Market Overview

Sachem Capital Reports 95% Increase in Revenue and 131% Increase in Net Income for the Second Quarter of 2018

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Conference Call and Webcast to be Held at 8:00 AM (EDT) on Thursday,
August 16, 2018

Sachem Capital Corp. (NYSE:SACH) today announced today its
financial results for the three- and six-month periods ended June 30,
2018. In addition, the Company announced that it will host its first
investor conference call on Thursday, August 16, 2018, beginning at 8:00
a.m. Eastern Daylight Time (additional details below).

Q2 2018 financial highlights:

  • Revenue increased approximately 95% to approximately 3.04 million
  • Net income increased approximately 131% to approximately $2.21
    million, or $0.14 per share
  • Shareholders' equity of approximately $55.5 million as of June 30, 2018

Based on its performance in the second quarter of 2018, the Company
increased its quarterly dividend to $0.11 per share. As a result, the
annualized dividend yield on the Company's common shares is currently
approximately 10.6%.

John Villano CPA, co-chief executive officer and chief financial officer
of Sachem Capital Corp., stated: "We continue to execute against our
business plan as illustrated by our sixth consecutive quarter of
sequential revenue growth and improved profitability. Moreover, we
continue to strengthen our balance sheet and ended the quarter with over
$55 million of shareholders' equity. We attribute this performance to
our disciplined underwriting, extensive due diligence and flexible
approach to structuring loans, which provides us a distinct advantage in
this market. Given our performance and the strength of our balance
sheet, we increased our quarterly dividend to $0.11 per share, which was
paid on July 27, 2018 to shareholders of record on July 20, 2017.
Looking ahead, we are encouraged by the outlook for the business as we
seek to expand our geographic footprint, increase earnings and maximize
value for our shareholders."

Results of operations -- three months ended June 30, 2018

Total revenues for the second quarter of 2018 were approximately $3.04
million compared to approximately $1.56 million for the second quarter
of 2017, an increase of approximately $1.48 million, or 94.9%. The
increase in revenue reflects an increase in lending operations. For the
2018 period, interest income from mortgage loans was approximately $2.38
million compared to approximately $1.22 million for the corresponding
2017 period, an increase of 95.1%. Origination fees for the 2018 period
were approximately $340,000 compared to approximately $170,000 in the
corresponding 2017 period. Other revenues increased to approximately
$326,000 in the second quarter of 2018 from approximately $166,000 in
the corresponding 2017 period. Components of other revenues include late
fees, processing fees and other fees collected in connection with
funding, extending and/or modifying mortgage loans, net rental income
and other income.

Total operating costs and expenses for the second quarter of 2018 were
approximately $832,000 compared to approximately $611,000 in the first
quarter of 2017, an increase of approximately $229,000, or approximately
37.9%. The increase in operating costs and expenses was due to the
increase in lending operations. Interest expense and amortization of
deferred financing costs in the 2018 period were approximately $382,000
compared to approximately $171,000 in the 2017 period, an increase of
approximately 123.4%, reflecting the increase in the amount of
outstanding debt under the Company's credit facilities. In addition,
compensation and related costs in the 2018 period were approximately
$300,000 compared to $165,000 in the 2017 period. This increase was due,
in part, to an increase in the annual base compensation of the Company's
two senior executive officers that went into effect as of April 1, 2018.
These increases were offset, in part, by a $50,500 decrease in general
and administrative expenses.

Net income for the second quarter of 2018 was approximately $2.21
million compared to approximately $957,000 for the second quarter of
2017, an increase of approximately 130.9%. Basic and diluted net income
per weighted average common share outstanding for the second quarter of
2018 was $0.14 compared to $0.09 per share for the second quarter of
2017.

