Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 08, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-37997 | |
Entity Registrant Name | Sachem Capital Corp. | |
Entity Incorporation, State or Country Code | NY | |
Entity Tax Identification Number | 81-3467779 | |
Entity Address, Address Line One | 698 Main Street, | |
Entity Address, City or Town | Branford | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06405 | |
City Area Code | 203 | |
Local Phone Number | 433-4736 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 40,795,709 | |
Entity Central Index Key | 0001682220 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock | ||
Document and Entity Information | ||
Title of 12(b) Security | Common Shares, par value $.001 per share | |
Trading Symbol | SACH | |
Security Exchange Name | NYSE | |
Notes 7.125 Percent Due 2024 | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.125% Notes due 2024 | |
Trading Symbol | SCCB | |
Security Exchange Name | NYSE | |
Notes 6.875 Percent Due 2024 | ||
Document and Entity Information | ||
Title of 12(b) Security | 6.875% Notes due 2024 | |
Trading Symbol | SACC | |
Security Exchange Name | NYSE | |
Notes 7.75 Percent Due 2025 | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.75% Notes due 2025 | |
Trading Symbol | SCCC | |
Security Exchange Name | NYSE | |
Notes 6.00 Percent Due 2026 | ||
Document and Entity Information | ||
Title of 12(b) Security | 6.00% Notes due 2026 | |
Trading Symbol | SCCD | |
Security Exchange Name | NYSE | |
Notes 6.00 Percent Due 2027 | ||
Document and Entity Information | ||
Title of 12(b) Security | 6.00% Notes due 2027 | |
Trading Symbol | SCCE | |
Security Exchange Name | NYSE | |
Notes 7.125 Percent Due 2027 | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.125% Notes due 2027 | |
Trading Symbol | SCCF | |
Security Exchange Name | NYSE | |
Notes 8.00 Percent Due 2027 | ||
Document and Entity Information | ||
Title of 12(b) Security | 8.00% Notes due 2027 | |
Trading Symbol | SCCG | |
Security Exchange Name | NYSE | |
Series A Preferred Stock | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.75% Series A Cumulative Redeemable Preferred Stock, Liquidation Preference $25.00 per share | |
Trading Symbol | SACHPRA | |
Security Exchange Name | NYSE |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and cash equivalents | $ 35,464,257 | $ 41,938,897 |
Investment securities | 34,351,374 | 60,633,661 |
Mortgages receivable | 448,524,665 | 292,301,209 |
Interest and fees receivable | 5,746,907 | 3,693,645 |
Due from borrowers | 5,055,146 | 3,671,016 |
Real estate owned | 5,615,940 | 6,559,010 |
Investments in partnerships | 22,542,941 | 6,055,838 |
Property and equipment, net | 3,397,812 | 2,172,185 |
Other assets | 1,122,342 | 936,290 |
Total assets | 561,821,384 | 417,961,751 |
Liabilities: | ||
Notes payable (net of deferred financing costs of $8,844,137 and $5,747,387) | 279,557,613 | 160,529,363 |
Repurchase facility | 43,100,146 | 19,087,189 |
Mortgage payable | 750,000 | 750,000 |
Line of credit | 3,542,853 | 33,178,031 |
Accrued dividends payable | 3,927,600 | |
Accounts payable and accrued liabilities | 1,162,170 | 697,403 |
Advances from borrowers | 9,936,828 | 15,066,114 |
Deferred revenue | 4,471,800 | 4,643,490 |
Total liabilities | 342,521,410 | 237,879,190 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Preferred shares - $.001 par value; 5,000,000 shares authorized; 1,903,000 shares of Series A Preferred Stock issued and outstanding | 1,903 | 1,903 |
Common shares - $.001 par value; 200,000,000 shares authorized; 40,080,672 and 32,730,004 issued and outstanding | 40,081 | 32,730 |
Paid-in capital | 222,520,783 | 185,516,394 |
Accumulated other comprehensive loss | (557,541) | (476,016) |
Accumulated deficit | (2,705,252) | (4,992,450) |
Total shareholders' equity | 219,299,974 | 180,082,561 |
Total liabilities and shareholders' equity | $ 561,821,384 | $ 417,961,751 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
BALANCE SHEETS | ||
Deferred financing costs | $ 8,844,137 | $ 5,747,387 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 1,903,000 | 1,903,000 |
Preferred stock, shares outstanding | 1,903,000 | 1,903,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common shares, shares authorized | 200,000,000 | 200,000,000 |
Common shares, shares issued | 40,080,672 | 32,730,004 |
Common shares, shares outstanding | 40,080,672 | 32,730,004 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue: | ||||
Interest income from loans | $ 11,545,748 | $ 6,094,165 | $ 30,490,694 | $ 15,307,692 |
Investment gains, net | 238,225 | 532,163 | 586,166 | 911,005 |
Income from partnership investments | 523,067 | 35,983 | 1,112,560 | 90,225 |
Origination and modification fees, net | 1,669,034 | 1,268,624 | 5,759,650 | 2,788,498 |
Fee and other income | 641,749 | 591,441 | 2,048,921 | 1,851,031 |
Unrealized losses on investment securities | (1,076,836) | (3,607,498) | ||
Total revenue | 13,540,987 | 8,522,376 | 36,390,493 | 20,948,451 |
Operating costs and expenses: | ||||
Interest and amortization of deferred financing costs | 5,974,975 | 2,589,847 | 15,083,228 | 7,541,536 |
Compensation, fees and taxes | 1,509,518 | 771,373 | 3,691,421 | 2,175,603 |
Other expenses | 90,899 | 137,607 | 320,231 | 248,581 |
General and administrative expenses | 715,994 | 478,484 | 1,993,812 | 1,369,328 |
Loss (Gain) on sale of real estate | 962 | 94,450 | (121,381) | 111,545 |
Impairment loss | 195,000 | 150,000 | 790,500 | 469,000 |
Total operating costs and expenses | 8,487,348 | 4,221,761 | 21,757,811 | 11,915,593 |
Net income | 5,053,639 | 4,300,615 | 14,632,682 | 9,032,858 |
Preferred stock dividend | (921,766) | (913,791) | (2,765,297) | (932,089) |
Net income attributable to common shareholders | 4,131,873 | 3,386,824 | 11,867,385 | 8,100,769 |
Other comprehensive loss | ||||
Unrealized gain (loss) on investment securities | (131,569) | (500,188) | (81,525) | (611,998) |
Comprehensive income | $ 4,000,304 | $ 2,886,636 | $ 11,785,860 | $ 7,488,771 |
Basic and diluted net income per common share outstanding: | ||||
Basic | $ 0.11 | $ 0.12 | $ 0.32 | $ 0.32 |
Diluted | $ 0.11 | $ 0.12 | $ 0.32 | $ 0.32 |
Weighted average number of common shares outstanding: | ||||
Basic | 38,829,610 | 27,973,249 | 36,723,305 | 24,968,885 |
Diluted | 38,829,852 | 27,977,095 | 36,729,184 | 24,972,837 |
STATEMENTS OF CHANGES IN SHAREH
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Series A Preferred Stock Preferred Stock | Series A Preferred Stock Additional Paid in Capital | Series A Preferred Stock | Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Balance balance at Dec. 31, 2020 | $ 22,125 | $ 83,814,376 | $ (25,992) | $ (2,890,969) | $ 80,919,540 | ||||
Beginning balance (in shares) at Dec. 31, 2020 | 22,124,801 | ||||||||
Issuance of Series A Preferred Stock, net of expenses | $ 1,903 | $ 45,460,723 | $ 45,462,626 | ||||||
Issuance of Series A Preferred Stock, net of expenses (in shares) | 1,903,000 | ||||||||
Issuance of common shares, net of expenses | $ 6,097 | 30,877,831 | 30,883,928 | ||||||
Issuance of common shares, net of expenses (in shares) | 6,096,448 | ||||||||
Stock based compensation | $ 94 | 126,538 | 126,632 | ||||||
Stock based compensation (in shares) | 94,681 | ||||||||
Unrealized loss on marketable securities | (611,998) | (611,998) | |||||||
Dividends paid on Series A Preferred Stock | (932,089) | (932,089) | |||||||
Dividends paid on common shares | (6,123,415) | (6,123,415) | |||||||
Net income | 9,032,858 | 9,032,858 | |||||||
Balance at Sep. 30, 2021 | $ 1,903 | $ 28,316 | 160,279,468 | (637,990) | (913,615) | 158,758,082 | |||
Balance (in shares) at Sep. 30, 2021 | 1,903,000 | 28,315,930 | |||||||
Balance balance at Jun. 30, 2021 | $ 1,700 | $ 26,733 | 147,362,456 | (137,802) | (963,683) | 146,289,404 | |||
Beginning balance (in shares) at Jun. 30, 2021 | 1,700,000 | 26,733,213 | |||||||
Issuance of Series A Preferred Stock, net of expenses | $ 203 | $ 4,849,297 | $ 4,849,500 | ||||||
Issuance of Series A Preferred Stock, net of expenses (in shares) | 203,000 | ||||||||
Issuance of common shares, net of expenses | $ 1,583 | 8,003,496 | 8,005,079 | ||||||
Issuance of common shares, net of expenses (in shares) | 1,582,717 | ||||||||
Stock based compensation | 64,219 | 64,219 | |||||||
Unrealized loss on marketable securities | (500,188) | (500,188) | |||||||
Dividends paid on Series A Preferred Stock | (913,791) | (913,791) | |||||||
Dividends paid on common shares | (3,336,756) | (3,336,756) | |||||||
Net income | 4,300,615 | 4,300,615 | |||||||
Balance at Sep. 30, 2021 | $ 1,903 | $ 28,316 | 160,279,468 | (637,990) | (913,615) | 158,758,082 | |||
Balance (in shares) at Sep. 30, 2021 | 1,903,000 | 28,315,930 | |||||||
Balance balance at Dec. 31, 2021 | $ 1,903 | $ 32,730 | 185,516,394 | (476,016) | (4,992,450) | 180,082,561 | |||
