Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 13, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Sachem Capital Corp. | |
Entity Current Reporting Status | Yes | |
Entity Central Index Key | 0001682220 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Trading Symbol | SACH | |
Entity Common Stock, Shares Outstanding | 22,117,301 | |
Entity Interactive Data Current | Yes |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Assets: | ||
Cash | $ 11,004,943 | $ 99,310 |
Cash - restricted | 0 | 59,549 |
Escrow deposits | 0 | 12,817 |
Mortgages receivable | 89,020,538 | 78,011,653 |
Mortgages receivable, affiliate | 879,457 | |
Interest and fees receivable | 1,431,414 | 1,397,038 |
Other receivables | 222,237 | 155,000 |
Due from borrowers | 843,409 | 695,218 |
Prepaid expenses | 37,171 | 14,866 |
Property and equipment, net | 1,320,424 | 1,180,107 |
Deposits on property and equipment | 49,881 | 12,000 |
Real estate owned | 5,310,523 | 2,943,438 |
Deferred financing costs | 38,351 | 553,597 |
Total assets | 109,278,891 | 86,014,050 |
Liabilities: | ||
Unsecured unsubordinated fixed rate notes (net of deferred financing costs of $1,242,192) | 22,420,808 | 0 |
Line of credit | 0 | 27,219,123 |
Mortgage payable | 788,148 | 290,984 |
Accounts payable and accrued expenses | 131,901 | 316,413 |
Security deposits held | 7,800 | 7,800 |
Funds held in escrow | 25,000 | |
Advances from borrowers | 498,504 | 317,324 |
Due to shareholder | 1,200,000 | |
Deferred revenue | 1,067,667 | 1,058,406 |
Notes payable | 68,634 | 0 |
Capital leases payable | 11,573 | 0 |
Dividend payable | 0 | 2,624,566 |
Accrued interest | 3,323 | 176,619 |
Total liabilities | 25,023,358 | 33,211,235 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued | 0 | 0 |
Common stock - $.001 par value; 50,000,000 shares authorized; 22,088,325 and 15,438,621 issued and outstanding | 22,088 | 15,439 |
Paid-in capital | 83,787,674 | 53,192,859 |
Retained earnings (accumulated deficit) | 445,771 | (405,483) |
Total shareholders' equity | 84,255,533 | 52,802,815 |
Total liabilities and shareholders' equity | $ 109,278,891 | $ 86,014,050 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
BALANCE SHEETS | ||
Unsecured unsubordinated fixed rate notes (net of deferred financing costs of $1,242,192) | $ 1,242,192 | |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Shares, Issued | 22,088,325 | 15,438,621 |
Common Stock, Shares, Outstanding | 22,088,325 | 15,438,621 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue: | ||||
Interest income from loans | $ 2,442,750 | $ 2,272,100 | $ 7,509,155 | $ 6,610,273 |
Origination fees, net | 497,237 | 383,322 | 1,202,777 | 1,071,921 |
Late and other fees | 18,149 | 59,949 | 205,182 | 144,031 |
Processing fees | 44,870 | 30,680 | 121,470 | 101,480 |
Rental income, net | 9,446 | 10,136 | 82,350 | 87,865 |
Other income | 353,671 | 175,271 | 650,202 | 674,830 |
Net gain on sale of real estate | 12,927 | 119,666 | 20,076 | 119,666 |
Total revenue | 3,379,050 | 3,051,124 | 9,791,212 | 8,810,066 |
Operating costs and expenses: | ||||
Interest and amortization of deferred financing costs | 537,878 | 493,992 | 1,611,332 | 1,098,912 |
Stock based compensation | 4,107 | 29,250 | 12,327 | 29,250 |
Professional fees | 105,053 | 54,330 | 259,275 | 212,789 |
Compensation, fees and taxes | 476,404 | 344,266 | 1,325,822 | 886,024 |
Exchange fees | 11,343 | 10,000 | 32,850 | 26,667 |
Other expenses and taxes | 39,355 | 7,669 | 70,683 | 67,668 |
Expense in connection with termination of LOC | 0 | 779,641 | 0 | |
Excise tax | 0 | 0 | 0 | 19,000 |
Depreciation | 18,618 | 6,834 | 44,286 | 20,302 |
General and administrative expenses | 131,206 | 142,119 | 400,561 | 314,839 |
Total operating costs and expenses | 1,323,964 | 1,088,460 | 4,536,777 | 2,675,451 |
Net income | $ 2,055,086 | $ 1,962,664 | $ 5,254,435 | $ 6,134,615 |
Basic and diluted net income per common share outstanding: | ||||
Basic | $ 0.10 | $ 0.13 | $ 0.30 | $ 0.40 |
Diluted | $ 0.10 | $ 0.13 | $ 0.30 | $ 0.40 |
Weighted average number of common shares outstanding: | ||||
Basic | 21,336,870 | 15,433,000 | 17,622,480 | 15,421,555 |
Diluted | 21,336,870 | 15,433,000 | 17,662,480 | 15,421,555 |
STATEMENT OF CHANGES IN SHAREHO
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Common Shares [Member]At the Market Offering [Member] | Common Shares [Member] | Additional Paid-in Capital [Member]At the Market Offering [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member]At the Market Offering [Member] | Retained Earnings [Member] | At the Market Offering [Member] | Total |
Beginning balance at Dec. 31, 2017 | $ 15,416 | $ 53,315,772 | $ 1,235,093 | $ 54,566,281 | ||||
Beginning balance (in shares) at Dec. 31, 2017 | 15,415,737 | |||||||
Stock based compensation | $ 21 | 29,229 | 0 | 29,250 | ||||
Dividends paid | 0 | 0 | (4,935,365) | (4,935,365) | ||||
Net income | 0 | 0 | 6,134,615 | 6,134,615 | ||||
Balance at Sep. 30, 2018 | $ 15,437 | 53,345,001 | 2,434,343 | 55,794,781 | ||||
Balance (in shares) at Sep. 30, 2018 | 15,415,737 | |||||||
Beginning balance at Jun. 30, 2018 | $ 15,416 | 53,315,772 | 2,180,618 | 55,511,806 | ||||
Beginning balance (in shares) at Jun. 30, 2018 | 15,415,737 | |||||||
Stock based compensation | $ 21 | 29,229 | 0 | 29,250 | ||||
Dividends paid | 0 | 0 | (1,708,939) | (1,708,939) | ||||
Net income | 0 | 0 | 1,962,664 | 1,962,664 | ||||
Balance at Sep. 30, 2018 | $ 15,437 | 53,345,001 | 2,434,343 | 55,794,781 | ||||
Balance (in shares) at Sep. 30, 2018 | 15,415,737 | |||||||
Beginning balance at Dec. 31, 2018 | $ 15,439 | 53,192,859 | (405,483) | 52,802,815 | ||||
Beginning balance (in shares) at Dec. 31, 2018 | 15,438,621 | |||||||
Sale of common stock | $ 4,333 | $ 2,300 | $ 19,832,267 | 10,668,202 | $ 0 | 0 | $ 19,836,600 | $ 10,670,502 |
Sale of common stock (in shares) | 4,333,297 | 2,300,000 | 4,340,456 | 2,300,000 | ||||
Exercise of warrants | $ 16 | 82,019 | 0 | $ 82,035 | ||||
Exercise of warrants (in shares) | 16,407 | |||||||
Stock based compensation | $ 0 | 12,327 | 0 | 12,327 | ||||
Dividends paid | 0 | 0 | (4,403,181) | (4,403,181) | ||||
Net income | 0 | 0 | 5,254,435 | 5,254,435 | ||||
Balance at Sep. 30, 2019 | $ 22,088 | 83,787,674 | 445,771 | 84,255,533 | ||||
Balance (in shares) at Sep. 30, 2019 | 22,088,325 | |||||||
