Sachem Capital Reports Revenue Increase of 26% for Q3 2020

November 9, 2020 8:00 AM EST

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Conference Call and Webcast to be held at 8:00 AM ET on Tuesday, November 10, 2020

BRANFORD, Conn.--(BUSINESS WIRE)-- Sachem Capital Corp. (NYSE American: SACH) announces its financial results for the third quarter ended September 30, 2020. The company will host a conference call on Tuesday, November 10th, 2020 at 8:00 a.m. Eastern Standard Time to discuss in greater detail its financial condition and operating results for the third quarter of 2020.

John Villano, CPA, the company’s Chief Executive and Chief Financial Officer stated: “We continue to achieve strong financial performance despite the COVID-19 pandemic, as evidenced by a 26% increase in third quarter 2020 revenue versus the same period last year. Importantly, the fix-and-flip market has continued to improve in our traditional markets, as evidenced by an increase in the number of loan pay-offs and new loans. As a result, we have relaxed some of the precautionary measures we put in place due to COVID-19, increasing our loan-to-value ratio back to 70% while still maintaining a cautionary approach. Moreover, we are aggressively expanding our mortgage loan portfolio in new markets such as Florida.”

“Looking ahead, our loan pipeline is more robust than ever. For this reason, we recently completed a public offering for gross proceeds of $14 million to fund new real estate loans. Nevertheless, we remain focused on prudently deploying this capital as well as maintaining disciplined underwriting and a conservative loan-to-value ratio. As a result, we remain highly encouraged by the outlook for the rest of this year and our prospects for 2021.”

Results of operations – three months ended September 30, 2020

Total revenue for the three months ended September 30, 2020, was approximately $4.3 million compared to approximately $3.4 million for the three months ended September 30, 2019, an increase of approximately 26%. For the third quarter of 2020, interest income and net origination fees were approximately $3.5 million and $393,000, respectively. In comparison, for the three months ended September 30, 2019, interest income and net origination fees were approximately $2.4 million and $497,000, respectively.

Total operating costs and expenses for the three months ended September 30, 2020, were approximately $2.1 million compared to $1.3 million for the three months ended September 30, 2019. Compared to the 2019 period, in the 2020 period interest expense and amortization of deferred financing costs increased approximately $724,000 due to the increase in the company’s overall indebtedness, which was $85.6 million at September 30, 2020, compared to $24.5 million at September 30, 2019.

Net income for the three months ended September 30, 2020 was approximately $2.1 million, or $0.10 per share, compared to $2.1 million, or $0.10 per share for the three months ended September 30, 2019.

Results of operations – nine months ended September 30, 2020

Total revenue for the nine months ended September 30, 2020 was approximately $12.9 million compared to approximately $9.8 million for the nine months ended September 30, 2019, an increase of approximately 32%. For the nine months ended September 30, 2020, interest income was approximately $9.6 million and net origination fees were approximately $1.6 million, respectively. In comparison, for the nine months ended September 30, 2019, interest income and net origination fees were approximately $7.5 million and $1.2 million, respectively.

Total operating costs and expenses for the nine months ended September 30, 2020, were approximately $6.3 million compared to $4.5 million for the nine months ended September 30, 2019. The increase in operating costs and expenses is primarily attributable to the increase in the company’s lending operations.

Net income for the nine months ended September 30, 2020 was approximately $6.7 million, or $0.30 per share, compared to approximately $5.3 million, or $0.30 per share for the nine months ended September 30, 2019.

Financial Condition

Overall, total assets increased by approximately $28.4 million as of September 30, 2020, compared to December 31, 2019, and total liabilities increased approximately $27.1 million during the same period. In addition, shareholders’ equity increased by approximately $1.3 million compared to December 31, 2019.

During the third quarter of 2020, the Company sold $14.36 million aggregate principal amount of its 7.75% unsecured, unsubordinated notes due 2025. The net proceeds of the offering were approximately $13.62 million after payment of underwriting discounts and commissions and estimated offering expenses. In October 2020, the Company subsequently sold an additional $14 million aggregate principal amount of its 7.75% unsecured, unsubordinated notes due 2025. The net proceeds of the offering were approximately $13.4 million after payment of underwriting discounts and commissions and estimated offering expenses.