Beginning balance (in shares) at Dec. 31, 2021 | 1,903,000 | 32,730,004 | |||||||
Issuance of common shares, net of expenses | $ 7,177 | 36,647,242 | 36,654,419 | ||||||
Issuance of common shares, net of expenses (in shares) | 7,177,043 | ||||||||
Exercise of warrants | $ 20 | (20) | |||||||
Exercise of warrants (in shares) | 19,658 | ||||||||
Stock based compensation | $ 154 | 357,167 | 357,321 | ||||||
Stock based compensation (in shares) | 153,967 | ||||||||
Unrealized loss on marketable securities | (81,525) | (81,525) | |||||||
Dividends paid on Series A Preferred Stock | (2,765,297) | (2,765,297) | |||||||
Dividends paid on common shares | (9,580,187) | (9,580,187) | |||||||
Net income | 14,632,682 | 14,632,682 | |||||||
Balance at Sep. 30, 2022 | $ 1,903 | $ 40,081 | 222,520,783 | (557,541) | (2,705,252) | 219,299,974 | |||
Balance (in shares) at Sep. 30, 2022 | 1,903,000 | 40,080,672 | |||||||
Balance balance at Jun. 30, 2022 | $ 1,903 | $ 36,756 | 206,973,510 | (425,972) | (1,583,202) | 205,002,995 | |||
Beginning balance (in shares) at Jun. 30, 2022 | 1,903,000 | 36,755,786 | |||||||
Issuance of common shares, net of expenses | $ 3,310 | 15,420,273 | 15,423,583 | ||||||
Issuance of common shares, net of expenses (in shares) | 3,309,886 | ||||||||
Stock based compensation | $ 15 | 127,000 | 127,015 | ||||||
Stock based compensation (in shares) | 15,000 | ||||||||
Unrealized loss on marketable securities | (131,569) | (131,569) | |||||||
Dividends paid on Series A Preferred Stock | (921,766) | (921,766) | |||||||
Dividends paid on common shares | (5,253,923) | (5,253,923) | |||||||
Net income | 5,053,639 | 5,053,639 | |||||||
Balance at Sep. 30, 2022 | $ 1,903 | $ 40,081 | $ 222,520,783 | $ (557,541) | $ (2,705,252) | $ 219,299,974 | |||
Balance (in shares) at Sep. 30, 2022 | 1,903,000 | 40,080,672 |
STATEMENTS OF CASH FLOW
STATEMENTS OF CASH FLOW - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 14,632,682 | $ 9,032,858 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of deferred financing costs and bond discount | 1,664,822 | 839,418 |
Write-off of deferred financing costs | 72,806 | |
Depreciation expense | 66,533 | 61,286 |
Stock based compensation | 357,321 | 126,632 |
Impairment loss | 790,500 | 469,000 |
(Gain) Loss on sale of real estate | (121,381) | 111,545 |
Unrealized loss on investment securities | 3,607,498 | (212,449) |
Loss on sale of investment securities | 148,565 | |
Debt Forgiveness | (257,845) | |
(Increase) decrease in: | ||
Interest and fees receivable | (2,154,704) | (885,380) |
Other assets - other receivables | (418,176) | (361,084) |
Due from borrowers | (1,505,785) | (1,405,352) |
Other assets - prepaid expenses | 153,842 | (14,500) |
(Decrease) increase in: | ||
Accounts payable and accrued liabilities - accrued interest | 431,110 | (3,344) |
Accounts payable and accrued liabilities - accounts payable and accrued expenses | 53,818 | (179,992) |
Deferred revenue | (171,690) | 1,779,960 |
Advances from borrowers | (5,129,286) | 8,201,117 |
Total adjustments | (2,227,013) | 8,341,818 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 12,405,669 | 17,374,676 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of investment securities | (39,715,900) | (160,896,229) |
Proceeds from the sale of investment securities | 62,160,599 | 141,709,658 |
Purchase of interests in investment partnerships, net | (16,487,103) | (1,804,217) |
Proceeds from sale of real estate owned | 1,571,467 | 1,839,977 |
Acquisitions of and improvements to real estate owned, net | (101,168) | (333,435) |
Purchase of property and equipment | (1,292,160) | (817,785) |
Security deposits held | (11,416) | |
Principal disbursements for mortgages receivable | (252,370,675) | (154,810,007) |
Principal collections on mortgages receivable | 95,173,969 | 90,463,016 |
Other assets - costs in connection with SPAC offering | (166,360) | (281,191) |
NET CASH USED FOR INVESTING ACTIVITIES | (151,227,331) | (84,941,629) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net proceeds from (repayment of) line of credit | (29,635,178) | 2,000,511 |
Net proceeds from repurchase facility | 24,012,957 | |
Repayment of mortgage payable | (767,508) | |
Accounts payable and accrued liabilities - principal payments on other notes | (20,161) | (17,184) |
Dividends paid on common shares | (13,507,787) | (8,778,392) |
Dividends paid on Series A Preferred Stock | (2,765,297) | (932,089) |
Financings costs incurred | (450,651) | |
Proceeds from issuance of common shares, net of expenses | 36,654,419 | 30,883,928 |
Proceeds from issuance of Series A Preferred Stock, net of expenses | 45,462,626 | |
Gross proceeds from issuance of fixed rate notes | 122,125,000 | |
Financings costs incurred in connection with fixed rate notes | (4,516,931) | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 132,347,022 | 67,401,241 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (6,474,640) | (165,712) |
CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR | 41,938,897 | 19,408,028 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 35,464,257 | 19,242,316 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION | ||
Interest paid | $ 13,012,805 | $ 6,745,109 |
STATEMENTS OF CASH FLOW (Parent
STATEMENTS OF CASH FLOW (Parenthetical) | Sep. 30, 2022 USD ($) |
STATEMENTS OF CASH FLOW | |
Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable | $ 1,091,348 |
The Company
The Company | 9 Months Ended |
Sep. 30, 2022 | |
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 |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
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 complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2021 and the notes thereto included in the Company’s Annual Report on Form 10-K. 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 its estimates on (a) various assumptions that consider its experience, (b) the Company’s projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could materially differ from those estimates. Cash and Cash Equivalents The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The combined account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. The Company does not believe that the risk is significant. Allowance for Loan Loss The Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, as well as the loan-to-value (LTV) ratio. Based on the analysis, management determines if any provisions for impairment of loans should be made and whether any loan loss reserves are required. Fair Value Measurements The framework for measuring fair value provides a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 are described as follows: Level 1 Level 2 ● ● ● ● If the asset or liability has a specified (i.e., Level 3 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. Land and building acquired in 2021 to serve as the Company’s future corporate headquarters is stated at cost. The building is not currently being depreciated as it is undergoing renovations. Real Estate Owned Real estate owned by the Company is stated at cost and is tested for impairment quarterly. Consolidations The consolidated financial statements of the Company include the accounts of all subsidiaries in which the Company has control over significant operating, financial and investing decisions of the entity. All intercompany accounts and transactions have been eliminated. Impairment of Long-Lived Assets The Company monitors events or changes in circumstances that could indicate 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 undiscounted cash flows are 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. Deferred Financing Costs Costs incurred in connection with the Company’s revolving credit facilities, described in Note 7-Line of Credit, Mortgage Payable and Churchill Facility are, amortized over the term of the applicable facility using the straight-line method. Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 9 - Notes Payable, are being amortized over the term of the respective Notes. Revenue Recognition Interest income from the Company’s loan portfolio is earned over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company’s loans provide for interest to be paid monthly in arrears. The Company, generally, does not accrue interest income on mortgages receivable that are more than 90 days past due or interest charged at default rates. However, interest income not accrued at September 30, 2022 but collected prior to the issuance of this report is included in income for the period ended September 30, 2022. Origination and modification fee revenue, generally 1% – 3% of either the original loan principal or the modified loan balance, is collected at loan funding and is recognized ratably over the contractual life of the loan in accordance with ASC 310. Income Taxes The Company believes it qualifies as a real estate investment trust (“REIT”) for federal income tax purposes and operates accordingly. It made the election to be taxed as a REIT on its 2017 Federal income tax return. 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 (the “Code”), relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding capital stock. 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. FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes ” “ ” Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260 “ ” Investment Transactions and Related Income. Investment transactions are accounted for on a trade-date basis. Dividends are recorded on the ex-dividend date and interest is recognized on the accrual basis. Investment securities are marked-to-market. Unrealized gains and losses on investment securities with a stated maturity date are included in other comprehensive income (loss). All other unrealized gains and losses on investment securities are included in net income (loss). Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements. Reclassifications Certain amounts included in the September 30, 2021 and December 31, 2021 financial statements have been reclassified to conform to the September 30, 2022 presentation. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurement | |
Fair Value Measurement | 3. Fair Value Measurement The fair value measurement level within the fair value hierarchy of an asset or liability is based on the lowest level of any input that is significant to the fair market value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of September 30, 2022: Level 1 Level 2 Level 3 Total Stocks and ETFs $ 9,135,577 — — $ 9,135,577 Mutual funds 25,215,797 — — 25,215,797 Total liquid investments $ 34,351,374 — — $ 34,351,374 Real estate owned — — $ 5,615,940 $ 5,615,940 Following is a description of the methodologies used for assets measured at fair value: Stocks and ETFs: Mutual funds: Real estate owned Impact of Fair Value of AFS Securities on OCI The following table presents the impact of the Company's Available-For-Sale (AFS) securities on its Other Comprehensive Income (OCI) for the three and nine months ended September 30, 2022 and 2021: Three Months Ended Nine months Ended September 30, September 30, 2022 2021 2022 2021 OCI from AFS securities: Unrealized (losses) on AFS securities at beginning of period $ (425,972) $ (137,802) $ (476,016) $ (25,992) Unrealized (losses) on securities available-for-sale (131,569) (500,188) (81,525) (611,998) Change in OCI from AFS securities (131,569) (500,188) (81,525) (611,998) Balance at end of period $ (557,541) $ (637,990) $ (557,541) $ (637,990) |
Mortgages Receivable
Mortgages Receivable | 9 Months Ended |
Sep. 30, 2022 | |
Mortgages Receivable | |
Mortgages Receivable | 4. Mortgages Receivable The Company offers secured, non-bank 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, New York and Florida. The loans are secured by first mortgage liens on one or more properties owned by the borrower or related parties. The loans are generally for a term of one to three years . The loans are initially recorded and carried thereafter, in the financial statements, at cost. Most of the 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 months ended September 30 , 2022 and 2021, the aggregate amounts of loans funded by the Company were $252,370,675 and $154,810,007 , respectively, offset by principal repayments of $95,173,969 and $90,463,016 , respectively. As of September 30, 2022, the Company’s mortgage loan portfolio includes loans ranging in size up to $26,117,118 with stated interest rates ranging from 5.0% to 14.2% . The default interest rate is generally 18% . As of September 30, 2022 and 2021, the Company’s mortgage loan portfolio had an impairment loss of $105,000 and $0, respectively. At September 30, 2022, no single borrower or group of related borrowers had loans outstanding representing more than 10% of the total balance of the loans outstanding. At September 30, 2021, we had one borrower whose outstanding loans represented 10.2% of the total balance of loans outstanding. The Company may agree to extend the term of a loan if, at the time of the extension, the loan and the borrower meet all the Company’s then underwriting requirements. The Company treats a loan extension as a new loan. Credit Risk Credit risk profile based on loan activity as of September 30, 2022 and December 31, 2021: Total Outstanding Residential Commercial Land Mixed Use Mortgages December 31, 2021 $ 157,841,896 $ 95,319,795 $ 20,755,891 $ 18,383,627 $ 292,301,209 September 30, 2022 $ 234,747,362 $ 143,898,654 $ 39,513,545 $ 30,365,104 $ 448,524,665 The following is the maturities of mortgages receivable as of September 30: 2022 and prior $ 90,968,755 2023 286,239,279 2024 68,108,899 2025 1,049,500 Thereafter 2,158,232 Total $ 448,524,665 At September 30, 2022 there were 92 loans having an aggregate unpaid principal balance of approximately $45.0 million that were past maturity and either in foreclosure or in the process of being extended. Of the 477 mortgage loans in the Company’s portfolio, 44 were the subject of foreclosure proceedings. The aggregate outstanding principal balance of these loans and the accrued but unpaid interest and borrower charges as of September 30, 2022 was approximately $21.4 million. In the case of each of these loans, the Company believes the value of the collateral exceeds the outstanding balance on the loan plus accrued interest and borrower charges. |
Real Estate Owned
Real Estate Owned | 9 Months Ended |
Sep. 30, 2022 | |
Real Estate Owned | |
Real Estate Owned | 5. 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, 2022 and 2021, real estate owned totaled $5,615,940 and $6,774,522, respectively, with no valuation allowance. For the nine months ended September 30, 2022, the Company recorded an impairment loss of $685,500 compared to an impairment loss of $469,000 for the same period in 2021. For the three-months ended September 30, 2022 and 2021, the impairment loss was $195,000 and $150,000, respectively. As of September 30, 2022, real estate owned included $800,053 of real estate held for rental and $4,815,887 of real estate held for sale. As of September 30, 2021, real estate owned included $916,325 of real estate held for rental and $5,858,197 of real estate held for sale. Properties Held for Sale During the three and nine months ended September 30, 2022, the Company sold two properties held for sale and recognized an aggregate loss of $962 and five properties for an aggregate gain of $121,381, respectively. During the three and nine months ended September 30, 2021, the Company sold four properties held for sale, and recognized an aggregate loss of $94,450 and six properties for an aggregate loss of $111,545, respectively. Properties Held for Rental As of September 30, 2022, one property, a commercial building, was held for rental. The tenant signed a five-year lease that commenced on August 1, 2021. Rental payments due from real estate held for rental are as follows: Year ending December 31, 2022 $ 53,200 Year ending December 31, 2023 53,200 Year ending December 31, 2024 53,200 Year ending December 31, 2025 53,200 Total $ 212,800 |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2022 | |
Other Assets. | |
Other Assets | 6. Other Assets As of September 30, 2022 and December 31, 2021, other assets consists of the following: September 30, 2022 December 31, 2021 Prepaid expenses $ 117,449 $ 271,291 Other receivables 512,284 94,108 Other assets 472,800 306,440 Deferred financing costs, net 19,809 264,451 Total $ 1,122,342 $ 936,290 |
Line of Credit, Mortgage Payabl
Line of Credit, Mortgage Payable, and Churchill Facility | 9 Months Ended |
Sep. 30, 2022 | |
Line of Credit, Mortgage Payable, and Churchill Facility | |
