Sachem Capital Reports 100% Revenue Growth and Net Income of $3.4 Million for the Third Quarter of 2021

Conference Call and Webcast to be held at 8:00 AM EDT on Friday, November 5, 2021

BRANFORD, Conn., Nov. 04, 2021 (GLOBE NEWSWIRE) -- Sachem Capital Corp. (NYSE American: SACH) announces its financial results for the quarter and nine months ended September 30, 2021. The company will host a conference call on Friday, November 5, 2021 at 8:00 a.m. Eastern Daylight Time to discuss in greater detail its financial condition and operating results for the third quarter of 2021.

John Villano, CPA, the company’s Chief Executive and Chief Financial Officer stated: “We achieved 100% revenue growth over the same period last year, as well as net income of $3.4 million for the third quarter of 2021, which provides further validation our long-term strategy is working. We have maintained a robust loan pipeline, a healthy balance sheet and continue to generate solid cash flow. Importantly, with the proceeds of our recent Series A Preferred offering, combined with the addition of our Churchill credit facility, we are poised for further growth during the balance of the year and beyond. As previously discussed, we are diversifying our holdings, including larger loans with established developers. We are also opportunistically expanding and diversifying the geographic footprint of our mortgage loan portfolio beyond Connecticut. We have accomplished these goals while maintaining strict underwriting criteria and a conservative loan to value ratio. Looking ahead, we are witnessing strong market demand for our loan products and remain highly encouraged by the outlook for the business.”

Results of operations – three months ended September 30, 2021

Total revenue for the three months ended September 30, 2021 was approximately $8.5 million compared to approximately $4.3 million for the three months ended September 30, 2020, an increase of approximately $4.3 million, or 100%. Interest income and origination fees were approximately $6.1 million and $1.0 million, respectively. In comparison, for the three months ended September 30, 2020, interest income and origination fees were approximately $3.5 million and $393,000, respectively. In the third quarter of 2021 the company had approximately $256,000 of gains from the sale of investment securities compared to a loss of approximately $22,000 for the 2020 period. Investment income for the third quarter of 2021 increased to $276,000 compared to approximately $32,000 for the same period last year. Other income was approximately $580,000 for the third quarter of 2021, compared to approximately $337,000 for the same period last year.

Total operating costs and expenses for three months ended September 30, 2021 were approximately $4.2 million compared to approximately $2.1 million for the three months ended September 30, 2020. The increase in operating costs and expenses is primarily attributable to the increase in interests expense and amortization of deferred financing costs, which, in turn, is a direct result of an increase in overall indebtedness, particularly the unsubordinated unsecured notes.

Net income attributable to common shareholders for the three months ended September 30, 2021 was approximately $3.4 million, or $0.12 per share, compared to $2.1 million, or $0.10 per share for the three months ended September 30, 2020.

Results of operations – nine months ended September 30, 2021

Total revenue for the nine months ended September 30, 2021 was approximately $20.9 million compared to approximately $12.9 million for the nine months ended September 30, 2020, an increase of approximately 62.5%. For the nine months ended September 30, 2021, interest income was approximately $15.3 million and origination fees were approximately $2.3 million, respectively. In comparison, for the nine months ended September 30, 2020, interest income and origination fees were approximately $9.6 million and $1.6 million, respectively. Net gain on the sale of investment securities was approximately $212,000 for the 2021 period compared to net gains of approximately $415,000 for the 2020 period. Investment income was approximately $699,000 for the first nine months of 2021 compared to approximately $163,000 for the same period last year. Other income was approximately $1.6 million for the first nine months of 2021, compared to approximately $904,000 for the same period last year.

Total operating costs and expenses for the nine months ended September 30, 2021, were approximately $11.9 million compared to $6.3 million for the nine months ended September 30, 2020. The increase in operating costs and expenses is primarily attributable to the increase in the company’s unsecured, unsubordinated notes while growing our lending operations.

Net income attributable to common shareholders for the nine months ended September 30, 2021, was approximately $8.1 million, or $0.32 per share, compared to $6.6 million, or $0.30 per share for the nine months ended September 30, 2020.

