Sachem Capital Reports Full Year 2023 Results
- None.
- Decline of 29.4% in net income attributable to common shareholders and 40.1% in earnings per share for 2023 compared to 2022.
- Provision for credit losses of $6.4 million, with over 70% attributed to commercial real estate.
- Total operating costs and expenses increased to $49.7 million in 2023 from $31.4 million in 2022, primarily due to higher interest expense and amortization of deferred financing costs.
- Total liabilities increased to $395.5 million at December 31, 2023, compared to $348.0 million at December 31, 2022.
- Approximately $23.7 million of notes payable coming due in June 2024.
- Net income for 2023 attributable to common shareholders was $12.1 million, or $0.27 per share, compared to $17.2 million, or $0.46 per share for 2022.
Insights
The reported revenue growth of 25.5% for Sachem Capital Corp. is a strong indicator of the company's ability to expand its mortgage portfolio and capitalize on higher interest rates charged to borrowers. However, this growth is somewhat offset by the 19% decrease in origination and modification fees, which suggests a potential slowdown in new loan generation and refinancing activities. This could be a red flag for future revenue streams if the trend continues.
The increase in operating costs and expenses, particularly the higher interest expense and amortization of deferred financing costs, is concerning. It reflects the rising cost of capital for the company, which could squeeze profit margins if interest rates continue to rise or if there is a further slowdown in the commercial real estate market.
Investors should also note the provision for credit losses, which is significant and driven by the decline in commercial real estate values. This provision is a non-cash charge but is important in understanding the health of the loan portfolio and the potential risk of defaults.
The weakness in commercial real estate, specifically office space, is a key concern for Sachem Capital, as over 70% of the credit loss provision was attributable to this sector. The pandemic has accelerated trends towards remote work and the demand for office space may continue to be affected. This trend could have a long-term impact on the valuation of commercial properties and, consequently, the performance of real estate investment trusts (REITs) like Sachem.
The company's balance sheet shows an 11% increase in total assets, which is a positive sign of growth. However, the corresponding increase in total liabilities, particularly the notes payable coming due in June 2024, will require careful liquidity management. The company's statement that it has sufficient working capital to meet these obligations is reassuring, but it will be important to monitor their cash flow and capital raising activities.
As a Real Estate Investment Trust (REIT), Sachem Capital is required to distribute at least 90% of its taxable income to shareholders. The consistency in dividend payments, as evidenced by the declared dividends, is a testament to the company's commitment to shareholder returns. However, the decline in earnings per share by 40.1% could potentially lead to lower distributable income in the future, which might impact dividend sustainability.
The company's strategy to focus on areas of the business it can control is prudent, especially in a volatile market. Still, the ability to adapt to macroeconomic changes and the health of the commercial real estate market will be critical for Sachem's performance. Investors should consider the company's long-term growth prospects against the backdrop of these challenges.
Revenues Increase, While Rising Interest Rates and Commercial Real Estate Values Impact Earnings
Company to Host Webcast and Conference Call
BRANFORD, Conn., April 01, 2024 (GLOBE NEWSWIRE) -- Sachem Capital Corp. (NYSE American: SACH) announced its financial results for the year ended December 31, 2023. The Company will host a conference call on Monday, April 1, 2024 at 8:00 a.m. Eastern Time to discuss its financial and operating results.
John Villano, CPA, Sachem Capital’s Chief Executive Officer commented, “While we remained disciplined and focused as we grew 2023 revenue nearly
Results of operations for year ended December 31, 2023
Total revenue increased
Total operating costs and expenses for the year ended December 31, 2023 were
Net income for 2023 attributable to common shareholders was approximately
Balance Sheet
Total assets at December 31, 2023 were up almost
Total indebtedness at quarter end was
Total shareholders’ equity at December 31, 2023 rose
Dividends
On March 28, 2024, the company declared a quarterly dividend of
On January 9, 2024, the company paid a quarterly dividend of
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
Investor Conference Webcast and Call
The company will host a webcast and conference call Monday, April 1, 2024 at 8:00 a.m. Eastern Daylight Time, to discuss in greater detail its financial results for the quarter and year ended December 31, 2023. A webcast of the call may be accessed on Sachem’s website at https://ir.sachemcapitalcorp.com/ir-calendar.
