Sachem Capital Corp. (NYSE American: SACH) announced its financial results for the third quarter ended September 30, 2023.

John Villano, CPA, Sachem Capital’s Chief Executive Officer, stated, “Once again we demonstrated our ability to grow revenue and profits during a very difficult macroeconomic backdrop. Our enhanced focus on deliberate underwriting, our conservative approach to balance sheet leverage and our experience in navigating past cycles continues to support our dividend that as of today yields over 12% on a trailing twelve month basis. Our portfolio is designed to produce steady performance in all economic conditions while protecting our capital for future opportunities.”

Results of operations for quarter ended September 30, 2023

Total revenue grew 29.5% to $17.5 million, compared to $13.5 million for the quarter ended September 30, 2022. The growth in revenue was due primarily to an increase in lending operations, as well as the increase in rates that the company was able to charge borrowers in comparison to the quarter ended September 30, 2022. For the third quarter 2023, interest income was $14.3 million compared to $11.5 million for the 2022 period.

Total operating costs and expenses for the quarter ended September 30, 2023 were $11.3 million, compared to $8.5 million for 2022 period. The largest contributor to this increase was interest and amortization of deferred financing costs, which were $7.7 million in the quarter, compared to $6.0 million in 2022. The other significant contributors to operating costs and expenses for the period include (i) $606,000 in general and administrative expenses, (ii) $226,000 of compensation, fees and taxes, and (iii) $198,000 loss on the sale of real estate.

Net income attributable to common shareholders for the three months ended September 30, 2023 was $5.2 million, or $0.12 per share, compared to $4.1 million, or $0.11 per share for the three months ended September 30, 2022.

Balance Sheet

Total assets at September 30, 2023 grew 12.8% to $637.8 million compared to $565.7 million at December 31, 2022. The increase was due primarily to the growth in the company’s mortgage loan portfolio, its investment securities holdings and investments in partnerships, which increased $35.3 million, $12.5 million and $9.1 million, respectively. In addition, during the three months ended September 30, 2023, the Company had net investments in real estate of $10.4 million. Total liabilities at September 30, 2023 were $402.3 million compared to $348.0 million at December 31, 2022.

Total indebtedness at quarter end was $382.1 million, which included $281.8 million of unsecured notes payable (net of $6.6 million of deferred financing costs), $51.3 million balance on margin loan account with Wells Fargo Advisors and on the revolving credit facility with Needham Bank, $47.9 million outstanding on the master repurchase financing facility with an affiliate of Churchill Real Estate, and $1.1 million outstanding on the mortgage loan with New Haven Bank.

Total shareholders’ equity at September 30, 2023 rose $17.8 million to $235.5 million compared to $217.7 million at December 31, 2022. The change was primarily due to additional paid-in capital of $17.6 million, relating to sales of common shares and Series A Preferred Stock under the company’s at-the-market offering facility.

Dividends

Subsequent to quarter end, on November 7th, 2023, the company paid a quarterly dividend of $0.11 per share to shareholders of record as of the close of trading on the NYSE American on October 31, 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 Webcast and Call

The company will host a webcast and conference call Tuesday, November 14, 2023 at 8:00 a.m. Eastern Daylight Time, to discuss in greater detail its financial results for the quarter ended September 30, 2023. A webcast of the call may be accessed on Sachem’s website at https://ir.sachemcapitalcorp.com/ir-calendar.

Interested parties can access the conference call via telephone by dialing toll free 844-825-9789 for U.S. callers or +1-412-317-5180 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 Tuesday, November 28, 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: 10184246.

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 filed with the U.S. Securities and Exchange Commission on March 31, 2023, as supplemented by subsequently filed Quarter Reports on Form 10-Q. 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)
           
  September 30, 2023   December 31, 2022
  (unaudited)   (audited)
Assets          
Cash and cash equivalents $ 25,811,964     $ 23,713,097  
Investment securities   37,044,657       24,576,462  
Mortgages receivable, net   495,917,840       460,633,268  
Investments in rental real estate, net   10,434,591        
Interest and fees receivable   7,922,415       6,309,845  
Due from borrowers   7,415,413       5,276,967  
Real estate owned   3,481,177       5,216,149  
Investments in partnerships   39,959,110       30,831,180  
Property and equipment, net   3,433,613       4,121,721  
Other assets   6,427,159       4,983,173  
Total assets $ 637,847,939     $ 565,661,862  
           
Liabilities and Shareholders’ Equity          
Liabilities:          
Unsecured notes payable (net of deferred financing costs of $6,641,817 and $8,352,597) $ 281,759,933     $ 280,049,153  
Repurchase facility   47,929,713       42,533,466  
Mortgage payable   1,100,635       750,000  
Line of credit   51,339,905       3,587,894  
Accrued dividends payable         5,342,160  
Accounts payable and accrued liabilities   2,060,788       1,439,219  
Advances from borrowers   12,505,033       9,892,164  
Below market lease intangible   664,737        
Deferred revenue   4,959,079       4,360,452  
Total liabilities   402,319,823       347,954,508  
           
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; 1,996,000 and 1,903,000 shares of Series A Preferred Stock issued and outstanding at September 30, 2023 and December 31, 2022, respectively   1,996       1,903  
Common shares - $.001 par value; 200,000,000 shares authorized; 45,364,429 and 41,093,536 issued and outstanding at September 30, 2023 and December 31, 2022, respectively   45,364       41,094  
Paid-in capital   243,834,113       226,220,990  
Accumulated other comprehensive loss   (459,684 )     (561,490 )
Accumulated deficit   (7,893,673 )     (7,995,143 )
Total shareholders’ equity   235,528,116       217,707,354  
Total liabilities and shareholders’ equity $ 637,847,939     $ 565,661,862  