Financial Condition

At September 30, 2021, total assets were approximately $313.4 million compared to $226.7 million at December 31, 2020. The increase was due primarily to the increase in cash and cash equivalents and investment securities of $18.6 million, an increase of the mortgage loan portfolio of approximately $64.3 million, an increase in investment in partnership of approximately $1.8 million, a net increase in property and equipment of approximately $756,000, and increases in due from borrowers of approximately $1.4 million and interest and fees receivable of approximately $885,000, offset by a decrease in real estate owned of approximately $2.1 million.

Total liabilities at September 30, 2021 were approximately $154.6 million compared to $145.8 million at December 31, 2020. This increase is principally due to an increase in the line of credit of approximately $2.0 million, advances from borrowers of $8.2 million and deferred revenue of approximately $1.8 million offset by decrease in dividends payable of $2.7 million, mortgage payable of $768,000, other loans of approximately $258,000, and accounts payable and accrued expenses of approximately $180,000.

Shareholders’ equity at September 30, 2021 was approximately $158.8 million compared to approximately $80.9 million at December 31, 2020. This increase was due primarily to net proceeds of $45.5 million from the sale of shares of our Series A Preferred Stock, net proceeds of $30.9 million from the sale of common shares and net income of approximately $8.1 million.

On October 13, 2021, the Company authorized and declared a quarterly dividend of $0.12 per share to be paid to shareholders of record as of the close of trading on the NYSE American on October 25, 2021. The dividend was paid on October 29, 2021.

Investor Conference Call

The company will host a conference call on Friday, November 5, 2021 at 8:00 a.m., Eastern Daylight Time, to discuss in greater detail its financial results for the third quarter ending September 30, 2021, as well as its outlook for the balance of 2021.

Interested parties can access the conference call via telephone by dialing toll free 1-877-545-0523 for U.S. callers or 973-528-0016 for international callers and entering the entry code: 664173. A webcast of the call may be accessed at https://www.webcaster4.com/Webcast/Page/2304/43586 or on Sachem’s website at https://ir.sachemcapitalcorp.com/ir-calendar.

The webcast will also be archived on the company’s website and a telephone replay of the call will be available approximately one hour following the call through Friday, November 19, 2021 and can be accessed by dialing 877-481-4010 for U.S. callers or 919-882-2331 for international callers and by entering replay passcode: 43586.

About Sachem Capital Corp.

Sachem Capital Corp. specializes in originating, underwriting, funding, servicing, and managing a portfolio of first mortgage loans. It offers short-term (i.e., three years or less) secured, non­banking loans (sometimes referred to as “hard money” loans) to real estate investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The company does not lend to owner occupants. The company’s primary underwriting criteria is a conservative loan to value ratio. The properties securing the company’s 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. Each loan is also personally guaranteed by the principal(s) of the borrower, which guaranty may be collaterally secured by a pledge of the guarantor’s interest in the borrower. The company also makes opportunistic real estate purchases apart from its lending activities. The company believes that it qualifies as a real estate investment trust (REIT) for federal income tax purposes and has elected to be taxed as a REIT beginning with its 2017 tax year.

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.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our 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 our Annual Report on Form 10-K for 2020 filed with the U.S. Securities and Exchange Commission. 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 we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements.   In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements.   We disclaim any duty to update any of these forward-looking statements.

All forward-looking statements attributable to us 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 us in the context of these risks and uncertainties.

Investor & Media Contact:
Crescendo Communications, LLC
Email: sach@crescendo-ir.com
Tel: (212) 671-1021

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SACHEM CAPITAL CORP.
BALANCE SHEETS

    September 30, 2021   December 31, 2020
       (Unaudited)      (Audited)
Assets              
Assets:              
Cash and cash equivalents   $ 19,242,316     $ 19,408,028  
Investment securities     56,080,725       37,293,703  
Investment in partnership     1,804,217        
Mortgages receivable     219,963,291       155,616,300  
Interest and fees receivable     2,705,447       1,820,067  
Other receivables     428,391       67,307  
Due from borrowers     3,431,015       2,025,663  
Prepaid expenses     85,813       71,313  
Property and equipment, net     2,189,887       1,433,388  
Real estate owned     6,774,522       8,861,609  
Other deposits     291,191        
Deferred financing costs, net     354,936       72,806  
Total assets   $ 313,351,751     $ 226,670,184  
             
