Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

Sachem Capital Reports Revenue Increase of 41%
and Net Income Increase of 98% for Q2 2020

 

Conference Call and Webcast to be held at 8:00 AM EDT on Tuesday, August 11, 2020

 

Branford, Connecticut, August 10, 2020 -- Sachem Capital Corp. (NYSE American: SACH) announces its financial results for the second quarter ended June 30, 2020. The company will host a conference call on Tuesday, August 11th, 2020 at 8:00 a.m. Eastern Daylight Saving Time to discuss in greater detail its financial condition and operating results for the second quarter of 2020.

 

Results of operations – three months ended June 30, 2020

 

Total revenue for the three months ended June 30, 2020, was approximately $4.3 million compared to approximately $3.1 million for the three months ended June 30, 2019, an increase of approximately 41%. For the second quarter of 2020, interest income and net origination fees were approximately $3.3 million and $647,000, respectively. In comparison, for the three months ended June 30, 2019, interest income and net origination fees were approximately $2.3 million and $341,000, respectively.

 

Total operating costs and expenses for the three months ended June 30, 2020, were approximately $2.0 million compared to $1.9 million for the three months ended June 30, 2019, an increase of approximately 6%. Compared to the 2019 period, in the 2020 period interest expense and amortization of deferred financing costs increased approximately $700,000 due to the increase in the company’s overall indebtedness, which was $59.0 million at June 30, 2020, compared to $23.8 million at June 30, 2019.

 

In light of the COVID-19 pandemic, in the second quarter of 2020 the company made a strategic and purposeful decision to restrict lending and conserve cash. These prudent actions temporarily slowed the growth of our loan portfolio and associated revenue growth. This also accounted for the increase in investment income of approximately $33,000.

 

Net income for the three months ended June 30, 2020 was approximately $2.3 million, or $0.10 per share, compared to $1.1 million, or $0.06 per share per share for the three months ended June 30, 2019.

 

Results of operations – six months ended June 30, 2020

 

Total revenue for the six months ended June 30, 2020 was approximately $8.6 million compared to approximately $6.4 million for the six months ended June 30, 2019, an increase of approximately 34%. Revenue growth for the six months ended June 30, 2020, is directly related to the increase in loans funded during the first quarter of 2020. For the six months ended June 30, 2020, interest income was approximately $6.2 million and net origination fees were approximately $1.2 million, respectively.

 

Total operating costs and expenses for the six months ended June 30, 2020, were approximately $4.1 million compared to $3.2 million for the six months ended June 30, 2019, an increase of approximately 28%. The increase in operating costs and expenses is primarily attributable to the increase in the company’s lending operations.

 

 

 

 

Net income for the six months ended June 30, 2020, was approximately $4.5 million, or $0.20 per share, compared to $3.2 million, or $0.19 per share for the six months ended June 30, 2019.

 

Financial Condition

 

Overall, total assets increased by approximately $2.2 million as of June 30, 2020, compared to December 31, 2019, and total liabilities increased approximately $350,000 during the same period.

 

On July 21, 2020, 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 July 31, 2020. The dividend was paid on August 7, 2020.

 

John Villano, CPA, the company’s Chief Executive and Chief Financial Officer stated: “We continue to generate strong financial performance despite the COVID-19 pandemic, as evidenced by a 41% increase in revenue and 98% increase in net income. In response to COVID-19 and the potential impact on the overall business environment, in early March we took immediate action- by temporarily putting our growth strategy on hold and focusing on preservation of capital and careful maintenance of our existing portfolio. Since that time, it is important to note that forbearance requests dropped from 42 at the end of the first quarter 2020 to just 23 at the end of the second quarter, which we believe illustrates an overall improvement in the market and validation of our strategy. Looking ahead, we will continue to prudently deploy capital and we are pursuing opportunistic expansion and diversification of our loan portfolio. Our loan pipeline is robust and we are cautiously optimistic heading into the second half of the year.”

