GlobeNewswire Inc | Mar 31, 2021 08:00AM EDT

March 31, 2021

Fourth quarter 2020 revenue increased 98% to $5.7 million andnet 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 companys 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 companys 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 companys website via webcast at https://www.sachemcapitalcorp.com. John Villano, the companys Chief Executive and Chief Financial Officer, will lead the conference call.

The webcast will also be archived on the companys 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 companys primary underwriting criteria is a conservative loan to value ratio. The properties securing the companys 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 guarantors 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

Thispressreleasemaycontainforward-lookingstatements.Allstatementsotherthanstatementsofhistoricalfactscontainedinthispressrelease,includingstatementsregardingourfutureresultsofoperationsandfinancialposition,strategyandplans,andourexpectationsforfutureoperations,areforward-lookingstatements.Thewordsanticipate,estimate,expect,project,plan,seek,intend,believe,may,might,will,should,could,likely,continue,design,andthenegativeofsuchtermsandotherwordsandtermsofsimilarexpressionsareintendedtoidentifyforward-looking statements.

Wehavebasedtheseforward-lookingstatementslargelyonourcurrentexpectationsandprojectionsaboutfutureeventsandtrendsthatwebelievemayaffectourfinancialcondition,resultsofoperations,strategy,short-termandlong-termbusinessoperationsandobjectivesandfinancialneeds.Theseforward-lookingstatementsaresubjectto severalrisks,uncertaintiesandassumptions 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 theserisks,uncertaintiesandassumptions,theforward-lookingeventsandcircumstancesdiscussedinthispressreleasemaynotoccur,andactualresultscoulddiffermateriallyandadverselyfromthoseanticipatedorimpliedin theforward-looking statements.

Youshouldnotrelyuponforward-lookingstatementsaspredictionsoffutureevents.Althoughwebelievethattheexpectationsreflectedintheforward-lookingstatementsarereasonable,wecannotguaranteefutureresults, levelofactivity,performanceorachievements.Inaddition,neitherwenoranyotherpersonassumesresponsibilityfortheaccuracyandcompletenessofanyoftheseforward-lookingstatements.Wedisclaimanyduty to updateanyoftheseforward-looking statements.

Allforward-lookingstatementsattributabletousareexpresslyqualifiedintheirentiretybythesecautionarystatementsaswellasothersmadeinthispressrelease. Youshouldevaluateall forward-looking statementsmadebyusinthe contextoftheserisksand uncertainties.

Investor & Media Contact:Crescendo Communications, LLCEmail: sach@crescendo-ir.comTel: (212) 671-1021

SACHEM CAPITAL CORP

BALANCE SHEETS

December31, 2020 2019Assets 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 $ 109,640,692 $ 55,475,810 costs of $4,886,058 and $2,687,190)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 ? ? issuedCommon stock - $.001 par value;100,000,000 shares authorized; 22,125 22,117 22,124,801 and22,117,301 issued and outstandingPaid-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' $ 226,670,184 $ 141,211,245 equity

SACHEM CAPITAL CORP.

STATEMENTS OF OPERATIONS

YearEnded December31, 2020 2019Revenue: 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 5,547,406 2,938,237 financing costsCompensation, 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 ? 340,195 credit facilityImpairment 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 24,886 (50,878 )securitiesComprehensive 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

YearsEnded December31, 2020 2019CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 8,993,865 $ 6,196,011 Adjustments to reconcile net incometo net cash provided by operating activities:Amortization of deferred financing 601,959 722,580 costsDepreciation 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 (903,257 ) ? securitiesChanges 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 122,098 (66,535 )expensesDeferred revenue 893,591 147,334 Advances from borrowers 982,271 530,944 Total adjustments 633,947 1,919,946 NET CASH PROVIDED BY OPERATING 9,627,812 8,115,957 ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (97,555,422 ) (16,000,680 )Proceeds from the sale of 77,139,664 ? investmentsProceeds from sale of real estate 1,816,522 1,087,004 ownedAcquisitions of and improvements to (1,811,980 ) (1,266,949 )real estate ownedPurchase of property and equipment (148,857 ) (241,855 )Security deposits held 5,616 ? Principal disbursements for (117,230,923 ) (64,742,552 )mortgages receivablePrincipal collections on mortgages 54,961,570 43,347,362 receivableNET CASH USED FOR INVESTING (82,823,810 ) (37,817,670 )ACTIVITIES 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 ? 1,017,000 shareholderRepayment of notes sold to ? (2,217,000 )shareholderPrincipal payments on mortgage (16,573 ) ? payablePrincipal 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 ? 30,544,945 stockProceeds from exercise of warrants ? 82,035 Gross proceeds from the issuance of 56,083,750 58,163,000 fixed rate notesFinancing costs incurred in (2,520,143 ) ? connection with fixed rate notesNET CASH PROVIDED BY FINANCING 73,762,089 48,384,791 ACTIVITIESNET INCREASE IN CASH AND CASH 566,091 18,683,078 EQUIVALENTSCASH AND CASH EQUIVALENTS - 18,841,937 158,859 BEGINNING OF YEARCASH AND CASH EQUIVALENTS - END OF $ 19,408,028 $ 18,841,937 YEAR

SACHEM CAPITAL CORP.

STATEMENTS OF CASH FLOW (Continued)

YearsEnded December31, 2020 2019SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATIONTaxes 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.