Sachem Capital Corp. (NYSE American: SACH) announces its financial
results for the first quarter ended March 31, 2022. The company
will host a conference call tomorrow, Wednesday, May 4, 2022 at
8:00 a.m. Eastern Daylight Time to discuss in greater detail its
financial condition and operating results for the first quarter
ended March 31, 2022, as well as its outlook for the balance of the
year.
John Villano, CPA, the company’s Chief Executive
and Chief Financial Officer stated: “Revenue for the first quarter
of 2022 increased 80.3% to $10.3 million, reflecting our continued
execution and the growing demand for our loan products. We
attribute this success to our ability to close quickly and our
flexibility in structuring loans to suit the needs of borrowers. We
are also diversifying our loan portfolio, both geographically and
within new asset classes. Overall, we have built a highly scalable
business model, as illustrated by the fact we achieved $3.4 million
of net income attributable to common shareholders and $4.5 million
of non-GAAP adjusted earnings, which is described below, for the
first quarter of 2022.”
Results of operations
Total revenue for the three months ended March
31, 2022 was approximately $10.3 million compared to approximately
$5.7 million for the three months ended March 31, 2021, an increase
of approximately $4.6 million, or 80.3%. The increase in revenue is
primarily attributable to an increase in our lending operations.
For the 2022 period, interest income was approximately $8.5 million
compared to approximately $4.5 million for the 2021 period,
representing an increase of approximately $4.0 million or 87.8%.
Origination fees were approximately $1.6 million compared to
approximately $517,000 for the 2021 period, representing an
increase of approximately $1.1 million or 216.5%. Other income and
fee income, including late fees and processing fees, all of which
we relate to our lending operations, were approximately $805,000
for the 2022 period compared to approximately $529,000 for the 2021
period, an increase of approximately $276,000 or 52.2%. Income
unrelated to our lending operations, including investment income,
income from partnership investments and net rental income, for the
2022 period was approximately $554,000 compared to $264,000 for the
comparable 2021 period. On the other hand, loss on sale of
investment securities and unrealized losses on investment
securities for the 2022 period were approximately $1.2 million. The
unrealized losses on investment securities were reflected by a 1.4%
loss in our investment portfolio during the three months ended
March 31, 2022.
Total operating costs and expenses for three
months ended March 31, 2022 were approximately $5.9 million
compared to approximately $3.5 million for the three months ended
March 31, 2021, an increase of approximately 68.6%. The increase in
operating costs and expenses is primarily attributable to the
increase in our unsecured indebtedness, particularly our unsecured
unsubordinated five-year notes, which helped finance the growth of
our loan portfolio. In the 2022 period, interest and amortization
of deferred financing costs was approximately $3.9 million compared
to approximately $2.5 million in the same 2021 period, an increase
of $1.4 million or 58.2%. The balance of the increase in operating
expenses was primarily attributable to (i) impairment loss, which
increased approximately $236,000, (ii) compensation, fees and
taxes, which increased approximately $402,000, and (iii) general
and administrative expenses, which increased approximately
$242,000.
For the quarter ended March 31, 2022, we
reported an unrealized gain on investment securities of
approximately $243,000 reflecting the decrease in prior unrealized
losses since December 31, 2021. For the quarter ended March 31,
2021, we reported an unrealized loss on investment securities of
approximately $7,500 reflecting the decrease in the market value of
such securities since December 31, 2020.
Net income attributable to common shareholders
for the three months ended March 31, 2022 was approximately $3.4
million, or $0.10 per share, compared to approximately $2.2
million, or $0.10 per share for the three months ended March 31,
2021.
Adjusted earnings for the three months ended
March 31, 2022 was approximately $4.5 million, or $0.13 per share,
compared to approximately $2.2 million, or $0.10 per share for the
three months ended March 31, 2021. Adjusted earnings is calculated
as net income attributable to common shareholders, prior to the
effect of unrealized gains (losses) on securities
available-for-sale. Adjusted earnings should be examined in
conjunction with net income (loss) as shown in our statements of
comprehensive income. Adjusted earnings is a non-GAAP (i.e.,
generally accepted accounting principles) metric that is sometimes
used to evaluate the operations and/or financial condition of a
company. However, it should not be considered as an alternative to
the typical GAAP metrics such as net income or loss or cash flows
from operating activities, as a measure of our financial condition
or liquidity, nor is adjusted earnings indicative of funds
available to fund our cash needs or cash available for distribution
to shareholders. Rather, adjusted earnings may be helpful to
investors when analyzing Sachem’s business performance because it
excludes the effects of certain non-cash charges that the company
believes are not necessarily indicative of its operating
performance. It should be noted that Sachem’s manner of calculating
adjusted earnings may differ from the calculations of similar
metrics used by other companies.
