8-K
Sachem Capital Corp. (SACH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OFTHE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 1, 2025
SACHEM
CAPITAL CORP.
(Exact name of Registrant as specified in its charter)
| New<br> York | 001-37997 | 81-3467779 |
|---|---|---|
| (State<br> or other jurisdiction of<br><br> incorporation) | (Commission File<br><br> Number) | (IRS<br> Employer <br><br> Identification No.) |
| 568<br> East Main Street, Branford,<br> Connecticut | 06405 | |
| --- | --- | |
| (Address<br> of Principal Executive Office) | (Zip<br> Code) |
Registrant's
telephone number, including area code (203) 433-4736
| (Former<br> Name or Former Address, if Changed Since Last Report) |
|---|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Ticker<br> symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| Common<br> Shares, par value $.001 per share | SACH | NYSE American LLC |
| 7.75%<br> notes due 2025 | SCCC | NYSE American LLC |
| 6.00%<br> notes due 2026 | SCCD | NYSE American LLC |
| 6.00%<br> notes due 2027 | SCCE | NYSE American LLC |
| 7.125%<br> notes due 2027 | SCCF | NYSE American LLC |
| 8.00%<br> notes due 2027 | SCCG | NYSE American LLC |
| 7.75%<br> Series A Cumulative Redeemable Preferred Stock, Liquidation Preference $25.00 per share | SACHPRA | NYSE<br> American LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On May 1, 2025, Sachem Capital Corp. (the “Company”) issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference, announcing its financial results for the three month period ended March 31, 2025.
| Item 7.01. | Regulation FD Disclosure. |
|---|
On May 1, 2025, the Company hosted a conference call for investors to discuss its financial condition and operating results for the three month period ended March 31, 2025. A transcript of the call is attached hereto as Exhibit 99.2.
The information furnished pursuant to this Item 7.01 shall not be deemed to constitute an admission that such information is required to be furnished pursuant to Regulation FD or that such information or exhibits contain material information that is not otherwise publicly available. In addition, the Company does not assume any obligation to update such information in the future.
| Item 8.01. | Other Events. |
|---|
On May 2, 2025, the Company’s Board of Directors (the “Board”) approved and ratified a new Insider Trading and Blackout Policy (the “Policy”) applicable to all employees, officers and directors of the Company and their respective family members. A copy of the Policy is attached hereto as Exhibit 19.1 and is incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 19.1 | New Insider Trading Policy and Procedures of the Company. |
| 99.1 | Press release, dated May 1, 2025, announcing financial results for the three month period ended March 31, 2025. |
| 99.2 | Transcript of investor conference call held on May 1, 2025. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, furnished pursuant to Items 2.02 and 7.01, including Exhibits 99.1 and 99.2, respectively, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
* * * * *
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Sachem Capital Corp. | ||
|---|---|---|
| Dated: May 5, 2025 | By: | /s/ John L. Villano |
| John L. Villano, CPA | ||
| President and Chief Executive Officer |
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Exhibit Index
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Exhibit 19.1
Insider Trading Policy
This Insider Trading Policy (“Policy”) describes the standards of Sachem Capital Corporation and its subsidiaries (the “Company”) on trading, and causing the trading of, the Company's securities or securities of certain other publicly traded companies while in possession of confidential information. This Policy is divided into two parts: the first part prohibits trading in certain circumstances and applies to all directors, officers and employees and their respective immediate family members, and the second part imposes special additional trading restrictions and applies to all (i) directors of the Company, (ii) executive officers of the Company (together with the directors, “CompanyInsiders”) and (iii) certain other employees that the Company may designate from time to time as “Covered Persons” because of their position, responsibilities or their actual or potential access to material information (all of the foregoing are collectively referred to as “Covered Persons”).
One of the principal purposes of the federal securities laws is to prohibit so-called “insider trading.” Simply stated, insider trading occurs when a person uses material nonpublic information obtained through involvement with the Company to make decisions to purchase, sell, give away, or otherwise trade the Company's securities or the securities of certain other companies or to provide that information to others outside the Company. The prohibitions against insider trading apply to trades, tips and recommendations by virtually any person, including all persons associated with the Company, if the information involved is “material” and “nonpublic.” These terms are defined in this Policy under Part I, Section 3 below. The prohibitions would apply to any director, officer or employee who buys or sells securities on the basis of material nonpublic information that he or she obtained about the Company, its customers, suppliers, partners, competitors or other companies with which the Company has contractual relationships or may be negotiating transactions.
PART I
1. Applicability
This Policy applies to all trading or other transactions in (i) the Company's securities, including common stock, options and any other securities that the Company may issue, such as preferred stock, notes, bonds and convertible securities, as well as to derivative securities relating to any of the Company's securities, whether or not issued by the Company and (ii) the securities of certain other companies, including common stock, options and other securities issued by those companies as well as derivative securities relating to any of those companies' securities.
This Policy applies to all employees of the Company, all officers of the Company and all members of the Company's board of directors and their respective family members.
2. General Policy: No Trading or Causing Trading While in Possessionof Material Nonpublic Information
**(a)**No director, officer or employee or any of their immediate family members may purchase or sell, or offer to purchase or sell, any Company security, whether or not issued by the Company, while in possession of material nonpublic information about the Company. (The terms "material" and "nonpublic" are defined in Part I, Section 3(a) and (b) below.)
**(b)**No director, officer or employee or any of their immediate family members who knows of any material nonpublic information about the Company may communicate that information to (“tip”) any other person, including family members and friends, or otherwise disclose such information without the Company’s authorization.
