Sachem Capital Corp.
John L. Villano, Co-CEO & CFO
FOR IMMEDIATE RELEASE
Capital Reports 57% Increase in Revenue and 49% Increase in Net
Income for the Third Quarter of 2018
Conference Call and Webcast to be Held at 8:00 AM (EST) on Wednesday, November 14, 2018
Branford, Connecticut, November 13, 2018 -- Sachem Capital Corp. (NYSE American: SACH) today announced today its financial results for the three- and nine-month periods ended September 30, 2018. In addition, the Company announced that it will host its investor conference call on Wednesday, November 14, 2018, beginning at 8:00 a.m. Eastern Standard Time (additional details below).
|·||Revenue for the third quarter increased approximately 57.4% to approximately $3.05 million|
|·||Net income for the third quarter increased approximately 48.9% to approximately $1.96 million, or $0.13 per share|
|·||Revenue for the nine months increased approximately 85.6% to approximately $8.81 million|
|·||Net income for the nine months increased approximately 93.4% to approximately $6.13 million, or $0.40 per share|
Balance Sheet highlights:
|·||Mortgages receivable at September 30, 2018, approximately $77.81 million, increased approximately 23.0% from December 31, 2017|
|·||Total assets at September 30, 2018, approximately $85.03 million, increased approximately 26.0% from December 31, 2017|
|·||Shareholders’ equity at September 30, 2018, approximately $55.79 million, increased approximately 2.25% from December 31, 2017|
Based on its performance in the third quarter of 2018, the Company increased its quarterly dividend to $0.12 per share. As a result, the dividend yield on the Company’s common shares is currently approximately 11.48%.
John Villano CPA, co-chief executive officer and chief financial officer of Sachem Capital Corp., stated, “I am pleased to report another quarter of strong year-over-year revenue growth and improved profitability. Last month, we announced that we increased our quarterly dividend to $0.12 per share, a 9% increase over our most recent quarterly dividend payment. We have also maintained a solid balance sheet and ended the quarter with almost $56 million of shareholders’ equity.”
“Despite some challenging market conditions such as rising interest rates, flat or declining real estate values, and our continuing need for growth capital, the demand for our products remains strong and, accordingly, we remain optimistic in the outlook for the business and our ability to continue to deliver attractive risk-adjusted returns to our shareholders. Our optimism stems from the fact that, as a non-bank real estate lender, we have more flexibility than traditional lenders to structure loans to suit the needs of our clients and to respond to changes in the market. We continue, as always, to adhere to our strict underwriting criteria, extensive due diligence into the borrowers and the collateral and a conservative loan-to-value ratio.”
Results of operations -- three months ended September 30, 2018
Total revenue for the three months ended September 30, 2018 was approximately $3.05 million compared to approximately $1.94 million for the three months ended September 30, 2017, an increase of $1.11 million, or 57.4%. The company recorded increases in all revenue categories, including interest income, net origination fees, other income (which includes modification fees, lender fees, income on borrower charges) and gains on the sale of real estate.
Total operating costs and expenses for three months ended September 30, 2018 were approximately $1.09 million compared to approximately $621,000 for the three months ended September 30, 2017, an increase of approximately 75.3%. The company recorded increases in all major cost and expense categories, including interest expense and amortization of deferred financing costs, compensation and related costs, professional fees and general and administrative expenses.
Net income for the third quarter of 2018 was approximately $1.96 million compared to approximately $1.32 million for the third quarter of 2017, an increase of approximately 48.9%. Basic and diluted net income per weighted average common share outstanding for the third quarter of 2018 was $0.13 compared to $0.12 per share for the third quarter of 2017.
Results of operations – nine months ended September 30, 2018
Total revenue for the nine months ended September 30, 2018 was approximately $8.81 million compared to approximately $4.75 million for the nine months ended September 30, 2017, an increase of $4.06 million, or 85.6%. The company recorded increases in all revenue categories, including interest income, origination fees, other income and gain on sale of real estate.
Total operating costs and expenses for nine months ended September 30, 2018 were $2.68 million compared to approximately $1.57 million for the nine months ended September 30, 2017, an increase of approximately 69.9%. The company recorded increases in all major operating costs and expense categories, including interest expense and amortization of deferred financing costs, compensation and related costs, professional fees and general and administrative expenses.
Net income for the nine months ended September 30, 2018 was approximately $6.13 million, compared to approximately $3.17 million, for the nine months ended September 30, 2017, an increase of approximately 93.4%. Basic and diluted net income per weighted average common share outstanding for the nine months ended September 30, 2018 was $0.40 per share, compared to $0.26 per share for the corresponding 2017 period. Net income per share data for the nine months ended September 30, 2017 does not include the net income per share for the period prior to February 9, 2017, the date of the company’s initial public offering
2018 Third Quarter Conference Call
The Company will host a conference call on Wednesday, November 14, 2018 at 8:00 a.m., Eastern Standard Time, to discuss its operating results for three and nine month periods ending September 30, 2018 and its financial condition at the date, as well as other relevant matters.
Interested parties can access the conference call by dialing 877-407-8033 for U.S. callers, or +201-689-8033 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 Co-Chief Executive Officer and Chief Financial Officer, will lead the conference call and will also be available to answer questions.
A 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 termination of the call, through 8:00 a.m. on February 14, 2019, and can be accessed by dialing: 877-481-4010 for U.S. callers or +919-882-2331 for international callers and entering conference ID: 41211.
About Sachem Capital, Corp.
