Sachem Capital Achieves Record Annual Revenue of $18.6 Million and Net Income of $9.0 Million for 2020

March 31, 2021 8:00 AM EDT

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Fourth quarter 2020 revenue increased 98% to $5.7 million andnet income increased 150% to $2.3 million versus same period last year

Conference call and webcast to be held at 8:00 AM Eastern Daylight Saving Time on April 1st

BRANFORD, Conn., March 31, 2021 (GLOBE NEWSWIRE) -- Sachem Capital Corp. (NYSE American: SACH) announces its financial results for the year ended December 31, 2020. In addition, the company will host a conference call on Thursday, April 1st at 8:00 a.m. Eastern Daylight Saving Time (EDT) to discuss in greater detail both its financial condition and operating results as of and for the year ended December 31, 2020 as well as its outlook for 2021.

John Villano, CPA, the company’s Chief Executive and Chief Financial Officer stated: “We continue to achieve strong financial results despite the COVID-19 pandemic, as evidenced by record revenue of $18.6 million and net income of $9.0 million for the year ending December 31, 2020. This is particularly noteworthy considering we scaled back our lending activities in the second quarter of 2020 as a precautionary measure due to the COVID-19 pandemic. As our visibility improved and we saw the real estate market stabilize, on July 1, 2020, we reverted to our standard lending criteria while maintaining a cautionary approach, to take advantage of market opportunities. In addition, in the second half of 2020, we successfully completed three offerings of fixed-rate five-year term notes, which generated approximately $56.1 million of gross proceeds. These funds will be used primarily to fund new mortgage loans. We also established a margin line of credit that allows us to borrow against the value of our short-term marketable securities portfolio at 1.75% below the prime rate, which provides us additional flexibility. In 2020, we also began to diversify geographically. We are now lending in ten states. As of December 31, 2020, we had 68 loans outside of Connecticut, which constituted 14% of our mortgage loans, or approximately 23% of the aggregate dollar amount of our portfolio. As a result of these and other initiatives, revenue for the fourth quarter of 2020 increased 98% over the same period last year, and net income increased 150% to $2.3 million in the fourth quarter of 2020 versus the fourth quarter of 2019. Looking ahead, we see a favorable competitive landscape and our loan pipeline remains robust. As a result of these factors and our strong balance sheet, which included cash and short-term marketable securities of approximately $56.7 million as of December 31, 2020, we are optimistic about the prospects for our continued growth in 2021.”

Results of operations

Total revenue for 2020 was $18.6 million compared to approximately $12.7 million for 2019, an increase of approximately $5.9 million, or 46.5%. Interest income increased approximately 41.7%, origination fee income increased approximately 24.6%, and other income increased by 50.8%.

Total operating costs and expenses for 2020 were approximately $9.6 million compared to approximately $6.5 million for 2019, an increase of approximately $3.1 million, or 47.7%. The company’s largest expense, representing approximately 57.7% of total operating expenses, was interest and amortization of deferred financing costs. In comparison, for 2019, interest and amortization of deferred financing costs represented approximately 45.3% of total operating expenses. The increase reflects the increase in overall indebtedness from $56.3 million at December 31, 2019 to $138.7 million at the end of 2020. As most of this increase was incurred in the third and fourth quarters of 2020, the company expects its interest and amortization of deferred financing costs expense to increase in 2021.

Net income for 2020 was approximately $9.0 million compared to approximately $6.2 million for 2019, an increase of approximately $2.8 million or approximately 45%. Net income per share for 2020 was $0.41 compared to $0.32 for 2019.

Financial Condition

At December 31, 2020, total assets were $226.7 million compared to $141.2 million at December 31, 2019, an increase of approximately $85.5 million, or approximately 61%. Most of this increase was attributable to increases in mortgage loans receivable, which increased by $61.3 million, or approximately 65%.

Total liabilities at December 31, 2020 were $145.8 million compared to $58.7 million at December 31, 2019. This reflected the $56.4 million aggregate original principal amount of notes issued in 2020 and the $28.1 million outstanding balance on our line of credit.

