Sachem Capital Reports Record 2022 Annual Revenue of $52.3 Million and Net Income Attributable to Common Shareholders of $17.2 Million or $0.46 per Share
Conference Call and Webcast to be held at 8:00 AM ET on Friday, March 31, 2023
BRANFORD, Conn., March 30, 2023 (GLOBE NEWSWIRE) — Sachem Capital Corp. (NYSE American: SACH) announced its financial results for the year ended December 31, 2022. The company will host a conference call on Friday, March 31, 2023 at 8:00 a.m. Eastern Time to discuss in greater detail its financial and operating results for 2022.
John Villano, CPA, the company’s Chief Executive Officer, stated: “2022 was another record year for our company with revenue of $52.3 million and net income attributable to common shareholders of $17.2 million. Earnings per share was $0.46 per share compared to $0.44 for the prior year. Further we achieved approximately $20.2 million of non-GAAP adjusted earnings or $0.53 per share in earnings, reflecting the strength of our business and specifically our loan portfolio in a very challenging interest rate environment. We fully understand the effects of rapid interest rate increases on our business and, more importantly, our borrowers and will continue to take appropriate measures to further reduce risk and insulate our loan portfolio, including additional enhancements to our underwriting process and limiting the term of new loans.
“In 2022, we acquired Urbane New Haven, LLC, which added construction finance service expertise in all phases of our business. This acquisition provides us the ability to reduce risks associated with distressed properties, as well as new income streams to help ensure the highest level of oversight and planning diligence on all construction financing. We are extremely pleased with the addition of the Urbane team and their operational excellence.
“Certainly, the process of lending has undergone significant changes the past year and despite the ongoing crosscurrents, our business model has proven to be highly scalable and resilient, as evidenced by our continued strong performance during the year.”
Results of operations for year ended December 31, 2022
Total revenue grew 71.8% to approximately $52.3 million compared to approximately $30.4 million for the year ended December 31, 2021. The growth in revenue was due primarily to an increase in lending operations. For 2022, interest income was approximately $42.6 million, origination fees were approximately $7.3 million and various other fees relating to the company’s lending activities were approximately $3.0 million.
Total operating costs and expenses for the year ended December 31, 2022 were approximately $31.4 million compared to approximately $17.1 million for 2021, an increase of approximately $14.3 million. Given the company’s implementation of its growth strategies, the largest contributor to this increase was interest and amortization of deferred financing costs, which were $21.5 million in 2022 compared to $10.4 million in 2021. The balance of the increases was attributable to (i) approximately $2.2 million of compensation (including stock-based compensation), fees and taxes and (ii) approximately $854,000 general and administrative expenses. These increases are attributable to the implementation of certain growth strategies.
Net income for 2022 attributable to common shareholders was approximately $17.2 million compared to approximately $11.5 million for 2021, an increase of approximately $5.8 million or 50.2%. Net income per weighted average common share outstanding for 2022 was $0.46 compared to $0.44 for 2021.
Balance Sheet
Total assets at December 31, 2022 were approximately $565.7 million compared to approximately $418.0 million at December 31, 2021, an increase of approximately $147.7 million, or 35.3%. The increase was due primarily to the growth in the company’s mortgage loan portfolio, which increased approximately $168.3 million, and an approximately $24.8 million increase in partnership investments. Total liabilities were approximately $348.0 million compared to approximately $237.9 million.
Total indebtedness at December 31, 2022 included $280.0 million of notes payable (net of $8.4 million of deferred financing costs), $3.6 million balance on our margin loan account with Wells Fargo Advisors, $42.5 million outstanding on the company’s master repurchase financing facility with an affiliate of Churchill Real Estate and $750,000 outstanding on a mortgage with New Haven Bank.
Total shareholders’ equity at December 31, 2022 increased approximately $37.6 million to $217.7 million compared to approximately $180.1 million at December 31, 2021. The change was primarily due to net income of approximately $20.9 million, net proceeds from the sale of common shares of $39.3 million, and approximately $1.0 million related to the acquisition of Urbane New Haven’s assets.
Dividends
The company declared and paid dividends of approximately $14.9 million on common shares approximately $3.7 million on Series A preferred shares, and reported approximately $5.3 million of accrued dividends.
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 on Friday, March 31, 2023, at 8:00 a.m., Eastern Time, to discuss in greater detail its financial results for the year ended December 31, 2022.
