographies that global real estate institutions do not. Integral to our competitive advantage is our in-house shared services group, which offers Caliber greater control over our real estate and visibility to future investment opportunities. There are multiple ways to participate in Caliber’s success: invest in Nasdaq-listed CaliberCos Inc. and/or invest directly in our Private Funds.

Forward-Looking Statements

This press release contains “forward-looking statements” that are subject to substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this press release are forward-looking statements. Forward-looking statements contained in this press release may be identified by the use of words such as “anticipate,” “believe,” “contemplate,” “could,” “estimate,” “expect,” “intend,” “seek,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “target,” “aim,” “should,” "will” “would,” or the negative of these words or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements are based on the Company’s current expectations and are subject to inherent uncertainties, risks and assumptions that are difficult to predict. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. These and other risks and uncertainties are described more fully in the section titled “Risk Factors” in the final prospectus related to the Company’s public offering filed with the SEC and other reports filed with the SEC thereafter. Forward-looking statements contained in this announcement are made as of this date, and the Company undertakes no duty to update such information except as required under applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240626178731/en/

Caliber:

Victoria Rotondo

+1 480-295-7600

Victoria.Rotondo@caliberco.com

Media Relations:

Kelly McAndrew

Financial Profiles

+1 310-622-8239

KMcAndrew@finprofiles.com

Source: Caliber

FAQ

What is Caliber's new housing development project in Ahwatukee?

Caliber's new housing development project in Ahwatukee involves converting a 160-room hotel into 104 apartment units and constructing 88 townhouse-style units.

When did Caliber begin demolition for the SP10 project?

Caliber began demolition on the interior of the tower for the SP10 project in May.

How many units will Caliber's SP10 project add to Ahwatukee?

Caliber's SP10 project will add a total of 192 new housing units to Ahwatukee, including 104 apartments and 88 townhouse-style units.

What amenities will be available in Caliber's new housing complex in Ahwatukee?

Caliber's new housing complex in Ahwatukee will feature Class A amenities, co-working spaces, club amenities, full kitchens, and washer/dryer units.

How is Caliber funding the first phase of the SP10 project?

Caliber is funding the first phase of the SP10 project through a combination of investor equity and a new construction loan.