Shareholders’ equity at December 31, 2020 was $81.0 million compared to $82.6 million at December 31, 2019. This decrease reflects the excess of the dividends paid and declared in 2020, $10.6 million, over net income, $9.0 million.

Dividends

In 2020, the company paid a total of approximately $8.0 million of dividends. In addition, in December, the company declared a dividend of $0.12 per share, or $2.7 million in the aggregate, which was paid in January 2021. The company currently operates and qualifies as a Real Estate Investment Trust (REIT) for federal income taxes and intends to continue to qualify and operate as a REIT. Under federal income tax rules, a REIT is required to distribute a minimum of 90% of taxable income each year to its shareholders and the company intends to comply with this requirement for the current year.

Investor Conference Call

The company will host a conference call on April 1, 2021 at 8:00 a.m. EDT, to discuss in greater detail its financial results for the year ending December 31, 2020, as well as its outlook for 2021. Interested parties can access the conference call by dialing +1-877-876-9173 for U.S. callers or +1-785-424-1667 for international callers. The call will be available here or 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. A telephone replay of the call will be available approximately one hour following the call, through April 15, 2021, and can be accessed by dialing +1-877-481-4010 for U.S. callers or +1-919-882-2331 for international callers. All callers should enter conference ID 40589.

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 2020 to be filed with the U.S. Securities and Exchange Commission. 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.

Investor & Media Contact:Crescendo Communications, LLCEmail: sach@crescendo-ir.comTel: (212) 671-1021

SACHEM CAPITAL CORP

BALANCE SHEETS

       
  December 31, 
  2020    2019
Assets        
Assets:        
Cash and cash equivalents $19,408,028  $18,841,937 
Short-term marketable securities  37,293,703   15,949,802 
Mortgages receivable  155,616,300   94,348,689 
Interest and fees receivable  1,820,067   1,370,998 
Other receivables  67,307   141,397 
Due from borrowers  2,025,663   840,930 
Prepaid expenses  71,313   24,734 
Property and equipment, net  1,433,388   1,346,396 
Deposits on property and equipment     71,680 
Real estate owned  8,861,609   8,258,082 
Deferred financing costs  72,806   16,600 
Total assets $226,670,184  $141,211,245 
       
Liabilities and Shareholders' Equity        
Liabilities:        
Notes payable (net of deferred financing costs of $4,886,058 and $2,687,190) $109,640,692  $55,475,810 
Mortgage payable  767,508   784,081 
Line of credit  28,055,648    
Accrued dividends payable  2,654,977    
Accounts payable and accrued expenses  372,662   249,879 
Other loans  257,845    
Security deposits held  13,416   7,800 
Advances from borrowers  1,830,539   848,268 
Deferred revenue  2,099,331   1,205,740 
Notes payable  54,682   75,433 
Accrued interest  3,344   3,416 
Total liabilities  145,750,644   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; 22,124,801 and22,117,301 issued and outstanding  22,125   22,117 
Paid-in capital  83,814,376   83,856,308 
Accumulated other comprehensive loss  (25,992)  (50,878)
Accumulated deficit  (2,890,969)  (1,266,729)
Total shareholders' equity  80,919,540   82,560,818 
Total liabilities and shareholders' equity $226,670,184  $141,211,245 

SACHEM CAPITAL CORP.

STATEMENTS OF OPERATIONS

       
  Year Ended
  December 31, 
     2020    2019
Revenue:        
Interest income from loans $13,821,831 $9,751,733 
Investment income  399,493  81,111 
Gain on sale of marketable securities  903,257   
Origination fees, net  1,893,143  1,519,294 
Late and other fees  85,469  265,310 
Processing fees  167,833  167,070 
Rental income, net  85,339  69,300 
Other income  1,246,530  826,688 
Total revenue  18,602,895  12,680,506 
       
Operating costs and expenses:        
Interest and amortization of deferred financing costs  5,547,406  2,938,237 
Compensation, fees and taxes  1,799,889  1,534,447 
Professional fees  628,797  542,920 
Other expenses and taxes  157,194  90,412 
Exchange fees  49,054  44,192 
Expense in connection with termination of credit facility    340,195 
Impairment loss  795,000  417,094 
Net loss on sale of real estate  7,218  34,919 
Depreciation  61,865  63,566 
General and administrative expenses  562,607  478,513 
Total operating costs and expenses  9,609,030  6,484,495 
Net income  8,993,865  6,196,011 
       