On October 16, 2020, the Company’s board of directors authorized and declared a quarterly dividend of $0.12 per share to be paid to shareholders of record as of the close of trading on the NYSE American on October 26, 2020. The dividend was paid on November 4, 2020.

Investor Conference Call

The company will host a conference call on Tuesday, November 10th, 2020 at 8:00 a.m., Eastern Standard Time, to discuss in greater detail its financial results for the third quarter ending September 30, 2020, as well as its outlook for the balance of 2020. Interested parties can access the conference call by calling 844-407-9500 for U.S. callers, or 862-298-0850 for international callers. The call will be available on the company’s website via webcast at https://www.sachemcapitalcorp.com. John Villano, the company’s Chief Executive and Chief Financial Officer will lead the conference call.

The webcast will also be archived on the company’s website and a telephone replay of the call will be available approximately one hour following the call, through Tuesday, November 24, 2020, and can be accessed by calling: 877-481-4010 for U.S. callers or 919-882-2331 for international callers and entering conference ID: 38542.

About Sachem Capital Corp.

Sachem Capital Corp. 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 (sometimes referred to as “hard money” loans) to real estate investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The company does not lend to owner occupants. The company’s primary underwriting criteria is a conservative loan to value ratio. The properties securing the company’s 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. Each loan is also personally guaranteed by the principal(s) of the borrower, which guaranty may be collaterally secured by a pledge of the guarantor’s interest in the borrower. The company also makes opportunistic real estate purchases apart from its lending activities. The company believes that it qualifies as a real estate investment trust (REIT) for federal income tax purposes and has elected to be taxed as a REIT beginning with its 2017 tax year.

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.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our 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 our Annual Report on Form 10-K for 2019 filed with the U.S. Securities and Exchange Commission on March 30, 2020. 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 we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We disclaim any duty to update any of these forward-looking statements.

All forward-looking statements attributable to us 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 us in the context of these risks and uncertainties.

 

SACHEM CAPITAL CORP.

BALANCE SHEETS

 

 

September 30, 2020

 

December 31, 2019

 

 

(Unaudited)

 

(Audited)

Assets

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,384,073

 

$

18,841,937

Investments

 

 

27,688,794

 

 

15,949,802

Mortgages receivable

 

 

124,131,879

 

 

94,348,689

Interest and fees receivable

 

 

1,551,333

 

 

1,370,998

Other receivables

 

 

87,307

 

 

141,397

Due from borrowers

 

 

1,501,470

 

 

840,930

Prepaid expenses

 

 

106,816

 

 

24,734

Property and equipment, net

 

 

1,418,442

 

 

1,346,396

Deposits on property and equipment

 

 

172,210

 

 

71,680

Real estate owned

 

 

7,523,584

 

 

8,258,082

Deferred financing costs

 

 

66,086

 

 

16,600

 

 

 

 

 

 

 

Total assets

 

$

169,631,994

 

$

141,211,245

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Notes payable (net of deferred financing costs of $3,074,115 and $2,687,190)

 

$

69,452,636

 

$

55,475,810

Mortgage payable

 

 

771,785

 

 

784,081

Line of credit

 

 

12,080,569

 

 

Accounts payable and accrued expenses

 

 

522,453

 

 

249,879

Other loans

 

 

257,845

 

 

Security deposits held

 

 

13,416

 

 

7,800

Advances from borrowers

 

 

1,413,974

 

 

848,268

Deferred revenue

 

 

1,114,721

 

 

1,205,740

Notes payable

 

 

60,130

 

 

75,433

Accrued interest

 

 

80,672

 

 

3,416

Total liabilities

 

 

85,768,201

 

 

58,650,427

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued

 

 

 

 

Common stock - $.001 par value; 100,000,000 shares authorized; 22,117,301 issued and outstanding

 

 

22,117

 

 

22,117

Paid-in capital

 

 

83,810,276

 

 

83,856,308

Accumulated other comprehensive loss

 

 

(37,596)

 

 

(50,878)

Retained earnings (accumulated deficit)

 

 

68,996

 

 

(1,266,729)

Total shareholders' equity

 

 

83,863,793

 

 

82,560,818

Total liabilities and shareholders' equity

 

$

169,631,994

 

$

141,211,245

SACHEM CAPITAL CORP.

STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

 

 

Three Months Ended

 

Nine Months

 

 

 

September 30,

 

Ended September 30,

 

 

 

2020

 

2019

 

2020

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income from loans

 

$

3,473,304

 

$

2,442,750

 

$

9,640,387

 

$

7,509,155

 

Interest income on investments

 

 

32,483

 

 

28,148

 

 

163,161

 

 

28,148

 

Gain/(loss)on sale of investment securities

 

 

(21,858)

 

 

 

 

415,301

 

 

 

Origination fees, net

 

 

393,097

 

 

497,237

 

 

1,551,652

 

 

1,202,777

 

Late and other fees

 

 

10,955

 

 

18,149

 

 

46,835

 

 

205,182

 

Processing fees

 

 

37,445

 

 

44,870

 

 

123,568

 

 

121,470

 

Rental income, net

 

 

9,593

 

 

9,446

 

 

49,777

 

 

82,350

 

Other income

 

 

336,789

 

 

325,523

 

 

904,071

 

 

622,054

 

Net gain on sale of real estate

 

 

 

 

12,927

 

 

 

 

20,076

 

Total revenue

 

 

4,271,808

 

 

3,379,050

 

 

12,894,752

 

 

9,791,212

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and amortization of deferred financing costs

 

 

1,262,278

 

 

537,878

 

 

3,564,533

 

 

1,611,332

 

Compensation, fees and taxes

 

 

496,058

 

 

476,404

 

 

1,220,412

 

 

1,325,822

 

Stock based compensation

 

 

4,107

 

 

4,107

 

 

12,321

 

 

12,327

 

Professional fees

 

 

158,206

 

 

105,053

 

 

400,868

 

 

259,275

 

Other expenses and taxes

 

 

26,247

 

 

39,355

 

 

61,484

 

 

70,683

 

Exchange fees

 

 

22,713

 

 

11,343

 

 

29,986

 

 

32,850

 

Expense in connection with termination of LOC

 

 

 

 

 

 

 

 

779,641

 

Impairment

 

 

 

 

 

 

495,000

 

 

 

Net loss on sale of real estate

 

 

2,816

 

 

 

 

7,276

 

 

 

Depreciation

 

 

15,348

 

 

18,618

 

 

46,318

 

 

44,286

 

General and administrative expenses

 

 

145,251

 

 

131,206

 

 

412,677

 

 

400,561

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating costs and expenses

 

 

2,133,024

 

 

1,323,964

 

 

6,250,875

 

 

4,536,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

2,138,784

 

 

2,055,086

 

 

6,643,877

 

 

5,254,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investment securities

 

 

(72,785)

 

 

 

 

13,282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

$

2,065,999

 

$

2,055,086

 

$

6,657,159

 

$

5,254,435

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net income per common share outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.10

 

$

0.10

 

$

0.30

 

$

0.30

 

Diluted

 

$

0.10

 

$

0.10

 

$

0.30

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

22,117,301

 

 

21,336,870

 

 

22,117,301

 

 

17,662,480

 

Diluted

 

 

22,117,301

 

 

21,336,870

 

 

22,117,301

 

 

17,622,480

 

 

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW

(unaudited)

 

 

Nine Months

 

 

 

Ended September 30,

 

 

 

2020

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net income

 

$

6,643,877

 

$

5,254,435

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Amortization of deferred financing costs

 

 

357,497

 

 

159,872

 

Depreciation expense

 

 

46,318

 

 

44,286

 

Stock based compensation

 

 

12,321

 

 

12,327

 

Impairment loss

 

 

495,000

 

 

 

Loss (gain) on sale of real estate

 

 

7,276

 

 

(20,076)

 

Abandonment of office furniture

 

 

 

 

12,000

 

Costs in connection with termination of line of credit

 

 

 

 

 

439,446

 

Realized gain on investments

 

 

(415,301)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

(Increase) decrease in:

 

 

 

 

 

 

 

Escrow deposits

 

 

 

 

12,813

 

Interest and fees receivable

 