Results of operations -- six months ended June 30, 2018

Total revenues for the first half of 2018 were approximately $5.76
million compared to approximately $2.82 million for the first half of
2017, an increase of approximately 104.2%. For the 2018 period, interest
income from mortgage loans was approximately $4.34 million compared to
approximately $2.26 million for the corresponding 2017 period.
Origination fees for the 2018 period were approximately $689,000
compared to approximately $267,000 in the corresponding 2017 period.
Other revenues for the first half of 2018 were approximately $732,000
compared to approximately $295,000 in the corresponding 2017 period, an
increase of $437,000 or approximately 148.1%.

Total operating costs and expenses for the first half of 2018 were
approximately $1.58 million compared to approximately $969,000 in the
first half of 2017, an increase of approximately $611,000, or
approximately 62.6%. Interest expense and amortization of deferred
financing costs in the 2018 period were approximately $605,000 compared
to approximately $287,000 in the 2017 period, an increase of
approximately 110.8%, reflecting the increase in the amount of
outstanding debt under the Company's credit facilities and offset by the
lower rate of interest on the Webster credit facility than the interest
rate on the Bankwell credit facility. (See below.) Similarly, the
Company experienced increases in compensation expense (approximately
$274,000), professional fees (approximately $26,000) and other fees and
taxes, including excise taxes (approximately $74,600) in the 2018 period
compared to the corresponding 2017 period. These increases were offset
by decreases in general and administrative expenses (approximately
$15,000), losses from the sale of real estate (approximately $16,000),
manager compensation (approximately $36,000) and exchange fees
(approximately $21,000).

Net income for the first half of 2018 was approximately $4.18 million
compared to approximately $1.85 million for the first of 2017, an
increase of approximately 125.9%. Basic and diluted net income per
weighted average common share outstanding for the first half of 2018 was
$0.27 compared to $0.14 per share for the first half of 2017.

Results of operations for 2017 include those of Sachem Capital Partners,
LLC from January 1 through February 9, 2017. For the 2017 period, net
income per weighted average number of shares is calculated based on net
income and shares outstanding for the period beginning on February 9,
2017 (the effective date of the Company's IPO) through June 30, 2017.
Net income for that period was approximately $610,000.

Financial condition – June 30, 2018

At June 30, 2018,

  • Total assets were approximately $79.90 million, compared to
    approximately $67.49 million at December 31, 2017;
  • The loan portfolio was approximately $72.38 million compared to
    approximately $63.27 million at December 31, 2017;
  • Interest and fees receivable from borrowers were approximately $1.12
    million compared to approximately $645,000 at December 31, 2017;
  • Total liabilities were approximately $24.38 million, including
    approximately $22.15 million outstanding under the Webster credit
    facility and approximately $296,000 outstanding under the term
    mortgage loan from Bankwell, compared to total liabilities of
    approximately $12.93 million at December 31, 2017, including
    approximately $9.84 million outstanding under the Bankwell credit
    facility and $301,000 outstanding on the Bankwell mortgage loan; and
  • Shareholders' equity was approximately $55.51 million compared to
    approximately $54.57 million at December 31, 2017.

As previously reported, on May 11, 2018, the Company entered into an
agreement with Webster Business Credit Corporation, Bankwell Bank and
Berkshire Bank (collectively, the "Lenders") under which the Lenders
agreed to provide the Company with a $35 million revolving credit
facility to replace the Bankwell credit facility, which has now been
repaid in full and terminated. The Webster credit facility is secured by
a first priority lien on substantially all of the Company's assets.
Amounts outstanding under the Webster credit facility will bear interest
at a floating rate equal to the 30-day LIBOR rate plus 4.00% per annum
and will be due and payable on May 11, 2022. As of June 30, 2018, the
interest rate on the Webster credit facility was 6.09%.

2018 Second Quarter Conference Call

The Company will host a conference call on Thursday, August 16,
2018 at 8:00 a.m., Eastern Daylight Time, to discuss its operating
results for three and six months ending June 30, 2018 and its financial
condition at the date, as well as other relevant matters.

Interested parties can access the conference call by dialing
877-407-8033 for U.S. callers, or +201-689-8033 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 Co-Chief Executive Officer and Chief
Financial Officer, will lead the conference call and will also be
available to answer questions.

