Sachem Capital Corp.

11/05/2025 | Press release | Distributed by Public on 11/05/2025 06:06

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes to those statements included elsewhere in this Report. Certain statements in this discussion and elsewhere in this Report constitute forward-looking statements, within the meaning of section 21E of the Exchange Act, that involve risks and uncertainties. Actual operating results and financial conditions may differ materially from those anticipated in these forward-looking statements.
Company Overview
Sachem Capital Corp., a New York corporation, established in 2010 and completing an initial public offering in 2017, is a self-managed REIT that specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. We operate our business as one segment. We offer short-term (i.e., one to three years), secured, non-bank loans to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States. The properties securing our 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 may also be secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower. Our primary underwriting criteria is a conservative loan to value ratio. In addition, we may make opportunistic real estate purchases and investments apart from our lending activities.
Critical Accounting Policies and Use of Estimates
Preparing our unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base the use of estimates on (a) various assumptions that consider prior reporting results, (b) our projections regarding future operations, and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. Significant estimates include the provisions for current expected credit losses, loans held for sale at fair value, and real estate owned. See Note 2 - Significant Accounting Policies - to our condensed consolidated financial statements for further details.
Revenue Recognition
Interest income from commercial loans is recognized, as earned, over the loan period, whereas origination and modification fee revenue on commercial loans are amortized over the term of the respective notes.
CECL Allowance
We record an allowance for credit losses ("CECL") on our loan portfolio in accordance with FASB Topic 326, Financial Instruments - Credit Losses, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics. This methodology replaces the probable incurred loss impairment methodology. In addition, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are also analyzed for credit losses in accordance with the CECL standard, as they represent a financial asset that is subject to credit risk. Further, CECL requires credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell. As allowed under the CECL standard that we have adopted, as a practical expedient, the fair value of the collateral at the reporting date is compared to the net carrying amount of the loan when determining the allowance for credit losses for loans in pending foreclosure status, as defined. Fair value of collateral is reduced by estimated cost to sell if the collateral is expected to be sold. The CECL standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the economic environment. We utilize a loss-rate method for estimating current expected credit losses. The loss rate method involves applying a loss rate to a pool of loans with similar risk characteristics to estimate the expected credit losses on that pool of loans. In determining the CECL allowance, we consider various factors including (1) historical loss experience in our loan portfolio, (2) loan specific losses for loans deemed collateral dependent based on
excess amortized cost over the fair value of the underlying collateral, and (3) management's current and future view of the macroeconomic environment. We also utilize a reasonable and supportable forecast period equal to the contractual term of the loan plus any applicable short-term extensions that are reasonably expected for construction loans. Loans, interest receivable, due from borrowers, unfunded commitments, and investment securities are all presented net on our Condensed Consolidated Balance Sheets with expanded disclosures in the notes to our condensed consolidated financial statements. The change in the balances during the reporting period are recorded in our Condensed Consolidated Statements of Operations under the provision for credit losses.
Loans held for sale
Loans are classified as held for sale if there is an intent to sell in the near-term. These loans are recorded at the lower of amortized cost or fair value. If the fair value of a loan is determined to be less than its amortized cost, a non-recurring fair value adjustment will be recorded through a valuation allowance. When a loan is transferred to the held for sale category, any previously recorded allowance for credit losses is reversed in the provision for credit losses related to loans and the loan is recorded at its amortized cost basis. If the amortized cost basis exceeds the loan's fair value at the date of transfer, a valuation allowance equal to the difference between amortized cost basis and fair value is recorded.
Real Estate Owned ("REO")
REO acquired through foreclosure is initially measured at fair value and is thereafter subject to an ongoing impairment analysis. After an REO acquisition, events or circumstances may occur that result in a material and sustained decrease in the cash flows generated from the property or other market indicators, including listing data, may signal a decline in the liquidation value. REO is evaluated for recoverability when impairment indicators are identified. Any impairment losses or recoveries are included in the Condensed Consolidated Statements of Operations.