Line of Credit, Mortgage Payable, and Churchill Facility | 7. Line of Credit, Mortgage Payable, and Churchill Facility Wells Fargo Margin Line of Credit During the year ended December 31, 2020, the Company established a margin loan account at Wells Fargo Advisors that is secured by the Company’s portfolio of short-term securities. The credit line bears interest at a rate equal to 1.75% below the prime rate. At September 30, 2022 the rate on the Wells Fargo credit line was 4.50%. As of September 30, 2022 the total outstanding balance on the Wells Fargo credit line was $3,542,853. Mortgage Payable In 2021, the Company obtained a new adjustable-rate mortgage loan from New Haven Bank (“NHB”) for up to a maximum principal amount of Churchill MRA Funding I LLC Repurchase Financing Facility On July 21, 2021, the Company consummated a $200 million master repurchase financing facility (“Facility”) with Churchill MRA Funding I LLC (“Churchill”), a subsidiary of Churchill Real Estate, a vertically integrated real estate finance company based in New York, New York. Under the terms of the Facility, the Company has the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans. In addition, the Company has the right and, in some instances the obligation, to repurchase those loans from Churchill. The amount that Churchill will pay for each mortgage loan it purchases will vary based on the attributes of the loan and various other circumstances. The repurchase price is calculated by applying an interest factor, as defined, to the purchase price of the mortgage loan. The Company has also pledged the mortgage loans sold to Churchill to secure its repurchase obligation. The cost of capital under the Facility is equal to the sum of (a) the greater of (i) 0.25% and (ii) the 30-day LIBOR plus (b) 3% - 4%, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time. As of September 30, 2022 the effective rate charged under the Facility was 6.99%. The Facility is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements. Under one such covenant, the Company (A) is prohibited from (i) paying any dividends or making distributions in excess of 90% of its taxable income, (ii) incurring any indebtedness or (iii) purchasing any of its capital stock, unless, it has an asset coverage ratio of at least 150%; and (B) must maintain unencumbered cash and cash equivalents in an amount equal to or greater than 2.50% of the amount of its repurchase obligations. Churchill has the right to terminate the Facility at any time upon 180 days prior notice to the Company. The Company then has an additional 180 days after termination to repurchase all the mortgage loans held by Churchill. The Company uses the proceeds from the Facility to finance the continued expansion of its lending business and for general corporate purposes. At September 30, 2022, the total amount outstanding under the Facility was $43,100,146 and the Company estimates that it had approximately $2.1 million of additional availability under the Facility. The collateral pledged to Churchill at September 30, 2022, was 32 mortgage loans that in the aggregate had unpaid principal balance of approximately $80.4 million. Each of the NHB Mortgage and the Churchill Facility contain cross-default provisions. |
Financing Transactions
Financing Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Financing Transactions | |
Financing Transactions | 8. Financing Transactions During the nine month period ended September 30, 2022, the Company generated approximately $159.7 million of gross proceeds from the sale of its securities as follows: (i) $51,875,000 from the sale of its 6.0% unsecured, unsubordinated notes due March 30, 2027; (ii) $30,000,000 from the sale of its 7.125% unsecured, unsubordinated notes due June 30, 2027; (iii) $40,250,000 from the sale of its 8.00% unsecured, unsubordinated notes due September 30, 2027; and (iv) $37,602,871 from the sale of 7,177,043 common shares in an “at-the-market” offering. The net proceeds from the sale of these securities, approximately $154,300,000, were used primarily to fund new mortgage loans, for working capital and general corporate purposes. During the nine month period ended September 30, 2022, the Company sold an aggregate of 7,177,043 common shares in an at-the-market offering. Net proceeds to the Company from the sale of these shares were $36,654,419. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2022 | |
Notes Payable | |
Notes Payable | 9. Notes Payable At September 30, 2022, the Company had an aggregate of $279,557,613 of unsecured, unsubordinated notes payable outstanding, net of $8,844,137 of deferred financing costs (collectively, the “Notes”). Currently, the Company has seven series of Notes outstanding: (i) Notes having an aggregate principal amount of $23,663,000 bearing interest at 7.125% per annum and maturing June 30, 2024 (“the June 2024 Notes”); (ii) Notes having an aggregate principal amount of $34,500,000 bearing interest at 6.875% per annum and maturing December 30, 2024 (the “December 2024 Notes”); (iii) Notes having an aggregate principal amount of $56,363,750 bearing interest at 7.75% per annum and maturing September 30, 2025 (the “September 2025 Notes”); (iv) Notes having an aggregate principal amount of $51,750,000 bearing interest at 6.0% per annum and maturing December 30, 2026 (the “December 2026 Notes”); (v) Notes having an aggregate principal amount of $51,875,000 bearing interest at 6.0% per annum and maturing March 30, 2027 (the “March 2027 Notes”); (vi) Notes having an aggregate principal amount of $30,000,000 bearing interest at 7.125% per annum and maturing June 30, 2027 (the "June 2027 Notes"); and (vii) Notes having an aggregate principal amount of $40,250,000 bearing interest at 8.00% per annum and maturing September 30, 2027 (the “September 2027 Notes”). The Notes were sold in underwritten public offerings, were issued in denomination of $25.00 each and are listed on the NYSE American and trade under the symbols “SCCB,” “SACC,” “SCCC,” “SCCD,” “SCCE,” “SCCF” and “SCCG,” respectively. All the Notes were issued at par except for the last tranche of the September 2025 notes, in the original principal amount of $28 million, which were issued at $24.75 each. Interest on the Notes is payable quarterly on each March 30, June 30, September 30 and December 30 that they are outstanding. So long as the Notes are outstanding, the Company is prohibited from making distributions in excess of |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
Accounts Payable and Accrued Liabilities. | |
Accounts Payable and Accrued Liabilities | 10. Accounts Payable and Accrued Liabilities As of September 30, 2022 and December 31, 2021, accounts payable and accrued liabilities include the following: September 30, 2022 December 31, 2021 Accounts payable and Accrued expenses 555,571 501,753 Other notes 10,760 30,921 Accrued interest 595,839 164,729 Total $ 1,162,170 $ 697,403 |
Fee And Other Income
Fee And Other Income | 9 Months Ended |
Sep. 30, 2022 | |
Fee And Other Income | |
Fee And Other Income | 11. Fee and Other Income For the three and nine-month periods ended September 30, 2022 and 2021, fee and other income consists of the following: Three Months Nine Months ended September 30, ended September 30, 2022 2021 2022 2021 Late and other fees $ 92,098 $ 202,572 $ 338,638 $ 300,471 Processing fees 37,480 50,230 165,950 129,615 Rental income, net 8,867 28,320 37,067 23,105 Extension fees 212,608 86,671 415,128 232,886 Other fees 124,292 55,025 259,542 150,094 Legal fees 91,115 69,800 253,055 181,600 Other income 75,289 98,823 579,541 833,260 Total $ 641,749 $ 591,441 $ 2,048,921 $ 1,851,031 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies Origination and Modification Fees Loan origination and modification fees generally range from 1% - 3% each of the original loan principal or the modified loan balance and, generally, are payable at the time the loan is funded or modified. The unamortized portion is recorded as deferred revenue on the balance sheet. At September 30, 2022, deferred revenue was $4,471,800, which will be recorded as income as follows: Year ending December 31, 2022 $ 1,583,313 Year ending December 31, 2023 2,687,114 Year ending December 31, 2024 201,373 Total $ 4,471,800 In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in full at the time of repayment. Employment Agreements In February 2017, the Company entered into an employment agreement with John Villano, the material terms of which are as follows: (i) the employment term is five years with extensions for successive one-year periods unless either party provides written notice at least 180 days prior to the next anniversary date of its intention to not renew the agreement; (ii) a base salary of $260,000, which was increased in April 2018, April 2021 and April 2022 to $360,000, $500,000 and $750,000, respectively; (iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s Board of Directors; (iv) participation in the Company’s employee benefit plans; (v) full indemnification to the extent permitted by law; (vi) a two-year non-competition period following the termination of employment without cause; and (vii) payments upon termination of employment or a change in control. In April 2022, the Company granted 98,425 restricted common shares (having a market value of approximately $500,000) to Mr. Villano. One-third one-third 2025 In July 2022, the Company entered into an employment agreement with John E. Warch, the material terms of which are as follows: (i) the employment term commenced on August 1, 2022 and will continue until terminated by either party; (ii) a base salary of $325,000; (iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s Board of Directors; (iv) participation in the Company’s employee benefit plans; (v) full indemnification to the extent permitted by law; and (vi) payments upon termination of employment or a change in control. Unfunded Commitments At September 30, 2022, the Company had future funding obligations totaling $118,103,785, which can be drawn by the borrowers when the conditions relating thereto have been satisfied. Other In the normal course of its business, the Company is named as a party-defendant in connection with tax foreclosure proceedings against properties on which it holds a first mortgage lien. The Company actively monitors these actions and, in all cases, believes there remains sufficient value in the subject property to assure that no loan impairment exists. At September 30, 2022, there were four such proceedings. The unpaid principal balances on the properties that are the subject of these proceedings was approximately $236,000. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions | |
