GlobeNewswire Inc | Aug 16, 2021 08:00AM EDT

August 16, 2021

BRANFORD, Conn., Aug. 16, 2021 (GLOBE NEWSWIRE) -- Sachem Capital Corp. (NYSE American: SACH) announces its financial results for the second quarter ended June 30, 2021. The company will host a conference call on Tuesday, August 17, 2021 at 8:00 a.m. Eastern Daylight Time to discuss in greater detail its financial condition and operating results for the second quarter of 2021.

John Villano, CPA, the companys Chief Executive and Chief Financial Officer stated: We achieved solid financial performance in the second quarter of 2021, as evidenced by a 56% increase in revenue, due in large part to an increase in interest income on our loan portfolio versus the same period last year. We also achieved net income of $2.5 million and generated over $6.1 million of cash flow from operations. In addition, we have significantly enhanced our balance sheet. As of June 30, 2021, we had cash, cash equivalents and investment securities totaling approximately $106.7 million compared to $56.7 million as of December 31, 2020. This increase in our liquidity largely reflects $40.6 million of net proceeds from our Series A Preferred Stock offering and $22.9 million from the sale of common shares. This past July, we also announced a $200 million master repurchase financing facility with Churchill MRA Funding I, which is expected to further reduce our overall cost of capital and help finance the continued expansion of our lending activities. Given our strong balance sheet, we are funding larger loans than we have in the past, which we believe are secured by high quality properties owned by established developers. At the same time, we continue to expand our geographic footprint. Looking ahead, we see a favorable competitive landscape and our loan pipeline remains robust. As a result, we believe we are well capitalized to take advantage of the market demand for our loan products for the balance of 2021 and beyond.

Results of operations three months ended June 30, 2021

Total revenue for the three months ended June 30, 2021 was approximately $6.7 million compared to approximately $4.3 million for the three months ended June 30, 2020, an increase of approximately $2.4 million, or 56%. The increase is primarily attributable to the growth in lending operations. For the second quarter of 2021, interest income and origination fees were approximately $4.7 million and $832,000, respectively. In comparison, for the three months ended June 30, 2020, interest income and origination fees were approximately $3.3 million and $647,000, respectively. In the second quarter of 2021 the company had $85,000 of gains from the sale of investment securities compared to a loss of approximately $8,900 for the 2020 period. Investment income for the second quarter of 2021 increased to $180,000 compared to approximately $33,000 for the same period last year. Other income was approximately $543,000 for the second quarter of 2021, compared to approximately $283,000 for the same period last year. Finally, the company recognized a gain on the extinguishment of debt of $257,845 for the second quarter of 2021.

Total operating costs and expenses for three months ended June 30, 2021 were approximately $4.2 million compared to approximately $2.0 million for the three months ended June 30, 2020. The increase in operating costs and expenses is primarily attributable to the increase in interests expense and amortization of deferred financing costs, which, in turn, is a direct result of an increase in overall indebtedness, particularly the unsubordinated unsecured notes.

Net income for the three months ended June 30, 2021 was approximately $2.5 million, or $0.10 per share, compared to $2.3 million, or $0.10 per share for the three months ended June 30, 2020.

Results of operations six months ended June 30, 2021

Total revenue for the six months ended June 30, 2021 was approximately $12.4 million compared to approximately $8.6 million for the six months ended June 30, 2020, an increase of approximately 44.2%. Revenue growth for the six months ended June 30, 2020, is directly related to the increase in lending operations. For the six months ended June 30, 2021, interest income was approximately $9.2 million and origination fees were approximately $1.35 million, respectively. In comparison, for the six months ended June 30, 2020, interest income and origination fees were approximately $6.2 million and $1.2 million, respectively. Investment income was approximately $423,000 for the first six months of 2021 compared to approximately $131,000 for the same period last year. Other income was approximately $1.0 million for the first six months of 2021, compared to approximately $567,000 for the same period last year.

Total operating costs and expenses for the six months ended June 30, 2021, were approximately $7.7 million compared to $4.1 million for the six months ended June 30, 2020. The increase in operating costs and expenses is primarily attributable to the increase in the companys unsecured, unsubordinated notes.

Net income for the six months ended June 30, 2021, was approximately $4.7 million, or $0.20 per share, compared to $4.5 million, or $0.20 per share for the six months ended June 30, 2020.

Financial Condition

At June 30, 2021, total assets were approximately $296.3 million compared to $226.7 million at December 31, 2020. The increase was due primarily to the increase in cash and cash equivalents and investment securities of $50.0 million, an increase of the mortgage loan portfolio of approximately $17.2 million, an increase in investment in partnership of approximately $1.8 million, and a net increase in property and equipment of $736,000.

