Sachem Capital Revenue Increases 42.8% to $14.7 Million for the First Quarter 2023

BRANFORD, Conn., May 15, 2023 (GLOBE NEWSWIRE) -- Sachem Capital Corp. (NYSE American: SACH) announced its financial results for the quarter ended March 31, 2023. The company will host a conference call today, Monday, May 15, 2023 at 8:00 a.m. Eastern Daylight Time to discuss in greater detail its financial performance and operating results for the first quarter ended March 31, 2023.

John Villano, CPA, the company’s Chief Executive Officer, stated: “Our loan portfolio continues to perform well in a very challenging macroeconomic environment. While we are mindful of the opportunities that arise in times of market dislocations, we continue to take a prudent approach to minimize risk and insulate our loan portfolio. As we move ahead our experienced management team will be very selective in deploying our capital while pursuing new opportunities in the current environment. As the lending environment stabilizes, we will once again expand our services and capabilities in a judicious manner. As is our custom, providing our shareholders with attractive, sustainable risk-adjusted returns is our first priority.”

Results of operations for quarter ended March 31, 2023

Total revenue grew 42.8% to approximately $14.7 million compared to approximately $10.3 million for the quarter ended March 31, 2022. The growth in revenue was due primarily to an increase in lending operations. For the first quarter 2023, interest income was approximately $11.0 million compared to approximately $8.5 million for the 2022 period.

Total operating costs and expenses for the quarter ended March 31, 2023 were approximately $9.6 million compared to approximately $5.9 million for 2022 period. Given the company’s ongoing investments in its growth strategies, the largest contributor to this increase was interest and amortization of deferred financing costs, which were approximately $6.9 million in the quarter compared to approximately $3.9 million in 2022 period. The balance of the changes was attributable to (i) approximately $785,000 of compensation (including stock-based compensation), fees and taxes and (ii) approximately $266,000 general and administrative expenses.

Net income attributable to common shareholders for the three months ended March 31, 2023 was approximately $4.2 million, or $0.10 per share, compared to approximately $3.4 million, or $0.10 per share for the three months ended March 31, 2022.

Balance Sheet

Total assets at March 31, 2023 were approximately $597.0 million compared to approximately $565.7 million at December 31, 2022, an increase of approximately $31.3 million, or 5.5%. The change was due primarily to the growth in the company’s mortgage loan portfolio and in its investment securities holdings, which increased approximately $15.8 million and $11.3 million, respectively. Total liabilities at March 31, 2023 were approximately $368.0 million compared to approximately $348.0 million at December 31, 2022.

Total indebtedness at quarter end included approximately $280.6 million of notes payable (net of approximately $7.8 million of deferred financing costs), approximately $13.7 million balance on the margin loan account with Wells Fargo Advisors, approximately $54.1 million outstanding on the master repurchase financing facility with an affiliate of Churchill Real Estate and approximately $1.7 million outstanding on the mortgage loan with New Haven Bank.

Total shareholders’ equity at March 31, 2023 rose approximately $11.3 million to $229.0 million compared to approximately $217.7 million at December 31, 2022. The change was primarily due to additional paid-in capital of approximately $9.5 million.

Dividends

Subsequent to quarter end, on April 24, 2023, the company paid a quarterly dividend of $0.13 per share to shareholders of record as of the close of trading on the NYSE American on April 17, 2023.

The company 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 Call

The company will host a conference call today Monday, May 15, 2023 at 8:00 a.m. Eastern Time, to discuss in greater detail its financial results for the quarter ended March 31, 2023.

Interested parties can access the conference call via telephone by dialing toll free 1-888-886-7786 for U.S. callers or +1 416-764-8658 for international callers. A webcast of the call may be accessed 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 through Monday, May 29, 2023 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: 62285433.

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 loan 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 will also make 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 2022 to be filed with the U.S. Securities and Exchange Commission on March 31, 2023. 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
(unaudited)
           
  March 31, 2023      December 31, 2022
Assets            
Cash and cash equivalents $ 20,332,516     $ 23,713,097  
Investment securities   35,837,202       24,576,462  
Mortgages receivable, net   476,469,464       460,633,268  
Interest and fees receivable, net   6,645,909       6,309,845  
Due from borrowers, net   6,037,966       5,276,967  
Real estate owned   6,138,912       5,216,149  
Investments in partnerships   35,322,234       30,831,180  
Property and equipment, net   4,792,472       4,121,721  
Other assets   5,420,367       4,983,173  
Total assets $ 596,997,042     $ 565,661,862  
           
Liabilities and Shareholders’ Equity            
Liabilities:            
Notes payable (net of deferred financing costs of $7,793,640 and $8,352,597) $ 280,608,110     $ 280,049,153  
Repurchase facility   54,055,815       42,533,466  
Mortgage payable   1,660,000       750,000  
Line of credit   13,673,930       3,587,894  
Accrued dividends payable         5,342,160  
Accounts payable and accrued liabilities   2,007,450       1,439,219  
Advances from borrowers   11,314,622       9,892,164  
Deferred revenue   4,681,060       4,360,452  
Total liabilities   368,000,987       347,954,508  
           
Commitments and Contingencies            
           
Shareholders’ Equity:            
Preferred shares - $0.001 par value; 5,000,000 shares authorized; 2,903,000 shares designated as Series A Preferred Stock; 1,909,187 and 1,903,000 shares of Series A Preferred Stock issued and outstanding at March 31, 2023 and December 31, 2022, respectively   1,909       1,903  
Common shares - $0.001 par value; 200,000,000 shares authorized; 43,756,724 and 41,093,536 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively   43,757       41,094  
Paid-in capital   235,709,499       226,220,990  
Accumulated other comprehensive loss   (469,853 )     (561,490 )
Accumulated deficit   (6,289,257 )     (7,995,143 )
Total shareholders’ equity   228,996,055       217,707,354  
Total liabilities and shareholders’ equity $ 596,997,042     $ 565,661,862  