Our Loan Portfolio
The following table presents certain information regarding our real estate lending activities for the three and nine months ended September 30, 2025:
Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025
(in thousands, except number
of loans)
Loans disbursed $ 44,657 $ 125,609
Loans repaid $ 40,651 $ 112,045
Principal of loans transferred to real estate owned $ 10,887 $ 17,185
Number of loans transferred to real estate owned 6 10
As of September 30, 2025 As of December 31, 2024
(in thousands, except number
of loans and weighted averages)
Number of loans held for investment outstanding 119 157
Gross principal amount of loans held for investment $ 375,220 $ 376,991
Weighted average contractual interest rate(1)
13.21 % 12.53 %
Weighted average term to maturity (in months) (2)
6 4
______________________________________________________________
(1)Includes default interest.
(2)Does not give effect to extensions.
At September 30, 2025, our outstanding mortgage loan portfolio included loans with outstanding principal balance amount up to $38.3 million. The table below presents our loans held for investment by loan size as of September 30, 2025:
Amount Number of
Loans 		Percentage Aggregate Gross
Principal
Amount 		Percentage
(in thousands)
$1,000,000 or less 54 45.4 % $ 22,484 6.0 %
$1,000,001 to $5,000,000 44 37.0 % 101,112 26.9 %
$5,000,001 to $10,000,000 11 9.2 % 70,705 18.8 %
$10,000,001 or more 10 8.4 % 180,919 48.3 %
Total 119 100.0 % $ 375,220 100.0 %
As of September 30, 2025, the primary markets in which we were exposed were Connecticut, Florida, Massachusetts and New York. The following table presents our loans held for investment by state as of September 30, 2025:
State Number of
Loans 		Percentage Gross Amount
Outstanding 		Percentage
(in thousands)
Connecticut 54 45.5 % 95,591 25.5 %
Florida 17 14.3 % 114,750 30.6 %
Georgia 1 0.8 % 3,840 1.0 %
Maine 2 1.7 % 883 0.2 %
Massachusetts 10 8.4 % 60,330 16.1 %
New Jersey 1 0.8 % 2,342 0.6 %
New York 17 14.3 % 31,537 8.4 %
North Carolina 5 4.2 % 24,638 6.6 %
Pennsylvania 2 1.7 % 4,857 1.3 %
Rhode Island 3 2.5 % 1,927 0.5 %
South Carolina 5 4.2 % 19,981 5.3 %
Tennessee 1 0.8 % 13,184 3.5 %
Washington D.C. 1 0.8 % 1,360 0.4 %
Total 119 100.0 % $ 375,220 100.0 %
The following table presents our loans held for investment as of September 30, 2025 by year of origination:
Year of Origination Number of
Loans 		Percentage Aggregate Gross
Principal
Amount 		Percentage
(in thousands)
2025 19 16.0 % 78,709 21.0 %
2024 23 19.3 % 41,769 11.1 %
2023 23 19.3 % 79,532 21.2 %
2022 18 15.1 % 38,508 10.3 %
2021 23 19.3 % 127,657 34.0 %
2020 4 3.4 % 6,283 1.7 %
2019 and prior 9 7.6 % 2,762 0.7 %
Total 119 100.0 % 375,220 100.0 %
The following table presents additional information regarding the types of properties securing loans held for investment as of September 30, 2025 and December 31, 2024:
September 30, 2025 December 31, 2024
(in thousands)
Aggregate Gross Principal Amount Percentage Aggregate Gross Principal Amount Percentage
Residential $ 202,220 53.9 % $ 211,939 56.2 %
Commercial 113,952 30.4 % 95,509 25.3 %
Pre-Development Land 13,890 3.7 % 23,466 6.3 %
Mixed Use 45,158 12.0 % 46,077 12.2 %
Total $ 375,220 100.0 % $ 376,991 100.0 %
Allowance for Credit Losses
Our allowance for credit losses is influenced by historical loss experience, current exposure by geographical region, current expected credit losses on loans in foreclosure based on fair value less cost to sell, non-performing status, and other supportable forecasts of economic conditions. A loan is considered non-performing once it has been delinquent on its monthly payments more than 90 days.