Related Party Transactions | 13. Related Party Transactions In the ordinary course of business, the Company may originate, fund, manage and service loans to shareholders. The underwriting process on these loans adheres to prevailing Company policy. The terms of such loans, including the interest rate, income, origination fees and other closing costs are the same as those applicable to loans made to unrelated third parties in the portfolio. As of September 30, 2022, and 2021, loans to known shareholders totaled $20,932,994 and $13,200,972, respectively. Interest income earned on these loans for the nine months ended September 30, 2022 and 2021 totaled $1,248,826 and $573,446, respectively, and for the three months ended September 30, 2022 and 2021 totaled $416,275 and $252,050, respectively. The wife of the Company’s chief executive officer was employed by the Company as its director of finance until the third quarter of 2022 when she retired. For the nine month periods ended September 30, 2022 and 2021, she was paid $62,865 and $85,634, respectively, as compensation from the Company. For the three months ended September 30, 2022 and 2021, the corresponding amounts were $2,115 and $29,250, respectively. In December 2021, the Company hired the daughter of the Company’s chief executive officer to perform certain internal audit and compliance services. For the three and nine month periods ended September 30, 2022, she received compensation of $35,727 and $106,327, respectively. In January 2022, the Company hired the step-daughter of the Company’s chief executive officer to perform executive assistant and administrative services. For the three and nine month periods ended September 30, 2022, she received compensation of $8,313 and $43,929, respectively. |
Concentration of Credit Risk
Concentration of Credit Risk | 9 Months Ended |
Sep. 30, 2022 | |
Concentration of Credit Risk | |
Concentration of Credit Risk | 14. Concentration of Credit Risk Currently, all of the Company’s investment securities, which include common stocks, preferred stock, corporate bonds and mutual funds, are held at Wells Fargo Advisors. Wells Fargo Advisors is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects clients against the custodial risk of a member investment firm becoming insolvent by replacing missing securities and cash up to $500,000, including up to $250,000 in cash, per client in accordance with SIPC rules. The Company makes loans that are secured by first mortgage liens on real property located primarily in Connecticut (approximately 43.0%), Florida (approximately 21.7%) and New York (approximately 14.2%). This concentration of credit risk may be affected by changes in economic or other conditions of the particular geographic area. Credit risks associated with the Company’s mortgage loan portfolio and related interest receivable are described in Note 4 - Mortgages Receivable. |
Outstanding Warrants
Outstanding Warrants | 9 Months Ended |
Sep. 30, 2022 | |
Outstanding Warrants | |
Outstanding Warrants | 15. Outstanding Warrants In 2017, the Company consummated two public offerings – an initial public offering (“IPO”) in February and a follow-on offering in October-November. In connection with the IPO, the Company issued to the underwriters warrants to purchase an aggregate of 130,000 common shares at an exercise price of $6.25 per common share (“IPO Warrants”). The IPO Warrants expired unexercised on February 9, 2022. In connection with a public offering that was consummated in October 2017, the Company issued to the underwriters warrants to purchase an aggregate of 187,500 common shares at an exercise price of $5.00 per share. In January 2022, warrants to purchase 93,750 of the Company’s common shares were exercised. The holders of those warrants elected to use the cashless exercise option available to them under the terms of the warrants. As such, they received 19,658 common shares. At September 30, 2022, 49,219 warrants were outstanding. All the unexercised warrants expired on October 24, 2022. |
Stock-Based Compensation and Em
Stock-Based Compensation and Employee Benefits | 9 Months Ended |
Sep. 30, 2022 | |
Stock-Based Compensation and Employee Benefits | |
Stock-Based Compensation and Employee Benefits | 16. Stock-Based Compensation and Employee Benefits 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 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 under the Plan as of September 30, 2022 was 1,198,468. During the nine months ended September 30, 2022 and 2021, the Company granted an aggregate of 153,967 and 94,681 restricted common shares under the Plan, respectively. During the three months ended September 30, 2022 and 2021, the Company granted an aggregate of 15,000 and -0- restricted common shares under the Plan, respectively. With respect to the restricted common shares granted in 2022, (i) 17,264 shares vested immediately on the date of grant, an additional 17,264 shares will vest on each of the first and second January Stock based compensation for the three months ended September 30, 2022 and 2021 was $127,000 and $64,219, respectively. Stock based compensation for the nine months ended September 30, 2022 and 2021 was $357,167 and $126,538, respectively. As of September 30, 2022, there was unrecorded stock-based compensation expense of $842,604. Employee Benefits On April 16, 2018, the Company’s Board of Directors approved the adoption of the Sachem Capital Corp. 401(k) Profit Sharing Plan (the “401(k) Plan”). All employees, who meet the participation criteria, are eligible to participate in the 401(k) Plan. Under the terms of the 401(k) Plan, the Company is obligated to contribute 3% of a participant’s compensation to the 401(k) Plan on behalf of an employee-participant. For the nine months ended September 30, 2022 and 2021, the 401(k) Plan expense was $71,925 and $46,276, respectively. For the three months ended September 30, 2022 and 2021, the 401(k) Plan expenses were $21,924 and $13,814, respectively. |
Equity Offerings
Equity Offerings | 9 Months Ended |
Sep. 30, 2022 | |
Equity Offerings | |
Equity Offerings | 17. Equity Offerings On December 6, 2021, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $44,925,000 of its common shares in an “at-the market” offering, which is ongoing. During the nine months ended September 30, 2022, the Company sold an aggregate of 7,177,043 common shares under this prospectus and realized net proceeds of $36,654,419 in connection therewith. On August 24, 2022, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $75,000,000 of its common shares and its Series A Preferred Stock (as defined in Note 20 below) with an aggregate liquidation preference of up to $25,000,000 in an “at-the market” offering, which is ongoing. During the nine months ended September 30, 2022, the Company did not sell any shares of Series A Preferred Stock nor any shares under this prospectus. At September 30, 2022, approximately $75 million of common shares and $25,000,000 of Series A Preferred Stock were available for future sale under the ongoing “at-the market” offering. |
Partnership Investments
Partnership Investments | 9 Months Ended |
Sep. 30, 2022 | |
Partnership Investments | |
Partnership Investments | 18. Partnership Investments As of September 30, 2022, the Company had invested an aggregate of approximately $22.5 million in four limited liability companies managed by a commercial real estate finance company that provides debt capital solutions to local and regional commercial real estate owners in the Northeastern United States. The Company’s ownership interest in the four limited liability companies ranges up to 49%. The Company accounts for these investments at cost because the Company does not control or have significant influence over the investments. The Company’s withdrawal from each limited liability company may only be granted by the manager of such entity. Each limited liability company has elected to be treated as a partnership for income tax purposes. For the three and nine months ended September 30, 2022, the partnerships generated $523,067 and $1,112,560 of income for the Company. At September 30, 2022, the Company had unfunded partnership commitments totaling approximately $3.6 million. |
Special Purpose Acquisition Cor
Special Purpose Acquisition Corporation | 9 Months Ended |
