Bay Street News

Sachem Capital Reports Second Quarter 2024 Results – Reports Quarterly Revenues of $15.1 Million

Company to Host Webcast and Conference Call

BRANFORD, Conn., Aug. 14, 2024 (GLOBE NEWSWIRE) — Sachem Capital Corp. (NYSE American: SACH), a real estate lender that specializes in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property, today announced its financial results for the second quarter ended June 30, 2024.

John Villano, CPA, Sachem Capital’s Chief Executive Officer, stated: “During the second quarter, we maintained our disciplined approach across our business by retaining cash, being selective with our lending, and exercising prudence in our borrowing. Specifically, in the second quarter we reduced the total amount of our indebtedness by $33.8 million, which includes a repayment of $23.7 million of unsecured unsubordinated notes. We will continue to build our platform and strengthen our balance sheet for the remainder of 2024 with a view towards growth in 2025 as accretive capital becomes available. Lastly, since our inception as a public company in February 2017, management has built a reliable and robust lending platform, paid an excellent stream of dividends and, most importantly, increased book value during some volatile market periods.”

Results of operations for quarter ended June 30, 2024

Total revenue for the quarter was $15.1 million, compared to $16.3 million for the quarter ended June 30, 2023. Interest income totaled $11.8 million, compared to $11.9 million in the same quarter in 2023. The decrease in interest income was due primarily to lower number of loans originated, modified or extended in comparison to the quarter ended June 30, 2023. As a result, fee income from loans, primarily made up of origination fees, were down approximately 37.2% compared to the quarter ending June 30, 2023.

Total operating costs and expenses for the quarter ended June 30, 2024 were $18.5 million compared to $10.3 million for the same 2023 period. The increase is primarily attributable to a $8.5 million provision for credit losses compared to $94,000 for the quarter ended June 30, 2023. This increase was partially offset by a decrease in compensation and employee benefits of $0.2 million because of a decrease in headcount between periods.

Net loss attributable to common shares for the three months ended June 30, 2024 was $4.1 million, or $0.09 per share, compared to net income attributable to common shares of $4.8 million, or $0.11 per share, for the three months ended June 30, 2023. The change is mainly attributable to the larger provision for credit losses reserves as mentioned above.

Balance Sheet

Total assets were $586.3 million at June 30, 2024 compared to $625.5 million at December 31, 2023. At June 30, 2024, cash and cash equivalents were $10.6 million and investments in partnerships were $47.0 million. Net mortgages receivable for the quarter were $485.7 million. Total liabilities at June 30, 2024 were $356.2 million compared to $395.5 million at December 31, 2023.

Total indebtedness at June 30, 2024 was $338.9 million. This includes: $259.9 million of unsecured notes payable (net of $4.8 million of deferred financing costs), $55.0 million outstanding on the Needham Bank revolving credit facility, $23.0 million outstanding on the Churchill master repurchase financing facility and $1.0 million outstanding on a New Haven Bank mortgage loan. We intend to repay $34.5 million of unsecured unsubordinated notes due in December 2024 either by refinancing them or with a combination of drawdowns on its existing credit facilities, current cash on hand and principal repayments of its mortgage loans.

Total shareholders’ equity at June 30, 2024 rose $0.1 million to $230.2 million compared to $230.1 million at December 31, 2023. The change was primarily due to additional paid-in capital of $6.1 million and a partly-offsetting increase in accumulated deficit of $5.7 million and a decrease in accumulated other comprehensive income of $0.3 million.

Dividends

On August 6, 2024, we paid a quarterly dividend of $0.08 per share to shareholders of record on July 29, 2024.

Sachem currently operates and qualifies as a Real Estate Investment Trust (REIT) for federal income taxes and intends to continue to qualify and operate as a REIT. Under federal income tax rules, a REIT is required to distribute a minimum of 90% of taxable income each year to its shareholders, and the Company intends to comply with this requirement for the current year.

Investor Conference Webcast and Call

The Company is hosting a webcast and conference call Wednesday, August 14, 2024 at 8:00 a.m. Eastern Time, to discuss in greater detail its financial results for the quarter ended June 30, 2024. A webcast of the call may be accessed on the Company’s website at https://ir.sachemcapitalcorp.com/ir-calendar.

Interested parties can access the conference call via telephone by dialing toll free 877-704-4453 for U.S. callers or +1-201-389-0920 for international callers.