The following table presents the allowance for credit losses against unpaid principal balance of loans held for investment as of September 30, 2025 and December 31, 2024:
September 30, 2025 December 31, 2024
(in thousands)
Aggregate Gross Principal Amount Allowance Percentage of
Respective
Principal 		Aggregate Gross Principal Amount Allowance Percentage of
Respective
Principal
Performing - General reserve $ 271,154 $ (5,205) 1.9 % $ 289,910 $ (5,051) 1.7 %
Non-performing - General reserve 20,970 (403) 1.9 % 5,396 (96) 1.8 %
Non-performing - Direct reserves 54,199 (2,372) 4.4 % 57,808 (7,265) 12.6 %
Non-performing in Foreclosure - Direct reserves 28,897 (3,103) 10.7 % 23,877 (6,058) 25.4 %
Non-performing subtotal $ 104,066 $ (5,878) 5.6 % $ 87,081 $ (13,419) 15.4 %
Total $ 375,220 $ (11,083) 3.0 % $ 376,991 $ (18,470) 4.9 %
For further information, see Note 4 - Loans and Allowance for Credit Losses - to our condensed consolidated financial statements.
Real Estate Owned
As of September 30, 2025, we owned 19 properties, each of which previously served as collateral for first mortgage loans. Six and ten properties were acquired during the three and nine months ended September 30, 2025, respectively, in connection with foreclosure actions. Four and ten properties were sold during the three and nine months ended September 30, 2025, respectively. Two properties were transferred from real estate owned to investment in developmental real estate during the three and nine months ended September 30, 2025.
The following table presents the carrying value of each of our real estate owned properties reflected on our Condensed Consolidated Balance Sheets as of September 30, 2025:
Property Type Location Month of
Acquisition 		Carrying
Value
(in thousands)
Commercial - Restaurant Bristol, CT March 2019 $ 750
Land Bristol, CT December 2019 1,406
Land Sturbridge, MA November 2022 110
Residential - Single Family Bellingham, MA December 2023 293
Land Stamford, CT May 2024 115
Land Stamford, CT May 2024 115
Residential - Multi Family Flagler Beach, FL October 2024 3,382
Residential - Single Family Gainsville, FL November 2024 250
Commercial - Office Windsor, CT December 2024 1,600
Commercial - Office Windsor, CT December 2024 2,250
Land Marathon, FL January 2025 410
Residential - Single Family Old Lyme, CT May 2025 1,310
Residential - Single Family Old Lyme, CT May 2025 285
Residential - Single Family Old Lyme, CT May 2025 315
Commercial - Office Trumbull, CT July 2025 $ 3,550
Commercial - Office Baltimore, MD July 2025 $ 799
Mixed Use Cumberland Center, ME July 2025 $ 300
Commercial - Office Wilton, CT September 2025 $ 1,338
Commercial - Office Wilton, CT September 2025 $ 334
Total $ 18,912
For further information, see Note 6 - Real Estate Owned (REO) - to our condensed consolidated financial statements.