 

Investor Conference Call

 

The company will host a conference call on Tuesday, August 11th, 2020 at 8:00 a.m., Eastern Daylight Saving Time, to discuss in greater detail its financial results for the second quarter ending June 30, 2020, as well as its outlook for the balance of 2020 and strategy for dealing with the impact of the COVID-19 pandemic. Interested parties can access the conference call by calling 844-407-9500 for U.S. callers, or 862-298-0850 for international callers. The call will be available on the company’s website via webcast at https://www.sachemcapitalcorp.com. John Villano, the company’s Chief Executive and Chief Financial Officer will lead the conference call.

 

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 August 25, 2020, and can be accessed by calling: 877-481-4010 for U.S. callers or 919-882-2331 for international callers and entering conference ID: 36572.

 

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, non-banking 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 2019 filed with the U.S. Securities and Exchange Commission on March 30, 2020. 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

 

 

 

 

SACHEM CAPITAL CORP.

BALANCE SHEETS

 

   June 30, 2020   December 31, 2019 
   (Unaudited)   (Audited) 
Assets          
Assets:          
Cash and cash equivalents  $4,647,973   $18,841,937 
Investments   15,961,433    15,949,802 
Mortgages receivable   111,430,500    94,348,689 
Interest and fees receivable   1,557,092    1,370,998 
Other receivables   116,397    141,397 
Due from borrowers   1,243,580    840,930 
Prepaid expenses   73,175    24,734 
Property and equipment, net   1,377,992    1,346,396 
Deposits on property and equipment   —    71,680 
Real estate owned   7,023,382    8,258,082 
Deferred financing costs   16,258    16,600 
           
Total assets  $143,447,782   $141,211,245 
           
Liabilities and Shareholders' Equity          
Liabilities:          
Notes payable (net of deferred financing costs of $2,451,618 and $2,687,190)  $55,711,382   $55,475,810 
Mortgage payable   775,901    784,081 
Accounts payable and accrued expenses   301,715    249,879 
Other loans   257,845    — 
Security deposits held   13,416    7,800 
Advances from borrowers   1,012,201    848,268 
Deferred revenue   858,885    1,205,740 
Notes payable   65,402    75,433 
Accrued interest   3,272    3,416 
Total liabilities   59,000,019    58,650,427 
Commitments and Contingencies          
           
Shareholders' equity:          
Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued   —    — 
Common stock - $.001 par value;100,000,000 shares authorized; 22,117,301 issued and outstanding   22,117    22,117 
Paid-in capital   83,806,169    83,856,308 
 Accumulated other comprehensive income (loss)   35,189    (50,878)
Retained earnings (accumulated deficit)   584,288    (1,266,729)
Total shareholders' equity   84,447,763    82,560,818 
Total liabilities and shareholders' equity  $143,447,782   $141,211,245 

 

 

 

 

SACHEM CAPITAL CORP.

STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

 

   Three Months Ended   Six Months 
   June 30,   Ended June 30, 
   2020   2019   2020   2019 
Revenue:                    
Interest income from loans  $3,265,677   $2,315,325   $6,167,083   $5,066,405 
Interest income on investments   33,162    —    130,678    — 
Loss (gain) on sale of investment securities   (8,925)   —    437,159    — 
Origination fees, net   647,499    340,823    1,158,555    705,540 
Late and other fees   21,099    140,537    35,880    187,033 
Processing fees   39,665    41,805    86,123    76,600 
Rental income, net   29,456    47,255    40,184    72,904 
Other income   283,009    179,391    567,283    296,531 
Net gain on sale of real estate   —         —    7,149 
Total revenue   4,310,642    3,065,136    8,622,945    6,412,162 
                     
Operating costs and expenses:                    
Interest and amortization of deferred financing costs   1,152,302    452,406    2,302,255    1,073,454 
Compensation, fees and taxes   383,968    465,193    724,355    849,420 
Stock based compensation   4,107    4,107    8,214    8,214 
Professional fees   110,104    70,215    242,413    154,222 
Other expenses and taxes   6,534    17,139    35,238    31,332 
Exchange fees   —    11,219    7,272    21,507 
Expense in connection with termination of LOC   —    779,641    —    779,641 
Impairment   245,000    —    495,000    — 
Net loss on sale of real estate   —    —    4,460    — 
Depreciation   14,688    18,164    30,971    25,667 
General and administrative expenses   127,460    103,909    267,674    269,358 
                     