**(c)**No director, officer or employee or any of their immediate family members may purchase or sell any security of any other publicly-traded company while in possession of material nonpublic information that was obtained in the course of his or her involvement with the Company. No director, officer or employee or any of their immediate family members who knows of any such material nonpublic information may communicate that information to, or tip, any other person, including family members and friends, or otherwise disclose such information without the Company's authorization.
**(d)**For compliance purposes, you should never trade, tip or recommend securities (or otherwise cause the purchase or sale of securities) while in possession of information that you have reason to believe is material and nonpublic unless you first consult with, and obtain the advance approval of, the Compliance Officers (which is defined in Part I, Section 3(c) below).
**(e)**Covered Persons must “pre-clear” all trading in securities of the Company in accordance with the procedures set forth in Part II, Section 3 below.
3. Definitions
(a) Material. Insider trading restrictions come into play only if the information you possess is “material.” Materiality, however, involves a relatively low threshold. Information is generally regarded as “material” if it has market significance, that is, if its public dissemination is likely to affect the market price of securities, or if it otherwise is information that a reasonable investor would want to know before making an investment decision.
Information dealing with the following subjects is reasonably likely to be found material in particular situations:
(i) significant changes in the Company's prospects;
(ii) significant write-downs in assets or increases in reserves;
(iii) developments regarding significant litigation or government agency investigations;
(iv) liquidity problems;
(v) changes in earnings estimates or unusual gains or losses in major operations;
(vi) major changes in the Company's management or the board of directors;
(vii) changes in dividends;
(viii) extraordinary borrowings;
(ix) major changes in accounting methods or policies;
(x) award or loss of a significant contract;
(xi) cybersecurity risks and incidents, including vulnerabilities and breaches;
(xii) changes in debt ratings;
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(xiii) proposals, plans or agreements, even if preliminary in nature, involving mergers, acquisitions, divestitures, recapitalizations, strategic alliances, licensing arrangements, or purchases or sales of substantial assets; and
(xiv) offerings of Company securities.
Material information is not limited to historical facts but may also include projections and forecasts. With respect to a future event, such as a merger, acquisition or introduction of a new product, the point at which negotiations or product development are determined to be material is determined by balancing the probability that the event will occur against the magnitude of the effect the event would have on a company's operations or stock price should it occur. Thus, information concerning an event that would have a large effect on stock price, such as a merger, may be material even if the possibility that the event will occur is relatively small. When in doubt about whether particular nonpublic information is material, you should presume it is material. If you are unsure whether information is material, you should either consult the Compliance Officers before making anydecision to disclose such information (other than to persons who need to know it) or to trade in or recommend securities to which thatinformation relates or assume that the information is material.
(b) Nonpublic. Insider trading prohibitions come into play only when you possess information that is material and “nonpublic.” The fact that information has been disclosed to a few members of the public does not make it public for insider trading purposes. To be “public” the information must have been disseminated in a manner designed to reach investors generally, and the investors must be given the opportunity to absorb the information. Even after public disclosure of information about the Company, you must wait until the close of business on the second trading day after the information was publicly disclosed before you can treat the information as public.
Nonpublic information may include:
(i) information available to a select group of analysts or brokers or institutional investors;
(ii) undisclosed facts that are the subject of rumors, even if the rumors are widely circulated; and
(iii) information that has been entrusted to the Company on a confidential basis until a public announcement of the information has been made and enough time has elapsed for the market to respond to a public announcement of the information (normally two trading days).
As with questions of materiality, if you are not sure whether informationis considered public, you should either consult with the Compliance Officers or assume that the information is nonpublic and treat itas confidential.
(c) Compliance Officers. The Company has appointed its principal executive officer and principal financial officer, as the Compliance Officers for this Policy. The duties of the Compliance Officers include, but are not limited to, the following:
(i) assisting with implementation and enforcement of this Policy;
(ii) circulating this Policy to all employees and ensuring that this Policy is amended as necessary to remain up-to-date with insider trading laws;
(iii) pre-clearing all trading in securities of the Company by Covered Persons in accordance with the procedures set forth in Part II, Section 3 below; and
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(iv) providing approval of any Rule 10b5-1 plans under Part II, Section 1(c) below and any prohibited transactions under Part II, Section 4 below.
4. Violations of Insider Trading Laws
Penalties for trading on or communicating material nonpublic information can be severe, both for individuals involved in such unlawful conduct and their employers and supervisors, and may include jail terms, criminal fines, civil penalties and civil enforcement injunctions. Given the severity of the potential penalties, compliance with this Policy is absolutely mandatory.
(a) Legal Penalties. A person who violates insider trading laws by engaging in transactions in a company's securities when he or she has material nonpublic information can be sentenced to a substantial jail term and required to pay a criminal penalty of several times the amount of profits gained or losses avoided.
In addition, a person who tips others may also be liable for transactions by the tippees to whom he or she has disclosed material nonpublic information. Tippers can be subject to the same penalties and sanctions as the tippees, and the SEC has imposed large penalties even when the tipper did not profit from the transaction.
The SEC can also seek substantial civil penalties from any person who, at the time of an insider trading violation, “directly or indirectly controlled the person who committed such violation,” which would apply to the Company and/or management and supervisory personnel. These control persons may be held liable for up to the greater of $1 million or three times the amount of the profits gained or losses avoided. Even for violations that result in a small or no profit, the SEC can seek penalties from a company and/or its management and supervisory personnel as control persons.
(b) Company-Imposed Penalties. Employees who violate this Policy may be subject to disciplinary action by the Company, including dismissal. Any exceptions to the Policy, if permitted, may only be granted by the Compliance Officers and must be provided before any activity contrary to the above requirements takes place.