Beginning balance at Jun. 30, 2019 | $ 18,906 | 68,658,030 | 739,137 | 69,416,073 | ||||
Beginning balance (in shares) at Jun. 30, 2019 | 18,905,586 | |||||||
Sale of common stock | $ 866 | $ 2,300 | $ 4,375,320 | 10,668,202 | $ 0 | 0 | $ 4,376,186 | 10,670,502 |
Sale of common stock (in shares) | 866,332 | 2,300,000 | ||||||
Exercise of warrants | $ 16 | 82,019 | 0 | 82,035 | ||||
Exercise of warrants (in shares) | 16,407 | |||||||
Stock based compensation | $ 0 | 4,103 | 0 | 4,103 | ||||
Dividends paid | 0 | 0 | (2,348,452) | (2,348,452) | ||||
Net income | 0 | 0 | 2,055,086 | 2,055,086 | ||||
Balance at Sep. 30, 2019 | $ 22,088 | $ 83,787,674 | $ 445,771 | $ 84,255,533 | ||||
Balance (in shares) at Sep. 30, 2019 | 22,088,325 |
STATEMENTS OF CASH FLOW
STATEMENTS OF CASH FLOW | 9 Months Ended | |
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 5,254,435 | $ 6,134,615 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of deferred financing costs | 159,872 | 90,165 |
Depreciation expense | 44,286 | 20,302 |
Stock based compensation | 12,327 | 29,250 |
Gain on sale of real estate | (20,076) | (119,666) |
Abandonment of office furniture | 12,000 | 0 |
Costs in connection with termination of line of credit | 439,446 | 0 |
(Increase) decrease in: | ||
Escrow deposits | 12,813 | 111,189 |
Interest and fees receivable | (454,487) | (916,672) |
Other receivables | (67,237) | (150,520) |
Due from borrowers | 2,122,939 | (308,866) |
Prepaid expenses | (22,305) | (23,093) |
Deposits on property | (37,881) | 0 |
(Decrease) increase in: | ||
Due to note purchaser | (176,619) | (723,478) |
Accrued interest | 3,323 | 117,128 |
Accrued expenses | (159,512) | (295,734) |
Deferred revenue | 9,261 | 44,265 |
Advances from borrowers | 180,889 | (243,387) |
Total adjustments | 2,059,039 | (2,369,117) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 7,313,474 | 3,765,498 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sale of real estate owned | 362,136 | 672,538 |
Acquisitions of and improvements to real estate owned | (443,217) | (104,799) |
Purchase of property and equipment | (196,603) | (331,386) |
Principal disbursements for mortgages receivable | (42,163,704) | (37,278,346) |
Principal collections on mortgages receivable | 27,917,331 | 20,958,280 |
NET CASH USED FOR INVESTING ACTIVITIES | (14,524,057) | (16,083,713) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from notes sold to shareholder | 1,017,000 | 0 |
Repayment of notes sold to shareholder | (2,217,000) | 0 |
Proceeds from line of credit | 42,720,829 | 61,067,401 |
Repayment of line of credit | (69,939,952) | (43,648,867) |
Dividends paid | (7,027,746) | (4,935,365) |
Pre-offering costs incurred | 0 | (853) |
Financing costs incurred | (6,836) | (566,886) |
Proceeds from mortgage payable | 795,000 | 0 |
Repayment of mortgage payable | (297,837) | (7,535) |
Proceeds from notes payable, net | 68,634 | 0 |
Proceeds from issuance of common stock | 30,736,148 | 0 |
Cost associated with the issuance of common stock | (147,002) | 0 |
Proceeds from issuance of bonds | 23,663,000 | 0 |
Cost associated with the issuance of notes | (1,307,571) | 0 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 18,056,667 | 11,907,895 |
NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH | 10,846,084 | (410,320) |
CASH AND RESTRICTED CASH- BEGINNING OF YEAR | 158,859 | 954,223 |
CASH AND RESTRICTED CASH - END OF PERIOD | 11,004,943 | 543,903 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION | ||
Taxes paid | 0 | 19,000 |
Interest paid | 472,329 | $ 1,008,747 |
Noncash Investing and Financing Items [Abstract] | ||
Dividends declared and payable | $ 0 |
STATEMENTS OF CASH FLOW (Parent
STATEMENTS OF CASH FLOW (Parenthetical) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
STATEMENTS OF CASH FLOW | ||
Notes Issued | $ 21,433 | |
Payments To Acquire Real Estate1 | $ 2,265,927 | 2,369,196 |
Reversal Of Previously Accrued Capitalized Costs | $ 6,212 | |
Capital Expenditures Incurred but Not yet Paid | 13,005 | |
Reclassification of mortgage receivable | 879,457 | |
Remaining balance of mortgages receivable | $ 0 |
The Company
The Company | 9 Months Ended |
Sep. 30, 2019 | |
The Company | |
The Company | 1. The Company Sachem Capital Corp. (the “Company”), a New York corporation, specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company offers short term ( i.e. , one to three years), secured, non-banking loans (sometimes referred to as “hard money” loans) to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. 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 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 its principals and/or personal guarantees by the principals of the borrower. The Company does not lend to owner-occupants. The Company’s primary underwriting criteria is a conservative loan-to-value ratio. In addition, the Company has made and may continue to make opportunistic real estate acquisitions. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Unaudited Financial Statements The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for audited financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the operating results to be attained in the entire fiscal year. Use of Estimates The preparation of 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. Management bases these estimates on (a) various assumptions that take into account the Company’s past experience, (b) the Company’s projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and mortgage loans. The Company maintains its cash with one major financial institution. Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation up to $250,000. Credit risks associated with the Company’s mortgage loan portfolio and related interest receivable are described in Note 3, below, entitled “Mortgage Loans Receivable.” Impairment of long-lived assets The Company continually monitors events or changes in circumstances that could indicate that the carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the undiscounted cash flows is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets. Income Taxes The Company believes it qualifies as a Real Estate Investment Trust (REIT) for federal income tax purposes and elected to be taxed as a REIT when it filed its 2017 federal income tax return. As a REIT, the Company is required to distribute at least 90% of its taxable income to its shareholders on an annual basis. The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended, relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distributions requirements applicable to REITs and the diversity of ownership of its outstanding common shares. So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S. federal income tax on its taxable income distributed to its shareholders. However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification. The Company has adopted the provisions of FASB ASC Topic 740‑10 “Accounting for Uncertainty in Income Taxes,” which prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and disclosure required. An entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in interest expense. The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of September 30, 2019. Property and Equipment Land and building acquired in December 2016 to serve as the Company’s office facilities is stated at cost. The building is being depreciated using the straight-line method over its estimated useful life of 40 years. Expenditures for repairs and maintenance are charged to expense as incurred. The Company relocated its entire operations to this property in March 2019. Revenue Recognition Interest income from the Company's mortgage loan portfolio is earned over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company's mortgage loans provide for interest to be paid monthly in arrears. Origination fee revenue is recognized ratably over the loan period in accordance with ASC 310. Deferred Financing Costs Costs incurred in connection with the Company’s revolving credit facilities, as discussed in Note 5 below, were amortized over the term of the applicable facility using the straight-line method. Unamortized deferred financing costs relating to the Webster credit facility were expensed when the liability was paid in full on June 25, 2019 and the facility was terminated. Fair Value of Financial Instruments The carrying amounts of the Bankwell mortgage, the mortgages receivable and the unsecured unsubordinated fixed rate notes payable approximates their respective fair values due to the relative short-term nature of such instruments. (See Notes 3, 5 and 6 below.) Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260, “Earnings Per Share.” Under ASC 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income. Recent Accounting Pronouncements In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The amendments in this ASU require that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The adoption of this guidance required the Company to reconcile changes in cash, cash equivalents, and restricted cash on the consolidated statement of cash flows. As a result, the Company no longer presents transfers between cash and cash equivalents and restricted cash in the statement of cash flows. The Company adopted this ASU in 2018. In May 2019, the FASB issued ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.” This ASU allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The Company plans to adopt both ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. Management does not believe that any other recently issued, but not yet effected, accounting standards if currently adopted would have a material effect on the Company’s financial statements. |
Mortgage Loans Receivable ; Due
Mortgage Loans Receivable ; Due from Borrowers | 9 Months Ended |
Sep. 30, 2019 | |
Mortgage Loans Receivable ; Due from Borrowers | |
Mortgage Loans Receivable ; Due from Borrowers | 3. Mortgage Loans Receivable; Due from Borrowers The Company offers secured, non-banking loans to real estate owners and investors (also known as "hard money" loans) to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The loans are secured by first mortgage liens on one or more properties owned by the borrower or related parties. In addition, each mortgage loan is personally guaranteed by the borrower or its principals, which guarantees may be collaterally secured as well. The mortgage loans are generally for a term of one to three years. The mortgage loans are initially recorded and carried thereafter, in our financial statements, at cost. Most of the mortgage loans provide for monthly payments of interest only (in arrears) during the term of the loan and a "balloon" payment of the principal on the maturity date. For the nine-month periods ended September 30, 2019 and 2018, the aggregate amounts of loans funded by the Company were $42,163,704 and $37,278,346, respectively, offset by principal repayments of $27,917,331 and $20,958,280, respectively. At September 30, 2019, the Company’s mortgage loan portfolio included loans ranging in size from approximately $8,000 to $2,900,000, with an average loan size of $206,000, and with stated interest rates ranging from 5.0% to 13.0% and a default interest rate for non-payment of 18%. At September 30, 2019, no single borrower, or affiliated group of borrowers, accounted for more than 10% of the total outstanding balance of the Company’s mortgage loan portfolio. At the request of the borrower, the Company may extend the term of a mortgage loan provided the loan satisfies the Company’s underwriting requirements at the time of the extension. A mortgage loan that is extended is treated as a new loan and the borrower is required to pay all fees associated with the funding of a new loan, including origination fees. Credit Risk Credit risk profile of the Company’s mortgage loan portfolio as of September 30, 2019 and December 31, 2018 is as follows: Total Outstanding Residential Commercial Land Mixed Use Mortgages September 30, 2019 $ 61,086,582 $ 20,548,936 $ 6,461,394 $ 923,626 $ 89,020,538 December 31, 2018 $ 52,980,472 $ 19,250,618 $ 5,638,113 $ 1,021,907 $ 78,891,110 The following are the maturities of mortgage loans receivable as of September 30: 2019 $ 20,820,611 2020 50,701,366 2021 10,007,796 2022 7,490,765 Total $ 89,020,538 At September 30, 2019, of the 432 mortgage loans in the Company’s mortgage loan portfolio, sixteen (16) have been referred to counsel for collection and are currently the subject of foreclosure proceedings, of which eight (8) had already been subject to foreclosure proceeding on July 1, 2019. The aggregate outstanding principal balance and the accrued but unpaid interest as of September 30, 2019 on these sixteen loans was approximately $7.9 million. At September 30, 2018, of the 395 mortgage loans in the Company’s portfolio, ten (10) had been referred to counsel for collection and were the subject of foreclosure proceedings. The aggregate outstanding principal balance and the accrued but unpaid interest as of September 30, 2018 on these ten loans was approximately $5.2 million. In the case of each of these loans, at September 30, 2019 and 2018, the Company believes that the value of the collateral exceeds the outstanding balance on such loan. |
