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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20201109005553/en/
Contacts:
David Waldman
Crescendo Communications, LLC
Email: sach@crescendo-ir.com
Tel: (212) 671-1021