5. Inquiries
If you have any questions regarding any of the provisions of this Policy, please contact the Compliance Officers.
PART II
1. Blackout Periods
All Covered Persons are prohibited from trading in the Company's securities during blackout periods as defined below.
(a) Quarterly Blackout Periods. Trading in the Company's securities is prohibited during the period beginning at the close of the market on two weeks before the end of each fiscal quarter and ending at the close of business on the second trading day following the date the Company's financial results are publicly disclosed. During these periods, Covered Persons generally possess or are presumed to possess material nonpublic information about the Company's financial results.
(b) Other Blackout Periods. From time to time, other types of material nonpublic information regarding the Company (such as negotiation of mergers, acquisitions or dispositions, investigation and assessment of cybersecurity incidents or new product developments) may be pending and not be publicly disclosed. While such material nonpublic information is pending, the Company may impose special blackout periods during which Covered Persons are prohibited from trading in the Company's securities. If the Company imposes a special blackout period, it will notify the Covered Persons affected.
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(c) Exception. These trading restrictions do not apply to transactions under a pre-existing written plan, contract, instruction, or arrangement under Rule 10b5-1 under the Securities Exchange Act of 1934 (an “Approved 10b5-1 Plan”) that:
(i) has been reviewed and approved at least one month in advance of any trades thereunder by the Compliance Officers (or, if revised or amended, such revisions or amendments have been reviewed and approved by the Compliance Officers at least one month in advance of any subsequent trades);
(ii) was entered into in good faith by the Covered Person at a time when the Covered Person was not in possession of material nonpublic information about the Company; and
(iii) gives a third party the discretionary authority to execute such purchases and sales, outside the control of the Covered Person, so long as such third party does not possess any material nonpublic information about the Company; or explicitly specifies the security or securities to be purchased or sold, the number of shares, the prices and/or dates of transactions, or other formula(s) describing such transactions.
2. Trading Window
Covered Persons are permitted to trade in the Company's securities when no blackout period is in effect. Generally, this means that Covered Person can trade during the period beginning on the third day following the date the Company’s financial results are publicly disclosed and ending on the day that is two weeks and one day before the close of the next fiscal quarter. However, even during this trading window, a Covered Person who is in possession of any material nonpublic information should not trade in the Company's securities until the information has been made publicly available or is no longer material. In addition, the Company may close this trading window if a special blackout period under Part II, Section 1(b) above is imposed and will re-open the trading window once the special blackout period has ended.
3. Pre-Clearance of Securities Transactions
**(a)**Because Company Insiders are likely to obtain material nonpublic information on a regular basis, the Company requires all such persons to refrain from trading, even during a trading window under Part II, Section 2 above, without first pre-clearing all transactions in the Company's securities.
**(b)**Subject to the exemption in subsection (d) below, no Company Insider may, directly or indirectly, purchase or sell (or otherwise make any transfer, gift, pledge or loan of) any Company security at any time without first obtaining prior approval from the Compliance Officers. These procedures also apply to transactions by such person's spouse, other persons living in such person’s household and minor children and to transactions by entities over which such person exercises control.
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**(c)**The Compliance Officers shall record the date each request is received and the date and time each request is approved or disapproved. Unless revoked, a grant of permission will normally remain valid until the close of trading two business days following the day on which it was granted. If the transaction does not occur during the two-day period, pre-clearance of the transaction must be re-requested.
**(d)**Pre-clearance is not required for purchases and sales of securities under an Approved 10b5-1 Plan. With respect to any purchase or sale under an Approved 10b5-1 Plan, the third party effecting transactions on behalf of the Company Insider should be instructed to send duplicate confirmations of all such transactions to the Compliance Officers.
4. Prohibited Transactions
**(a)**Company Insiders are prohibited from trading in the Company’s equity securities during a blackout period imposed under an “individual account” retirement or pension plan of the Company, during which at least 50% of the plan participants are unable to purchase, sell or otherwise acquire or transfer an interest in equity securities of the Company, due to a temporary suspension of trading by the Company or the plan fiduciary.
**(b)**Covered Persons, including any person’s spouse, other persons living in such person’s household and minor children and entities over which such person exercises control, are prohibited from engaging in the following transactions in the Company’s securities unless advance approval is obtained from the Compliance Officers:
(i) Short-term trading. Company Insiders who purchase Company securities may not sell any Company securities of the same class for at least six months after the purchase;
(ii) Short sales. Covered Persons may not sell the Company's securities short;
(iii) Options trading. Covered Persons may not buy or sell puts or calls or other derivative securities on the Company’s securities;
(iv) Trading on margin or pledging. Covered Persons may not hold Company securities in a margin account or pledge Company securities as collateral for a loan; and
(v) Hedging. Covered Persons may not enter into hedging or monetization transactions or similar arrangements with respect to Company securities.
5. Acknowledgment and Certification
All Covered Persons are required to sign the attached acknowledgment and certification.
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ACKNOWLEDGMENT AND CERTIFICATION
The undersigned does hereby acknowledge receipt of the Sachem Capital Corporation’s Insider Trading Policy. The undersigned has read and understands (or has had explained) such Policy and agrees to be governed by such Policy at all times in connection with the purchase and sale of securities and the confidentiality of nonpublic information.
| (Signature) | |
|---|---|
| (Please print name) | |
| Date: |
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Exhibit 99.1
SACHEM CAPITAL REPORTS FIRST QUARTER 2025 RESULTS
- Companyto Host Webcast and Conference Call -
BRANFORD, Conn.,May 1, 2025 (GLOBE NEWSWIRE) -- Sachem Capital Corp. (NYSE American: SACH) (the “Company”), a real estate lender specializing in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property, today announced its financial results for the quarter ended March 31, 2025.