Real Estate Owned
Real Estate Owned | 9 Months Ended |
Sep. 30, 2019 | |
Real Estate Owned | |
Real Estate Owned | 4. Real Estate Owned Property purchased for rental or acquired through foreclosure are included on the balance sheet as real estate owned. As of September 30, 2019, and December 31, 2018, real estate owned totaled $5,310,523 and $2,943,438, respectively, with no valuation allowance. As of September 30, 2019, real estate owned included $906,617 of real estate held for rental and $4,403,906 of real estate held for sale. As of December 31, 2018, real estate owned included $887,918 of real estate held for rental and $2,055,520 of real estate held for sale. |
Line of Credit and Mortgage Pay
Line of Credit and Mortgage Payable | 9 Months Ended |
Sep. 30, 2019 | |
Line of Credit and Mortgage Payable | |
Line of Credit and Mortgage Payable | 5. Line of Credit and Mortgage Payable Line of Credit Prior to May 11, 2018, the Company maintained a $20 million revolving credit facility with Bankwell Bank (“Bankwell”). The Bankwell credit facility was secured by substantially all the Company’s assets. Interest on the amounts outstanding accrued at a rate equal to the greater of (x) 5.5% and (y) the three-month LIBOR Rate plus 4.50%. At May 11, 2018 the outstanding balance under the Bankwell credit facility was $18,512,470 and was accruing interest at the rate of 6.79% per annum. Effective May 11, 2018 (the “Closing Date”), the Company entered into a Credit and Security Agreement with Webster Business Credit Corporation (“WBCC”), Bankwell Bank and Berkshire Bank (collectively, the “Lenders”) regarding a new $35 million revolving credit facility (the “Webster Facility”) to replace the Bankwell credit facility. The Webster Facility was secured by a first priority lien on all the Company’s assets, including its mortgage loan portfolio. Interest on the outstanding balance accrued at a rate equal to the 30-day LIBOR rate plus 4.00% per annum. All amounts outstanding under the Webster Facility, including principal, accrued interest and other fees and charges, were to be due and payable May 11, 2022. On June 25, 2019, the entire outstanding balance on the Webster Facility, including principal, accrued but unpaid interest and other fees, in the aggregate amount of $19.8 million, was paid in full and the Webster Facility was terminated. In connection with the termination of the Webster Facility, the Company expensed non-recurring charges of $779,641, of which $439,446 constituted the write-off of non-cash deferred financing costs. Mortgage Payable Effective March 29, 2019, the Company refinanced a $310,000 mortgage loan it obtained from Bankwell in February 2017 with a new mortgage loan from Bankwell Bank in the principal amount of $795,000 bearing interest at the rate of 5.06% per annum and maturing on March 31, 2029 (the “New Bankwell Mortgage Loan”). Beginning May 2019, principal and interest on the New Bankwell Mortgage Loan is payable, in arrears, in monthly installments of $4,710. The New Bankwell Mortgage Loan is secured by a first mortgage lien on the property located at 698 Main Street, Branford, Connecticut, which, since March 2019, serves as the Company’s principal place of business. Principal payments on the New Bankwell Mortgage Loan are due as follows: Year ending December 31, 2019 $ 11,025 2020 17,249 2021 18,142 2022 19,082 2023 20,070 2024 and thereafter 702,580 Total $ 788,148 |
Financing Transactions
Financing Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Financing Transactions | |
Financing Transactions | 6. Financing Transactions During the nine-month period ended September 30, 2019, the Company generated approximately $55.7 million of gross proceeds from the sale of its securities as follows: (i) $20,465,203 from the sale of 4,340,456 common shares in an “at-the-market” offerings, (ii) $23,663,000 from the sale of its 7.125% unsecured, unsubordinated notes due June 30, 2024 (the “Notes”), (iii) $ 82,035 from the exercise of 16,407 warrants, and (iv) $11,500,000 from the sale of 2,300,000 common shares from an equity offering In total, approximately $31.5 million of the net proceeds from these offerings were used primarily to pay-off the Webster Facility on an ongoing basis until fully paid on June 25, 2019, with the balance used as working capital and for general corporate purposes. The Notes were sold in an underwritten public offering. The Notes were issued in denomination of $25.00 each and are listed on the NYSE American and trade under the symbol “SCCB”. Interest on the Notes commenced accruing on June 25, 2019. The accrued interest is payable quarterly in cash, in arrears, on March 30, June 30, September 30 and December 30, commencing September 30, 2019. The Notes mature and the entire principal amount is due June 30, 2024. So long as the Notes are outstanding, the Company is prohibited from making distributions in excess of 90% of its taxable income, incurring any additional indebtedness or purchasing any shares of its capital stock unless it has an “Asset Coverage Ratio” of at least 150% after giving effect to the payment of such dividend, the incurrence of such indebtedness or the application of the net proceeds, as the case may be. The Company may redeem the Notes, in whole or in part, without premium or penalty, at any time after June 25, 2021 upon at least 30 days prior written notice to the holders of the Notes. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption. The Notes are reflected on the Company’s September 30, 2019 balance sheet net of deferred financing costs in the amount of approximately $1.2 million. |
Other income
Other income | 9 Months Ended |
Sep. 30, 2019 | |