SACHEM CAPITAL CORP.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(unaudited)
                       
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
    2023       2022       2023       2022  
Revenue:                      
Interest income from loans $ 14,273,858     $ 11,545,748     $ 37,155,668     $ 30,490,694  
Investment gain, net   284,841       238,225       893,510       586,166  
Income from partnership investments   781,530       523,067       2,337,731       1,112,560  
Origination and modification fees, net   1,194,645       1,669,034       4,434,828       5,759,650  
Fee and other income   1,239,552       641,749       3,518,132       2,048,921  
Unrealized gain (loss) on investment securities   (239,989 )     (1,076,836 )     360,610       (3,607,498 )
Total revenue   17,534,437       13,540,987       48,700,479       36,390,493  
                       
Operating costs and expenses:                      
Interest and amortization of deferred financing costs   7,683,059       5,974,975       21,694,966       15,083,228  
Compensation, fees and taxes   1,735,430       1,509,518       5,077,213       3,691,421  
General and administrative expenses   1,321,807       715,994       3,537,266       1,993,812  
Other expenses   336,480       90,899       633,025       320,231  
(Gain) Loss on sale of real estate   198,849       962       71,988       (121,381 )
(Recovery of) provision for loan losses   (131,382 )           65,065       105,000  
Impairment loss   200,000       195,000       612,500       685,500  
Total operating costs and expenses   11,344,243       8,487,348       31,692,023       21,757,811  
Net income   6,190,194       5,053,639       17,008,456       14,632,682  
Dividends paid on Series A Preferred Stock   (966,754 )     (921,766 )     (2,816,279 )     (2,765,297 )
Net income attributable to common shareholders   5,223,440       4,131,873       14,192,177       11,867,385  
                       
Other comprehensive loss                      
Unrealized gain (loss) on investment securities   (83,606 )     (131,569 )     101,806       (81,525 )
Comprehensive income $ 5,139,834     $ 4,000,304     $ 14,293,983     $ 11,785,860  
Basic and diluted net income per common share outstanding:                      
Basic $ 0.12     $ 0.11     $ 0.32     $ 0.32  
Diluted $ 0.12     $ 0.11     $ 0.32     $ 0.32  
Weighted average number of common shares outstanding:                      
Basic   44,754,921       38,829,610       43,805,310       36,723,305  
Diluted   44,754,921       38,829,852       43,805,310       36,729,184  

SACHEM CAPITAL CORP.CONSOLIDATED STATEMENTS OF CASH FLOW(unaudited)
           
  Nine Months Ended
  September 30,
    2023       2022  
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income $ 17,008,456     $ 14,632,682  
Adjustments to reconcile net income to net cash provided by operating activities:          
Amortization of deferred financing costs and bond discount   1,832,236       1,664,822  
Depreciation expense   169,368       66,533  
Write-off of other assets - pre-offering costs   477,047        
Stock based compensation   616,679       357,321  
Provision for credit losses   65,065       105,000  
Impairment loss   612,500       685,500  
(Gain) Loss on sale of real estate   71,988       (121,381 )
Unrealized (gain) loss on investment securities   (360,610 )     3,607,498  
Gain on sale of investment securities         148,565  
Changes in operating assets and liabilities:          
(Increase) decrease in:          
Interest and fees receivable   (1,641,747 )     (2,154,704 )
Other assets - miscellaneous   (1,235,523 )     (418,176 )
Due from borrowers   (2,170,729 )     (1,505,785 )
Other assets - prepaid expenses   192,370       153,842  
(Decrease) increase in:          
Accrued Interest   54,660       431,110  
Accounts payable and accrued liabilities   41,423       53,818  
Deferred revenue   598,627       (171,690 )
Advances from borrowers   2,612,869       (5,129,286 )
Total adjustments   1,936,223       (2,227,013 )
           
NET CASH PROVIDED BY OPERATING ACTIVITIES   18,944,679       12,405,669  
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of investment securities   (21,064,492 )     (39,715,900 )
Proceeds from the sale of investment securities   9,060,095       62,160,599  
Purchase of interests in investment partnerships, net   (9,120,284 )     (16,487,103 )
Proceeds from sale of real estate owned   148,842       1,571,467  
Acquisitions of and improvements to real estate owned, net   (214,642 )     (101,168 )
Proceeds from sale (purchases) of property and equipment, net   518,740       (1,292,160 )
Investment in rental real estate, net   (10,725,237 )      
Principal disbursements for mortgages receivable   (159,678,482 )     (252,370,675 )
Principal collections on mortgages receivable   123,495,534       95,173,969  
Other assets - pre-offering costs         (166,360 )
NET CASH USED FOR INVESTING ACTIVITIES   (67,579,926 )     (151,227,331 )
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Net proceeds from (repayment of) line of credit   47,752,011       (29,635,178 )
Net proceeds from repurchase facility   5,396,247       24,012,957  
Proceeds from mortgage   350,635        
Accounts payable and accrued liabilities - principal payments on other notes   (6,014 )     (20,161 )
Dividends paid on common stock   (16,943,293 )     (13,507,787 )
Dividends paid on Series A Preferred Stock   (2,816,279 )     (2,765,297 )
Proceeds from issuance of common shares, net of expenses   15,331,931       36,654,419  
Common stock buyback   (226,327 )      
Proceeds from issuance of Series A Preferred Stock, net of expenses   1,895,203        
Gross proceeds from issuance of fixed rate notes         122,125,000  
Financings costs incurred in connection with fixed rate notes         (4,516,931 )
NET CASH PROVIDED BY FINANCING ACTIVITIES   50,734,114       132,347,022  
           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   2,098,867       (6,474,640 )
           
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR   23,713,097       41,938,897  
           
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 25,811,964     $ 35,464,257  
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