Results of Operations
Three months ended September 30, 2025 compared to three months ended September 30, 2024
Three Months Ended September 30,
2025 2024 $ Change % Change % of 2025 Total Revenue % of 2024 Total Revenue
Revenues
Interest income from loans 8,326 $ 11,420 $ (3,094) (27.1) % 69.4 % 77.2 %
Fee income from loans 1,964 1,843 121 6.6 % 16.4 % 12.5 %
Income from limited liability company investments 1,098 1,495 (397) (26.6) % 9.2 % 10.1 %
Other investment income 85 3 82 2733.3 % 0.7 % - %
Other income 527 24 503 2095.8 % 4.4 % 0.2 %
Total revenues 12,000 14,785 (2,785) (18.8) % 100.0 % 100.0 %
Operating expenses
Interest and amortization of deferred financing costs 6,565 6,836 (271) (4.0) % 54.7 % 46.2 %
Compensation and employee benefits 2,334 1,745 589 33.8 % 19.5 % 11.8 %
General and administrative expenses 1,679 2,301 (622) (27.0) % 14.0 % 15.6 %
Provision for credit losses related to loans held for investment 812 8,096 (7,284) (90.0) % 6.8 % 54.8 %
Change in valuation allowance related to loans held for sale 33 - 33 100.0 % 0.3 % - %
Impairment loss on real estate owned 185 320 (135) (42.2) % 1.5 % 2.2 %
Loss (gain) on sale of real estate owned and property and equipment, net 312 (30) 342 (1140.0) % 2.6 % (0.2) %
Other expenses 447 339 108 31.9 % 3.7 % 2.3 %
Total operating expenses 12,367 19,607 (7,240) (36.9) % 103.1 % 132.6 %
Operating (loss) income (367) (4,822) 4,455 92.4 % (3.1) % (32.6) %
Other income, net
Gain (loss) on equity securities 1,364 (229) 1,593 695.6 % 11.4 % (1.5) %
Total other income, net 1,364 (229) 1,593 695.6 % 11.4 % (1.5) %
Net income (loss) 997 (5,051) 6,048 119.7 % 8.3 % (34.2) %
Preferred stock dividends (1,117) (1,095) (22) 2.0 % (9.3) % (7.4) %
Net (loss) income attributable to common shareholders $ (120) $ (6,146) $ 6,026 98.0 % (1.0) % (41.6) %
Basic and diluted (loss) earnings per common share $ 0.00 $ (0.13) $ 0.13 98.0 %
Total revenues
The change in revenue was primarily due to the cumulative effect of materially lower net new origination over the last twelve months, resulting in a reduction in the unpaid principal balance of loans held for investment, in addition to a currently elevated amount of nonperforming loans and real estate owned. Utilizing the average performing loans held for investment balance for the three months ended September 30, 2025 of $268.1 million, the effective interest rate on loans held for investment was 12.4% for the three months ended September 30, 2025. Comparatively, utilizing the average performing loans held for investment balance for the three months ended September 30, 2024 of $361.7 million, the effective interest rate on loans held for investment was 12.6% for the three months ended September 30, 2024.
Income from limited liability company investments has decreased as we have reduced our investments in limited liability companies by $12.8 million since December 31, 2024. The Company used returns of capital from its investments in limited liability companies to fund additional loans held for investment during the period.
Operating expenses
Interest and amortization of deferred financing costs remained relatively consistent with the corresponding 2024 period in total dollars, but increased as a percentage of total revenues due to lower revenues in 2025 as the overall size of our loan portfolio decreased and nonperforming loans as a percentage of the loan portfolio increased.
The increase in compensation and employee benefits relates to one time cash bonuses of $0.4 million and additional headcount to build out the executive team due to the resignation of the prior chief financial officer and the hiring of his replacement and a new chief accounting officer.
The material decline in the provision for credit losses related to loans held for investment for the three months ended September 30, 2025 as compared to the corresponding 2024 period is a result of the prior year build up and recognition of credit loss allowance as the aggregate non-performing loan balances were rising materially. The aggregate non-performing loan balance as of September 30, 2024 was $147.0 million, up $62.4 million from the December 31, 2023 balance of $84.6 million. As the Company has been addressing the non-performing loan portfolio for the last year through certain loan sales primarily during the fourth quarter of 2024, ongoing foreclosure sales and conversions to real estate owned with subsequent sale, material additional new material credit loss allowance has not been required.