Replay

The webcast will also be archived on the Company’s website and a telephone replay of the call will be available through Wednesday, August 28, 2024 and can be accessed by dialing 1-844-512-2921 for U.S. callers or +1 412-317-6671 for international callers and by entering replay passcode: 13746956.

About Sachem Capital Corp

Sachem Capital Corp. is a mortgage REIT that specializes in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property. It offers short-term (i.e., three years or less) secured, nonbanking loans to real estate investors to fund their acquisition, renovation, development, rehabilitation, or improvement of properties. The Company’s primary underwriting criteria is a conservative loan to value ratio. The properties securing the loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is secured by a first mortgage lien on real estate and is personally guaranteed by the principal(s) of the borrower. The Company also makes opportunistic real estate purchases apart from its lending activities.

Forward Looking Statements

This press release may contain forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “estimate,” “expect,” “project,” “plan,” “seek,” “intend,” “believe,” “may,” “might,” “will,” “should,” “could,” “likely,” “continue,” “design,” and the negative of such terms and other words and terms of similar expressions are intended to identify forward-looking statements. These forward-looking statements are based primarily on management’s current expectations and projections about future events and trends that management believes may affect the Company’s financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to several risks, uncertainties and assumptions as described in the Annual Report on Form 10-K for 2023 filed with the U.S. Securities and Exchange Commission on April 1, 2024. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this press release may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, level of activity, performance, or achievements. In addition, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company disclaims any duty to update any of these forward-looking statements. All forward-looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements as well as others made in this press release. You should evaluate all forward-looking statements made by the Company in the context of these risks and uncertainties.

Investor & Media Contact:
Email: investors@sachemcapitalcorp.com

 
SACHEM CAPITAL CORP.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
(unaudited)
 
    June 30, 2024   December 31, 2023
        (audited)
Assets            
Cash and cash equivalents   $ 10,577     $ 12,598  
Investment securities (at fair value)     1,798       37,776  
Mortgages receivable     500,133       499,235  
Less: Allowance for credit losses     (14,405 )     (7,523 )
Mortgages receivable, net of allowance for credit losses     485,728       491,712  
Interest and fees receivable, net     7,769       8,475  
Due from borrowers, net     5,636       5,597  
Real estate owned     3,872       3,462  
Investments in partnerships     46,952       43,036  
Investments in rental real estate, net     11,904       10,554  
Property and equipment, net     3,277       3,373  
Other assets     8,808       8,956  
Total assets   $ 586,321     $ 625,539  
             
Liabilities and Shareholders’ Equity            
Liabilities:            
Notes payable (net of deferred financing costs of $4,826 and $6,048)   $ 259,913     $ 282,353  
Repurchase facility     22,993       26,461  
Mortgage payable     1,042       1,081  
Lines of credit     55,000       61,792  
Accrued dividends payable           5,144  
Accounts payable and accrued liabilities     2,800       2,322  
Advances from borrowers     8,893       10,998  
Below market lease intangible     665       665  
Deferred revenue     4,847       4,647  
Total liabilities     356,153       395,463  
             
Commitments and Contingencies            
             
Shareholders’ equity:            
Preferred shares – $.001 par value; 5,000,000 shares authorized; 2,903,000 shares designated as Series A Preferred Stock; 2,206,128 and 2,029,923 shares of Series A Preferred Stock issued and outstanding at June 30, 2024 and December 31, 2023, respectively   $ 2     $ 2  
Common shares – $.001 par value; 200,000,000 shares authorized; 47,547,051 and 46,765,483 issued and outstanding at June 30, 2024 and December 31, 2023     48       47  
Additional paid-in capital     255,928       249,826  
Accumulated other comprehensive income           316  
Accumulated deficit     (25,810 )     (20,115 )
Total shareholders’ equity     230,168       230,076  
Total liabilities and shareholders’ equity   $ 586,321     $ 625,539  
 
 
SACHEM CAPITAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(dollars in thousands, except share and per share data)
 
                         
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2024
  2023
  2024
  2023
Revenues                        
Interest income from loans   $ 11,754     $ 11,898     $ 24,395     $ 22,882  
Fee income from loans     2,083       3,319       4,699       5,489  
Income from partnership investments     1,217       1,006       2,413       1,556  
Other investment income     70       34       386       633  
Other income     22       16       57       30  
Total revenues     15,146       16,273       31,950       30,590  
                         