Liabilities and Shareholders’ Equity              
Liabilities:              
Notes payable (net of deferred financing costs of $4,132,355 and $4,866,058)   $ 110,394,395     $ 109,640,692  
Mortgage payable           767,508  
Line of credit     30,056,159       28,055,648  
Accrued dividends payable           2,654,977  
Accounts payable and accrued expenses     192,670       372,662  
Other loans           257,845  
Security deposits held     2,000       13,416  
Advances from borrowers     10,031,656       1,830,539  
Deferred revenue     3,879,291       2,099,331  
Notes payable     37,498       54,682  
Accrued interest           3,344  
Total liabilities     154,593,669       145,750,644  
             
Commitments and Contingencies              
             
Shareholders’ equity:              
Preferred shares - $.001 par value; 5,000,000 shares authorized; 1,903,000 shares of Series A Preferred Stock issued and outstanding     1,903        
Common stock - $.001 par value; 100,000,000 shares authorized; 28,315,930 and 22,124,801 issued and outstanding     28,316       22,125  
Paid-in capital     160,279,468       83,814,376  
Accumulated other comprehensive loss     (637,990 )     (25,992 )
Accumulated deficit     (913,615 )     (2,890,969 )
Total shareholders’ equity     158,758,082       80,919,540  
Total liabilities and shareholders’ equity   $ 313,351,751     $ 226,670,184  


SACHEM CAPITAL CORP.
STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)

                         
    Three Months Ended   Nine Months Ended
    September 30,    September 30, 
         2021          2020          2021          2020
Revenue:                            
Interest income from loans   $ 6,094,165     $ 3,473,304     $ 15,307,692     $ 9,640,387
Investment income     275,745       32,483       698,556       163,161
Income from partnership investment     35,983             90,225      
Gain (loss) on sale of investment securities     256,418       (21,858 )     212,449       415,301
Origination fees     999,287       393,097       2,348,608       1,551,652
Late and other fees     202,572       10,955       300,471       46,835
Processing fees     50,230       37,445       129,615       123,568
Rental income (loss), net     28,320       9,593       23,105       49,777
Debt Forgiveness                 257,845      
Other income     579,656       336,789       1,579,885       904,071
Total revenue     8,522,376       4,271,808       20,948,451       12,894,752
                         
Operating costs and expenses:                            
Interest and amortization of deferred financing costs     2,589,847       1,262,278       7,541,536       3,564,533
Professional fees     183,503       158,206       666,431       400,868
Compensation, fees and taxes     771,373       500,165       2,175,603       1,232,733
Exchange fees     12,603       22,713       37,397       29,986
Other expenses and taxes     104,583       26,247       149,898       61,484
Depreciation     20,421       15,348       61,286       46,318
General and administrative expenses     294,981       145,251       702,897       412,677
Loss on sale of real estate     94,450       2,816       111,545       7,276
Impairment loss     150,000             469,000       495,000
Total operating costs and expenses     4,221,761       2,133,024       11,915,593       6,250,875
Net income     4,300,615       2,138,784       9,032,858       6,643,877
Preferred stock dividend     (913,791 )           (932,089 )    
Net income attributable to common shareholders     3,386,824       2,138,784       8,100,769       6,643,877
                         
Other comprehensive (loss) gain                        
Unrealized (loss) gain on investment securities     (500,188 )     (72,785 )     (611,998 )     13,282
Comprehensive income   $ 2,886,636     $ 2,065,999     $ 7,488,771     $ 6,657,159
Basic and diluted net income per common share outstanding:                            
Basic   $ 0.12     $ 0.10     $ 0.32     $ 0.30
Diluted   $ 0.12     $ 0.10     $ 0.32     $ 0.30
Weighted average number of common shares outstanding:                            
Basic     27,973,249       22,117,301       24,968,885       22,117,301
Diluted     27,977,095       22,117,301       24,972,837       22,117,301