Sachem Capital Corp. (SCC), is the successor to Sachem Capital Partners, LLC (SCP) having acquired all of SCP’s assets and assumed all of SCP’s liabilities in February 2017. Immediately thereafter, SCC completed an underwritten initial public offering of its shares. (Except where otherwise stated to the contrary, SCC and SCP are, collectively, referred to as the “Company”.) The Company 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 and may also be secured with additional real estate collateral. 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. SCC 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 2017 filed with the U.S. Securities and Exchange Commission on April 2, 2018. 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
Tel: (212) 671-1021
SACHEM CAPITAL CORP.
|Mortgages receivable, affiliate||969,457||1,104,022|
|Interest and fees receivable||1,381,536||645,493|
|Due from borrowers||357,810||451,795|
|Property and equipment, net||812,903||501,819|
|Real estate owned||3,145,532||1,224,409|
|Deferred financing costs, net||572,281||95,560|
|Liabilities and Shareholders' Equity:|
|Line of credit||$||27,260,147||$||9,841,613|
|Accounts payable and accrued expenses||95,024||390,758|
|Security deposit held||2,550||2,550|
|Advances from borrowers||276,377||519,764|
|Due to note purchaser||-||723,478|
|Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued||-||-|
|Common shares - $.001 par value; 50,000,000 shares authorized; 15,436,914 and 15,415,737 issued and outstanding, respectively||15,437||15,416|
|Total shareholders' equity||55,794,781||54,566,281|
|Total liabilities and shareholders' equity||$||85,032,830||$||67,494,537|
SACHEM CAPITAL CORP.
STATEMENTS OF OPERATIONS
|Ended September 30,||Ended September 30,|
|Interest income from loans||$||2,272,100||$||1,570,877||$||6,610,273||$||3,831,636|
|Origination fees, net||383,322||196,811||1,071,921||464,211|
|Late and other fees||59,949||34,998||144,031||100,453|
|Rental income, net||10,136||9,637||87,865||58,865|
|Gain on sale of real estate||119,666||15,931||119,666||178|
|Operating costs and expenses:|
|Interest and amortization of deferred financing costs||493,992||302,548||1,098,912||589,457|
|Compensation, fees and taxes||344,266||195,673||886,024||466,497|
|Compensation to manager||-||-||-||35,847|
|Other fees and taxes||7,669||-||67,668||-|
|General and administrative expenses||142,119||35,338||314,839||212,676|
|Total operating costs and expenses||1,088,460||621,043||2,675,451||1,574,658|
|Basic and diluted net income per common share outstanding:|
|Weighted average number of common shares outstanding:|
* Basic and diluted net income per common share outstanding and weighted average number of common shares outstanding are calculated for the period beginning February 9, 2017 (i.e., the effective date of the company’s initial public offering) and ending September 30, 2017.
SACHEM CAPITAL CORP.
STATEMENTS OF CASH FLOW
Ended September 30,
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Amortization of deferred financing costs||90,165||43,677|
|Gain on sale of real estate||(119,666||)||(179||)|
|Adjustment to loss for sale of collateral||-||(42,231||)|
|Changes in operating assets and liabilities:|
|(Increase) decrease in:|
|Interest and fees receivable||(916,672||)||(154,877||)|
|Due from borrowers||(308,866||)||(278,694||)|
|(Decrease) increase in:|
|Due to member||-||(656,296||)|
|Due to shareholder||-||16,957|
|Due to note purchaser||(723,478||)||-|
|Advances from borrowers||(243,387||)||154,888|
|NET CASH PROVIDED BY OPERATING ACTIVITIES||3,765,498||2,769,698|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Proceeds from sale of real estate owned||672,538||530,181|
|Acquisitions of and improvements to real estate owned||(104,799||)||(424,023||)|
|Purchase of property and equipment||(331,386||)||(132,729||)|
|Principal disbursements for mortgages receivable||(37,278,346||)||(33,792,878||)|
|Principal collections on mortgages receivable||20,958,280||14,849,831|
|NET CASH USED FOR INVESTING ACTIVITIES||(16,083,713||)||(19,014,308||)|
SACHEM CAPITAL CORP.
STATEMENTS OF CASH FLOW (Continued)
Ended September 30,
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Proceeds from line of credit||61,067,401||25,341,633|
|Repayment of line of credit||(43,648,867||)||(17,534,390||)|
|Principal payments on mortgage payable||(7,535||)||(6,432||)|
|Proceeds from IPO||-||13,000,000|
|Pre-offering costs incurred||(853||)||(1,486,798||)|
|Financing costs incurred||(566,886||)||(87,202||)|
|NET CASH PROVIDED BY INVESTING ACTIVITIES||11,907,895||15,699,335|
|NET DECREASE IN CASH||(410,320||)||(545,275||)|
|CASH – BEGINNING OF PERIOD||954,223||1,561,863|
|CASH – END OF PERIOD||$||543,903||$||1,016,588|
|SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION|
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES
During the nine months ended September 30, 2018, the Company purchased a mortgage receivable from a third party at a discount in the amount of $21,433.
Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the nine months ended September 30, 2018 amounted to $2,369,196.
The reversal of previously accrued capitalized costs during the nine months ended September 30, 2018, amounted to $6,212.
During the nine months ended September 30, 2017, the Company issued notes payable in the amount of $169,338 for the acquisition of mortgages receivable.
On February 8, 2017, Sachem Capital Partners, LLC transferred all its assets and liabilities to the Company in exchange for 6,283,237 shares of the Company’s Common stock.