Interested parties can access the conference call via telephone by dialing toll free 1-877-704-4453 for U.S. callers or +1 201-389-0920 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 Friday, April 14, 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: 13737135.
About Sachem Capital Corp
Sachem Capital Corp. is a financing REIT that 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 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 | ||||||||
| December 31, 2022 | December 31, 2021 | |||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | 23,713,097 | $ | 41,938,897 | ||||
| Investment securities | 24,576,462 | 60,633,661 | ||||||
| Mortgages receivable | 460,633,268 | 292,301,209 | ||||||
| Interest and fees receivable | 6,309,845 | 3,693,645 | ||||||
| Due from borrowers | 5,276,967 | 3,671,016 | ||||||
| Real estate owned | 5,216,149 | 6,559,010 | ||||||
| Investments in partnerships | 30,831,180 | 6,055,838 | ||||||
| Property and equipment, net | 4,121,721 | 2,172,185 | ||||||
| Other assets | 4,983,173 | 936,290 | ||||||
| Total assets | $ | 565,661,862 | $ | 417,961,751 | ||||
| Liabilities and Shareholders’ Equity: | ||||||||
| Liabilities: | ||||||||
| Notes payable (net of deferred financing costs of $8,352,597 and $5,747,387) | $ | 280,049,153 | $ | 160,529,363 | ||||
| Repurchase facility | 42,533,466 | 19,087,189 | ||||||
| Mortgage payable | 750,000 | 750,000 | ||||||
| Line of credit | 3,587,894 | 33,178,031 | ||||||
| Accrued dividends payable | 5,342,160 | 3,927,600 | ||||||
| Accounts payable and accrued liabilities | 1,439,219 | 697,403 | ||||||
| Advances from borrowers | 9,892,164 | 15,066,114 | ||||||
| Deferred revenue | 4,360,452 | 4,643,490 | ||||||
| Total liabilities | 347,954,508 | 237,879,190 | ||||||
| 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 | 1,903 | ||||||
| Common stock – $.001 par value; 200,000,000 shares authorized; 41,093,536 and 32,730,004 issued and outstanding | 41,094 | 32,730 | ||||||
| Paid-in capital | 226,220,990 | 185,516,394 | ||||||
| Accumulated other comprehensive loss | (561,490 | ) | (476,016 | ) | ||||
| Accumulated deficit | (7,995,143 | ) | (4,992,450 | ) | ||||
| Total shareholders’ equity | 217,707,354 | 180,082,561 | ||||||
| Total liabilities and shareholders’ equity | $ | 565,661,862 | $ | 417,961,751 | ||||
| The accompanying notes are an integral part of these financial statements. | ||||||||
| SACHEM CAPITAL CORP. | |||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||
| Years Ended | |||||||
| December 31, | |||||||
| 2022 | 2021 | ||||||
| Revenue: | |||||||
| Interest income from loans | $ | 42,618,817 | $ | 22,305,530 | |||
| Investment gain (loss), net | 521,662 | 1,069,374 | |||||
| Income from partnership investments | 1,809,564 | 142,026 | |||||
| Origination and modification fees, net | 7,320,625 | 4,322,883 | |||||
| Fee and other income | 2,969,117 | 2,299,970 | |||||
| Unrealized losses on investment securities | (2,963,760 | ) | 284,769 | ||||
| Total revenue | 52,276,025 | 30,424,552 | |||||
| Operating costs and expenses: | |||||||
| Interest and amortization of deferred financing costs | 21,549,859 | 10,422,101 | |||||
| Compensation, fees and taxes | 5,315,455 | 3,122,934 | |||||
| Other expenses | 544,684 | 432,868 | |||||
| General and administrative expenses | 3,097,219 | 2,243,038 | |||||
| Loss (Gain) on sale of real estate | (44,752 | ) | 165,915 | ||||
| Impairment loss | 904,909 | 719,000 | |||||
| Total operating costs and expenses | 31,367,374 | 17,105,856 | |||||
| Net income | 20,908,651 | 13,318,696 | |||||
| Preferred stock dividend | (3,687,062 | ) | (1,853,855 | ) | |||
| Net income attributable to common shareholders | 17,221,589 | 11,464,841 | |||||
| Other comprehensive loss | |||||||
| Unrealized gain (loss) on investment securities | (85,474 | ) | (476,016 | ) | |||
| Comprehensive income | $ | 17,136,115 | $ | 10,988,825 | |||
