Conference Call and Webcast to be held at 8:00 AM EDT on Tuesday, August 11, 2020
BRANFORD, Conn.--(BUSINESS WIRE)-- Sachem Capital Corp. (NYSE American: SACH) announces its financial results for the second quarter ended June 30, 2020. The company will host a conference call on Tuesday, August 11th, 2020 at 8:00 a.m. Eastern Daylight Saving Time to discuss in greater detail its financial condition and operating results for the second quarter of 2020.
Results of operations – three months ended June 30, 2020
Total revenue for the three months ended June 30, 2020, was approximately $4.3 million compared to approximately $3.1 million for the three months ended June 30, 2019, an increase of approximately 41%. For the second quarter of 2020, interest income and net origination fees were approximately $3.3 million and $647,000, respectively. In comparison, for the three months ended June 30, 2019, interest income and net origination fees were approximately $2.3 million and $341,000, respectively.
Total operating costs and expenses for the three months ended June 30, 2020, were approximately $2.0 million compared to $1.9 million for the three months ended June 30, 2019, an increase of approximately 6%. Compared to the 2019 period, in the 2020 period interest expense and amortization of deferred financing costs increased approximately $700,000 due to the increase in the company’s overall indebtedness, which was $59.0 million at June 30, 2020, compared to $23.8 million at June 30, 2019.
In light of the COVID-19 pandemic, in the second quarter of 2020 the company made a strategic and purposeful decision to restrict lending and conserve cash. These prudent actions temporarily slowed the growth of our loan portfolio and associated revenue growth. This also accounted for the increase in investment income of approximately $33,000.
Net income for the three months ended June 30, 2020 was approximately $2.3 million, or $0.10 per share, compared to $1.1 million, or $0.06 per share per share for the three months ended June 30, 2019.
Results of operations – six months ended June 30, 2020
Total revenue for the six months ended June 30, 2020 was approximately $8.6 million compared to approximately $6.4 million for the six months ended June 30, 2019, an increase of approximately 34%. Revenue growth for the six months ended June 30, 2020, is directly related to the increase in loans funded during the first quarter of 2020. For the six months ended June 30, 2020, interest income was approximately $6.2 million and net origination fees were approximately $1.2 million, respectively.
Total operating costs and expenses for the six months ended June 30, 2020, were approximately $4.1 million compared to $3.2 million for the six months ended June 30, 2019, an increase of approximately 28%. The increase in operating costs and expenses is primarily attributable to the increase in the company’s lending operations.
Net income for the six months ended June 30, 2020, was approximately $4.5 million, or $0.20 per share, compared to $3.2 million, or $0.19 per share for the six months ended June 30, 2019.
Financial Condition
Overall, total assets increased by approximately $2.2 million as of June 30, 2020, compared to December 31, 2019, and total liabilities increased approximately $350,000 during the same period.
On July 21, 2020, the Company 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 July 31, 2020. The dividend was paid on August 7, 2020.
John Villano, CPA, the company’s Chief Executive and Chief Financial Officer stated: “We continue to generate strong financial performance despite the COVID-19 pandemic, as evidenced by a 41% increase in revenue and 98% increase in net income. In response to COVID-19 and the potential impact on the overall business environment, in early March we took immediate action- by temporarily putting our growth strategy on hold and focusing on preservation of capital and careful maintenance of our existing portfolio. Since that time, it is important to note that forbearance requests dropped from 42 at the end of the first quarter 2020 to just 23 at the end of the second quarter, which we believe illustrates an overall improvement in the market and validation of our strategy. Looking ahead, we will continue to prudently deploy capital and we are pursuing opportunistic expansion and diversification of our loan portfolio. Our loan pipeline is robust and we are cautiously optimistic heading into the second half of the year.”
Investor Conference Call
The company will host a conference call on Tuesday, August 11th, 2020 at 8:00 a.m., Eastern Daylight Saving Time, to discuss in greater detail its financial results for the second quarter ending June 30, 2020, as well as its outlook for the balance of 2020 and strategy for dealing with the impact of the COVID-19 pandemic. 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 August 25, 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: 36572.