Total operating costs and expenses   2,044,163    1,921,993    4,117,852    3,212,815 
                     
Net income   2,266,479    1,143,143    4,505,093    3,199,347 
Other comprehensive income                    
Unrealized gain on investment securities   221,449    —    86,067    — 
                     
Comprehensive income  $2,487,928   $1,143,143   $4,591,160   $3,199,347 
                     
Basic and diluted net income per common share outstanding:                    
Basic  $0.10   $0.06   $0.20   $0.19 
Diluted  $0.10   $0.06   $0.20   $0.19 
                     
Weighted average number of common shares outstanding:                    
Basic   22,117,301    18,499,531    22,117,301    17,144,104 
Diluted   22,117,301    18,499,531    22,117,301    17,144,104 

 

 

 

 

 

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW

(unaudited)

 

   Six Months 
   Ended June 30, 
   2020   2019 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income  $4,505,093   $3,199,347 
Adjustments to reconcile net income to net cash provided by operating activities:          
Amortization of deferred financing costs   235,913    94,323 
Depreciation expense   30,971    25,667 
Stock based compensation   8,214    8,214 
Impairment loss   495,000    — 
Loss(gain) on sale of real estate   4,460    (7,149)
Abandonment of office furniture   —    12,000 
Costs in connection with termination of line of credit        439,446 
Realized gain on investments   (437,159)   — 
Changes in operating assets and liabilities:          
(Increase) decrease in:          
Escrow deposits   —    12,817 
Interest and fees receivable   (186,094)   (449,809)
Other receivables   25,000    25,000 
Due from borrowers   (597,776)   780,320 
Prepaid expenses   (48,441)   (48,013)
Deposits on property and equipment   71,680    (177,481)
(Decrease) increase in:          
Due to note purchaser   —    (176,619)
Accrued interest   (144)   — 
Accounts payable and accrued expenses   51,836    (5,706)
Deferred revenue   (346,855)   50,088 
Advances from borrowers   163,933    (54,560)
Total adjustments   (529,462)   528,538 
NET CASH PROVIDED BY OPERATING ACTIVITIES   3,975,631    3,727,885 
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of investments   (17,428,603)   — 
Proceeds from the sale of investments   17,940,198    — 
Proceeds from sale of real estate owned   1,762,775    264,809 
Acquisitions of and improvements to real estate owned   (1,027,533)   (342,598)
Purchase of property and equipment   (62,567)   (165,263)
Security deposits held   5,616    — 
Principal disbursements for mortgages receivable   (42,303,747)   (28,516,128)
Principal collections on mortgages receivable   25,417,062    21,098,466 
NET CASH USED FOR INVESTING ACTIVITIES   (15,696,799)   (7,660,714)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from line of credit   —    42,720,829 
Repayment of line of credit   —    (69,939,952)
Proceeds from notes sold to shareholder   —    1,017,000 
Principal payments on mortgage payable   (8,181)   (2,947)
Principal payments on notes payable   (10,031)   — 
Dividends paid   (2,654,076)   (4,679,293)
Financing costs incurred   (58,353)   (12,113)
Proceeds from other loans   257,845    — 
Proceeds from mortgage payable   —    795,000 
Repayment of mortgage payable   —    (290,984)
Proceeds from notes payable, net   —    71,820 
Issuance of common stock ATM, net   —    15,460,427 
Gross proceeds from issuance of fixed rate notes   —    23,000,000 
Financing costs incurred in connection with fixed rate notes   —    (1,270,000)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES   (2,472,796)   6,869,787 
           
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (14,193,964)   2,936,958 
CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR   18,841,937    158,860 
           
CASH AND CASH EQUIVALENTS - END OF PERIOD  $4,647,973   $3,095,818 

 

 

 

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

(unaudited)

 

   Six months 
   Ended June 30, 
   2020   2019 
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION        
Taxes paid  $—   $— 
Interest paid  $2,066,341   $979,131 

 

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 June 30, 2019 amounted to $1,962,669.