|
|
|
|
For the Period Ended March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
Adjusted
earnings: |
|
|
|
|
|
|
|
Net income
attributable to common shareholders |
$ |
3,429,700 |
|
$ |
2,183,101 |
Add: Unrealized
losses on investment securities |
|
|
1,052,230 |
|
|
|
— |
Adjusted earnings
attributable to common shareholders |
|
$ |
4,481,930 |
|
$ |
2,183,101 |
Financial Condition
Total assets at March 31, 2022 were
approximately $481.8 million compared to approximately $418.0
million at December 31, 2021, an increase of approximately $63.8
million, or 15.3%. The increase was due primarily to the increase
of our mortgage loan portfolio of approximately $61.3 million, an
increase in investments in partnerships of approximately $11.4
million, offset in part by a decrease in cash and cash equivalents
and investment securities of approximately $9.2 million.
Total liabilities at March 31, 2022 were
approximately $282.4 million compared to approximately $237.9
million at December 31, 2021, an increase of approximately $44.5
million, or approximately 18.7%. This increase is principally due
to an increase in the repurchase facility of approximately $7.9
million and the notes payable, net of deferred financing costs, of
approximately $48.5 million, offset by decreases in the accrued
dividends payable of approximately $3.9 million and line of credit
of approximately $9.9 million.
Total shareholders’ equity at March 31, 2022 was
approximately $199.4 million compared to approximately $180.1
million at December 31, 2021, an increase of approximately $19.3
million. This increase was due primarily to net proceeds of $15.5
million from the sale of common shares and our net income
attributable to common shareholders of approximately $4.5
million.
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
Wednesday, May 4, 2022, at 8:00 a.m., Eastern Daylight Time, to
discuss in greater detail its financial results for the first
quarter ended March 31, 2022, as well as its outlook for the
balance of 2022.
Interested parties can access the conference
call via telephone by dialing toll free 1- 877-545-0523 for U.S.
callers or +1 973-528-0016 for international callers and entering
the entry code: 615395. A webcast of the call may be accessed at
https://www.webcaster4.com/Webcast/Page/2304/45474 or on Sachem’s
website at https://ir.sachemcapitalcorp.com/ir-calendar.
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
Wednesday, May 18, 2022 and can be accessed by dialing 877-481-4010
for U.S. callers or +1 919-882-2331 for international callers and
by entering replay passcode: 45474.
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 2021 filed with the U.S. Securities
and Exchange Commission on March 31, 2022. 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
(tables follow)
SACHEM CAPITAL
CORP.BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
|
(unaudited) |
|
(audited) |
Assets |
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
57,863,469 |
|
|
$ |
41,938,897 |
|
Investment securities |
|
|
35,510,232 |
|
|
|
60,633,661 |
|
Mortgages receivable |
|
|
353,627,221 |
|
|
|
292,301,209 |
|
Interest and fees receivable |
|
|
3,988,127 |
|
|
|
3,693,645 |
|
Other receivables |
|
|
304,796 |
|
|
|
94,108 |
|
Due from borrowers |
|
|
3,841,663 |
|
|
|
3,671,016 |
|
Prepaid expenses |
|
|
229,071 |
|
|
|
271,291 |
|
Property and equipment, net |
|
|
2,153,604 |
|
|
|
2,172,185 |
|
Real estate owned |
|
|
6,312,818 |
|
|
|
6,559,010 |
|
Investments in partnerships |
|
|
17,413,855 |
|
|
|
6,055,838 |
|
Other assets |
|
|
364,208 |
|
|
|
306,440 |
|
Deferred financing costs, net |
|
|
155,542 |
|
|
|
264,451 |
|
Total assets |
|
$ |
481,764,606 |
|
|
$ |
417,961,751 |
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