Total liabilities at June 30, 2021 were approximately $150.0 million compared to $145.8 million at December 31, 2020. This increase is principally due to an increase in the line of credit of approximately $6.2 million, advances from borrowers of $1.2 million and deferred revenue of approximately $131,000 offset by decreases in dividends payable of $2.7 million, mortgage payable of $770,000 and other items.

Shareholders equity at June 30, 2021 was approximately $146.3 million compared to approximately $80.9 million at December 31, 2020. This increase was due primarily to net proceeds of $40.6 million from the sale of shares of our Series A Preferred Stock, net proceeds of $22.9 million from the sale of common shares and net income of approximately $4.7 million.

On July 15, 2021, 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 26, 2021. The dividend was paid on July 30, 2021.

Investor Conference Call

The company will host a conference call on Tuesday, August 17th, 2021 at 8:00 a.m., Eastern Daylight Time, to discuss in greater detail its financial results for the second quarter ending June 30, 2021, as well as its outlook for the balance of 2021.

Interested parties can access the conference call via telephone by dialing toll free 1-888-506-0062 for U.S. callers or 973-528-0011 for international callers and entering the entry code: 709814. A webcast of the call may be accessed at https://www.webcaster4.com/Webcast/Page/2304/42490 or on Sachems website at https://ir.sachemcapitalcorp.com/presentations.

The webcast will also be archived on the companys website and a telephone replay of the call will be available approximately one hour following the call through Tuesday, August 31, 2021 and can be accessed by dialing 877-481-4010 for U.S. callers or 919-992-2331 for international callers and by entering replay passcode: 42490.

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 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

(tables follow)SACHEM CAPITAL CORP.BALANCE SHEETS

June30,2021 December31,2020 (Unaudited) (Audited)Assets Assets: Cash and cash equivalents $ 62,225,813 $ 19,408,028 Investment securities 44,502,267 37,293,703 Investment in partnership 1,843,398 ? Mortgages receivable 172,793,975 155,616,300 Interest and fees receivable 2,017,996 1,820,067 Other receivables 131,175 67,307 Due from borrowers 2,306,346 2,025,663 Prepaid expenses 153,732 71,313 Property and equipment, net 2,168,988 1,433,388 Real estate owned 7,892,845 8,861,609 Other deposits 192,646 ? Deferred financing costs 88,212 72,806 Total assets $ 296,317,393 $ 226,670,184 Liabilities and Shareholders' Equity Liabilities: Notes payable (net of deferred financing $ 110,143,564 $ 109,640,692 costs of $4,383,186 and $4,866,058)Mortgage payable ? 767,508 Line of credit 34,276,418 28,055,648 Accrued dividends payable ? 2,654,977 Accounts payable and accrued expenses 315,708 372,662 Other loans ? 257,845 Security deposits held 13,416 13,416 Advances from borrowers 2,987,231 1,830,539 Deferred revenue 2,230,435 2,099,331 Notes payable 42,918 54,682 Accrued interest 18,299 3,344 Total liabilities 150,027,989 145,750,644 Commitments and Contingencies Shareholders? equity: Preferred shares - $.001 par value;5,000,000 shares authorized; 1,700,000 1,700 ? shares of Series A Preferred Stock issuedand outstandingCommon stock - $.001 par value;100,000,000 shares authorized; 26,733,213 26,733 22,125 and 22,124,801 issued and outstandingPaid-in capital 147,362,456 83,814,376 Accumulated other comprehensive loss (137,802 ) (25,992 )Accumulated deficit (963,683 ) (2,890,969 )Total shareholders' equity 146,289,404 80,919,540 Total liabilities and shareholders' $ 296,317,393 $ 226,670,184 equity

SACHEM CAPITAL CORP.STATEMENTS OF COMPREHENSIVE INCOME(unaudited)