A 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 termination of the call, through 8:00 a.m. on November 16, 2018, and
can be accessed by dialing: 877-481-4010 for U.S. callers or
+919-882-2331 for international callers and entering conference ID:
13682601.

About Sachem Capital, Corp.

Sachem Capital Corp. (SCC), is the successor to Sachem Capital Partners,
LLC (SCP) having acquired all of SCP's assets and assumed all of SCP's
liabilities in February 2017. Immediately thereafter, SCC completed an
underwritten initial public offering of its shares. (Except where
otherwise stated to the contrary, SCC and SCP are, collectively,
referred to as the "Company".) The Company 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 and may also be secured with additional real estate
collateral. 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.
SCC believes that it qualifies as a real estate investment trust (REIT)
for federal income tax purposes and intends to make the election to be
taxed as a REIT when it files its 2017 federal income tax return.

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 2017 filed with the U.S. Securities and
Exchange Commission on April 2, 2018. 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

     

 

June 30,
2018
December
31, 2017
(Unaudited) (Audited)
Assets:
Cash $ 2,221,209 $ 954,223
Escrow deposits - 111,189
Mortgages receivable 71,408,038 62,166,937
Mortgages receivable, affiliate 969,457 1,104,022
Interest and fees receivable 1,122,580 645,493
Other receivables 53,740 234,570
Due from borrowers 207,156 451,795
Prepaid expenses 46,860 4,520
Property and equipment, net 482,137 501,819
Real estate owned 2,724,819 1,224,409
Deposits on property 18,000 -
Deferred financing costs   636,913   95,560
Total assets $ 79,890,909 $ 67,494,537
 
Liabilities and Shareholders' Equity:
Liabilities:
Line of credit $ 22,145,106 $ 9,841,613
Mortgage payable 296,082 301,101
Accounts payable and accrued expenses 103,607 390,758
Security deposit held 2,550 2,550
Advances from borrowers 469,598 519,764
Due to note purchaser - 723,478
Deferred revenue 1,236,907 1,108,400
Accrued interest   125,253   40,592
Total liabilities 24,379,103 12,928,256
 
Shareholders' equity:
Preferred shares - $.001 par value; 5,000,000 shares authorized; no
shares issued
- -

Common shares - $.001 par value; 50,000,000 shares authorized;
15,415,737
issued and outstanding

15,416 15,416
Paid-in capital 53,315,772 53,315,772
Retained earnings   2,180,618   1,235,093
Total shareholders' equity   55,511,806   54,566,281
Total liabilities and shareholders' equity $ 79,890,909 $ 67,494,537
 
 

SACHEM CAPITAL CORP.

STATEMENTS OF OPERATIONS

(unaudited)

     
Three Months Six Months
Ended June 30, Ended June 30,
2018     2017 2018     2017
Revenue:
Interest income from loans $ 2,375,797 $ 1,223,919 $ 4,338,170 $ 2,260,759
Origination fees, net 340,052 169,939 688,600 267,400
Late and other fees 49,986 35,472 84,083 65,454
Processing fees 37,670 29,450 70,800 54,375
Rental income, net 33,975 21,845 77,730 49,228
Other income   204,781   79,433   499,528   125,580
Total revenue   3,042,261   1,560,058   5,758,911   2,822,796
 
Operating costs and expenses:
Interest and amortization of deferred financing costs 381,964 170,639 604,920 286,909
Compensation, fees and taxes 299,729 164,986 545,304 270,825
Compensation to manager - - - 35,847
Professional fees 42,137 48,403 158,459 132,142
Other fees and taxes 21,121 - 55,601 -
Exchange fees - 37,665 16,667 37,665
Depreciation 5,834 7,734 13,468 12,890
General and administrative expenses 81,297 131,754 162,660 177,341
Loss on sale of real estate - 42,231 - 15,753
Excise tax   -   -   19,000   -
Total operating costs and expenses   832,082   603,412   1,576,079   969,372
Net income $ 2,210,179 $ 956,646 $ 4,182,832 $ 1,853,424
 