John Villano, CPA, Sachem Capital’s Chief Executive Officer commented, “The first quarter was one of stability for the Company as we put the challenges of the past year behind us. Our balance sheet showed almost no change from the prior quarter, as we remain focused on effectively managing our loan portfolio and protecting our capital. Our goal is to grow our balance sheet, capitalizing on quality opportunities to invest capital at attractive yields, while maintaining a prudent capital allocation approach. Overall, while uncertainty across the real estate and capital markets remain elevated, we are pleased with the stability of our portfolio and the liquidity on our balance sheet, and we are confident that cash flow and dividend growth will return as we leverage our industry relationships and focus on driving shareholder value.”
Results of operations for the quarter endedMarch 31, 2025
Total revenue was $11.4 million compared to $16.8 million in the first quarter of 2024. The change in revenue was primarily due to the cumulative effect of fewer originations over the last fifteen months, resulting in a reduction in the unpaid principal balance of loans held for investment, in addition to a currently elevated amount of nonperforming loans and real estate owned. On the other hand, income from our preferred membership limited liability company investments increased approximately 71.7%, compared to the three months ended March 31, 2024.
Total operating costs and expenses for the first quarter of 2025 were $10.4 million compared to $12.5 million in the same quarter last year. The change was primarily due to reductions in interest and amortization expense of $1.4 million, compensation and employee benefits, provision for credit losses related to loans, and other expenses totaling $0.8 million.
Net loss attributable to common shareholders for the first quarter of 2025 was $213,000, or $0.00 per share, compared to net income attributable to common shareholders of $3.6 million, or $0.08 per share for the first quarter of 2024.
Balance Sheet
Total assets as of March 31, 2025 were $491.4 million compared to $492.0 million as of December 31, 2024. Total liabilities as of March 31, 2025 were $312.1 million compared to $310.3 million as of December 31, 2024.
Total indebtedness at quarter-end was $305.6 million. This includes: $227.0 million of notes payable (net of $3.2 million of deferred financing costs) and $78.6 million aggregate outstanding principal amount of the amounts due under various credit facilities and the mortgage loan on the Company’s office building.
Total shareholders’ equity at March 31, 2025 was $179.3 million compared to $181.7 million at year-end 2024. Book value per common share at March 31, 2025 was $2.57 compared to $2.64 at year-end 2024. The $0.07 decrease in book value is primarily due to the aggregate $3.5 million in preferred and common dividends declared and paid during this first quarter 2025.
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.
On March 31, 2025, the Company paid a dividend of $0.484375 per share to the holders of its Series A Preferred Stock of record on March 15, 2025.
On March 31, 2025, the Company paid a dividend of $0.05 per share to its common shareholders of record on March 17, 2025.
Investor Conference Webcast and Call
The Company is hosting a webcast and conference call Thursday, May 1, 2025 at 8:00 a.m. Eastern Time, to discuss in greater detail its financial results for the quarter ended March 31, 2025. A webcast of the call may be accessed on the Company’s website at https://sachemcapitalcorp.com/investor-relations/events-and-presentations/default.aspx.
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.
Replay
The webcast will also be archived on the Company’s website and a telephone replay of the call will be available through Thursday, May 15, 2025, 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: 13752977.
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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 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 also makes 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. Such forward-looking statements are subject to several risks, uncertainties and assumptions as described in the Annual Report on Form 10-K for 2024 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2025. Because of these risks, uncertainties and assumptions, any forward-looking events and circumstances discussed in this press release may not occur. You should not rely upon forward-looking statements as predictions of future events. 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
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SACHEM CAPITAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| December 31, 2024 | |||||
|---|---|---|---|---|---|
| (audited) | |||||
| Assets | |||||
| Cash and cash equivalents | 24,414 | $ | 18,066 | ||
| Investment securities (at fair value) | 1,392 | 1,517 | |||
| Loans held for investment (net of deferred loan fees of 2,225 and 1,950) | 365,635 | 375,041 | |||
| Allowance for credit losses | (18,122 | ) | (18,470 | ) | |
| Loans held for investment, net | 347,513 | 356,571 | |||
| Loans held for sale (net of valuation allowance of 4,876 and 4,880) | 10,974 | 10,970 | |||
| Interest and fees receivable (net of allowance of 2,981 and 3,133) | 4,281 | 3,768 | |||
| Due from borrowers (net of allowance of 1,956 and 1,135) | 4,413 | 5,150 | |||
| Real estate owned, net | 18,865 | 18,574 | |||
| Investments in limited liability companies | 53,935 | 53,942 | |||
| Investments in developmental real estate, net | 16,432 | 14,032 | |||
| Property and equipment, net | 3,209 | 3,222 | |||
| Other assets | 5,967 | 6,164 | |||
| Total assets | 491,395 | $ | 491,976 | ||
| Liabilities and Shareholders’ Equity | |||||
| Liabilities: | |||||
| Notes payable (net of deferred financing costs of 3,232 and 3,713) | 227,007 | $ | 226,526 | ||
| Repurchase agreements | 41,519 | 33,708 | |||
| Mortgage payable | 981 | 1,002 | |||
| Lines of credit | 36,100 | 40,000 | |||
| Accounts payable and accrued liabilities | 2,705 | 4,377 | |||
| Advances from borrowers | 3,079 | 4,047 | |||
| Below market lease intangible | 665 | 665 | |||
| Total liabilities | 312,056 | 310,325 | |||
| Commitments and Contingencies - Note 13 | |||||
| Shareholders’ equity: | |||||
| Preferred shares - 0.001 par value; 5,000,000 shares authorized; 2,903,000 shares designated as Series A Preferred Stock; 2,306,748 shares of Series A Preferred Stock issued and outstanding at March 31, 2025 and December 31, 2024 | 2 | 2 | |||
| Common Shares - 0.001 par value; 200,000,000 shares authorized; 47,310,139 and 46,965,306 issued and outstanding at March 31, 2025 and December 31, 2024, respectively | 47 | 47 | |||
| Additional paid-in capital | 257,220 | 256,956 | |||
| Cumulative net earnings | 36,422 | 35,518 | |||
| Cumulative dividends paid | (114,352 | ) | (110,872 | ) | |
| Total shareholders’ equity | 179,339 | 181,651 | |||
| Total liabilities and shareholders’ equity | 491,395 | $ | 491,976 |
All values are in US Dollars.
