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

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

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

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

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

Results of operations

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

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

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

Financial Condition

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

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

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

Dividends

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

Investor Conference Call

The company will host a conference call on April 1, 2021 at 8:00 a.m. EDT, to discuss in greater detail its financial results for the year ending December 31, 2020, as well as its outlook for 2021. Interested parties can access the conference call by dialing +1-877-876-9173 for U.S. callers or +1-785-424-1667 for international callers. The call will be available here or on the company’s website via webcast at https://www.sachemcapitalcorp.com. John Villano, the company’s Chief Executive and Chief Financial Officer, will lead the conference call.

The webcast will also be archived on the company’s website. A telephone replay of the call will be available approximately one hour following the call, through April 15, 2021, and can be accessed by dialing +1-877-481-4010 for U.S. callers or +1-919-882-2331 for international callers. All callers should enter conference ID 40589.

About Sachem Capital Corp.

Sachem Capital Corp. specializes in originating, underwriting, funding, servicing, and managing a portfolio of first mortgage loans. It offers short-term (i.e., three years or less) secured, non­banking loans (sometimes referred to as “hard money” loans) to real estate investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The company does not lend to owner occupants. The company’s primary underwriting criteria is a conservative loan to value ratio. The properties securing the company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is secured by a first mortgage lien on real estate. Each loan is also personally guaranteed by the principal(s) of the borrower, which guaranty may be collaterally secured by a pledge of the guarantor’s interest in the borrower. The company also makes opportunistic real estate purchases apart from its lending activities. The company believes that it qualifies as a real estate investment trust (REIT) for federal income tax purposes and has elected to be taxed as a REIT beginning with its 2017 tax year.

Forward Looking Statements

This press release may contain forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “estimate,” “expect,” “project,” “plan,” “seek,” “intend,” “believe,” “may,” “might,” “will,” “should,” “could,” “likely,” “continue,” “design,” and the negative of such terms and other words and terms of similar expressions are intended to identify forward- looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to several risks, uncertainties and assumptions as described in our Annual Report on Form 10-K for 2020 to be filed with the U.S. Securities and Exchange Commission. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this press release may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We disclaim any duty to update any of these forward-looking statements.

All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in this press release. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties.

Investor & Media Contact:
Crescendo Communications, LLC
Email: sach@crescendo-ir.com
Tel: (212) 671-1021

SACHEM CAPITAL CORP

BALANCE SHEETS

             
    December 31, 
    2020      2019
Assets              
Assets:              
Cash and cash equivalents   $ 19,408,028     $ 18,841,937  
Short-term marketable securities     37,293,703       15,949,802  
Mortgages receivable     155,616,300       94,348,689  
Interest and fees receivable     1,820,067       1,370,998  
Other receivables     67,307       141,397  
Due from borrowers     2,025,663       840,930  
Prepaid expenses     71,313       24,734  
Property and equipment, net     1,433,388       1,346,396  
Deposits on property and equipment           71,680  
Real estate owned     8,861,609       8,258,082  
Deferred financing costs     72,806       16,600  
Total assets   $ 226,670,184     $ 141,211,245  
             
Liabilities and Shareholders' Equity              
Liabilities:              
Notes payable (net of deferred financing costs of $4,886,058 and $2,687,190)   $ 109,640,692     $ 55,475,810  
Mortgage payable     767,508       784,081  
Line of credit     28,055,648        
Accrued dividends payable     2,654,977        
Accounts payable and accrued expenses     372,662       249,879  
Other loans     257,845        
Security deposits held     13,416       7,800  
Advances from borrowers     1,830,539       848,268  
Deferred revenue     2,099,331       1,205,740  
Notes payable     54,682       75,433  
Accrued interest     3,344       3,416  
Total liabilities     145,750,644       58,650,427  
             
Commitments and Contingencies              
             
Shareholders’ equity:              
Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued            
Common stock - $.001 par value; 100,000,000 shares authorized; 22,124,801 and
22,117,301 issued and outstanding
    22,125       22,117  
Paid-in capital     83,814,376       83,856,308  
Accumulated other comprehensive loss     (25,992 )     (50,878 )
Accumulated deficit     (2,890,969 )     (1,266,729 )
Total shareholders' equity     80,919,540       82,560,818  
Total liabilities and shareholders' equity   $ 226,670,184     $ 141,211,245  


SACHEM CAPITAL CORP.