Operating expenses                        
Interest and amortization of deferred financing costs     6,973       7,139       14,442       14,012  
Compensation and employee benefits     1,365       1,562       3,308       3,342  
General and administrative expenses     1,258       1,317       2,496       2,215  
Provision for credit losses related to loans     8,503       94       9,868       197  
Other expenses     362       213       866       297  
Total operating expenses     18,461       10,325       30,980       20,063  
Income before other income (loss)     (3,315 )     5,948       970       10,527  
                         
Other income (loss)                        
Impairment loss     (77 )     (413 )     (77 )     (413 )
Gain (loss) on sale of real estate and property and equipment, net     275       (21 )     264       127  
Gain on equity securities     61       184       458       577  
Total other income (loss), net     259       (250 )     645       291  
Net income (loss)     (3,056 )     5,698       1,615       10,818  
Preferred stock dividend     (1,068 )     (925 )     (2,091 )     (1,850 )
Net income (loss) attributable to common shareholders   $ (4,124 )   $ 4,773     $ (476 )   $ 8,968  
                         
Basic earnings (loss) per common share   $ (0.09 )   $ 0.11     $ (0.01 )   $ 0.21  
Diluted earnings (loss) per common share   $ (0.09 )   $ 0.11     $ (0.01 )   $ 0.21  
Basic weighted average common shares outstanding     47,504,875       43,844,285       47,415,630       43,321,303  
Diluted weighted average common shares outstanding     47,504,875       43,844,285       47,415,630       43,321,303  
 
 
SACHEM CAPITAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(dollars in thousands)
 
             
    Six Months Ended
    June 30,
    2024   2023
CASH FLOWS FROM OPERATING ACTIVITIES            
Net income   $ 1,615     $ 10,818  
Adjustments to reconcile net income to net cash provided by operating activities:            
Amortization of deferred financing costs and bond discount     1,275       1,225  
Depreciation expense     189       109  
Stock-based compensation     437       396  
Provision for credit losses related to loans     9,868       197  
Impairment Loss     77       413  
(Gain) on sale of real estate and property and equipment, net     (264 )     (127 )
(Gain) on equity securities     (458 )     (577 )
Changes in operating assets and liabilities:            
Interest and fees receivable, net     411       (1,456 )
Other assets     80       (700 )
Due from borrowers, net     (624 )     (1,521 )
Accounts payable and accrued liabilities     478       153  
Deferred revenue     200       455  
Advances from borrowers     (2,105 )     2,694  
Total adjustments     9,564       1,261  
NET CASH PROVIDED BY OPERATING ACTIVITIES     11,179       12,079  
             
CASH FLOWS FROM INVESTING ACTIVITIES            
Purchase of investment securities     (7,767 )     (18,347 )
Proceeds from the sale of investment securities     43,964       6,560  
Purchase of interests in investment partnerships, net     (3,916 )     (4,568 )
Proceeds from sale of real estate owned     1,403       191  
Acquisitions of and improvements to real estate owned, net           (180 )
Purchases of property and equipment     (26 )     (722 )
Improvements in investment in rental real estate     (1,424 )      
Principal disbursements for mortgages receivable     (84,328 )     (114,468 )
Principal collections on mortgages receivable     79,628       66,356  
Other assets – pre-offering costs           19  
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES     27,534       (65,159 )
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Net proceeds from (repayment of) lines of credit     (6,792 )     32,313  
Net proceeds from (repayment of) repurchase facility     (3,468 )     7,976  
Proceeds from (repayment of) mortgage payable     (39 )     899  
Dividends paid on common shares     (10,363 )     (11,048 )
Dividends paid on Series A Preferred Stock     (2,091 )     (1,850 )
Proceeds from issuance of common shares, net of expenses     2,050       9,689  
Repurchase of common shares           (225 )
Proceeds from issuance of Series A Preferred Stock, net of expenses     3,616       517  
Gross proceeds from (repayment of) notes payable     (23,647 )     6,225  
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES     (40,734 )     44,496  
             
NET DECREASE IN CASH AND CASH EQUIVALENTS     (2,021 )     (8,584 )
             
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD     12,598       23,713  
             
CASH AND CASH EQUIVALENTS – END OF PERIOD   $ 10,577     $ 15,129  


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