| Basic and diluted net income per common share outstanding: | |||||||
| Basic | $ | 0.46 | $ | 0.44 | |||
| Diluted | $ | 0.46 | $ | 0.44 | |||
| Weighted average number of common shares outstanding: | |||||||
| Basic | 37,741,657 | 26,316,286 | |||||
| Diluted | 37,749,169 | 26,324,986 | |||||
| The accompanying notes are an integral part of these financial statements. | |||||||
| SACHEM CAPITAL CORP. | |||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||
| FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 | |||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||
| Additional | Other | ||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Loss | Deficit | Totals | ||||||||||||||||||
| Balance, January 1, 2021 | – | – | 22,124,801 | 22,125 | 83,814,376 | (25,992 | ) | (2,890,969 | ) | $ | 80,919,540 | ||||||||||||||
| Issuance of Preferred Stock, Net of expenses | 1,903,000 | 1,903 | 45,460,723 | 45,462,626 | |||||||||||||||||||||
| Issuance of Common Stock, Net of expenses | 10,490,188 | 10,490 | 56,049,982 | 56,060,472 | |||||||||||||||||||||
| Exercise of warrants | 5,334 | 5 | (5 | ) | – | ||||||||||||||||||||
| Stock based compensation | 109,681 | 110 | 191,318 | 191,428 | |||||||||||||||||||||
| Unrealized loss on investments | (450,024 | ) | (450,024 | ) | |||||||||||||||||||||
| Dividends paid on Common shares | (9,638,722 | ) | (9,638,722 | ) | |||||||||||||||||||||
| Dividends paid on Series A Preferred Stock | (1,853,855 | ) | (1,853,855 | ) | |||||||||||||||||||||
| Dividends declared and payable | (3,927,600 | ) | (3,927,600 | ) | |||||||||||||||||||||
| Net income for the year ended December 31, 2021 | 13,318,696 | 13,318,696 | |||||||||||||||||||||||
| Balance, December 31, 2021 | 1,903,000 | 1,903 | 32,730,004 | 32,730 | 185,516,394 | (476,016 | ) | (4,992,450 | ) | 180,082,561 | |||||||||||||||
| Issuance of Preferred Stock, net of expenses | – | – | (70,000 | ) | (70,000 | ) | |||||||||||||||||||
| Issuance of Common Stock, net of expenses | 7,879,907 | 7,880 | 39,284,065 | 39,291,945 | |||||||||||||||||||||
| Acquisition of Urbane New Haven assets | 300,000 | 300 | 995,700 | 996,000 | |||||||||||||||||||||
| Exercise of warrants | 19,658 | 20 | (20 | ) | – | ||||||||||||||||||||
| Stock based compensation | 163,967 | 164 | 494,851 | 495,015 | |||||||||||||||||||||
| Unrealized loss on investments | (85,474 | ) | (85,474 | ) | |||||||||||||||||||||
| Dividends paid on Common shares | (14,882,122 | ) | (14,882,122 | ) | |||||||||||||||||||||
| Dividends paid on Series A Preferred Stock | (3,687,062 | ) | (3,687,062 | ) | |||||||||||||||||||||
| Accrued Dividends | (5,342,160 | ) | (5,342,160 | ) | |||||||||||||||||||||
| Net income for the year ended December 31, 2022 | 20,908,651 | 20,908,651 | |||||||||||||||||||||||
| Balance, December 31, 2022 | 1,903,000 | $ | 1,903 | 41,093,536 | $ | 41,094 | $ | 226,220,990 | $ | (561,490 | ) | $ | (7,995,143 | ) | $ | 217,707,354 | |||||||||
| The accompanying notes are an integral part of these financial statements. | |||||||||||||||||||||||||
| SACHEM CAPITAL CORP. | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOW | |||||||
| Years Ended | |||||||
| December 30, | |||||||
| 2022 | 2021 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 20,908,651 | $ | 13,318,696 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Amortization of deferred financing costs and bond discount | 2,104,093 | 1,215,200 | |||||
| Write-off of deferred financing costs | – | 72,806 | |||||
| Depreciation expense | 106,414 | 83,525 | |||||
| Stock based compensation | 495,015 | 191,318 | |||||
| Impairment loss | 904,909 | 719,000 | |||||
| (Gain) Loss on sale of real estate | (44,752 | ) | 165,915 | ||||
| Unrealized loss on investment securities | 2,963,760 | (284,769 | ) | ||||
| Gain on sale of investment securities | (521,662 | ) | – | ||||
| Changes in operating assets and liabilities: | |||||||
| (Increase) decrease in: | |||||||
