Complicated contributions to Caliber equate to massive growth plans

SCOTTSDALE, Arizona — Last week, Caliber Hospitality Trust announced it was adding seven more hotels to its portfolio worth approximately $120 million, this time from Atlanta-based Satori Collective. From the prior sentence, one might assume that this is a REIT acquiring seven hotels, but neither of those assumptions is correct. It’s much more complicated than that.

Caliber Hospitality Trust (CHT) isn’t acquiring the hotels; rather, Satori is “contributing” them to CHT. The company isn’t a REIT but is set up as an “UP-C.” Jennifer Schrader, president, co-founder and director at Scottsdale, Arizona-based CaliberCos Inc., the publicly traded parent company of Caliber Hospitality Trust, said the complexity is intentional.

“After having gone through this for approximately two years, the best way I can summarize it is that this is the most complex way to acquire real estate,” she said, laughing.

As to whether CHT is technically a REIT, Schrader said that’s a complex answer, too. “We just haven’t made that tax election yet, so it looks, smells and feels like a REIT. It’s often referred to as a REIT. But when we get technical, it’s an UP-C.”

“Technical” is a good way to explain how CHT is building its portfolio.

• Caliber initially formed CHT in 2022 by contributing six hotels it owned. Those hotels are managed by New York City-based Highgate Hotel, which also manages a few Caliber properties that sit outside CHT.
• In June 2023, Caliber reached an agreement with Virginia Beach, Virginia-based L.T.D. Hospitality Group for the company to contribute nine of its hotel assets to CHT. While only one of the nine has officially closed, Schrader the first one was complicated and the rest should close much faster.
• The seven hotels Satori is contributing are expected to close in early 2025. The portfolio includes a mix of middle-market full-service, select-service and extended-stay hotels in Madison, Wisconsin; Peoria, Illinois; Houston; Columbus, Georgia and Tuscaloosa, Alabama, representing Marriott, Hilton and IHG brands. The hotels will continue to be operated by Atlanta-based Aperture Hotels (which is a Satori company).

When these three different sets of transactions are complete, CHT will have 22 assets in its portfolio worth approximately $530 million. But Schrader said CHT is just getting started in terms of adding assets because Caliber is in active discussions with other potential third-party contributors to CHT and is expected to make additional announcements in the coming months.

In terms of scale, Schrader said CHT has a lot of room to grow. The first 22 assets are valued at approximately $530 million, and Caliber would like CHT to get a little over $1 billion in assets under management. Schrader said those deals would be contributions from two to three other groups that CHT is currently in negotiations with (she estimated that could roughly amount to 25 to 30 more hotels). The growth plans don’t stop there as Schrader said Caliber would like to get CHT to at least another $2 to $3 billion in AUM over the next few years.

Inside the ‘contributions’

L.T.D. and Satori are contributing the hotels in exchange for “OpCo units (shares)” in CHT and a portion of equity back on the property.


This gives the contributing parties an opportunity to bring in some cash to either their families or their investors, or some combination.
Jennifer Schrader
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What are the benefits of this type of deal, as opposed to a more traditional transaction? Schrader said there are significant tax advantages, which are the driving factor for the owner, especially in what continues to be a challenging M&A and debt market.

“This gives the contributing parties an opportunity to bring in some cash to either their families or their investors, or some combination,” she said.

So, what are the benefits for CHT? It’s a source to acquire properties in a unique way against competitors.

“What we recognized very early on the pandemic was assets needed rescue capital, and we couldn’t, in our case, place it because we had different ownership structures for each of our assets,” Schrader said.

She also said CHT is either assuming the existing financing if it’s a lower market rate or seeking portfolio refinancing while the hotels are being contributed.

What are the commonalities of the 22 assets? Schrader said they are primarily in the SMILE region (with some in the Midwest, so more of a “squiggly SMILE,” she said). CHT wants stabilized or nearly stabilized assets that have great demand drivers. In terms of segments, the hotels run the gamut from select- or limited-service, full-service, extended-stay and lifestyle.


The Holiday Inn Newport in Virginia was the first of L.T.D.'s contributions to close for Caliber Hospitality Trust.

Retaining management

One of the drivers for companies to contribute is that because of its structure, CHT cannot self-manage its properties. That’s a draw for companies that want to continue to manage their assets.

“Often we’re seeing family-owned hotel companies that are second- or third-generation, and they’re looking for an exit for the parents or the grandparents, but they want to retain the management,” she said. (For example, L.T.D. will continue to manage the nine assets it contributed.)

Having multiple management companies working with CHT has other benefits for future deals, Schrader said. “If there are groups that don’t want to retain management, then, depending on the geographical location and also the type of property that it is, then we would look to one of the existing managers to bid on that,” she said.

Schrader said the discussions with Satori started about 12 months ago. The portfolio was attractive for CHT because it has the top three brands in locations, which made sense. While the process has taken a lot of time, Schrader said it should get faster now. She said that meant asking Satori and other potential contributors to slow down the process as CHT worked through the complexity of closing that first contribution from L.T.D.

“Now that we’ve done the heavy lifting… we see it as becoming more of a mechanical process and speeding up,” she said.


Historically, hospitality has always looked back in order to forecast forward; internally, we spend a lot more time looking forward than we do looking back.
Jennifer Schrader
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Schrader said the contributions can also be a way to mitigate the bid-ask spread that is still out there. “We see this as a solution for not only the disposition of an asset for a group but also perhaps the disposition of an entire portfolio, or how to address those generational needs for the family-owned type companies,” she said. “Because we haven’t seen a whole lot of hotels trade over the past couple of years due to the debt market, this has been a solution that we’ve been able to bring to the table, and that’s what’s been so attractive.”

For tax purposes, Schrader said CHT intends to hold these assets for at least seven years. She also said the current strategy only includes U.S. assets.

Growing the portfolio

Schrader said more announcements about contributions from other parties should be coming in the near future.

“We see this as a nice balance, and it’s something that actually differentiates CHT,” she said. “Historically, the limited- and select-service properties have always been steady as they go, but there’s a lot of opportunity to make money in full-service properties, as well as lifestyle and extended-stay properties.”

Currently, resorts and luxury don’t fit CHT’s strategy because the risk profile is too high. Overall, Schrader said CHT is taking a unique view of how it sees the current market.

“We are seeing the opportunities there and taking more of a forward-view approach,” she said. “Historically, hospitality has always looked back in order to forecast forward; internally, we spend a lot more time looking forward than we do looking back.”