Sep. 30, 2022 | |
Special Purpose Acquisition Corporation | |
Special Purpose Acquisition Corporation | 19. Special Purpose Acquisition Corporation On March 24, 2021, the Company loaned $25,000 to its wholly-owned subsidiary, Sachem Sponsor LLC. Sachem Sponsor LLC used those funds to purchase 1,437,500 shares of Class B common stock of Sachem Acquisition Corp., a newly organized blank check company formed under the laws of Maryland in February 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. As of September 30, 2022, the Company had incurred approximately $472,800 of costs related to the preparation and filing of the registration statement, including legal fees, accounting fees and filing fees as well organizational costs and an expense advance to the underwriter. On July 14, 2021, Sachem Acquisition Corp. filed a registration statement on Form S-1 registering the sale of 5,750,000 units at $10.00 per unit, or $57,500,000 in the aggregate. Each unit consists of one share of Class A common stock and one |
Series A Preferred Stock
Series A Preferred Stock | 9 Months Ended |
Sep. 30, 2022 | |
Series A Preferred Stock. | |
Series A Preferred Stock | 20. Series A Preferred Stock On June 25, 2021, the Company filed a Certificate of Amendment with the Department of State of the State of New York to designate 1,955,000 shares of the Company’s authorized preferred shares, par value $0.001 per share, as shares of Series A Preferred Stock with the powers, designations, preferences and other rights as set forth therein (the “Certificate of Amendment”). The Certificate of Amendment provides that the Company will pay quarterly cumulative dividends on the Series A Preferred Stock, in arrears, on the 30th day of each of September, December, March and June from, and including, the date of original issuance of the Series A Preferred Stock at 7.75% of the $25.00 per share liquidation preference per annum (equivalent to $1.9375 per annum per share). The Series A Preferred Stock will not be redeemable before June 29, 2026, except upon the occurrence of a Change of Control (as defined in the Certificate of Amendment). On or after June 29, 2026, the Company may, at its option, redeem any or all of the shares of the Series A Preferred Stock at $25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date. Upon the occurrence of a Change of Control, the Company may, at its option, redeem any or all of the shares of Series A Preferred Stock within 120 days after the first date on which such Change of Control occurred at $25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date. The Series A Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by the Company or converted into common shares in connection with a Change of Control by the holders of the Series A Preferred Stock. Upon the occurrence of a Change of Control, each holder of Series A Preferred Stock will have the right (subject to the Company’s election to redeem the Series A Preferred Stock in whole or in part, as described above, prior to the Change of Control Conversion Date as defined in the Certificate of Amendment) to convert some or all of the Series A Preferred Stock held by such holder on the Change of Control Conversion Date into a number of the common shares determined by formula, in each case, on the terms and subject to the conditions described in the Certificate of Amendment, including provisions for the receipt, under specified circumstances, of alternative consideration as described in the Certificate of Amendment. Except under limited circumstances, holders of the Series A Preferred Stock generally do not have any voting rights. |
Charter Amendment
Charter Amendment | 9 Months Ended |
Sep. 30, 2022 | |
Charter Amendment | |
Charter Amendment | 21. Charter Amendments On July 19, 2022, after shareholders approved an amendment to the Company’s charter at its 2022 Annual Meeting of Shareholders held on July 19, 2022, the Company filed a Certificate of Amendment of the Certificate of Incorporation to increase the number of authorized common shares available for issuance from 100,000,000 to 200,000,000. On August 23, 2022, in connection with the ongoing “at-the market” offering, the Company filed a Certificate of Amendment with the Department of State of the State of New York to increase the number of authorized shares of Series A Preferred Stock from 1,955,000 to 2,903,000 and to fix the number of common shares to be reserved upon conversion of the Series A Preferred Stock at 72,575,000. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events | |
Subsequent Events | 22. Subsequent Events From October 1, 2022 through November 9, 2022, the Company sold an aggregate of 405,037 common shares under its at-the-market offering facility realizing gross proceeds of approximately $1.6 million. On October 6, 2022, the Company acquired substantially all the business assets of Urbane New Haven, LLC (“Urbane”), a real estate firm specializing in all phases of real estate development and construction, including architecture, design, contracting and marketing. The purchase price for the assets was 300,000 common shares, or approximately $1.1 million based on the closing price of $3.68 per share on October 5, 2022. The issuance of the shares to Urbane was exempt from the registration requirements of the Securities Act of 1933, as amended (the "Act"), pursuant to Sections 4(a)(2) and/or 4(a)(5) thereunder. A legend restricting resale, transfer, or other disposition of these shares other than in compliance with the Act was placed on such shares. In connection with the acquisition, Eric O’Brien, one of the owners of Urbane, has been hired by the Company as its new Senior Vice President, Asset Management. Mr. O’Brien’s primary responsibilities include construction management oversight and real estate development. The Company is currently in the process of determining it’s potential contingent liability, if any, for the purchase, as well as its allocation of the purchase price amongst the assets purchased, intangible assets, goodwill and liabilities assumed. Accordingly, these amounts are not included. Effective on October 7, 2022, the Company’s Board of Directors adopted a stock repurchase plan pursuant to which the Company may repurchase up to an aggregate of $7.5 million of its outstanding common shares in the open market at prevailing market prices or in negotiated transactions off the market, in accordance with all applicable securities laws and regulations, including Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Plan”). The Plan is expected to continue through September 30, 2023, unless extended or shortened by the Company’s Board of Directors. Ladenburg Thalmann & Co. Inc. will act as the Company’s exclusive purchasing agent under the Plan. On October 24, 2022, all of the remaining outstanding underwriters’ warrants expired without being exercised. (See Note 15, above.) On October 26, 2022, the Company issued 10,000 restricted common shares to an employee, of which 3,334 shares vest immediately upon issuance and 3,333 shares On October 27, 2022, the Company’s Board of Directors declared a dividend of $0.13 per share payable to shareholders of record as of November 7, 2022. The dividend is payable November 14, 2022. Management has evaluated subsequent events through November 10, 2022 the date on which the financial statements were available to be issued. Based on the evaluation, no adjustments were required in the accompanying financial statements. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
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 complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2021 and the notes thereto included in the Company’s Annual Report on Form 10-K. 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 its estimates on (a) various assumptions that consider its experience, (b) the Company’s projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could materially differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The combined account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. The Company does not believe that the risk is significant. |
Allowance for Loan Loss | Allowance for Loan Loss The Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, as well as the loan-to-value (LTV) ratio. Based on the analysis, management determines if any provisions for impairment of loans should be made and whether any loan loss reserves are required. |
Fair Value Measurements | Fair Value Measurements The framework for measuring fair value provides a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 are described as follows: Level 1 Level 2 ● ● ● ● If the asset or liability has a specified (i.e., Level 3 |
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. Land and building acquired in 2021 to serve as the Company’s future corporate headquarters is stated at cost. The building is not currently being depreciated as it is undergoing renovations. |