Other income | |
Other income | 7. Other income Other income consists of the following: Three Months Nine Months ended September 30, ended September 30, 2019 2018 2019 2018 Borrower charges $ 130,871 $ 23,579 $ 163,364 $ 164,296 Lender fees 51,426 26,955 132,397 205,222 In-house legal fees 36,500 7,478 108,200 58,728 Modification and extension fees 86,722 115,544 155,976 194,416 Interest income from investments 28,148 — 28,148 — Other income 20,004 1,715 62,117 52,168 Total $ 353,671 $ 175,271 $ 650,202 $ 674,830 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies Origination Fees Loan origination fees range from 2%‑5% of the original loan principal and, generally, are payable at the time the loan is funded. These payments are amortized for financial statement purposes over the life of the loan and will be recorded as income as follows: Original maturities of deferred revenue are as follows as of September 30: 2019 $ 2020 581,541 2021 117,145 2022 35,783 Total $ 1,067,667 If a mortgage loan is paid in full prior to its stated maturity date, the balance of any unamortized deferred revenue is recognized in full. Unfunded Commitments At September 30, 2019, the Company is committed to future fundings with respect to existing mortgage loans in an amount equal to $7,329,025 subject to satisfaction by the borrower of the conditions set forth in the note and related mortgage. Other In the normal course of its business, the Company is named as a party-defendant in various legal proceedings because it is a mortgagee having an interest in real property that is the subject of a foreclosure proceeding, usually resulting from unpaid property taxes. The Company actively monitors these actions and, in all cases, the Company believes that the fair market value of the property subject to foreclosure is in excess of the sum of the unpaid balance of the loan, accrued but unpaid interest and unpaid property taxes, if any. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions | |
Related Party Transactions | 9. Related Party Transactions Until March 11, 2019, the Company leased office space, on a month-to-month basis, in a building owned by Union News of New Haven, Inc., an entity that is controlled and 20%-owned by Jeffrey C. Villano, the Company’s co-CEO. Rent and other facility related charges paid by the Company to Union News for the nine- and three-month periods ended September 30, 2019 were $4,500 and $-0-, respectively, and for the nine- and three-month periods ended June 30, 2018 were $9,000 and $4,500, respectively. In March 2019, the Company moved to its operations to a new Company-owned building. Accordingly, rental payments are no longer due to JJV. Prior to the Exchange, from time to time, SCP would lend funds to JJV (the “JJV Loans”), which JJV would then use to acquire troubled assets from third parties who were not existing SCP borrowers. Those properties are then mortgaged to secure the JJV Loans. As part of the Exchange, the Company acquired the notes evidencing these loans from SCP. The principal balance of the JJV Loans at September 30, 2019 was $-0-, compared to $879,457 at December 31, 2018. During the quarter ended September 30, 2019, both of the JJV Loans were assigned to the Company so that the underlying borrower is directly liable to the Company. Interest earned on these mortgage loans for the three and nine months ended September 30, 2019 was $5,812 and $40,686, respectively. For the three- and nine-month periods ended September 30, 2018 interest payments on the JJV Loans were $26,384 and $85,388, respectively. In 2018 the Company sold two notes, having an aggregate original principal amount of $1,717,000, to a shareholder at par. In the first quarter of 2019, the Company sold a third note, having an aggregate original principal amount of $500,000, to the same shareholder at par. All three notes are secured by commercial properties. The Company continued to service the notes on behalf of the purchaser until paid. In December 2018, the Company reacquired one of the notes, having an original principal amount of $1,200,000, and in 2019 reacquired the other two notes, having an aggregate principal amount, $1,017,000. The balance owed to the purchaser for the notes, $1,200,000 at December 31, 2018, is characterized as due to shareholder on the Company’s balance sheets for the relevant periods. On July 26, 2019 all principal and interest due to the shareholder were paid in full. At September 30, 2019 and December 31, 2018, amounts owed by JJV to the Company were $22,794 and $22,977, respectively, and is reflected as other receivables on the Company’s balance sheet. For the nine months ended September 30, 2019 and 2018, the wife of one of our executive officers was paid $75,000 and $56,250, respectively, for accounting and financial reporting services provided to the Company. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 10. Stock-Based Compensation On October 27, 2016, the Company adopted the 2016 Equity Compensation Plan (the “Plan”), the purpose of which is to align the interests of the Company’s officers, other employees, advisors and consultants or any subsidiary, if any, with those of the Company’s shareholders and to afford an incentive to such officers, employees, consultants and advisors to continue as such, to increase their efforts on the Company’s behalf and to promote the success of the Company’s business. The basis of participation in the Plan is upon discretionary grants of awards by the Company’s Board of Directors. The Plan is administered by the Compensation Committee. The maximum number of Common Shares reserved for the grant of awards under the Plan is 1,500,000, subject to adjustment as provided in Section 5 of the Plan. The number of securities remaining available for future issuance by the Plan is 1,477,116. Stock based compensation for the three- and nine-month periods ended September 30, 2019 was $4,107 and $12,321, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events | |