 

(180,335)

 

 

(454,487)

 

Other receivables

 

 

54,090

 

 

(67,237)

 

Due from borrowers

 

 

(273,202)

 

 

2,122,939

 

Prepaid expenses

 

 

(82,082)

 

 

(22,305)

 

Deposits on property and equipment

 

 

(100,530)

 

 

(37,881)

 

(Decrease) increase in:

 

 

 

 

 

 

 

Due to note purchaser

 

 

 

 

(176,619)

 

Accrued interest

 

 

77,256

 

 

3,323

 

Accounts payable and accrued expenses

 

 

272,574

 

 

(159,512)

 

Deferred revenue

 

 

(91,019)

 

 

9,261

 

Advances from borrowers

 

 

565,706

 

 

180,889

 

Total adjustments

 

 

745,569

 

 

2,059,039

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

7,389,446

 

 

7,313,474

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Purchase of investments

 

 

(37,216,177)

 

 

 

Proceeds from the sale of investments

 

 

25,905,769

 

 

 

Proceeds from sale of real estate owned

 

 

1,816,522

 

 

362,136

 

Acquisitions of and improvements to real estate owned

 

 

(1,584,300)

 

 

(443,217)

 

Purchase of property and equipment

 

 

(118,364)

 

 

(196,603)

 

Security deposits held

 

 

5,616

 

 

 

Principal disbursements for mortgages receivable

 

 

(68,029,798)

 

 

(42,163,704)

 

Principal collections on mortgages receivable

 

 

37,859,270

 

 

27,917,331

 

NET CASH USED FOR INVESTING ACTIVITIES

 

 

(41,361,462)

 

 

(14,524,057)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Proceeds from line of credit

 

 

14,080,569

 

 

42,720,829

 

Repayment of line of credit

 

 

(2,000,000)

 

 

(69,939,952)

 

Proceeds from notes sold to shareholder

 

 

 

 

1,017,000

 

Repayment of notes sold to shareholder

 

 

 

 

(2,217,000)

 

Principal payments on mortgage payable

 

 

(12,296)

 

 

 

Principal payments on notes payable

 

 

(15,303)

 

 

 

Dividends paid

 

 

(5,308,152)

 

 

(7,027,746)

 

Financing costs incurred

 

 

(108,353)

 

 

(6,836)

 

Proceeds from other loans

 

 

257,845

 

 

 

Proceeds from mortgage payable

 

 

 

 

795,000

 

Repayment of mortgage payable

 

 

 

 

(297,837)

 

Proceeds from notes payable, net

 

 

 

 

68,634

 

Proceeds from issuance of common stock

 

 

 

 

30,736,148

 

Costs associated with the issuance of common stock

 

 

 

 

(147,002)

 

Gross proceeds from issuance of fixed rate notes

 

 

14,363,750

 

 

23,663,000

 

Financing costs incurred in connection with fixed rate notes

 

 

(743,908)

 

 

(1,307,571)

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

20,514,152

 

 

18,056,667

 

 

 

 

 

 

 

 

 

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

 

 

(13,457,864)

 

 

10,846,084

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR

 

 

18,841,937

 

 

158,859

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS - END OF PERIOD

 

$

5,384,073

 

$

11,004,943

 

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

(unaudited)

 

 

Nine Months Ended

 

 

September 30,

 

 

2020

 

2019

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

 

 

 

 

 

 

Taxes paid

 

$

 

$

Interest paid

 

$

2,093,080

 

$

472,329

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION-NON-CASH

 

 

 

 

 

 

Dividends declared and payable

 

$

 

$

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the period ended September 30, 2019 amounted to $2,265,927.

During the nine months ended September 30, 2019, the Company purchased equipment for $13,005 subject to a capital lease.

During the nine months ended September 30, 2019, Mortgages receivable, affiliate in the amount of $879,457 were reduced to $0 as the underlying loans were transferred to the Company and are included in Mortgages receivable.

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the period ended September 30, 2020 amounted to $170,383.

Investor & Media Contact:
David Waldman
Crescendo Communications, LLC
Email: sach@crescendo-ir.com
Tel: (212) 671-1021

Source: Sachem Capital Corp.



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