| Interest and fees receivable | (2,616,200 | ) | (1,873,578 | ) | |||
| Other assets | (3,599,779 | ) | (26,801 | ) | |||
| Due from borrowers | (1,605,951 | ) | (1,645,353 | ) | |||
| Accrued Dividends Payable | (1,414,560 | ) | – | ||||
| Other Assets – Prepaid Expenses | – | (199,978 | ) | ||||
| (Decrease) increase in: | |||||||
| Accrued Interest | 158,687 | 161,385 | |||||
| Accounts payable and accrued liabilities | 766,723 | 129,091 | |||||
| Deferred revenue | (283,038 | ) | 2,544,159 | ||||
| Advances from borrowers | (5,173,950 | ) | 13,235,575 | ||||
| Total adjustments | (7,760,291 | ) | 14,487,495 | ||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 13,148,360 | 27,806,191 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Purchase of investment securities | (51,651,930 | ) | (204,064,590 | ) | |||
| Proceeds from the sale of investment securities | 85,113,227 | 180,533,333 | |||||
| Purchase of interests in investment partnerships, net | (24,775,342 | ) | (6,055,838 | ) | |||
| Proceeds from sale of real estate owned | 2,090,879 | 2,399,557 | |||||
| Acquisitions of and improvements to real estate owned, net | (126,442 | ) | (981,873 | ) | |||
| Purchase of property and equipment | (1,581,350 | ) | (822,322 | ) | |||
| Security deposits held | – | (13,415 | ) | ||||
| Principal disbursements for mortgages receivable | (300,277,303 | ) | (251,832,318 | ) | |||
| Principal collections on mortgages receivable | 131,840,244 | 115,147,409 | |||||
| Other Assets – Pre-offering Costs | (170,606 | ) | (306,440 | ) | |||
| NET CASH USED FOR INVESTING ACTIVITIES | (159,538,623 | ) | (165,996,497 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Net proceeds from (repayment of) line of credit | (29,590,137 | ) | 5,122,383 | ||||
| Net proceeds from repurchase facility | 23,446,277 | 19,087,189 | |||||
| Proceeds from mortgage | – | 750,000 | |||||
| Repayment of mortgage payable | – | (767,508 | ) | ||||
| Accounts payable and accrued liabilities – principal payments on other notes | (24,907 | ) | (23,761 | ) | |||
| Dividends paid on Common Stock | (18,809,722 | ) | (12,267,706 | ) | |||
| Dividends paid on Preferred Stock | (3,687,062 | ) | (1,853,855 | ) | |||
| Financings costs incurred | – | (461,357 | ) | ||||
| Repayment of other loans | – | (257,845 | ) | ||||
| Proceeds from issuance of common shares, net of expenses | 39,291,945 | 56,060,472 | |||||
| Proceeds from issuance of Series A Preferred Stock, net of expenses | (70,000 | ) | 45,462,626 | ||||
| Gross proceeds from issuance of fixed rate notes | 122,125,000 | 51,750,000 | |||||
| Financings costs incurred in connection with fixed rate notes | (4,516,931 | ) | (1,879,463 | ) | |||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 128,164,463 | 160,721,175 | |||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (18,225,800 | ) | 22,530,869 | ||||
| CASH AND CASH EQUIVALENTS – BEGINNING OF YEAR | 41,938,897 | 19,408,028 | |||||
| CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | 23,713,097 | $ | 41,938,897 | |||
| The accompanying notes are an integral part of these financial statements. | |||||||
| SACHEM CAPITAL CORP. | ||||||
| CONSOLIDATED STATEMENTS OF CASH FLOW (Continued) | ||||||
| Years Ended | ||||||
| December 30, | ||||||
| 2022 | 2021 | |||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOWS | ||||||
| INFORMATION | ||||||
| Interest paid | $ | 19,286,819 | $ | 9,097,631 | ||
| SUPPLEMENTAL INFORMATION-NON-CASH | ||||||
| Dividends declared and payable | $ | 5,342,160 | $ | 3,927,600 | ||
| Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the period ended December 31, 2022 amounted to $1,376,733. Additionally, Property and Equipment, Goodwill, and Intangibles acquired in connection with the acquisition from Urbane New Haven during the period ended December 31, 2022 amounted to $996,000. | ||||||
| The accompanying notes are an integral part of these financial statements. | ||||||