Real Estate Owned | Real Estate Owned Real estate owned by the Company is stated at cost and is tested for impairment quarterly. |
Consolidations | Consolidations The consolidated financial statements of the Company include the accounts of all subsidiaries in which the Company has control over significant operating, financial and investing decisions of the entity. All intercompany accounts and transactions have been eliminated. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company monitors events or changes in circumstances that could indicate 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 undiscounted cash flows are 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. |
Deferred Financing Costs | Deferred Financing Costs Costs incurred in connection with the Company’s revolving credit facilities, described in Note 7-Line of Credit, Mortgage Payable and Churchill Facility are, amortized over the term of the applicable facility using the straight-line method. Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 9 - Notes Payable, are being amortized over the term of the respective Notes. |
Revenue Recognition | Revenue Recognition Interest income from the Company’s loan portfolio is earned over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company’s loans provide for interest to be paid monthly in arrears. The Company, generally, does not accrue interest income on mortgages receivable that are more than 90 days past due or interest charged at default rates. However, interest income not accrued at September 30, 2022 but collected prior to the issuance of this report is included in income for the period ended September 30, 2022. Origination and modification fee revenue, generally 1% – 3% of either the original loan principal or the modified loan balance, is collected at loan funding and is recognized ratably over the contractual life of the loan in accordance with ASC 310. |
Income Taxes | Income Taxes The Company believes it qualifies as a real estate investment trust (“REIT”) for federal income tax purposes and operates accordingly. It made the election to be taxed as a REIT on its 2017 Federal income tax return. 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 (the “Code”), relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding capital stock. 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. FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes ” “ ” |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260 “ ” |
Investment Transactions and Related Income. | Investment Transactions and Related Income. Investment transactions are accounted for on a trade-date basis. Dividends are recorded on the ex-dividend date and interest is recognized on the accrual basis. Investment securities are marked-to-market. Unrealized gains and losses on investment securities with a stated maturity date are included in other comprehensive income (loss). All other unrealized gains and losses on investment securities are included in net income (loss). |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements. |
Reclassifications | Reclassifications Certain amounts included in the September 30, 2021 and December 31, 2021 financial statements have been reclassified to conform to the September 30, 2022 presentation. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurement | |
Schedule of company's assets at fair value | The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of September 30, 2022: Level 1 Level 2 Level 3 Total Stocks and ETFs $ 9,135,577 — — $ 9,135,577 Mutual funds 25,215,797 — — 25,215,797 Total liquid investments $ 34,351,374 — — $ 34,351,374 Real estate owned — — $ 5,615,940 $ 5,615,940 |
Schedule of company's available-for-sale (AFS) securities and other comprehensive income (OCI) | The following table presents the impact of the Company's Available-For-Sale (AFS) securities on its Other Comprehensive Income (OCI) for the three and nine months ended September 30, 2022 and 2021: Three Months Ended Nine months Ended September 30, September 30, 2022 2021 2022 2021 OCI from AFS securities: Unrealized (losses) on AFS securities at beginning of period $ (425,972) $ (137,802) $ (476,016) $ (25,992) Unrealized (losses) on securities available-for-sale (131,569) (500,188) (81,525) (611,998) Change in OCI from AFS securities (131,569) (500,188) (81,525) (611,998) Balance at end of period $ (557,541) $ (637,990) $ (557,541) $ (637,990) |
Mortgages Receivable (Tables)
Mortgages Receivable (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Mortgages Receivable | |
Schedule of credit risk profile | Credit risk profile based on loan activity as of September 30, 2022 and December 31, 2021: Total Outstanding Residential Commercial Land Mixed Use Mortgages December 31, 2021 $ 157,841,896 $ 95,319,795 $ 20,755,891 $ 18,383,627 $ 292,301,209 September 30, 2022 $ 234,747,362 $ 143,898,654 $ 39,513,545 $ 30,365,104 $ 448,524,665 |
Schedule of maturities of mortgage receivable | The following is the maturities of mortgages receivable as of September 30: 2022 and prior $ 90,968,755 2023 286,239,279 2024 68,108,899 2025 1,049,500 Thereafter 2,158,232 Total $ 448,524,665 |
Real Estate Owned (Tables)
Real Estate Owned (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Real Estate Owned | |
Schedule of rental payments due from real estate held for rental | Year ending December 31, 2022 $ 53,200 Year ending December 31, 2023 53,200 Year ending December 31, 2024 53,200 Year ending December 31, 2025 53,200 Total $ 212,800 |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Other Assets. | |
Schedule of other assets | September 30, 2022 December 31, 2021 Prepaid expenses $ 117,449 $ 271,291 Other receivables 512,284 94,108 Other assets 472,800 306,440 Deferred financing costs, net 19,809 264,451 Total $ 1,122,342 $ 936,290 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounts Payable and Accrued Liabilities. | |
Schedule of accounts payable and accrued liabilities | September 30, 2022 December 31, 2021 Accounts payable and Accrued expenses 555,571 501,753 Other notes 10,760 30,921 Accrued interest 595,839 164,729 Total $ 1,162,170 $ 697,403 |
Fee And Other Income (Tables)
Fee And Other Income (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fee And Other Income | |
Schedule of fees and other income | Three Months Nine Months ended September 30, ended September 30, 2022 2021 2022 2021 Late and other fees $ 92,098 $ 202,572 $ 338,638 $ 300,471 Processing fees 37,480 50,230 165,950 129,615 Rental income, net 8,867 28,320 37,067 23,105 Extension fees 212,608 86,671 415,128 232,886 Other fees 124,292 55,025 259,542 150,094 Legal fees 91,115 69,800 253,055 181,600 Other income 75,289 98,823 579,541 833,260 Total $ 641,749 $ 591,441 $ 2,048,921 $ 1,851,031 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies | |
Schedule of original maturities of deferred revenue | Year ending December 31, 2022 $ 1,583,313 Year ending December 31, 2023 2,687,114 Year ending December 31, 2024 201,373 Total $ 4,471,800 |
The Company (Details)
The Company (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Minimum | |
The Company | |
Term of debt | 1 year |
Maximum | |
The Company | |
Term of debt | 3 years |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Significant Accounting Policies | ||
Uncertain tax positions | $ 0 | $ 0 |
Land and building | ||
Significant Accounting Policies | ||
Property plant and equipment, useful life | 40 years | |
Minimum | ||
Significant Accounting Policies | ||
Origination and modification fee revenue as a percentage of original loan principal amount | 1% | |
Maximum | ||
Significant Accounting Policies | ||
Origination and modification fee revenue as a percentage of original loan principal amount | 3% |
Fair Value Measurement (Details
Fair Value Measurement (Details) | Sep. 30, 2022 USD ($) |
Fair Value Measurement | |
Stocks and ETFs | $ 9,135,577 |
Mutual funds | 25,215,797 |
Total liquid investments | 34,351,374 |
Real estate owned | 5,615,940 |
Level 1 | |
Fair Value Measurement | |
Stocks and ETFs | 9,135,577 |
Mutual funds | 25,215,797 |
Total liquid investments | 34,351,374 |
Real estate owned | 0 |
Level 2 | |
Fair Value Measurement | |
Stocks and ETFs | 0 |
Mutual funds | 0 |
Total liquid investments | 0 |
Real estate owned | 0 |
Level 3 | |
Fair Value Measurement | |
Stocks and ETFs | 0 |
Mutual funds | 0 |
Total liquid investments | 0 |
Real estate owned | $ 5,615,940 |
Fair Value Measurement - Compan
Fair Value Measurement - Company's available-for-sale (AFS) securities and other comprehensive income (OCI) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
OCI from AFS securities: | ||||
Unrealized (losses) on AFS securities | $ (425,972) | $ (137,802) | $ (476,016) | $ (25,992) |
Unrealized (losses) on securities available-for-sale | (131,569) | (500,188) | (81,525) | (611,998) |