Book value per common share
The following table presents the calculation of our book value per common share (in thousands, except share and per share data):
September 30, 2025 June 30, 2025
Total shareholders' equity $ 175,618 $ 177,907
Series A Preferred Stock ($25 liquidation preference per share) (57,669) (57,669)
Total shareholders' equity, net of preferred stock $ 117,949 $ 120,238
Number of common shares outstanding at period end 47,691,121 47,310,139
Book value per common share $ 2.47 $ 2.54
The decrease in book value per common share is primarily due to cash dividends declared and paid for the three months ended September 30, 2025 on issued and outstanding common shares and shares of Series A Preferred Stock totaling $3.5 million, or $0.07 per common share, partially offset by net income for the three months ended September 30, 2025 of $1.0 million, or $0.02 per common share.
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024
Nine Months Ended September 30,
2025 2024 $ Change % Change % of 2025 Total Revenue % of 2024 Total Revenue
Revenues
Interest income from loans $ 23,696 $ 35,816 $ (12,120) (33.8) % 69.3 % 76.6 %
Fee income from loans 5,160 6,543 (1,383) (21.1) % 15.1 % 14.0 %
Income from limited liability company investments 4,128 3,907 221 5.7 % 12.1 % 8.4 %
Other investment income 102 388 (286) (73.7) % 0.3 % 0.8 %
Other income 1,131 81 1,050 1296.3 % 3.3 % 0.2 %
Total revenues 34,217 46,735 (12,518) (26.8) % 100.0 % 100.0 %
Operating expenses
Interest and amortization of deferred financing costs 18,798 21,278 (2,480) (11.7) % 54.9 % 45.5 %
Compensation and employee benefits 5,926 5,053 873 17.3 % 17.3 % 10.8 %
General and administrative expenses 4,338 4,797 (459) (9.6) % 12.7 % 10.3 %
Provision for credit losses related to loans held for investment 2,788 17,964 (15,176) (84.5) % 8.1 % 38.4 %
Change in valuation allowance related to loans held for sale (1,014) - (1,014) 100.0 % (3.0) % - %
Impairment loss on real estate owned 185 397 (212) (53.4) % 0.5 % 0.8 %
Loss (gain) on sale of real estate owned and property and equipment, net 181 (294) 475 (161.6) % 0.5 % (0.6) %
Other expenses 1,287 1,205 82 6.8 % 3.8 % 2.6 %
Total operating expenses 32,489 50,400 (17,911) (35.5) % 94.9 % 107.8 %
Operating (loss) income 1,728 (3,665) 5,393 147.1 % 5.1 % (7.8) %
Other income, net
Gain (loss) on equity securities 2,060 229 1,831 799.6 % 6.0 % 0.5 %
Total other income, net 2,060 229 1,831 799.6 % 6.0 % 0.5 %
Net income (loss) 3,788 (3,436) 7,224 210.2 % 11.1 % (7.4) %
Preferred stock dividends (3,352) (3,187) (165) 5.2 % (9.8) % (6.8) %
Net (loss) income attributable to common shareholders $ 436 $ (6,623) $ 7,059 106.6 % 1.3 % (14.2) %
Basic and diluted (loss) earnings per common share $ 0.01 $ (0.14) $ 0.15 $ 1.07
Total revenues
The change in revenue was primarily due to the cumulative effect of materially lower net new origination over the last twelve months, resulting in a reduction in the unpaid principal balance of loans held for investment, in addition to a currently elevated amount of nonperforming loans and real estate owned. Utilizing the average performing loans held for investment balance for the nine months ended September 30, 2025 of $271.6 million, the effective interest rate on loans held for investment rate was 11.6% for the nine months ended September 30, 2025. Comparatively, utilizing the average performing loans held for investment balance for the nine months ended September 30, 2024 of $385.8 million, the effective interest rate on loans held for investment was 12.4% for the nine months ended September 30, 2024.
Operating expenses
Interest and amortization of deferred financing costs decreased as we paid off $34.5 million of notes payable in December 2024 with proceeds from loans sold, but increased as a percentage of total revenues due to lower revenues in 2025 as the overall size of our loan portfolio decreased and nonperforming loans as a percentage of the loan portfolio increased.
The increase in compensation and employee benefits relates to additional headcount to build out the executive team due to resignation of our former chief financial officer and the hiring of his replacement and a new chief accounting officer.