SACHEM CAPITAL CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
           
  Three Months Ended
  March 31, 
  2023      2022
Revenue:            
Interest income from loans $ 10,983,326     $ 8,511,375  
Investment gain, net   274,796       117,337  
Income from partnership investments   549,723       272,488  
Origination and modification fees, net   1,475,920       1,843,841  
Fee and other income   707,605       608,564  
Unrealized gain (loss) on investment securities   716,389       (1,052,230 )
Total revenue   14,707,759       10,301,375  
           
Operating costs and expenses:            
Interest and amortization of deferred financing costs   6,872,967       3,898,389  
Compensation, fees and taxes   1,779,318       993,962  
General and administrative expenses   898,115       631,948  
Other expenses   83,722       99,272  
(Gain) Loss on sale of real estate   (148,100 )     65,838  
Allowance for credit losses   101,515       105,000  
Impairment loss         155,500  
Total operating costs and expenses   9,587,537       5,949,909  
Net income   5,120,222       4,351,466  
Series A Preferred Stock dividend   (924,762 )     (921,766 )
Net income attributable to common shareholders   4,195,460       3,429,700  
           
Other comprehensive loss          
Unrealized gain on investment securities   91,637       242,808  
Comprehensive income $ 4,287,097     $ 3,672,508  
Basic and diluted net income per common share outstanding:            
Basic $ 0.10     $ 0.10  
Diluted $ 0.10     $ 0.10  
Weighted average number of common shares outstanding:            
Basic   42,792,509       34,892,883  
Diluted   42,792,509       34,898,666  


SACHEM CAPITAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
           
  Three Months Ended
  March 31, 
  2023        2022  
CASH FLOWS FROM OPERATING ACTIVITIES            
Net income $ 5,120,222     $ 4,351,466  
Adjustments to reconcile net income to net cash provided by operating activities:          
Amortization of deferred financing costs and bond discount   600,215       469,251  
Depreciation expense   40,132       22,239  
Stock based compensation   173,315       106,879  
Allowance for credit losses   101,515       105,000  
Impairment loss         155,500  
(Gain) loss on sale of real estate   (148,100 )     65,838  
Unrealized(gain) loss on investment securities   (716,389 )     1,052,230  
(Gain) loss on sale of investment securities   (275,879 )     154,135  
Changes in operating assets and liabilities:           
(Increase) decrease in:          
Interest and fees receivable   (366,191 )     (395,924 )
Other assets - miscellaneous   (499,651 )     (210,688 )
Due from borrowers   (783,302 )     (292,302 )
Other assets - prepaid expenses   9,955       42,220  
(Decrease) increase in:          
Accounts payable and accrued liabilities - accrued interest   95,221       121,913  
Accounts payable and accrued liabilities - accounts payable and accrued expenses   (84,738 )     10,720  
Deferred revenue   320,608       232,794  
Advances from borrowers   1,422,458       1,563,852  
Total adjustments   (110,831 )     3,203,657  
           
NET CASH PROVIDED BY OPERATING ACTIVITIES   5,009,391       7,555,123  
           
CASH FLOWS FROM INVESTING ACTIVITIES            
Purchase of investment securities   (13,971,218 )     (27,545,183 )
Proceeds from the sale of investment securities   3,780,522       51,705,055  
Purchase of interests in investment partnerships, net   (4,491,054 )     (11,358,017 )
Proceeds from sale of real estate owned   515,136       622,737  
Acquisitions of and improvements to real estate owned, net   (103,136 )     (177,336 )
Purchase of property and equipment   (710,883 )     (3,658 )
Principal disbursements for mortgages receivable   (58,883,818 )     (88,735,230 )
Principal collections on mortgages receivable   39,884,300       27,106,768  
Other assets – pre-offering costs   25,111       (57,768 )
NET CASH USED FOR INVESTING ACTIVITIES   (33,955,040 )     (48,442,632 )
           
CASH FLOWS FROM FINANCING ACTIVITIES            
Net proceeds from (repayment of) line of credit   10,086,036       (9,898,667 )
Net proceeds from repurchase facility   11,522,349       7,857,960  
Proceeds from mortgage   910,000        
Accounts payable and accrued liabilities - principal payments on other notes   (4,252 )     (6,627 )
Dividends paid on Common Stock   (5,342,160 )     (3,927,600 )
Dividends paid on Series A Preferred Stock   (924,762 )     (921,766 )
Proceeds from issuance of common shares, net of expenses   9,181,158       15,547,815  
Proceeds from issuance of Series A Preferred Stock, net of expenses   136,699        
Gross proceeds from issuance of fixed rate notes         50,000,000  
Financings costs incurred in connection with fixed rate notes         (1,839,034 )
NET CASH PROVIDED BY FINANCING ACTIVITIES   25,565,068       56,812,081  
           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   (3,380,581 )     15,924,572  
           
CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR   23,713,097       41,938,897  
           
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 20,332,516     $ 57,863,469  


SACHEM CAPITAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)
(unaudited)
               
  Three Months Ended
  March 31, 
  2023      2022
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION                
Interest paid $ 6,191,398     $ 3,307,225  


Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the three months ended March 31, 2023 amounted to $1,186,663.


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Source: Sachem Capital Corp.