– 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) |
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| 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) |
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| 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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