The material decline in the provision for credit losses related to loans held for investment for the nine months ended September 30, 2025 as compared to the corresponding 2024 period is a result of the prior year build up and recognition of credit loss allowance due to a material increase in the aggregate non-performing loan balances. The aggregate non-performing loan balance as of September 30, 2024 was $147.0 million, up $62.4 million from the December 31, 2023 balance of $84.6 million. As the Company has been addressing the non-performing loan portfolio for the last year through loan sales, primarily during the fourth quarter of 2024, ongoing foreclosure sales and conversions to real estate owned with subsequent sale, material additional new material credit loss allowance has not been required.
Book value per common share
The following table presents the calculation of our book value per common share (in thousands, except share and per share data):
September 30, 2025 December 31, 2024
Total shareholders' equity $ 175,618 $ 181,651
Series A Preferred Stock ($25 liquidation preference per share) (57,669) (57,669)
Total shareholders' equity, net of preferred stock $ 117,949 $ 123,982
Number of common shares outstanding at period end 47,691,121 46,965,306
Book value per common share $ 2.47 $ 2.64
The decrease in book value per common share is primarily due to cash dividends declared and paid for the ninemonths ended September 30, 2025on issued and outstanding common shares and Series A Preferred Stock totaling $10.4 million, or $0.22 per common share, partially offset by net income for the ninemonths ended September 30, 2025of $3.8 million, or $0.08 per common share.
Liquidity and Capital Resources
Total assets at September 30, 2025were $484.4 million compared to $492.0 million at December 31, 2024, a decrease of $7.6 million, or 1.5%. The net decrease was due primarily to decreases in cash and cash equivalents of $6.9 million and investments in limited liability companies of $12.8 million offset by increases in loans held for investment, net of $5.2 million and real estate owned of $4.6 million. The Company used returns of capital from its investments in limited liability companies to fund additional loans held for investment during the period.
Total liabilities at September 30, 2025were $308.8 million compared to $310.3 million at December 31, 2024, a decrease of $1.5 million, or 0.5%. This decrease is primarily due to decreases in notes payable of $55.5 million, repurchase agreements of $25.9 million, and lines of credit of $7.3 million offset by a $86.4 million increase in senior secured notes payable net of deferred financing costs of $3.6 million. The Company used the proceeds from sale of its senior secured notes to reduce other indebtedness.
Total shareholders' equity at September 30, 2025 was $175.6 million compared to $181.7 million at December 31, 2024, a decrease of $6.0 million, or 3.3%. This decrease was due primarily to an aggregate increase of $10.5 million of dividends paid to holders of Series A Preferred Stock and common shares, which was partially offset by an aggregate increase of $3.8 million of cumulative net earnings for the nine month period and $0.6 million increase in additional paid-in capital related to stock-based compensation.
Sources and Uses of Funds
Our primary sources of cash include principal and interest payments on mortgage loans and various fees associated with such loans, proceeds from the sales of real property, net proceeds from offerings of equity securities, and borrowings from our credit facilities. Our primary uses of cash include debt service payments (both principal and interest), new originations of loans held for investment, new investments in real estate, dividend distributions to our shareholders, and operating expenses.
These sources and uses of cash are reflected in our Condensed Consolidated Statements of Cash Flows as summarized below:
Nine Months Ended One Year-Change
Amount 2025 2024 Amount Percentage
(in thousands) (in thousands)
Cash and cash equivalents, January 1 $ 18,066 $ 12,598 $ 5,468 43.4 %
Net cash provided by operating activities 5,624 13,510 (7,886) (58.4) %
Net cash provided by investing activities 1,589 44,262 (42,673) (96.4) %
Net cash used in financing activities (14,107) (64,489) 50,382 (78.1) %
Cash and cash equivalents, September 30 $ 11,172 $ 5,881 $ 5,291 90.0 %
For a detailed breakdown of our cash flows during the nine months ended September 30, 2025 and 2024, see our Condensed Consolidated Statement of Cash Flows.