Subsequent Events | 11. Subsequent Events On October 22, 2019 the Company paid a dividend of $0.12 per common share, or $2,654,076 in the aggregate. On October 3, 2019, the Company’s board of directors authorized the grant of 2,500 common shares to each of its independent directors, of which 625 shares vested immediately upon grant and 625 shares will vest on each of October 4, 2020, 2021 and 2022 (each a “Vesting Date”) unless the director resigns or is removed for “cause” prior to the Vesting Date. The shares, 7,500 in the aggregate, were issued under the Plan. In addition, each independent director entered into a Restricted Stock Agreement with the Company with respect to the 1,875 restricted shares granted to such director. From October 1 through November 13, 2019, the Company sold 14,317 common shares through its at-the-market offering facility, realizing gross proceeds of $68,006. On or about October 7, 2019 the Company filed an amendment to its certificate of incorporation increasing the number of its authorized common shares, par value $0.001 per share, from 50,000,000 to 100,000,000. The amendment was approved by shareholders at the Company’s 2019 Annual Meeting of Shareholders held on October 3, 2019. On November 7, 2019, the Company consummated the sale of $30.0 million aggregate principal amount of its 6.875% unsecured unsubordinated notes due December 30, 2024 (the “November 2019 Notes”). Interest on the November 2019 Notes is payable quarterly in arrears on each March 30, June 30, September 30 and December 30 that they are outstanding beginning December 30, 2019. The Company has the right to prepay the November 2019 Notes, in whole or in part, at any time on or after November 7, 2021. Pending their use, the net proceeds from the offering have been invested in short-term certificates of deposit. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Significant Accounting Policies | |
Unaudited Financial Statements | Unaudited Financial Statements The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for audited financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the operating results to be attained in the entire fiscal year. |
Use of Estimates | Use of Estimates The preparation of 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. Management bases these estimates on (a) various assumptions that take into account the Company’s past experience, (b) the Company’s projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and mortgage loans. The Company maintains its cash with one major financial institution. Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation up to $250,000. Credit risks associated with the Company’s mortgage loan portfolio and related interest receivable are described in Note 3, below, entitled “Mortgage Loans Receivable.” |
Impairment of long-lived assets | Impairment of long-lived assets The Company continually monitors events or changes in circumstances that could indicate that the carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the undiscounted cash flows is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets. |
Income Taxes | Income Taxes The Company believes it qualifies as a Real Estate Investment Trust (REIT) for federal income tax purposes and elected to be taxed as a REIT when it filed its 2017 federal income tax return. As a REIT, the Company is required to distribute at least 90% of its taxable income to its shareholders on an annual basis. The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended, relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distributions requirements applicable to REITs and the diversity of ownership of its outstanding common shares. So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S. federal income tax on its taxable income distributed to its shareholders. However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification. The Company has adopted the provisions of FASB ASC Topic 740‑10 “Accounting for Uncertainty in Income Taxes,” which prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and disclosure required. An entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in interest expense. The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of September 30, 2019. |
Property and Equipment | Property and Equipment Land and building acquired in December 2016 to serve as the Company’s office facilities is stated at cost. The building is being depreciated using the straight-line method over its estimated useful life of 40 years. Expenditures for repairs and maintenance are charged to expense as incurred. The Company relocated its entire operations to this property in March 2019. |
Revenue Recognition | Revenue Recognition Interest income from the Company's mortgage loan portfolio is earned over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company's mortgage loans provide for interest to be paid monthly in arrears. Origination fee revenue is recognized ratably over the loan period in accordance with ASC 310. |
Deferred Financing Costs | Deferred Financing Costs Costs incurred in connection with the Company’s revolving credit facilities, as discussed in Note 5 below, were amortized over the term of the applicable facility using the straight-line method. Unamortized deferred financing costs relating to the Webster credit facility were expensed when the liability was paid in full on June 25, 2019 and the facility was terminated. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Bankwell mortgage, the mortgages receivable and the unsecured unsubordinated fixed rate notes payable approximates their respective fair values due to the relative short-term nature of such instruments. (See Notes 3, 5 and 6 below.) |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260, “Earnings Per Share.” Under ASC 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” The amendments in this ASU require that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The adoption of this guidance required the Company to reconcile changes in cash, cash equivalents, and restricted cash on the consolidated statement of cash flows. As a result, the Company no longer presents transfers between cash and cash equivalents and restricted cash in the statement of cash flows. The Company adopted this ASU in 2018. In May 2019, the FASB issued ASU 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief.” This ASU allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The Company plans to adopt both ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements. Management does not believe that any other recently issued, but not yet effected, accounting standards if currently adopted would have a material effect on the Company’s financial statements. |