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SACHEM CAPITAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per sharedata)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2025 | 2024 | |||||
| Revenues | ||||||
| Interest income from loans | $ | 7,887 | $ | 12,641 | ||
| Fee income from loans | 1,425 | 2,616 | ||||
| Income from limited liability company investments | 2,052 | 1,195 | ||||
| Other investment income | 6 | 316 | ||||
| Other income | 72 | 35 | ||||
| Total revenues | 11,442 | 16,803 | ||||
| Operating expenses | ||||||
| Interest and amortization of deferred financing costs | 6,094 | 7,469 | ||||
| Compensation and employee benefits | 1,771 | 1,943 | ||||
| General and administrative expenses | 1,355 | 1,239 | ||||
| Provision for credit losses related to loans held for investment | 1,052 | 1,365 | ||||
| Change in valuation allowance related to loans held for sale | (4 | ) | — | |||
| Loss on sale of real estate owned and property and equipment, net | — | 11 | ||||
| Other expenses | 145 | 503 | ||||
| Total operating expenses | 10,413 | 12,530 | ||||
| Operating income | 1,029 | 4,273 | ||||
| Other (loss) income, net | ||||||
| (Loss) gain on equity securities | (125 | ) | 397 | |||
| Total other (loss) income, net | (125 | ) | 397 | |||
| Net income | 904 | 4,670 | ||||
| Preferred stock dividend | (1,117 | ) | (1,022 | ) | ||
| Net (loss) income attributable to common shareholders | $ | (213 | ) | $ | 3,648 | |
| Basic and diluted (loss) earnings per Common Share | $ | (0.00 | ) | $ | 0.08 | |
| Basic and diluted weighted average Common Shares outstanding | 46,784,744 | 47,128,511 |
5
SACHEM CAPITAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| 2025 | 2024 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net income | $ | 904 | $ | 4,670 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Amortization of deferred financing costs | 545 | 624 | ||||
| Depreciation expense | 92 | 94 | ||||
| Stock-based compensation | 264 | 239 | ||||
| Provision for credit losses related to loans held for investment | 1,052 | 1,365 | ||||
| Change in valuation allowance related to loans held for sale | (4 | ) | — | |||
| Loss on sale of real estate owned and property and equipment, net | — | 11 | ||||
| Loss (gain) on equity securities | 125 | (397 | ) | |||
| Change in deferred loan fees | 275 | (291 | ) | |||
| Changes in operating assets and liabilities: | ||||||
| Interest and fees receivable, net | (361 | ) | 392 | |||
| Other assets | 133 | (63 | ) | |||
| Due from borrowers, net | (254 | ) | (1,038 | ) | ||
| Accounts payable and accrued liabilities | (1,612 | ) | 433 | |||
| Advances from borrowers | (968 | ) | (1,822 | ) | ||
| Total adjustments and operating changes | (713 | ) | (453 | ) | ||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 191 | 4,217 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Purchase of investment securities | — | (7,725 | ) | |||
| Proceeds from the sale of investment securities | — | 7,128 | ||||
| Purchase of interests in limited liability companies | (4,223 | ) | (3,186 | ) | ||
| Proceeds from limited liability companies returns of capital | 4,230 | — | ||||
| Proceeds from sale of real estate owned | 89 | 121 | ||||
| Acquisitions of and improvements to real estate owned | — | (749 | ) | |||
| Purchase of property and equipment | (41 | ) | (14 | ) | ||
| Improvements in investment in developmental real estate | (742 | ) | — | |||
| Principal disbursements for loans | (41,308 | ) | (42,654 | ) | ||
| Principal collections on loans | 47,742 | 51,398 | ||||
| NET CASH PROVIDED BY INVESTING ACTIVITIES | 5,747 | 4,319 | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Proceeds from lines of credit | 36,100 | 460 | ||||
| Repayments on lines of credit | (40,000 | ) | (600 | ) | ||
| Proceeds from repurchase agreements | 11,693 | — | ||||
| Repayments of repurchase agreements | (3,882 | ) | — | |||
| Repayment of mortgage payable | (21 | ) | (20 | ) | ||
| Dividends paid on Common Shares | (2,363 | ) | (5,144 | ) | ||
| Dividends paid on Series A Preferred Stock | (1,117 | ) | (1,022 | ) | ||
| Proceeds from issuance of Common Shares, net of expenses | — | 2,049 | ||||
| Proceeds from issuance of Series A Preferred Stock, net of expenses | — | 1,556 | ||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | 410 | (2,721 | ) | |||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 6,348 | 5,815 | ||||
| CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | 18,066 | 12,598 | ||||
| CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | 24,414 | $ | 18,413 |
6
Exhibit 99.2
****
Sachem Capital Corp. NYSEAM:SACH
FQ1 2025 Earnings Call Transcripts
Thursday, May 1, 2025 12:00PM GMT
S&P Global Market Intelligence Estimates
| **** | -FQ1 2025- | -FQ 2025- | -FY 2025- | -FY 2026- | ||
|---|---|---|---|---|---|---|
| **** | CONSENSUS | ACTUAL | SURPRISE | CONSENSUS | CONSENSUS | CONSENSUS |
| EPS (GAAP) | (0.06) | 0.00 | NM | (0.06) | (0.20) | NA |
| Revenue (mm) | 11.67 | 11.44 |  (1.97 %) |
11.29 | 44.94 | NA |
Currency: USD
Consensus as of Apr-03-2025 11:35 AM GMT
| **** | **** | - EPS (GAAP) - | ||
|---|---|---|---|---|
| **** | CONSENSUS | ACTUAL | SURPRISE | |
| FQ2 2024 | 0.12 | (0.09) | NM | |
| FQ3 2024 | 0.10 | (0.13) | NM | |
| FQ4 2024 | (0.47) | (0.76) | NM | |
| FQ1 2025 | (0.06) | 0.00 | NM |
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Contents
| Table of Contents<br><br><br><br><br><br><br><br><br><br><br><br>**** | ||
|---|---|---|
| Call Participants | ........................................................................................................................................................ | 3 |
| Presentation | ........................................................................................................................................................ | 4 |