Basic and diluted net income per common share outstanding:
Basic $ 0.14 $ 0.09 $ 0.27 $ 0.14 *
Diluted $ 0.14 $ 0.09 $ 0.27 $ 0.14 *
 
Weighted average number of common shares outstanding:
Basic   15,415,737   11,103,237   15,415,737   11,103,237
Diluted   15,415,737   11,103,237   15,415,737   11,103,237
 
* Basic and diluted net income per common share outstanding and
weighted average number of common shares outstanding are calculated
for the period beginning February 9, 2017 (i.e., the effective date
of the company's initial public offering) and ending June 30, 2017.
 
 

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW

(unaudited)

 
Six Months
Ended June 30,
2018   2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,182,832 $ 1,853,424
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of deferred financing costs 43,614 29,117
Depreciation expense 13,468 12,890
Loss on sale of real estate - 15,753
Adjustment to loss for sale of collateral - (42,231 )
Changes in operating assets and liabilities:
(Increase) decrease in:
Escrow deposit 111,189 -
Interest and fees receivable (570,404 ) (88,716 )
Other receivables 180,830 8,897
Due from borrowers (105,350 ) (108,654 )
Prepaid expenses (42,340 ) (72,432 )
Deposits on property (18,000 ) (5,000 )
(Decrease) increase in:
Due to member - (656,296 )
Due to shareholder - 14,928
Due to note purchaser (723,478 ) -
Accrued interest 84,661 14,800
Accrued expenses (280,939 ) 31,236
Deferred revenue 107,074 401,646
Advances from borrowers   (50,166 )   249,458
Total adjustments   (1,249,841 )   (194,604 )
NET CASH PROVIDED BY OPERATING ACTIVITIES   2,932,991   1,658,820
 
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of real estate owned - 90,123
Acquisitions of and improvements to real estate owned (61,166 ) (62,055 )
Escrow deposit - (311,950 )
Purchase of furniture and equipment - (116,105 )
Security deposit - 1,750
Principal disbursements for mortgages receivable (30,263,339 ) (23,237,925 )
Principal collections on mortgages receivable 18,982,298 9,181,290
Proceeds from sale of mortgage receivable   1,200,000   -
NET CASH USED FOR INVESTING ACTIVITIES   (10,142,207 )   (14,454,872 )
 
 

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

(unaudited)

 
Six Months
Ended June 30,
2018   2017
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit 45,727,947 16,545,766
Repayment of line of credit (33,424,454 ) (12,498,329 )
Principal payments on mortgage payable (5,019 ) (4,030 )
Proceeds from IPO - 13,000,000
Dividends paid (3,237,305 ) (555,162 )
Pre-offering costs incurred - (1,492,330 )
Financing costs incurred (584,967 ) (87,202 )
Member contributions - 653,646
Member distributions   -   (2,460,125 )
NET CASH PROVIDED BY FINANCING ACTIVITIES   8,476,202   13,102,234
 
NET INCREASE IN CASH 1,266,986 306,182
 
CASH – BEGINNING OF PERIOD   954,223   1,561,863
 
CASH – END OF PERIOD $ 2,221,209 $ 1,868,045
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
 
Interest paid $ 561,307 $ 242,991
 
 
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING
ACTIVITIES
 
During the six months ended June 30, 2018, the Company purchased a
mortgage receivable from a third party at a discount in the amount
of $21,433.
 
Real estate acquired in connection with the foreclosure of certain
mortgages, inclusive of interest and other fees receivable, during
the six months ended June 30, 2018 amounted to $1,439,244.
 
The reversal of previously accrued capitalized costs during the six
months ended June 30, 2018, amounted to $6,212.
 
During the six months ended June 30, 2017, the Company issued notes
payable in the amount of $169,338 for the acquisition of mortgages
receivable.
 
On February 8, 2017, Sachem Capital Partners, LLC transferred all
its assets and liabilities to the Company in exchange for 6,283,237
shares of the Company's Common stock.
 

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