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Local investment firm eyes raising $50M

BY WAYNE SCHUTSKY Progress Managing Editor

AScottsdale-based real estate investment firm launched its first online public offering in February, capitalizing on years of growth driven by investments in Opportunity Zones throughout Arizona.

On Feb. 5, Caliber hosted a party in downtown Phoenix to announce a Reg A+ campaign to raise up to $50 million over the next 12 months by offering 12.5 million shares at $4 per share.

Caliber’s announcement was not the kickoff for a traditional IPO, though.

Reg A+ was included in the 2013 federal JOBS Act as a way to make it easier for entrepreneurs and small businesses to generate investment. The law also made it easier for individuals to invest in these ventures by lowering the financial qualifications required to invest.

Chris Loeffler, Caliber’s co-founder and CEO, called the process “a big wide platform (with) lots of shareholders – everybody gets to participate in growing the company.”

Typically, investors in new companies must be accredited with a yearly income over $200,000 or net worth of at least $1 million and meet high investment minimums dictated by the firms.

Reg A+ significantly lowers the threshold.

“What it allows us to do is raise up to $50 million from almost anybody, “Loeffler said. “They don’t have to be an accredited investor anymore…their limitation, per the SEC’s rules, is they can invest up to 10 percent of their net worth.”

The minimum investment in Caliber’s Reg A+ offering is $2,500, well below the minimum investment of $35,000 to $250,000 in its funds.

Caliber CEO Chris Loeffler, right, listen's to a speaker at his company’s first public offering. (Courtesy of Caliber)

Loeffler views the lower barrier as an asset and said it will allow many of the individuals who have followed the company for years – from subcontractors to real estate agents – to invest in the growing company.

According to the SEC, there are some basic requirements companies have to meet before becoming eligible for a Reg A+ offering, including complying with provisions designed to prevent “bad actors” from taking advantage of the system.

Caliber, which is pursuing a Tier 2 offering allowing for up to $50 million, also must provide audited financial statements and file annual and mid-year reports to the SEC.

Even with these protections in place, Reg A+ has received significant criticism since the SEC finalized rules in 2015 due to relative lack of success associated with the fundraising model.

Even companies once held up as Reg A+ success stories have taken hits in recent years.

Just weeks ago, the SEC announced it reached a $400,000 settlement with Venkata Meenavalli, CEO of Longfin Corp, over allegations the fintech company lied about being based in the U.S. Over the course of its investigation, the SEC recovered $26 million in “illgotten gains” from Longfin, once considered one of the most successful Reg A+ companies.

Loeffler said Caliber is something of an outlier when it comes to Reg A+ offerings because it is not a startup and has a decade-long proven track record. “We’re one of the few companies that has lots of assets and has lots of momentum and that has 12 years of operating history allowing people to invest via this vehicle,” Loeffler said.

According to Caliber’s SEC filing, the company has $172,726,013 in total assets versus $165,642,447 in total liabilities.

The Barron’s report backs up Loeffler’s argument.

According to Barron’s, the over 300 Reg A+ offerings it analyzed, which included everything from cannabis paraphernalia and flying cars to a UFO venture by former Blink 182 guitarist Tom DeLonge, were short on proven concepts. “Proven ideas like this are rare among

microcaps,” Barron’s noted, referencing BrewDog, a successful Scottland-based brewpub chain that used Reg A+ to expand to the U.S.

Based on its proven track record, Caliber appears to have more in common with BrewDog than the other businesses that have used Reg A+ in the past.

Loeffler said the next step for the company will be listing on an exchange and pursuing a more traditional IPO, though he declined to comment on a timeline for those moves, citing industry rules.

Caliber leadership made the decision back to jump on Opportunity Zones early while many others were waiting for more guidance from the federal government.

In 2019, Rodney Riley, Caliber’s director of acquisitions and development, told the Progress the decision tied directly into its early talks about going public.

The company was building up its accounting and legal teams as it explored the possibility of going public, which also gave the company the resources and people it needed to get a head start on the considerable compliance requirements associated with opportunity zones when talking about the potential legislation began to heat up.

CEO Chris Loeffler “saw it as opportunity to take advantage of what we were already building,” Riley said.

Loeffler is bullish on the company’s ability to sustain its growth through this latest fundraising effort.

According to the company, the Reg A+ offering will allow the company to scale its operating, reduce debt, invest in its funds and improve infrastructure and operating and control systems.

Aspringtime rite of passage for baseball fans returns to the Valley next weekend, with the dawning of the 2020 Cactus League.