Notes payable (net of deferred financing costs of $7,226,079 and
$5,747,387) |
|
$ |
209,050,671 |
|
|
$ |
160,529,363 |
|
Repurchase facility |
|
|
26,945,149 |
|
|
|
19,087,189 |
|
Mortgage payable |
|
|
750,000 |
|
|
|
750,000 |
|
Line of credit |
|
|
23,279,364 |
|
|
|
33,178,031 |
|
Accrued dividends payable |
|
|
— |
|
|
|
3,927,600 |
|
Accounts payable and accrued expenses |
|
|
512,473 |
|
|
|
501,753 |
|
Advances from borrowers |
|
|
16,629,966 |
|
|
|
15,066,114 |
|
Deferred revenue |
|
|
4,876,284 |
|
|
|
4,643,490 |
|
Other notes |
|
|
24,294 |
|
|
|
30,921 |
|
Accrued interest |
|
|
286,642 |
|
|
|
164,729 |
|
Total liabilities |
|
|
282,354,843 |
|
|
|
237,879,190 |
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
|
|
Preferred shares -
$.001 par value; 5,000,000 shares authorized; 1,903,000 shares of
Series A Preferred Stock issued and outstanding |
|
|
1,903 |
|
|
|
1,903 |
|
Common stock -
$.001 par value; 100,000,000 shares authorized; 35,513,887 and
32,730,004 issued and outstanding |
|
|
35,514 |
|
|
|
32,730 |
|
Paid-in
capital |
|
|
201,168,304 |
|
|
|
185,516,394 |
|
Accumulated other
comprehensive loss |
|
|
(233,208 |
) |
|
|
(476,016 |
) |
Accumulated
deficit |
|
|
(1,562,750 |
) |
|
|
(4,992,450 |
) |
Total shareholders’ equity |
|
|
199,409,763 |
|
|
|
180,182,561 |
|
Total liabilities and shareholders’ equity |
|
$ |
481,764,606 |
|
|
$ |
417,961,751 |
|
SACHEM CAPITAL
CORP.STATEMENTS OF COMPREHENSIVE
INCOME(unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2022 |
|
|
2021 |
|
Revenue: |
|
|
|
|
|
|
Interest income from loans |
|
$ |
8,511,375 |
|
|
$ |
4,531,232 |
|
Investment income |
|
|
271,472 |
|
|
|
242,691 |
|
Income from partnership investments |
|
|
272,488 |
|
|
|
17,373 |
|
Loss on sale of investment securities |
|
|
(154,135 |
) |
|
|
(129,440 |
) |
Origination fees, net |
|
|
1,637,627 |
|
|
|
517,428 |
|
Late and other fees |
|
|
128,864 |
|
|
|
35,929 |
|
Processing fees |
|
|
65,855 |
|
|
|
35,975 |
|
Rental income, net |
|
|
10,042 |
|
|
|
4,184 |
|
Unrealized losses on investment securities |
|
|
(1,052,230 |
) |
|
|
— |
|
Other income |
|
|
610,017 |
|
|
|
456,809 |
|
Total revenue |
|
|
10,301,375 |
|
|
|
5,712,181 |
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
Interest and amortization of deferred financing costs |
|
|
3,898,389 |
|
|
|
2,464,755 |
|
Professional fees |
|
|
230,715 |
|
|
|
231,756 |
|
Compensation, fees and payroll taxes |
|
|
993,962 |
|
|
|
592,087 |
|
Exchange fees |
|
|
12,329 |
|
|
|
12,329 |
|
Other expenses and other taxes |
|
|
64,704 |
|
|
|
21,809 |
|
Depreciation |
|
|
22,239 |
|
|
|
19,602 |
|
General and administrative expenses |
|
|
401,233 |
|
|
|
159,608 |
|
Loss on sale of real estate |
|
|
65,838 |
|
|
|
2,134 |
|
Impairment loss |
|
|
260,500 |
|
|
|
25,000 |
|
Total operating costs and expenses |
|
|
5,949,909 |
|
|
|
3,529,080 |
|
Net income |
|
|
4,351,466 |
|
|
|
2,183,101 |
|
Preferred stock dividend |
|
|
(921,766 |
) |
|
|
— |
|
Net income attributable to common shareholders |
|
|
3,429,700 |
|
|
|
2,183,101 |
|
|
|
|
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
|
Unrealized gain (loss) on investment securities |
|
|
242,808 |
|
|
|
(7,494 |
) |
Comprehensive income |
|
$ |
3,672,508 |
|
|
$ |
2,175,607 |
|
Basic
and diluted net income per common share outstanding: |
|
|
|
|
|
|
Basic |
|
$ |
0.10 |
|
|
$ |
0.10 |
|
Diluted |
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
34,892,883 |
|
|
|
22,138,006 |
|
Diluted |
|
|
34,898,666 |
|
|
|
22,138,006 |
|
SACHEM CAPITAL
CORP.STATEMENTS OF CASH FLOW
(unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
March 31, |
|
|
2022 |
|
|
2021 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
|
Net income |
|
$ |
4,351,466 |
|
|
$ |
2,183,101 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