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
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June 30, 2020 |
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December 31, 2019 |
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(Unaudited) |
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(Audited) |
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Assets |
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Assets: |
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Cash and cash equivalents |
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$ |
4,647,973 |
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$ |
18,841,937 |
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Investments |
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15,961,433 |
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15,949,802 |
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Mortgages receivable |
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111,430,500 |
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94,348,689 |
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Interest and fees receivable |
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1,557,092 |
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1,370,998 |
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Other receivables |
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116,397 |
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141,397 |
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Due from borrowers |
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1,243,580 |
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840,930 |
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Prepaid expenses |
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73,175 |
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24,734 |
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Property and equipment, net |
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1,377,992 |
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1,346,396 |
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Deposits on property and equipment |
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— |
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71,680 |
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Real estate owned |
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7,023,382 |
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8,258,082 |
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Deferred financing costs |
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16,258 |
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16,600 |
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Total assets |
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$ |
143,447,782 |
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$ |
141,211,245 |
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Liabilities and Shareholders' Equity |
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Liabilities: |
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Notes payable (net of deferred financing costs of $2,451,618 and $2,687,190) |
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$ |
55,711,382 |
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$ |
55,475,810 |
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Mortgage payable |
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775,901 |
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784,081 |
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Accounts payable and accrued expenses |
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301,715 |
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249,879 |
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Other loans |
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257,845 |
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— |
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Security deposits held |
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13,416 |
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7,800 |
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Advances from borrowers |
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1,012,201 |
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848,268 |
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Deferred revenue |
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858,885 |
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1,205,740 |
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Notes payable |
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65,402 |
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75,433 |
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Accrued interest |
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3,272 |
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3,416 |
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Total liabilities |
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59,000,019 |
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58,650,427 |
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Commitments and Contingencies |
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Shareholders' equity: |
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Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued |
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— |
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— |
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Common stock - $.001 par value;100,000,000 shares authorized; 22,117,301 issued
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22,117 |
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22,117 |
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Paid-in capital |
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83,806,169 |
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83,856,308 |
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Accumulated other comprehensive income (loss) |
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35,189 |
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(50,878) |
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Retained earnings (accumulated deficit) |
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584,288 |
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(1,266,729) |
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Total shareholders' equity |
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84,447,763 |
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82,560,818 |
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Total liabilities and shareholders' equity |
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$ |
143,447,782 |
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$ |
141,211,245 |
SACHEM CAPITAL CORP.
STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
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Three Months Ended |
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Six Months |
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June 30, |
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Ended June 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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Revenue: |
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Interest income from loans |
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$ |
3,265,677 |
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$ |
2,315,325 |
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$ |
6,167,083 |
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$ |
5,066,405 |
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Interest income on investments |
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33,162 |
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— |
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130,678 |
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— |
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Loss (gain) on sale of investment securities |
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(8,925) |
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— |
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|
437,159 |
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— |
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Origination fees, net |
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|
647,499 |
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340,823 |
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1,158,555 |
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705,540 |
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Late and other fees |
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21,099 |
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140,537 |
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35,880 |
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187,033 |
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Processing fees |
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39,665 |
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41,805 |
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86,123 |
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76,600 |
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Rental income, net |
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29,456 |
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47,255 |
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40,184 |
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|
72,904 |
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Other income |
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283,009 |
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|
179,391 |
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|
567,283 |
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|
296,531 |
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Net gain on sale of real estate |
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— |
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— |
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|
7,149 |
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Total revenue |
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4,310,642 |
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3,065,136 |
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8,622,945 |
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6,412,162 |
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Operating costs and expenses: |
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Interest and amortization of deferred financing costs |
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1,152,302 |
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|
452,406 |
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2,302,255 |
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1,073,454 |
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Compensation, fees and taxes |
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383,968 |
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465,193 |
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724,355 |
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849,420 |
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Stock based compensation |
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4,107 |
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4,107 |
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8,214 |
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|
8,214 |
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Professional fees |
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|
110,104 |
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|
70,215 |
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|
242,413 |
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|
154,222 |
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Other expenses and taxes |
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6,534 |
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17,139 |
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35,238 |
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31,332 |
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Exchange fees |
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— |
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|
11,219 |
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|
7,273 |
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|
21,507 |
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Expense in connection with termination of LOC |
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— |
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779,641 |
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— |
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|
779,641 |
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Impairment |
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245,000 |
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— |
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|
495,000 |
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— |
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Net loss on sale of real estate |
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— |
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— |
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4,460 |
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— |
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Depreciation |
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14,688 |
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18,164 |
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30,971 |
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|
25,667 |
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General and administrative expenses |
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127,460 |
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|
103,909 |
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267,674 |
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269,358 |
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Total operating costs and expenses |
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2,044,163 |
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1,921,993 |
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4,117,852 |
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3,212,815 |
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Net income |
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2,266,479 |
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1,143,143 |
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4,505,093 |
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3,199,347 |
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Other comprehensive income |
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Unrealized gain on investment securities |
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221,449 |
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— |
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86,067 |
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— |
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Comprehensive income |
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$ |
2,487,928 |
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$ |
1,143,143 |
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$ |
4,591,160 |
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$ |
3,199,347 |
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Basic and diluted net income per common share outstanding: |
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Basic |
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$ |
0.10 |
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$ |
0.06 |
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$ |
0.20 |
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$ |
0.19 |
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Diluted |
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$ |
0.10 |
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$ |
0.06 |
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$ |
0.20 |
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$ |
0.19 |
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Weighted average number of common shares outstanding: |
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Basic |
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22,117,301 |
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18,499,531 |
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22,117,301 |
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17,144,104 |
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Diluted |
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22,117,301 |
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18,499,531 |
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22,117,301 |
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|
17,144,104 |
SACHEM CAPITAL CORP.