STATEMENTS OF OPERATIONS

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


SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW

             
    Years Ended
    December 31, 
       2020      2019
CASH FLOWS FROM OPERATING ACTIVITIES              
Net income   $ 8,993,865     $ 6,196,011  
Adjustments to reconcile net income to net cash provided by operating activities:             
Amortization of deferred financing costs     601,959       722,580  
Depreciation expense     61,865       63,566  
Stock based compensation     16,429       43,147  
Impairment loss     795,000       417,094  
Loss on sale of real estate     7,218       34,919  
Abandonment of office furniture           12,000  
Gain on sale of marketable securities     (903,257 )      
Changes in operating assets and liabilities:             
(Increase) decrease in:            
Escrow deposits           12,817  
Interest and fees receivable     (504,578 )     (154,196 )
Other receivables     74,090       13,603  
Due from borrowers     (1,537,768 )     385,424  
Prepaid expenses     (46,579 )     (9,868 )
Deposits on property and equipment     71,680       (59,680 )
(Decrease) increase in:            
Accrued interest     (72 )     (173,203 )
Accounts payable and accrued expenses     122,098       (66,535 )
Deferred revenue     893,591       147,334  
Advances from borrowers     982,271       530,944  
Total adjustments     633,947       1,919,946  
NET CASH PROVIDED BY OPERATING ACTIVITIES     9,627,812       8,115,957  
             
CASH FLOWS FROM INVESTING ACTIVITIES              
Purchase of investments     (97,555,422 )     (16,000,680 )
Proceeds from the sale of investments     77,139,664        
Proceeds from sale of real estate owned     1,816,522       1,087,004  
Acquisitions of and improvements to real estate owned     (1,811,980 )     (1,266,949 )
Purchase of property and equipment     (148,857 )     (241,855 )
Security deposits held     5,616        
Principal disbursements for mortgages receivable     (117,230,923 )     (64,742,552 )
Principal collections on mortgages receivable     54,961,570       43,347,362  
NET CASH USED FOR INVESTING ACTIVITIES     (82,823,810 )     (37,817,670 )
             
CASH FLOWS FROM FINANCING ACTIVITIES              
Proceeds from line of credit     30,055,648       42,720,829  
Repayment of line of credit     (2,000,000 )     (69,939,952 )
Proceeds from notes sold to shareholder           1,017,000  
Repayment of notes sold to shareholder           (2,217,000 )
Principal payments on mortgage payable     (16,573 )      
Principal payments on notes payable     (20,751 )      
Dividends paid     (7,963,128 )     (9,681,823 )
Financing costs incurred     (114,559 )     (2,872,774 )
Proceeds from other loans     257,845        
Proceeds from mortgage payable           795,000  
Prepayment of mortgage payable           (301,903 )
Proceeds from notes payable, net           75,434  
Proceeds from issuance of common stock           30,544,945  
Proceeds from exercise of warrants           82,035  
Gross proceeds from the issuance of fixed rate notes     56,083,750       58,163,000  
Financing costs incurred in connection with fixed rate notes     (2,520,143 )      
NET CASH PROVIDED BY FINANCING ACTIVITIES     73,762,089       48,384,791  
NET INCREASE IN CASH AND CASH EQUIVALENTS     566,091       18,683,078  
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR     18,841,937       158,859  
CASH AND CASH EQUIVALENTS - END OF YEAR   $ 19,408,028     $ 18,841,937  


SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

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

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the year ended December 31, 2019 amounted to $5,406,477.

During the year ended December 31, 2019, mortgages receivable, affiliate in the amount of $879,457 were reduced to $0 as the underlying loans were transferred to the Company and are included in mortgages receivable.

Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable, during the year ended December 31, 2020 amounted to $1,553,103.


Source: Sachem Capital Corp.