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 1 st
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 1 st 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.