STATEMENTS OF CASH FLOW
(unaudited)
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Six Months |
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Ended June 30, |
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2020 |
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2019 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income |
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$ |
4,505,093 |
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$ |
3,199,347 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Amortization of deferred financing costs |
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235,913 |
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94,323 |
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Depreciation expense |
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30,971 |
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25,667 |
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Stock based compensation |
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|
8,214 |
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|
8,214 |
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Impairment loss |
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|
495,000 |
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— |
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Loss(gain) on sale of real estate |
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4,460 |
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(7,149) |
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Abandonment of office furniture |
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— |
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12,000 |
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Costs in connection with termination of line of credit |
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|
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|
439,446 |
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Realized gain on investments |
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(437,159) |
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— |
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Changes in operating assets and liabilities: |
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(Increase) decrease in: |
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Escrow deposits |
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— |
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|
12,817 |
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Interest and fees receivable |
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(186,094) |
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|
(449,809) |
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Other receivables |
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|
25,000 |
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|
25,000 |
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Due from borrowers |
|
|
(597,776) |
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|
780,320 |
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Prepaid expenses |
|
|
(48,441) |
|
|
(48,013) |
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Deposits on property and equipment |
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|
71,680 |
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|
(177,481) |
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(Decrease) increase in: |
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Due to note purchaser |
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— |
|
|
(176,619) |
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Accrued interest |
|
|
(144) |
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|
— |
|
Accounts payable and accrued expenses |
|
|
51,836 |
|
|
(5,706) |
|
Deferred revenue |
|
|
(346,855) |
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|
50,088 |
|
Advances from borrowers |
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|
163,933 |
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|
(54,560) |
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Total adjustments |
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|
(529,462) |
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|
528,538 |
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NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
|
3,975,631 |
|
|
3,727,885 |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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|
|
|
|
|
|
Purchase of investments |
|
|
(17,428,603) |
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|
— |
|
Proceeds from the sale of investments |
|
|
17,940,198 |
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|
— |
|
Proceeds from sale of real estate owned |
|
|
1,762,775 |
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|
264,809 |
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Acquisitions of and improvements to real estate owned |
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|
(1,027,533) |
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|
(342,598) |
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Purchase of property and equipment |
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|
(62,567) |
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|
(165,263) |
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Security deposits held |
|
|
5,616 |
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|
— |
|
Principal disbursements for mortgages receivable |
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|
(42,303,747) |
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|
(28,516,128) |
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Principal collections on mortgages receivable |
|
|
25,417,062 |
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|
21,098,466 |
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NET CASH USED FOR INVESTING ACTIVITIES |
|
|
(15,696,799) |
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|
(7,660,714) |
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CASH FLOWS FROM FINANCING ACTIVITIES |
|
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Proceeds from line of credit |
|
|
— |
|
|
42,720,829 |
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Repayment of line of credit |
|
|
— |
|
|
(69,939,952) |
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Proceeds from notes sold to shareholder |
|
|
— |
|
|
1,017,000 |
|
Principal payments on mortgage payable |
|
|
(8,180) |
|
|
(2,947) |
|
Principal payments on notes payable |
|
|
(10,031) |
|
|
— |
|
Dividends paid |
|
|
(2,654,076) |
|
|
(4,679,293) |
|
Financing costs incurred |
|
|
(58,353) |
|
|
(12,113) |
|
Proceeds from other loans |
|
|
257,845 |
|
|
— |
|
Proceeds from mortgage payable |
|
|
— |
|
|
795,000 |
|
Repayment of mortgage payable |
|
|
— |
|
|
(290,984) |
|
Proceeds from notes payable, net |
|
|
— |
|
|
71,820 |
|
Issuance of common stock ATM, net |
|
|
— |
|
|
15,460,427 |
|
Gross proceeds from issuance of fixed rate notes |
|
|
— |
|
|
23,000,000 |
|
Financing costs incurred in connection with fixed rate notes |
|
|
— |
|
|
(1,270,000) |
|
NET CASH (USED IN)PROVIDED BY FINANCING ACTIVITIES |
|
|
(2,472,795) |
|
|
6,869,787 |
|
|
|
|
|
|
|
|
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
(14,193,964) |
|
|
2,936,958 |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR |
|
|
18,841,937 |
|
|
158,859 |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS - END OF YEAR |
|
$ |
4,647,973 |
|
$ |
3,095,818 |
SACHEM CAPITAL CORP.
STATEMENTS OF CASH FLOW (Continued)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Six months |
||||
|
|
|
Ended June 30, |
||||
|
|
|
2020 |
|
2019 |
||
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION |
|
|
|
|
|
|
|
Taxes paid |
|
$ |
— |
|
$ |
— |
|
Interest paid |
|
$ |
2,066,341 |
|
$ |
979,131 |
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 June 30, 2019 amounted to $1,962,669.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200810005160/en/
Investor & Media Contact:
David Waldman
Crescendo Communications, LLC
Email: sach@crescendo-ir.com
Tel: (212) 671-1021
Source: Sachem Capital Corp.
Released August 10, 2020