Mortgage Loans Receivable ; D_2
Mortgage Loans Receivable ; Due from Borrowers (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Mortgage Loans Receivable ; Due from Borrowers | |
Schedule of credit risk profile | Credit risk profile of the Company’s mortgage loan portfolio as of September 30, 2019 and December 31, 2018 is as follows: Total Outstanding Residential Commercial Land Mixed Use Mortgages September 30, 2019 $ 61,086,582 $ 20,548,936 $ 6,461,394 $ 923,626 $ 89,020,538 December 31, 2018 $ 52,980,472 $ 19,250,618 $ 5,638,113 $ 1,021,907 $ 78,891,110 |
Schedule of maturities of mortgage loans receivable | The following are the maturities of mortgage loans receivable as of September 30: 2019 $ 20,820,611 2020 50,701,366 2021 10,007,796 2022 7,490,765 Total $ 89,020,538 |
Line of Credit and Mortgage P_2
Line of Credit and Mortgage Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Line of Credit and Mortgage Payable | |
Schedule of principal payments | Principal payments on the New Bankwell Mortgage Loan are due as follows: Year ending December 31, 2019 $ 11,025 2020 17,249 2021 18,142 2022 19,082 2023 20,070 2024 and thereafter 702,580 Total $ 788,148 |
Other income (Tables)
Other income (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Other income | |
Schedule of other income | Other income consists of the following: Three Months Nine Months ended September 30, ended September 30, 2019 2018 2019 2018 Borrower charges $ 130,871 $ 23,579 $ 163,364 $ 164,296 Lender fees 51,426 26,955 132,397 205,222 In-house legal fees 36,500 7,478 108,200 58,728 Modification and extension fees 86,722 115,544 155,976 194,416 Interest income from investments 28,148 — 28,148 — Other income 20,004 1,715 62,117 52,168 Total $ 353,671 $ 175,271 $ 650,202 $ 674,830 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies | |
Schedule of original maturities of deferred revenue | Original maturities of deferred revenue are as follows as of September 30: 2019 $ 2020 581,541 2021 117,145 2022 35,783 Total $ 1,067,667 |
The Company (Details)
The Company (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Minimum [Member] | |
Debt term (in years) | 1 year |
Maximum [Member] | |
Debt term (in years) | 3 years |
Significant Accounting Polici_3
Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Cash, FDIC Insured Amount | $ 250,000 |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 90.00% |
Land and Building [Member] | |
Property, Plant and Equipment, Useful Life | 40 years |
Mortgage Loans Receivable ; D_3
Mortgage Loans Receivable ; Due from Borrowers (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | $ 89,020,538 | $ 78,891,110 |
Land [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | 6,461,394 | 5,638,113 |
Residential Mortgage [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | 61,086,582 | 52,980,472 |
Commercial Loan [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | 20,548,936 | 19,250,618 |
Mixed Use [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | $ 923,626 | $ 1,021,907 |
Mortgage Loans Receivable ; D_4
Mortgage Loans Receivable ; Due from Borrowers - Maturities of mortgage loans (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Mortgage Loans Receivable ; Due from Borrowers | ||
2019 | $ 20,820,611 | |
2020 | 50,701,366 | |
2021 | 10,007,796 | |
2022 | 7,490,765 | |
Total | $ 89,020,538 | $ 78,891,110 |
Mortgage Loans Receivable ; D_5
Mortgage Loans Receivable ; Due from Borrowers - Additional information (Details) | Jul. 01, 2019loan | Sep. 30, 2019USD ($)loan | Sep. 30, 2018USD ($)loan | Dec. 31, 2018USD ($) |
Payments to Acquire Mortgage Receivable | $ 42,163,704 | $ 37,278,346 | ||
Mortgage Loans on Real Estate, Face Amount of Mortgages | $ 206,000 | |||
Mortgage Loans on Real Estate, Interest Rate | 18.00% | |||
Proceeds from Collection of Mortgages Receivable | $ 27,917,331 | $ 20,958,280 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | $ 89,020,538 | $ 78,011,653 | ||
Mortgage loan portfolio number of loans | loan | 432 | 395 | ||
Mortgage Concentration Risk [Member] | ||||
Concentration Risk, Percentage | 10.00% | |||
Mortgages [Member] | ||||
Proceeds from Collection of Mortgages Receivable | $ 27,917,331 | $ 20,958,280 | ||
Minimum [Member] | ||||
Debt term (in years) | 1 year | |||
Mortgage Loans on Real Estate, Face Amount of Mortgages | $ 8,000 | |||
Mortgage Loans on Real Estate, Interest Rate | 5.00% | |||
Maximum [Member] | ||||
Debt term (in years) | 3 years | |||
Mortgage Loans on Real Estate, Face Amount of Mortgages | $ 2,900,000 | |||
Mortgage Loans on Real Estate, Interest Rate | 13.00% | |||
Sixteen Mortgage Loans [Member] | ||||
Mortgage loan portfolio number of loans in process of foreclosure | loan | 8 | 16 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Foreclosure | $ 7,900,000 | |||
Ten Mortgage Loans [Member] | ||||
Mortgage loan portfolio number of loans in process of foreclosure | loan | 10 | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Foreclosure | $ 5,200,000 |
Real Estate Owned (Details)
Real Estate Owned (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Real Estate Owned | ||
Real Estate Investment Property, at Cost | $ 5,310,523 | $ 2,943,438 |
Rental Properties | 906,617 | 887,918 |
Real Estate Held-for-sale | $ 4,403,906 | $ 2,055,520 |
Line of Credit and Mortgage P_3
Line of Credit and Mortgage Payable - Principal payments on the Bankwell mortgage loan (Details) | Sep. 30, 2019USD ($) |
Line of Credit and Mortgage Payable | |
Year ending December 31, 2019 | $ 11,025 |
2020 | 17,249 |
2021 | 18,142 |
2022 | 19,082 |
2023 | 20,070 |
2024 and thereafter | 702,580 |
Total | $ 788,148 |
Line of Credit and Mortgage P_4
Line of Credit and Mortgage Payable - Additional information (Details) - USD ($) | Jun. 25, 2019 | May 11, 2018 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Mar. 29, 2019 | Dec. 31, 2018 | May 10, 2018 |
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | ||||||||
Long-term Line of Credit | $ 0 | $ 27,219,123 | |||||||
Proceeds from Lines of Credit | 42,720,829 | $ 61,067,401 | |||||||
Repayments of Lines of Credit | $ 19,800,000 | 69,939,952 | 43,648,867 | ||||||
Non-recurring charges | 779,641 | $ 0 | (779,641) | 0 | |||||