Interested parties can access the conference call via telephone by dialing toll free 877-704-4453 for U.S. callers or +1-201-389-0920 for international callers.
Replay
The webcast will be archived on the company’s website and a telephone replay of the call will be available through Monday, April 15, 2024 and can be accessed by dialing 1-844-512-2921 for U.S. callers or +1 412-317-6671 for international callers and by entering replay passcode: 13743197.
About Sachem Capital Corp
Sachem Capital Corp. is a mortgage REIT that specializes in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property. It offers short-term (i.e., three years or less) secured, nonbanking loan to real estate investors to fund their acquisition, renovation, development, rehabilitation, or improvement of properties. The company’s primary underwriting criteria is a conservative loan to value ratio. The properties securing the 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 is personally guaranteed by the principal(s) of the borrower. The company will also make opportunistic real estate purchases apart from its lending activities.
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. These forward-looking statements are based primarily on management’s current expectations and projections about future events and trends that management believes may affect the company’s 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 the Annual Report on Form 10-K for 2023 filed with the U.S. Securities and Exchange Commission on April 1, 2024. 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 the company believes that the expectations reflected in the forward-looking statements are reasonable, the company cannot guarantee future results, level of activity, performance, or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements. All forward-looking statements attributable to the company 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 the company in the context of these risks and uncertainties.
Investor & Media Contact:
Email: investors@sachemcapitalcorp.com
SACHEM CAPITAL CORP.
CONSOLIDATED BALANCE SHEETS
| Years Ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 12,598,256 | $ | 23,713,097 | ||||
| Investment securities, net (at fair value) | 37,776,032 | 24,576,462 | ||||||
| Mortgages receivable | 499,235,371 | 460,738,268 | ||||||
| Less: Allowance for credit losses | (7,523,160 | ) | (105,000 | ) | ||||
| Mortgages receivable, net of allowance for credit losses | 491,712,211 | 460,633,268 | ||||||
| Investments in rental real estate, net | 10,554,461 | — | ||||||
| Interest and fees receivable, net | 8,474,820 | 6,309,845 | ||||||
| Due from borrowers, net | 5,596,883 | 5,276,967 | ||||||
| Real estate owned | 3,461,519 | 5,216,149 | ||||||
| Investments in partnerships | 43,035,895 | 30,831,180 | ||||||
| Property and equipment, net | 3,373,485 | 4,121,721 | ||||||
| Other assets | 8,955,250 | 4,983,173 | ||||||
| Total assets | $ | 625,538,812 | $ | 565,661,862 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Liabilities: | ||||||||
| Notes payable (net of deferred financing costs of | $ | 282,353,260 | $ | 280,049,153 | ||||
| Repurchase facility | 26,461,098 | 42,533,466 | ||||||
| Mortgage payable | 1,081,303 | 750,000 | ||||||
| Lines of credit | 61,792,330 | 3,587,894 | ||||||
| Accrued dividends payable | 5,144,203 | 5,342,160 | ||||||
| Accounts payable and accrued liabilities | 2,321,535 | 1,439,219 | ||||||
| Advances from borrowers | 10,998,351 | 9,892,164 | ||||||
| Below market lease intangible | 664,737 | — | ||||||
| Deferred revenue | 4,647,302 | 4,360,452 | ||||||
| Total liabilities | 395,464,119 | 347,954,508 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' equity: | ||||||||
