Sachem Capital Reports Third Quarter 2023 Results – Produces Revenue Growth of 29.5% to $17.5 Million
Company to Host Webcast and Conference Call
BRANFORD, Conn., Nov. 13, 2023 (GLOBE NEWSWIRE) — 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 | |||