Three Months Ended Six Months Ended June30, June30, 2021 2020 2021 2020 Revenue: Interestincome from $ 4,682,295 $ 3,265,677 $ 9,213,528 $ 6,167,083 loansInvestment 180,120 33,162 422,811 130,678 incomeIncome frompartnership 36,868 ? 54,241 ? investmentGain (loss) onsale of 85,471 (8,925 ) (43,968 ) 437,159 investmentsecuritiesOrigination 831,893 647,499 1,349,321 1,158,555 feesLate and other 61,970 21,099 97,899 35,880 feesProcessing 43,410 39,665 79,385 86,123 feesRental income (9,398 ) 29,456 (5,214 ) 40,184 (loss), netDebt 257,845 ? 257,845 ? forgivenessOther income 543,421 283,009 1,000,230 567,283 Total revenue 6,713,895 4,310,642 12,426,078 8,622,945 Operatingcosts and expenses:Interest andamortizationof deferred 2,505,234 1,152,302 4,969,989 2,302,255 financingcostsProfessional 251,170 110,104 482,928 242,413 feesCompensation, 812,143 388,075 1,404,230 732,569 fees and taxesExchange fees 12,465 ? 24,795 7,272 Other expenses 23,506 6,534 45,314 35,238 and taxesDepreciation 21,263 14,688 40,865 30,971 General andadministrative 248,308 127,460 407,916 267,674 expensesLoss on sale 14,962 ? 17,096 4,460 of real estateImpairment 294,000 245,000 319,000 495,000 lossTotaloperating 4,183,051 2,044,163 7,712,133 4,117,852 costs andexpensesNet income 2,530,844 2,266,479 4,713,945 4,505,093 Othercomprehensive (loss) gainUnrealized(loss) gain on (104,316 ) 221,449 (111,810 ) 86,067 investmentsecuritiesComprehensive $ 2,426,528 $ 2,487,928 $ 4,602,135 $ 4,591,160 incomeBasic anddiluted netincome per common shareoutstanding:Basic $ 0.10 $ 0.10 $ 0.20 $ 0.20 Diluted $ 0.10 $ 0.10 $ 0.20 $ 0.20 Weightedaverage numberof common sharesoutstanding:Basic 24,851,010 22,117,301 23,503,679 22,117,301 Diluted 24,857,897 22,117,301 23,507,685 22,117,301

SACHEM CAPITAL CORP.STATEMENTS OF CASH FLOW (unaudited)

Six Months Ended June30, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 4,713,945 $ 4,505,093 Adjustments to reconcile net income to net cash provided by operating activities:Amortization of deferred financing costs 502,872 235,913 and bond discountWrite-off of deferred financing costs 72,806 ? Depreciation expense 40,865 30,971 Stock based compensation 62,319 8,214 Impairment loss 319,000 495,000 Loss on sale of real estate 17,096 4,460 Loss (gain) on sale of marketable 43,968 (437,159 )securitiesDebt forgiveness (257,845 ) ? Changes in operating assets and liabilities:(Increase) decrease in: Interest and fees receivable (197,929 ) (186,094 ) Other receivables (63,868 ) 25,000 Due from borrowers (280,683 ) (597,776 ) Prepaid expenses (82,419 ) (48,441 ) Deposits on property and equipment ? 71,680 (Decrease) increase in: Accrued interest 14,955 (144 ) Accounts payable and accrued expenses (56,954 ) 51,836 Deferred revenue 131,104 (346,855 ) Advances from borrowers 1,156,692 163,933 Total adjustments 1,421,979 (529,462 )NET CASH PROVIDED BY OPERATING ACTIVITIES 6,135,924 3,975,631 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities (85,471,393 ) (17,428,603 )Proceeds from the sale of investment 78,107,144 17,940,198 securitiesPurchase of interest in investment (1,843,398 ) ? partnershipProceeds from sale of real estate owned 919,014 1,762,775 Acquisitions of and improvements to real (286,346 ) (1,027,533 )estate ownedPurchase of property and equipment (776,465 ) (62,567 )Security deposits held ? 5,616 Principal disbursements for mortgages (75,190,172 ) (42,303,747 )receivablePrincipal collections on mortgages 58,012,498 25,417,062 receivableCosts in connection with investment (192,646 ) ? activitiesNET CASH USED FOR INVESTING ACTIVITIES (26,721,764 ) (15,696,799 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from line of credit 6,220,770 ? Repayment of mortgage payable (767,508 ) (8,181 )Principal payments on notes payable (11,764 ) (10,031 )Dividends paid (5,441,636 ) (2,654,076 )Financings costs incurred (88,212 ) (58,353 )Proceeds from other loans ? 257,845 Proceeds from issuance of common shares, 22,878,849 ? net of expensesProceeds from issuance of Series A 40,613,126 ? Preferred Stock, net of expensesNET CASH PROVIDED BY (USED IN) FINANCING 63,403,625 (2,472,796 )ACTIVITIES NET INCREASE(DECREASE) IN CASH AND CASH 42,817,785 (14,193,964 )EQUIVALENTS CASH AND CASH EQUIVALENTS- BEGINNING OF 19,408,028 18,841,937 YEAR CASH AND CASH EQUIVALENTS - END OF PERIOD $ 62,225,813 $ 4,647,973 SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATIONInterest paid $ 4,479,800 $ 2,066,341