The 15-team league, which has its first game Friday, Feb. 21, and runs through the end of March, brings Major League Baseball competition to 10 fields in the region. The games technically don’t count in the year-end standings, but make a huge impact on the state’s economy, according to ASU’s Daniel Marburger.

Marburger, a clinical professor in the W.P. Carey School of Business, said the league makes a unique impact unlike any other sporting event in the region.

“It’s a little bit different than trying to estimate the economic impact of, let’s say, the Super Bowl, which is people coming in from the outside to go to the game, they spend some money here for the weekend and then they go back, because with the Cactus League, you have people who are BY CHRISTOPHER BOAN Progress Staff Writer retirees, snowbirds, who have chosen Arizona, chosen Phoenix, because it’s where the Cubs play,” Marburger said.

“Maybe they would have retired in Florida, or maybe they’d be snowbirds in Florida if the Cubs were playing in Florida,” he continued, adding:

“So, it’s not just visitors who came up for an event and then went home, or even a better example would be, let’s say, the Arizona Cardinals. Well, most people who go to a Cardinals game, live in Phoenix, Phoenix area, and therefore you really don’t count them, because they’re not coming in from the outside. But when you have permanent residents or semi-permanent residents who have actually chosen Phoenix because of Cactus League baseball.”

The research by Marburger and his colleagues at the W.P. Carey School of Business backs up his point.

The college’s 2018 study found the Cactus League brought in $315.7 million in economic impact, with $122.6 million being spent on bars and restaurants while $89.8 million was spent on lodging and accommodations.

What stands out for Cactus League Baseball Association Executive Director Bridget Binsbacher is the impact the exhibition has on the communities hosting the league’s 10 stadiums.

“I’ve been focusing on really trying to understand the different models existing in all of our Spring Training cities,” Binsbacher said. “They’re all different and their impact on the community, their relationship with the community, with the team, they’re all unique to one another.”

The league, which was founded in 1947, has entrenched itself in Grand Canyon State sporting lore, with generations of fans flocking to the venues each year.

ASU’s economic impact study found the league drew 1,737,975 fans for the 2019 season, across 220 games, averaging out at 7,900 people per contest.

Leading the way in 2019, in terms of attendance, were the Chicago Cubs, who drew 13,939 fans per game, a .4% increase over 2018.

The Arizona Diamondbacks (10,628) and Los Angeles Dodgers (10,326) were the other franchises to draw more than 10,000 fans per game in 2019.

The San Diego Padres saw the largest year-over-year increase, in terms of pergame attendance, gaining 12%, to 6,704 fans per contest.

The league’s ability to draw in fans from across the country year after year is important for a number of reasons, according to Binsbacher.

Mainly, attendance is vital, as the league itself is a nonprofit organization using its proceeds to fund a number of causes, such as scholarships for local teenagers.

Binsbacher believes the league can gain on its altruistic roots, serving the region off the field while entertaining the masses with top-notch action on the diamond.

“As a result of volunteer work and the various relationships we’ve built, we gen

seeCACTUS LEAGUE page 34

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erate more than $2.6 million in funding,” Binsbacher said. “Whether it’s scholarships or grants or different funding for various programs, mostly youth-based in various communities.

“So, it’s just another impact we weren’t talking about before we’re really starting to look at how we can measure it and really continue to focus and grow.”

Above all, the Cactus League serves as states in the entire country hosting these types of games and Arizona is one of them. And we do an amazing job at it and it has a tremendous impact on the state as a whole.

“It’s a tremendous opportunity and we really have to take care of it and understand what it means to our economy, to our communities, to our local businesses.” Marburger saw the impact first-hand, watching the league bloom from its more austere roots to an economic powerhouse CACTUS LEAGUE from page 32

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a month-long advertisement for the state and its way of life, according to Marburger. “You’ve got a bunch of teams, and if you’re loyal to one of those teams and you’re from someplace else and you come here for a vacation or come here as a snowbird or a retiree,” Marburger said. “Now these are people who are permanent or semi-permanent residents who were influenced by the Cactus League.”

This draw isn’t lost on Binsbacher, who cited the state’s unique position as one of two states, along with Florida, hosting Spring Training games, as an economic tour de force.

“We’re so fortunate to have this league here,” Binsbacher said. “There are two

and continues to grows every year.

The ASU economic professor remembers when he was a Ph.D. student in Tempe during the late-1980s, when he could walk to see the Cubs play at Hohokam Stadium in Mesa.

Now, the Cubs have their own palatial complex, Sloan Park, which was built in 2014 for $99 million, with a league-high capacity of 15,000.

Marburger believes the league’s longevity has helped bake baseball into the bloodlines of local residents, as we’ve grown accustomed to seeing the best players in the world play in intimate venues throughout the region for decades.

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