Write-off of non-cash deferred financing costs | $ 439,446 | 439,446 | 0 | ||||||
Amortization Costs | $ 159,872 | $ 90,165 | |||||||
Mortgages [Member] | |||||||||
Debt Instrument, Face Amount | $ 795,000 | $ 310,000 | |||||||
Debt Instrument, Periodic Payment | $ 4,710 | ||||||||
Revolving Credit Facility [Member] | |||||||||
Proceeds from Issuance of Long-term Debt | $ 35,000,000 | ||||||||
Bankwell Bank[ [Member] | Line of Credit [Member] | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.79% | 5.50% | |||||||
Long-term Line of Credit | $ 18,512,470 | ||||||||
Debt Instrument, Basis Spread on Variable Rate | 5.06% | 4.50% | |||||||
Bankwell Bank[ [Member] | Revolving Credit Facility [Member] | |||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 20,000,000 |
Financing Transactions (Details
Financing Transactions (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | May 11, 2018 | |
Financing Transactions [Line items] | |||
Gross proceeds from sale of securities | $ 55,700,000 | ||
Proceeds from sale of commons stock | $ 11,500,000 | ||
Sale of common stock (in shares) | 2,300,000 | ||
Gross proceeds from warrants | $ 82,035 | ||
Warrants | 16,407 | ||
Interest rate (as a percent) | 4.00% | ||
Net proceeds from sale of securities | $ 31,500,000 | ||
Debt Issuance Costs, Net | 38,351 | $ 553,597 | |
At the Market Offering [Member] | |||
Financing Transactions [Line items] | |||
Proceeds from sale of commons stock | $ 20,465,203 | ||
Sale of common stock (in shares) | 4,340,456 | ||
Unsecured Unsubordinated Notes Due June 30, 2024 [Member] | |||
Financing Transactions [Line items] | |||
Proceeds from sale of unsecured, unsubordinated notes | $ 23,663,000 | ||
Interest rate (as a percent) | 7.125% | ||
Notes issued denomination | $ 25 | ||
Threshold percentage of taxable income to prohibit distribution | 90.00% | ||
Threshold asset coverage ratio | 150.00% | ||
Period of written notice to redeem notes without premium or penalty | 30 days | ||
Debt Issuance Costs, Net | $ 1,200,000 |
Other income (Details)
Other income (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Other income | ||||
Borrower charges | $ 130,871 | $ 23,579 | $ 163,364 | $ 164,296 |
Lender fees | 51,426 | 26,955 | 132,397 | 205,222 |
In-house legal fees | 36,500 | 7,478 | 108,200 | 58,728 |
Modification and extension fees | 86,722 | 115,544 | 155,976 | 194,416 |
Interest income on investments | 28,148 | 0 | 28,148 | 0 |
Other income | 20,004 | 1,715 | 62,117 | 52,168 |
Total | $ 353,671 | $ 175,271 | $ 650,202 | $ 674,830 |
Commitments and Contingencies -
Commitments and Contingencies - Original maturities of deferred revenue (Details) | Sep. 30, 2019USD ($) |
Other Commitments [Line Items] | |
Total | $ 7,329,025 |
Deferred Lease Revenue [Member] | |
Other Commitments [Line Items] | |
2019 | 333,198 |
2020 | 581,541 |
2021 | 117,145 |
2022 | 35,783 |
Total | $ 1,067,667 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Other Commitment | $ 7,329,025 |
JJV LLC [Member] | Minimum [Member] | |
Loan Origination Fees On Original Loan Principal, Percentage | 2.00% |
JJV LLC [Member] | Maximum [Member] | |
Loan Origination Fees On Original Loan Principal, Percentage | 5.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Related Party Transaction [Line Items] | |||||||
Repayments of Related Party Debt | $ 2,217,000 | $ 0 | |||||
Payments for Rent | $ 0 | $ 4,500 | 4,500 | 9,000 | |||
Interest Expense, Related Party | 5,812 | $ 26,384 | 40,686 | $ 85,388 | |||
Due to Related Parties | $ 1,200,000 | $ 1,200,000 | |||||
Manager [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Loans and Leases Receivable, Related Parties | 879,457 | 0 | 0 | 879,457 | |||
Due to Officers or Stockholders | 22,977 | $ 22,794 | 22,794 | 22,977 | |||
Investor [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Origination of Notes Receivable from Related Parties | $ 1,200,000 | 1,717,000 | |||||
Jeffrey Villano [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Equity Method Investment, Ownership Percentage | 20.00% | 20.00% | |||||
Wife of Executive Officer [Member] | Accounting and Financial Services [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Related Party Transaction, Expenses from Transactions with Related Party | 75,000 | $ 56,250 | |||||
One Note [Member] | Investor [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Origination of Notes Receivable from Related Parties | $ 500,000 | ||||||
Two Note [Member] | Investor [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Origination of Notes Receivable from Related Parties | $ 1,017,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Oct. 27, 2016 | |
Share-based Compensation | $ 4,107 | $ 29,250 | $ 12,327 | $ 29,250 | |
Two thousand sixteen equity plan [Member] | |||||
Common Stock, Capital Shares Reserved for Future Issuance | 1,500,000 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,477,116 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Nov. 07, 2019 | Oct. 22, 2019 | Oct. 03, 2019 | Nov. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Oct. 04, 2019 | Dec. 31, 2018 | May 11, 2018 |
Subsequent Event [Line Items] | |||||||||
Payments of Ordinary Dividends | $ 7,027,746 | $ 4,935,365 | |||||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | |||||||
Proceeds from Warrant Exercises | $ 82,035 | ||||||||
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | ||||||||
Stock Issued During Period, Shares, New Issues | 2,300,000 | ||||||||
Subsequent Event [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Payments of Ordinary Dividends | $ 2,654,076 | $ 68,006 | |||||||
Proceeds from Warrant Exercises | $ 30,000,000 | ||||||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.12 | ||||||||
Common Stock, Shares Authorized | 50,000,000 | 100,000,000 | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.875% | ||||||||
Stock Issued During Period, Shares, New Issues | 7,500 | 14,317 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 2,500 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 1,875 | ||||||||
Subsequent Event [Member] | Shares vested immediately upon grant [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 625 | ||||||||
Subsequent Event [Member] | Shares will vest on each of October 2020, 2021 and 2022 [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 625 |