| Preferred shares - $.001 par value; 5,000,000 shares authorized; 2,903,000 shares designated as Series A Preferred Stock; 2,029,923 and 1,903,000 shares of Series A Preferred Stock issued and outstanding at December 31, 2023 and December 31, 2022, respectively | $ | 2,030 | $ | 1,903 | ||||
| Common stock - $.001 par value; 200,000,000 shares authorized; 46,765,483 and 41,093,536 issued and outstanding at December 31, 2023 and December 31, 2022 | 46,765 | 41,094 | ||||||
| Paid-in capital | 249,825,780 | 226,220,990 | ||||||
| Accumulated other comprehensive income (loss) | 315,614 | (561,490 | ) | |||||
| Accumulated deficit | (20,115,496 | ) | (7,995,143 | ) | ||||
| Total shareholders’ equity | 230,074,693 | 217,707,354 | ||||||
| Total liabilities and shareholders’ equity | $ | 625,538,812 | $ | 565,661,862 | ||||
SACHEM CAPITAL CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Years Ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue: | ||||||||
| Interest income from loans | $ | 49,265,040 | $ | 42,618,817 | ||||
| Investment gain, net | 1,233,537 | 521,662 | ||||||
| Income from partnership investments | 3,521,721 | 1,809,564 | ||||||
| Origination and modification fees, net | 5,940,393 | 7,320,625 | ||||||
| Fee and other income | 4,812,629 | 2,969,117 | ||||||
| Unrealized gain (loss) on investment securities | 835,818 | (2,963,760 | ) | |||||
| Total revenue | 65,609,138 | 52,276,025 | ||||||
| Operating costs and expenses: | ||||||||
| Interest and amortization of deferred financing costs | 29,189,901 | 21,549,859 | ||||||
| Compensation, fees and taxes | 6,931,757 | 5,315,455 | ||||||
| General and administrative expenses | 5,293,057 | 3,097,219 | ||||||
| Other expenses | 1,032,520 | 544,684 | ||||||
| (Gain) Loss on sale of real estate and property and equipment, net | 88,115 | (44,752 | ) | |||||
| Provision for credit losses related to loans | 5,571,612 | 105,000 | ||||||
| Provision for credit losses related to available-for-sale debt securities | 808,561 | — | ||||||
| Impairment loss | 794,462 | 799,909 | ||||||
| Total operating costs and expenses | 49,709,985 | 31,367,374 | ||||||
| Net income | 15,899,153 | 20,908,651 | ||||||
| Preferred stock dividend | (3,795,389 | ) | (3,687,062 | ) | ||||
| Net income attributable to common shareholders | 12,103,764 | 17,221,589 | ||||||
| Other comprehensive income | ||||||||
| Unrealized gain (loss) on investment securities, net | 877,104 | (85,474 | ) | |||||
| Total Comprehensive income | $ | 12,980,868 | $ | 17,136,115 | ||||
| Basic and diluted net income per common share outstanding: | ||||||||
| Basic | $ | 0.27 | $ | 0.46 | ||||
| Diluted | $ | 0.27 | $ | 0.46 | ||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 44,244,988 | 37,741,657 | ||||||
| Diluted | 44,244,988 | 37,749,169 | ||||||
SACHEM CAPITAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOW
| Years Ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 15,899,153 | $ | 20,908,651 | ||||
| Adjustments to reconcile net income to net | ||||||||
| cash provided by operating activities: | ||||||||
| Amortization of deferred financing costs and bond discount | 2,415,405 | 2,104,093 | ||||||
| Depreciation expense | 266,331 | 106,414 | ||||||
| Write-off of failed deal expenses | 477,047 | — | ||||||
| Stock based compensation | 822,231 | 495,015 | ||||||
| Provision for credit losses related to loans | 5,571,612 | 105,000 | ||||||
| Provision for credit losses related to available-for-sale debt securities | 808,561 | — | ||||||
| Impairment loss | 794,462 | 799,909 | ||||||
| Loss (Gain) on sale of real estate and property and equipment, net | 88,115 | (44,752 | ) | |||||