Other comprehensive income (loss)      
Unrealized gain (loss) on investment securities  24,886  (50,878)
Comprehensive income $9,018,751 $6,145,133 
Basic and diluted net income per common share outstanding:      
Basic $0.41 $0.32 
Diluted $0.41 $0.32 
Weighted average number of common shares outstanding:        
Basic  22,118,522  19,415,237 
Diluted  22,118,522  19,415,237 

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW

       
  Years Ended
  December 31, 
     2020    2019
CASH FLOWS FROM OPERATING ACTIVITIES        
Net income $8,993,865  $6,196,011 
Adjustments to reconcile net income to net cash provided by operating activities:       
Amortization of deferred financing costs  601,959   722,580 
Depreciation expense  61,865   63,566 
Stock based compensation  16,429   43,147 
Impairment loss  795,000   417,094 
Loss on sale of real estate  7,218   34,919 
Abandonment of office furniture     12,000 
Gain on sale of marketable securities  (903,257)   
Changes in operating assets and liabilities:       
(Increase) decrease in:      
Escrow deposits     12,817 
Interest and fees receivable  (504,578)  (154,196)
Other receivables  74,090   13,603 
Due from borrowers  (1,537,768)  385,424 
Prepaid expenses  (46,579)  (9,868)
Deposits on property and equipment  71,680   (59,680)
(Decrease) increase in:      
Accrued interest  (72)  (173,203)
Accounts payable and accrued expenses  122,098   (66,535)
Deferred revenue  893,591   147,334 
Advances from borrowers  982,271   530,944 
Total adjustments  633,947   1,919,946 
NET CASH PROVIDED BY OPERATING ACTIVITIES  9,627,812   8,115,957 
       
CASH FLOWS FROM INVESTING ACTIVITIES        
Purchase of investments  (97,555,422)  (16,000,680)
Proceeds from the sale of investments  77,139,664    
Proceeds from sale of real estate owned  1,816,522   1,087,004 
Acquisitions of and improvements to real estate owned  (1,811,980)  (1,266,949)
Purchase of property and equipment  (148,857)  (241,855)
Security deposits held  5,616    
Principal disbursements for mortgages receivable  (117,230,923)  (64,742,552)
Principal collections on mortgages receivable  54,961,570   43,347,362 
NET CASH USED FOR INVESTING ACTIVITIES  (82,823,810)  (37,817,670)
       
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from line of credit  30,055,648   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  (16,573)   
Principal payments on notes payable  (20,751)   
Dividends paid  (7,963,128)  (9,681,823)
Financing costs incurred  (114,559)  (2,872,774)
Proceeds from other loans  257,845    
Proceeds from mortgage payable     795,000 
Prepayment of mortgage payable     (301,903)
Proceeds from notes payable, net     75,434 
Proceeds from issuance of common stock     30,544,945 
Proceeds from exercise of warrants     82,035 
Gross proceeds from the issuance of fixed rate notes  56,083,750   58,163,000 
Financing costs incurred in connection with fixed rate notes  (2,520,143)   
NET CASH PROVIDED BY FINANCING ACTIVITIES  73,762,089   48,384,791 
NET INCREASE IN CASH AND CASH EQUIVALENTS  566,091   18,683,078 
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR  18,841,937   158,859 
CASH AND CASH EQUIVALENTS - END OF YEAR $19,408,028  $18,841,937 

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

       
  Years Ended
  December 31, 
     2020    2019
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION        
Taxes paid $ $
Interest paid $4,945,448 $2,237,240
       
SUPPLEMENTAL INFORMATION-NON-CASH        
Original Issue Discount $280,000 $
Dividends declared and payable $2,654,976 $

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 year ended December 31, 2019 amounted to $5,406,477.

During the year ended December 31, 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 year ended December 31, 2020 amounted to $1,553,103.

Source: Sachem Capital Corp.


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