| Question and Answer | ........................................................................................................................................................ | 7 |
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SACHEM CAPITAL CORP. FQ1 2025 EARNINGS CALL MAY 01, 2025
Call Participants
EXECUTIVES
Jeffery C. Walraven
Interim CFO & Director
John L. Villano
Founder, Chairman, President & CEO
Unknown Executive
ANALYSTS
Christopher Whitbread Patrick Nolan
Ladenburg Thalmann & Co. Inc., Research Division
Gaurav Mehta
Alliance Global Partners, Research Division
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SACHEM CAPITAL CORP. FQ1 2025 EARNINGS CALL MAY 01, 2025
Presentation
Operator
Greetings, and welcome to the Sachem Capital Corp. First Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to hand it over to Investor Relations. Thank you. You may begin.
Unknown Executive
Good morning, and thank you for joining Sachem Capital Corp.'s First Quarter 2025 Earnings Conference Call.
On the call from Sachem Capital today is Chief Executive Officer, John Villano, CPA; and Interim Chief Financial Officer, Jeff Walraven.
This morning, the company announced its operating and financial results for the quarter ended March 31, 2025. The press release is posted on the company's website, www.sachemcapitalcorp.com. In addition, the company filed its Form 10-Q today, which can be accessed on the company's website as well as the SEC's website at www.sec.gov.
As a reminder, remarks made on today's conference call may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. We do not undertake any obligation to update our forward-looking statements in light of new information or future events. For a more detailed discussion of the factors that may affect the company's results, please refer to our earnings release for this quarter and to our most recent SEC filings.
During this call, the company will be discussing certain non-GAAP financial measures. More information about these non-GAAP financial measures and the reconciliations to the most directly comparable GAAP financial measures are contained in our SEC filings.
With that, I'll turn the call over to John.
John L. Villano
Founder, Chairman, President & CEO
Thank you, and thanks to everyone for joining us today.
We will begin by reviewing our operating and financial results for the first quarter and discuss the future as we continue working towards growing our lending platform and restoring bottom line profits to the company. The difficulties of last fall, coupled with our desire to protect our balance sheet from non-accretive finance, set the stage for stability this quarter and further illuminated the path of our recovery into the second quarter of 2025. We continue to search for accretive capital to build our business. And as of today, we have 2 signed term sheets with well-respected lenders. We will keep you informed of our progress on these financing transactions.
In 2025, our portfolio is now performing as expected. As stated during our last earnings call, our post-COVID loan fundings are performing famously. While we still have $153 million of non-performing loans or $124 million of NPLs net compared to $103 million of non-performing loans net as of December 31, 2024, we did not incur any material incremental markdowns during the quarter. The net increase in NPLs was due to our Naples, Florida mortgage, moving from performing to non-performing during the quarter as well as other loans totaling $25 million.
Further, significant progress has been made as we continue to work through all problem assets. We realized a significant part of our dividend growth plan is directly tied to unlocking our non-performing loans. As of March 31, our book value stood at $2.57 per share, down less than 3% from year-end 2024. Further, we have successfully diversified our business model and cash flow sources through 2 successful partnerships. These partnerships not only add stability to our income, but create opportunities for further growth.
Urbane New Haven brings expertise in real estate development and construction services and oversees our construction loan servicing and asset management. Additionally, they have added significant expertise to further enhance our underwriting guidelines as well as our construction service policies and procedures. Together, our target is to build a pipeline of development projects where we can better control risk and returns, and Sachem can benefit from interest on invested capital and potential asset appreciation over time.
As I mentioned on our last call, we currently have 4 urban real estate development projects underway, 1 in Westport, Connecticut and 3 in Coconut Grove, Florida. We will continue to provide updates as these projects advance toward completion and lease-up. Second, Shem Creek Capital, a commercial real estate finance platform that provides debt capital solutions to multifamily, workforce housing and industrial real estate owners, aligns with our focus on multifamily housing as a strong credit product, especially in the current high-cost environment where producing new residential supply is increasingly challenging and homeownership is less affordable.
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SACHEM CAPITAL CORP. FQ1 2025 EARNINGS CALL MAY 01, 2025
The Shem partnership allows us to participate in multifamily finance, with strong borrower sponsorship while earning great risk- adjusted returns. Prior to Shem, this market was not available to us due to our elevated cost of capital. At March 31, 2025, we invested an aggregate of $51.4 million in projects managed by Shem Creek through 6 investment funds and the funds manager. In the first quarter, these investments generated approximately $2 million in revenue, representing an attractive low-risk double-digit yield.