| Unrealized (gain) loss on investment securities | (835,818 | ) | 2,963,760 | |||||
| Gain on sale of investment securities | — | (521,662 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in operating assets: | ||||||||
| Interest and fees receivable, net | (2,285,064 | ) | (2,616,200 | ) | ||||
| Other assets – miscellaneous | (3,504,390 | ) | (3,599,779 | ) | ||||
| Due from borrowers, net | (334,253 | ) | (1,605,951 | ) | ||||
| Accrued dividends payable | — | (1,414,560 | ) | |||||
| Other assets - prepaid expenses | (100,649 | ) | — | |||||
| (Decrease) increase in operating liabilities: | ||||||||
| Accrued Interest | 158,973 | 158,687 | ||||||
| Accounts payable and accrued liabilities | 220,757 | 766,723 | ||||||
| Deferred revenue | 286,850 | (283,038 | ) | |||||
| Advances from borrowers | 1,106,187 | (5,173,950 | ) | |||||
| Total adjustments | 5,956,357 | (7,760,291 | ) | |||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 21,855,510 | 13,148,360 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of investment securities | (30,415,304 | ) | (51,651,930 | ) | ||||
| Proceeds from the sale of investment securities | 18,120,095 | 85,113,227 | ||||||
| Purchase of interests in investment partnerships, net | (12,235,563 | ) | (24,775,342 | ) | ||||
| Proceeds from sale of real estate owned | 450,420 | 2,090,879 | ||||||
| Acquisitions of and improvements to real estate owned, net | (229,587 | ) | (126,442 | ) | ||||
| Proceeds from sale (purchases) of property and equipment, net | 515,391 | (1,581,350 | ) | |||||
| Investment in rental real estate, net | (10,845,107 | ) | — | |||||
| Principal disbursements for mortgages receivable | (204,884,592 | ) | (300,277,303 | ) | ||||
| Principal collections on mortgages receivable | 167,036,071 | 131,840,244 | ||||||
| Other assets - pre-offering costs | — | (170,606 | ) | |||||
| NET CASH USED FOR INVESTING ACTIVITIES | (72,488,176 | ) | (159,538,623 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Net proceeds from (repayment of) lines of credit | 58,204,436 | (29,590,137 | ) | |||||
| Net proceeds from (repayment of) repurchase facility | (16,072,368 | ) | 23,446,277 | |||||
| Proceeds from mortgage | 331,303 | — | ||||||
| Accounts payable and accrued liabilities - principal payments on other notes | (6,014 | ) | (24,907 | ) | ||||
| Dividends paid on common shares | (21,932,500 | ) | (18,809,722 | ) | ||||
| Dividends paid on Series A Preferred Stock | (3,795,389 | ) | (3,687,062 | ) | ||||
| Proceeds from issuance of common shares, net of expenses | 20,450,874 | 39,291,945 | ||||||
| Repurchase of common shares | (226,327 | ) | — | |||||
| Proceeds from issuance of Series A Preferred Stock, net of expenses | 2,563,810 | (70,000 | ) | |||||
| Gross proceeds from issuance of fixed rate notes | — | 122,125,000 | ||||||
| Financings costs incurred in connection with fixed rate notes | — | (4,516,931 | ) | |||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 39,517,825 | 128,164,463 | ||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (11,114,841 | ) | (18,225,800 | ) | ||||
| CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR | 23,713,097 | 41,938,897 | ||||||
| CASH AND CASH EQUIVALENTS - END OF YEAR | $ | 12,598,256 | $ | 23,713,097 | ||||
FAQ
What was the percentage increase in total revenue for Sachem Capital Corp. in 2023?
Why did net income attributable to common shareholders decline in 2023 for Sachem Capital Corp.?
What was the total operating costs and expenses for Sachem Capital Corp. in 2023?
How much were the total liabilities for Sachem Capital Corp. at December 31, 2023?
When are the notes payable coming due for Sachem Capital Corp.?
What was the net income for common shareholders for Sachem Capital Corp. in 2023?