We project anticipated cash requirements for our operating needs as well as cash flows generated from operating activities available to meet these needs. Our short-term cash requirements primarily include funding of loans, dividend payments, interest and principal payments on our indebtedness, and payments for usual and customary operating and administrative expenses, such as employee compensation and sales and marketing expenses. Based on this analysis, we believe that our current cash balances, availability on our debt facilities, and our anticipated cash flows from operations will be sufficient to fund the operations for the next 12 months.
Our long-term cash needs will include principal and interest payments on outstanding indebtedness maturing in late 2026 and early 2027, preferred stock dividends and funding of new mortgage loans. Funding for long-term cash needs will come from unused net proceeds from financing activities, operating cash flows, refinancing existing debt, and proceeds from sales of real estate owned.
On March 20, 2025, we entered into a new Credit Agreement with Needham Bank (the "New Credit Agreement"), replacing the prior Needham Credit Facility, which was fully repaid and terminated on the same date. The new facility matures on March 2, 2026, and includes an option to extend the term by one year upon satisfaction of certain conditions. Under the new agreement, SN Holdings LLC ("SN Holdings"), our wholly owned subsidiary, serves as the borrower, and we serve as guarantor of all SN Holdings' obligations under the New Credit Agreement. The new facility is secured by a first priority lien on all the assets of SN Holdings, and includes a requirement that SN Holdings maintain assets equal to at least two times the outstanding principal balance under the facility. In addition, SN Holdings is required to collaterally assign to Needham a portfolio of mortgage loans with an outstanding principal balance of no less than the greater of $30 million or the full drawn balance on the facility. We, as guarantor, have also granted Needham a lien on substantially all of our assets, with the ability to request lien releases to facilitate other financings. The new facility, at the subsidiary borrower level, is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements, including a covenant that requires SN Holdings to maintain: (A) a ratio of Adjusted EBITDA (as defined in the New Credit Agreement) to Debt Service (as defined in the New Credit Agreement) of not less than 1.40 to 1.0, tested on a trailing-twelve-month basis at the end of each fiscal quarter; (B) a sum of cash, cash equivalents (at the consolidated guarantor level) and availability under the facility equal to or greater than $10 million; and (C) an Asset Coverage Ratio (as defined) of at least 150%. As of September 30, 2025, SN Holdings had borrowed $32.7 million under the new facility and was in compliance with all covenants under the New Credit Agreement.
On June 11, 2025, Sachem Capital Corporation Holdings, LLC ("Holdings"), our indirect, wholly-owned subsidiary, consummated a private placement of $100.0 million aggregate principal amount of Senior Secured Notes due June 11, 2030 (the "Senior Secured Notes") to various institutional investors under a Note Purchase and Guaranty
Agreement. An initial draw of $50.0 million was made at closing, an additional draw of $40.0 million was made in September 2025, and the remaining $10.0 million may be drawn at any time on or prior to May 15, 2026. The Senior Secured Notes bear interest at a fixed rate of 9.875% per annum, with interest only payable quarterly on the 1st day of March, June, September and December, and include a commitment fee of 1.0% on the undrawn portion of the Senior Secured Notes.
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of our requirements for capital resources.
Contractual Obligations
As of September 30, 2025, our contractual obligations include unfunded amounts of any outstanding construction loans and unfunded commitments for loans and limited liability company investments.
Total Less than
1 year 		1 - 3
years 		3 - 5
years 		More than
5 years
(In thousands)
Unfunded portions of outstanding construction loans $ 47,323 $ 23,793 $ 23,530 $ - $ -
Unfunded commitments to investments in LLC's 2,409 2,409 - - -
Total contractual obligations $ 49,732 $ 26,202 $ 23,530 $ - $ -
Recent Accounting Pronouncements
See Note 2 - Significant Accounting Policies - to our condensed consolidated financial statements for explanation of recent accounting pronouncements impacting us.
Sachem Capital Corp. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 12:06 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]