Turning to the macro environment. Our industry continues to face a wide range of headwinds. Ongoing tariff uncertainty has contributed to renewed volatility in the financial markets, making cost projections and incremental capital sources less predictable. Further, many real estate construction projects will be affected by increased costs from materials and supplies originating from outside of the U.S. We do expect product shortages resulting from supply chain issues. Expectations are for interest rates to decline during 2025. However, rates remain elevated as the markets look for stability moving forward.
While the volume of real estate transactions is gradually recovering, it's still well below the levels we saw in the immediate post- pandemic period. Pricing for many property types and across many markets continues to trend downward as buyers struggle with high real estate costs and costly financing. Also, restrictive bank lending policies are still limiting the amount of capital our borrowers can access for takeout financing. While these challenges persist, they also create meaningful opportunities for Sachem. Considering the constraints in the broader lending markets, our pipeline of new origination opportunities remains robust and well beyond what we have the capacity to take on today.
We will continue to stay highly selective in pursuit of new loans, and we will remain focused on single-family and multifamily residential assets in growing markets where market fundamentals remain strong. Our underwriting process continues to pursue highly experienced and creditworthy sponsors. As I stated earlier, our ability to work through the remaining $124 million of net NPLs on our book can unlock significant capital to drive earnings and cash flow growth. Our success in this area will directly benefit our earnings and increase dividends to our shareholders. We will continue to seek incremental sources of accretive capital to strengthen our balance sheet and support further growth. We are very excited with the opportunity ahead.
And I will now turn the call over to Jeff.
Jeffery C. Walraven
Interim CFO & Director
Thank you, John.
I'll walk you through Sachem Capital's financial highlights for the first quarter ended March 31, 2025. Starting with revenues. Total revenue for the first quarter was $11.4 million compared to $16.8 million for the same period in 2024. The 31.9% decrease primarily reflects the cumulative effect of fewer loan originations over the past 15 months, resulting in a compression in our earning unpaid principal loan balance portfolio alongside elevated levels of non-performing loans and conversion of loans through foreclosure to real estate owned. On a positive note, income from our preferred membership in Shem Creek LLC investment earnings increased approximately 71.7% as compared to the first quarter of 2024.
Turning to expenses. Total operating expenses were $10.4 million, down from $12.5 million in the prior year's quarter, a 16.9% reduction. The primary drivers were lower interest and amortization expenses due to the repayment of $58.2 million in unsecured retail notes in 2024, as well as reductions in compensation and employee benefits and credit loss provisions.
On net results, this resulted in GAAP net income of $0.9 million and after payment of the Series A Preferred Stock dividends of $1.1 million, net loss attributable to common shareholders was $0.2 million or $0.00 per share compared to $3.6 million of income, or $0.08 per share for the first quarter of 2024. On balance sheet position, total assets were $491.4 million, nearly flat compared to $492 million at December 31, 2024. Total liabilities increased just slightly to $312.1 million, mainly due to higher repurchase agreements, partially offset by reductions in lines of credit and accounts payable.
Our outstanding debt at March 31 was $306 million. This resulting in total asset to total liability coverage of 1.57x. Our shareholders' equity stands at $179.3 million, resulting in debt-to-equity ratio of 1.7x, or 62.3% debt and 37.7% equity. On book value, as John mentioned earlier, our book value was very stable in the quarter as expected. Book value per common share at March 31, 2025, was $2.57. This is down from $2.64 at year ended 2024. This $0.07 decrease was nearly solely driven by $3.5 million in preferred and common dividends paid during the first quarter that is in excess of book net earnings.
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SACHEM CAPITAL CORP. FQ1 2025 EARNINGS CALL MAY 01, 2025
The stability of our book value demonstrates the work we continue to complete to resolve delinquencies, sell non-performing loans and clear REO off our books. While the market continues to evolve, impacting the entire industry, we are confident that the major issues are behind us as we look to return to growth.
On liquidity and capital resources, cash and cash equivalents increased to $24.4 million from $18.1 million at the start of the year. During the first quarter, we closed on a replacement credit facility with Needham Bank. This facility is nearly identical to the previous credit facility and provides for up to $50 million of committed available liquidity for Sachem at an attractive interest rate, subject to an assigned and pledged borrowing base assets. We continue to maintain solid liquidity, with a focus on prudent management of debt maturities and funding requirements.
Specifically with regard to our $56 million in retail notes coming due in September, while we would expect to be able to fully repay the notes from drawdowns from our existing credit facilities and retained cash on hand from principal repayments from our mortgage loans, we are in advanced stages of definitive document negotiation on 2 separate credit facilities, one of which will have committed term loan funds available to us that would provide proceeds to repay, replace the maturing bond principal, avoiding any additional balance sheet and loan portfolio compression.
On dividends, I'll first note, we declared and paid our first quarter 2025 dividend during March of 2025. Our Board regularly evaluates our dividend distribution policy on an ongoing basis, balancing our operational performance, federal tax requirements and the importance of maintaining long-term financial flexibility. As a reminder, going forward, the company has aligned the timing of its common dividend declarations and payments to be in line with the timing of our Series A Preferred Stock dividends, therefore, occurring in March, June, September and December.
I will now turn the call back to John for closing comments.
John L. Villano
Founder, Chairman, President & CEO
Thanks, Jeff.