Amortization of deferred financing costs and bond discount |
|
|
469,251 |
|
|
|
244,105 |
|
Write-off of deferred financing costs |
|
|
— |
|
|
|
72,806 |
|
Depreciation expense |
|
|
22,239 |
|
|
|
19,602 |
|
Stock based compensation |
|
|
106,879 |
|
|
|
4,107 |
|
Impairment loss |
|
|
260,500 |
|
|
|
25,000 |
|
Loss on sale of real estate |
|
|
65,838 |
|
|
|
2,134 |
|
Unrealized loss on investment securities |
|
|
1,052,230 |
|
|
|
— |
|
Loss on sale of investment securities |
|
|
154,135 |
|
|
|
129,440 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
(Increase) decrease in: |
|
|
|
|
|
|
Interest and fees receivable |
|
|
(395,924 |
) |
|
|
(62,544 |
) |
Other receivables |
|
|
(210,688 |
) |
|
|
(345,905 |
) |
Due from borrowers |
|
|
(292,302 |
) |
|
|
(499,376 |
) |
Prepaid expenses |
|
|
42,220 |
|
|
|
(102,175 |
) |
(Decrease) increase in: |
|
|
|
|
|
|
Accrued interest |
|
|
121,913 |
|
|
|
(3,344 |
) |
Accounts payable and accrued expenses |
|
|
10,720 |
|
|
|
163,661 |
|
Deferred revenue |
|
|
232,794 |
|
|
|
84,984 |
|
Advances from borrowers |
|
|
1,563,852 |
|
|
|
873,460 |
|
Total adjustments |
|
|
3,203,657 |
|
|
|
605,955 |
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY OPERATING
ACTIVITIES |
|
|
7,555,123 |
|
|
|
2,789,056 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
|
|
Purchase of investment securities |
|
|
(27,545,183 |
) |
|
|
(22,755,450 |
) |
Proceeds from the sale of investment securities |
|
|
51,705,055 |
|
|
|
23,606,780 |
|
Purchase of interests in investment partnerships, net |
|
|
(11,358,017 |
) |
|
|
(1,843,398 |
) |
Proceeds from sale of real estate owned |
|
|
622,737 |
|
|
|
370,792 |
|
Acquisitions of and improvements to real estate owned |
|
|
(177,336 |
) |
|
|
(160,361 |
) |
Purchase of property and equipment |
|
|
(3,658 |
) |
|
|
(35,867 |
) |
Principal disbursements for mortgages receivable |
|
|
(88,735,230 |
) |
|
|
(31,661,577 |
) |
Principal collections on mortgages receivable |
|
|
27,106,768 |
|
|
|
30,506,173 |
|
Costs in connection with investment activities |
|
|
(57,768 |
) |
|
|
(98,210 |
) |
NET CASH USED FOR INVESTING
ACTIVITIES |
|
|
(48,442,632 |
) |
|
|
(2,071,118 |
) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
|
|
Net proceeds from line of credit |
|
|
— |
|
|
|
105,340 |
|
Net proceeds from repurchase facility |
|
|
7,857,960 |
|
|
|
— |
|
Repayment of mortgage payable |
|
|
— |
|
|
|
(767,508 |
) |
Repayment of line of credit |
|
|
(9,898,667 |
) |
|
|
— |
|
Principal payments on notes payable |
|
|
(6,627 |
) |
|
|
(5,632 |
) |
Dividends paid on Common Stock |
|
|
(3,927,600 |
) |
|
|
(2,654,977 |
) |
Dividends paid on Preferred Stock |
|
|
(921,766 |
) |
|
|
— |
|
Proceeds from issuance of common shares, net of expenses |
|
|
15,547,815 |
|
|
|
1,542,465 |
|
Gross proceeds from issuance of fixed rate notes |
|
|
50,000,000 |
|
|
|
— |
|
Financings costs incurred in connection with fixed rate notes |
|
|
(1,839,034 |
) |
|
|
— |
|
NET CASH PROVIDED BY (USED
FOR) FINANCING ACTIVITIES |
|
|
56,812,081 |
|
|
|
(1,780,312 |
) |
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS |
|
|
15,924,572 |
|
|
|
(1,062,374 |
) |
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS- BEGINNING OF YEAR |
|
|
41,938,897 |
|
|
|
19,408,028 |
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS - END OF PERIOD |
|
$ |
57,863,469 |
|
|
$ |
18,345,654 |
|
SACHEM CAPITAL
CORP.STATEMENTS OF CASH FLOW
(Continued)(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
|
2022 |
|
2021 |
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION |
|
|
|
|
|
|
|
Interest paid |
|
$ |
3,307,225 |
|
$ |
2,445,468 |
|
SCHEDULE OF NON-CASH 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 March 31, 2022 amounted to
$420,547.
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