SACHEM CAPITAL CORP.
STATEMENTS OF CASH FLOW
(unaudited)

             
    Nine Months Ended
    September 30, 
         2021          2020  
CASH FLOWS FROM OPERATING ACTIVITIES              
Net income   $ 9,032,858     $ 6,643,877  
Adjustments to reconcile net income to net cash provided by operating activities:             
Amortization of deferred financing costs and bond discount     839,418       357,497  
Write-off of deferred financing costs     72,806        
Depreciation expense     61,286       46,318  
Stock based compensation     126,538       12,321  
Impairment loss     469,000       495,000  
Loss on sale of real estate     111,545       7,276  
Gain on sale of marketable securities     (212,449 )     (415,301 )
Debt Forgiveness     (257,845 )      
Changes in operating assets and liabilities:             
(Increase) decrease in:            
Interest and fees receivable     (885,380 )     (180,335 )
Other receivables     (361,084 )     54,090  
Due from borrowers     (1,405,352 )     (273,202 )
Prepaid expenses     (14,500 )     (82,082 )
Deposits on property and equipment           (100,530 )
(Decrease) increase in:            
Accrued interest     (3,344 )     77,256  
Accounts payable and accrued expenses     (179,992 )     272,574  
Deferred revenue     1,779,960       (91,019 )
Advances from borrowers     8,201,117       565,706  
Total adjustments     8,341,724       745,569  
             
NET CASH PROVIDED BY OPERATING ACTIVITIES     17,374,582       7,389,446  
             
CASH FLOWS FROM INVESTING ACTIVITIES              
Purchase of investment securities     (160,896,229 )     (37,216,177 )
Proceeds from the sale of investment securities     141,709,658       25,905,769  
Purchase of interest in investment partnership, net     (1,804,217 )      
Proceeds from sale of real estate owned     1,839,977       1,816,522  
Acquisitions of and improvements to real estate owned     (333,435 )     (1,584,300 )
Purchase of property and equipment     (817,785 )     (118,364 )
Security deposits held     (11,416 )     5,616  
Principal disbursements for mortgages receivable     (154,810,007 )     (68,029,798 )
Principal collections on mortgages receivable     90,463,016       37,859,270  
Costs in connection with investment activities     (281,191 )      
NET CASH USED FOR INVESTING ACTIVITIES     (84,941,629 )     (41,361,462 )
             
CASH FLOWS FROM FINANCING ACTIVITIES              
Net proceeds from line of credit     2,000,511       12,080,569  
Repayment of mortgage payable     (767,508 )     (12,296 )
Principal payments on notes payable     (17,184 )     (15,303 )
Dividends paid on Common Stock     (8,778,392 )     (5,308,152 )
Dividends paid on Preferred Stock     (932,089 )      
Financings costs incurred     (450,651 )     (108,353 )
Proceeds from other loans           257,845  
Proceeds from issuance of common shares, net of expenses     30,884,022        
Proceeds from issuance of Series A Preferred Stock, net of expenses     45,462,626        
Gross proceeds from issuance of fixed rate notes           14,363,750  
Financings costs incurred in connection with fixed rate notes           (743,908 )
NET CASH PROVIDED BY FINANCING ACTIVITIES     67,401,335       20,514,152  
             
NET DECREASE IN CASH AND CASH EQUIVALENTS     (165,712 )     (13,457,864 )
             
CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR     19,408,028       18,841,937  
             
CASH AND CASH EQUIVALENTS - END OF PERIOD   $ 19,242,316     $ 5,384,073  

SACHEM CAPITAL CORP.
STATEMENTS OF CASH FLOW (Continued)
(unaudited)

             
    Nine Months Ended
    September 30, 
       2021      2020
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION              
Interest paid   $ 6,745,109   $ 2,093,080

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the period ended September 30, 2020 amounted to $170,383.


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Source: Sachem Capital Corp.