We are excited with our recent performance, and believe Sachem is positioned to be a market leader in small balance real estate finance. We look forward to resolving our remaining NPLs to unlock capital for growth and accessing new sources of accretive capital to refill our loan pipeline. While our recovery is well underway, more time is needed to be fully back on track. We will continue to manage our business, grow book value and our dividend, with the ultimate goal to produce value for our shareholders. Thank you. And we will now open the call to questions from our analysts.
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SACHEM CAPITAL CORP. FQ1 2025 EARNINGS CALL MAY 01, 2025
Question and Answer
Operator
[Operator Instructions] The first question is from Gaurav Mehta from Alliance Global Partners.
Gaurav Mehta
Alliance Global Partners, Research Division
I wanted to follow up on your comments around 2 term sheets with different lenders and just wanted to get some details. So if you were to execute on those 2 term sheets, so that would provide funds to address the upcoming debt maturity? Or would that provide more funds than that to maybe allocate towards loan originations?
John L. Villano
Founder, Chairman, President & CEO
Gaurav, the facility that you're talking about comes in 2 components. There is an initial funding and a delayed draw. The initial funding will provide some working capital for us to build our business. The second -- the delayed draw will provide funds directly related to the payment of the unsecured notes in September.
Gaurav Mehta
Alliance Global Partners, Research Division
Okay. So it's not like -- it won't be like a note. It's going to be like a credit line, right?
John L. Villano
Founder, Chairman, President & CEO
No, it is a term note, a term note.
Jeffery C. Walraven
Interim CFO & Director
Gaurav, I'll add real quick. Gaurav, one of the 2 is the term, as John just described, and we're reserving a portion of that to avoid balance sheet compression via the delayed draw. The other facility is a new facility similar to like a Churchill and others that would provide other growth on kind of really a direct match of use of those funds for growth assets. So, there is a significant component of the 2 facilities that is related to give us expansionary growth, while a portion of the one is protection, basically liquidity protection against the -- from a compression perspective on the redemption of the bond in September.
Gaurav Mehta
Alliance Global Partners, Research Division
Okay. Understood. Maybe on the macro environment, you touched upon some headwinds in the market. I was wondering if you would maybe comment on what you guys saw in April in the loan market as far as credit spreads and loan origination opportunities.
John L. Villano
Founder, Chairman, President & CEO
Yes. And you've heard me say this countless times, we are never at a loss for opportunity. We have a significant pipeline. As we discussed, we have more opportunities than we have capital available. Seems to be the nature of our business. The significant pricing differences that we are noticing is single-family and multifamily are commanding better pricing. There is a push in the world today where they are the most sought-after asset class in our industry. So, lenders are aggressive.
With respect to mixed-use development, residential with a retail component on the first floor, we're able to really maintain our standard pricing, which is 12% and 2%, 12% interest, 2% origination. And if there's a construction component, we still continue to get our construction service fee. And we expect to see further rate compression in the single-family, multifamily space. Again, it's just a preferred asset class and a good portion of the industry's capital is flowing into that area.
Operator
The next question is from Christopher Nolan from Ladenburg Thalmann.
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SACHEM CAPITAL CORP. FQ1 2025 EARNINGS CALL MAY 01, 2025
Christopher Whitbread Patrick Nolan
Ladenburg Thalmann & Co. Inc., Research Division
On the new facilities that you guys mentioned, are they fixed rate? Or would you benefit if interest rates were cut?
John L. Villano
Founder, Chairman, President & CEO
We would benefit if rates are cut on one of the facilities. Our delayed draw facility will be a fixed rate.
Christopher Whitbread Patrick Nolan
Ladenburg Thalmann & Co. Inc., Research Division
Great. And then what sort of advance rates are you getting on these various facilities, including Churchill?
John L. Villano
Founder, Chairman, President & CEO
Up until recently, Churchill was kind of all over the board, and they seem to have stabilized a bit. We are getting between 60% and 70% advance rates. They are becoming a little more specific with asset type and quality. One of our potential facilities could have advance rates up to 75% or 80%, which is very attractive to us, but it's a very specific asset class. It will be resi and multifamily specifically. The delayed draw facility has a lot more flexibility with advance. In our world, we're at 70% LTV. So, we're getting much less than the amount needed to close these things. So, we have to maintain our liquidity to do this. So, we're basically getting, in most cases, 70% on 70. So it sucks up our cash pretty quick, but it does give us a nice amount of leverage and it does work with our loan covenants at 1.5x.
Christopher Whitbread Patrick Nolan
Ladenburg Thalmann & Co. Inc., Research Division
And then what do all these change -- I mean, I know the baby bonds impose leverage limits on you guys. As those mature and pay off, should we expect the leverage levels of the balance sheet to start to go up or stay around current levels?
John L. Villano
Founder, Chairman, President & CEO
That's an interesting question. Our new facilities, specifically one of our facilities will have a 1.5x asset coverage ratio. Jeff, if you'd like to expand on that? It does look like we're going to be tied to a 1.5x asset coverage ratio going forward.
Jeffery C. Walraven
Interim CFO & Director
Yes. Still for -- at the collateral level, as John has mentioned, it's at 1.5x. I mean, even when you do look at the baby bonds, the last -- the maturity of the baby bonds, we have the 9/30 maturity. Our next maturity is out at 12/31 of '26. And then we have a first quarter, second quarter and third quarter maturity in '27. So, unless we were to do some kind of financing even just relative to the baby bonds, we have the 1.5x coverage on those bond debentures all the way out to June 30 of '27. So, sans an early payoff of or redemption of those bonds.
Operator
This concludes the question-and-answer session and today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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SACHEM CAPITAL CORP. FQ1 2025 EARNINGS CALL MAY 01, 2025
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