Change in OCI from AFS securities | (131,569) | (500,188) | (81,525) | (611,998) |
Balance at end of period | $ (557,541) | $ (637,990) | $ (557,541) | $ (637,990) |
Mortgages Receivable (Details)
Mortgages Receivable (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Mortgages Receivable | ||
Mortgage loans on real estate commercial and consumer, net | $ 448,524,665 | $ 292,301,209 |
Residential | ||
Mortgages Receivable | ||
Mortgage loans on real estate commercial and consumer, net | 234,747,362 | 157,841,896 |
Commercial | ||
Mortgages Receivable | ||
Mortgage loans on real estate commercial and consumer, net | 143,898,654 | 95,319,795 |
Mixed Use | ||
Mortgages Receivable | ||
Mortgage loans on real estate commercial and consumer, net | 30,365,104 | 18,383,627 |
Land | ||
Mortgages Receivable | ||
Mortgage loans on real estate commercial and consumer, net | $ 39,513,545 | $ 20,755,891 |
Mortgages Receivable - Maturiti
Mortgages Receivable - Maturities of mortgage receivable (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Mortgages Receivable | ||
2022 and prior | $ 90,968,755 | |
2023 | 286,239,279 | |
2024 | 68,108,899 | |
2025 | 1,049,500 | |
Thereafter | 2,158,232 | |
Total | $ 448,524,665 | $ 292,301,209 |
Mortgages Receivable - Addition
Mortgages Receivable - Additional information (Details) | 9 Months Ended | |
Sep. 30, 2022 USD ($) loan | Sep. 30, 2021 USD ($) | |
Mortgages Receivable | ||
Aggregate amounts of loans funded | $ 252,370,675 | $ 154,810,007 |
Principal collections on mortgages receivable | 95,173,969 | 90,463,016 |
Face amount of mortgages | $ 26,117,118 | |
Default interest rate on mortgage loans. | 18% | |
Impairment loss on mortgage loan portfolio | $ 105,000 | $ 0 |
Number of loans with past maturity due | loan | 92 | |
Mortgage receivable with past maturity | $ 45,000,000 | |
Mortgage loan portfolio number of loans | loan | 477 | |
Mortgage loan portfolio number of loans in process of foreclosure | loan | 44 | |
Accrued interest and borrower charges | $ 21,400,000 | |
Mortgage Concentration Risk | Revenue Benchmark | No borrower | ||
Mortgages Receivable | ||
Loans outstanding (in percent) | 10% | |
Mortgage Concentration Risk | Revenue Benchmark | One borrower | ||
Mortgages Receivable | ||
Loans outstanding (in percent) | 10.20% | |
Minimum | ||
Mortgages Receivable | ||
Term of debt | 1 year | |
Interest rate (as a percent) | 5% | |
Maximum | ||
Mortgages Receivable | ||
Term of debt | 3 years | |
Interest rate (as a percent) | 14.20% |
Real Estate Owned (Details)
Real Estate Owned (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) property | Sep. 30, 2022 USD ($) property | Sep. 30, 2021 USD ($) property | |
Real Estate Owned | ||||
Real estate owned | $ 5,615,940 | $ 6,774,522 | $ 5,615,940 | $ 6,774,522 |
Valuation allowance | 0 | 0 | ||
Impairment loss on real estate owned | 195,000 | 150,000 | 685,500 | 469,000 |
Real estate on owned | 800,053 | 916,325 | 800,053 | 916,325 |
Real estate held-for-sale | $ 4,815,887 | $ 5,858,197 | $ 4,815,887 | $ 5,858,197 |
Number of properties held for sale | property | 2 | 4 | 5 | 6 |
Gain or Loss on sale of real estate | $ 962 | $ 94,450 | $ (121,381) | $ 111,545 |
Number of properties held for rental | property | 1 | 1 | ||
Lease term of rental property held for rental | 5 years |
Real Estate Owned - Rental paym
Real Estate Owned - Rental payments due from real estate (Details) | Sep. 30, 2022 USD ($) |
Real Estate Owned | |
Year ending December 31, 2022 | $ 53,200 |
Year ending December 31, 2023 | 53,200 |
Year ending December 31, 2024 | 53,200 |
Year ending December 31, 2025 | 53,200 |
Total | $ 212,800 |
Other Assets (Details)
Other Assets (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Other Assets. | ||
Prepaid expenses | $ 117,449 | $ 271,291 |
Other receivables | 512,284 | 94,108 |
Other assets | 472,800 | 306,440 |
Deferred financing costs, net | 19,809 | 264,451 |
Total | $ 1,122,342 | $ 936,290 |
Line of Credit, Mortgage Paya_2
Line of Credit, Mortgage Payable, and Churchill Facility (Details) | 9 Months Ended | 12 Months Ended | ||
Jul. 21, 2021 USD ($) | Sep. 30, 2022 USD ($) loan | Dec. 31, 2021 USD ($) | Dec. 31, 2020 | |
Line of Credit, Mortgage Payable, and Churchill Facility | ||||
Outstanding balance | $ 3,542,853 | $ 33,178,031 | ||
Threshold asset coverage ratio | 150% | |||
Number of first line mortgage loans | loan | 32 | |||
Wells Fargo Credit line | ||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||
Spread on variable rate | 4.50% | 1.75% | ||
Outstanding balance | $ 3,542,853 | |||
New Haven Bank Mortgage | ||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||
Maximum principal amount | $ 1,400,000 | |||
Amount outstanding | 750,000 | |||
Interest rate | 3.75% | |||
Interest accrued period | 72 months | |||
Period for which only interest is payable | 12 months | |||
Amortization period | 20 years | |||
Term of Federal Home Loan Bank of Boston Classic Advance Rate | 5 years | |||
Unpaid principal balance | $ 750,000 | |||
Value of East Main Street Property | $ 1,400,000 | |||
New Haven Bank Mortgage | Federal Home Loan Bank of Boston Classic Advance Rate | ||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||
Spread on variable rate | 2.60% | |||
Master Repurchase Agreement | ||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||
Outstanding balance | $ 43,100,146 | |||
Interest rate | 0.25% | 6.99% | ||
Unpaid principal balance | $ 80,400,000 | |||
Repurchase face amount | $ 200,000,000 | |||
Notes callable period | 30 days | |||
Threshold asset coverage ratio | 150% | |||
Percentage amount of repurchase obligation of unencumbered cash and cash equivalents | 2.50% | |||
Term of debt | 180 days | |||
Additional availability | $ 2,100,000 | |||
Minimum | ||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||
Term of debt | 1 year | |||
Minimum | Master Repurchase Agreement | ||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||
Interest rate | 3% | |||
Maximum | ||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||
Term of debt | 3 years | |||
Maximum | Master Repurchase Agreement | ||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||
Interest rate | 4% |
Financing Transactions (Details
Financing Transactions (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Financing Transactions | ||
Gross proceeds from sale of securities | $ 159,700,000 | |
Net proceeds from sale of securities | 154,300,000 | |
Net proceeds from the sale of common shares | 36,654,419 | $ 30,883,928 |
ATM | ||
Financing Transactions | ||
Gross proceeds from warrants | $ 37,602,871 | |
Warrants to purchase common shares | 7,177,043 | |
Number of shares issued during the period | 7,177,043 | |
Net proceeds from the sale of common shares | $ 36,654,419 | |
March 2027 Notes | ||
Financing Transactions | ||
Gross proceeds from sale of securities | $ 51,875,000 | |
Interest rate | 6% | |
June 2027 Notes | ||
Financing Transactions | ||
Proceeds from sale of common stock | $ 30,000,000 | |
Interest rate | 7.125% | |
September 2027 Notes | ||
Financing Transactions | ||
Proceeds from sale of common stock | $ 40,250,000 | |
Interest rate | 8% |
Notes Payable (Details)
Notes Payable (Details) | 9 Months Ended | |
Sep. 30, 2022 USD ($) series $ / shares | Dec. 31, 2021 USD ($) | |
Notes Payable | ||
Deferred financing costs | $ 8,844,137 | $ 5,747,387 |
Number of unsecured unsubordinated notes | series | 7 | |
Notes issued denomination | $ / shares | $ 25 | |
Threshold percentage of taxable income to prohibit distribution | 90% | |
Threshold asset coverage ratio | 150% | |
Period of written notice to redeem notes without premium or penalty | 30 days | |
Notes | ||
Notes Payable | ||
Aggregate amount outstanding | $ 279,557,613 | |
Deferred financing costs | 8,844,137 | |
June 2024 Notes | ||
Notes Payable | ||
Aggregate amount outstanding | $ 23,663,000 | |
Interest rate | 7.125% | |
December 2024 Notes | ||
Notes Payable | ||
Aggregate amount outstanding | $ 34,500,000 | |
Interest rate | 6.875% | |
September 2025 Notes | ||
Notes Payable | ||
Aggregate amount outstanding | $ 56,363,750 | |
Interest rate | 7.75% | |
Maximum principal amount | $ 28,000,000 | |
Notes issued denomination | $ / shares | $ 24.75 | |
December 2026 Notes | ||
Notes Payable | ||
Aggregate amount outstanding | $ 51,750,000 | |
Interest rate | 6% | |
March 2027 Notes | ||
Notes Payable | ||
Aggregate amount outstanding | $ 51,875,000 | |
Interest rate | 6% | |
June 2027 Notes | ||
Notes Payable | ||
Aggregate amount outstanding | $ 30,000,000 | |
Interest rate | 7.125% | |
September 2027 Notes | ||
Notes Payable | ||
Aggregate amount outstanding | $ 40,250,000 | |
Interest rate | 8% |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Accounts Payable and Accrued Liabilities. | ||
Accounts payable and Accrued expenses | $ 555,571 | $ 501,753 |
Other notes | 10,760 | 30,921 |
Accrued interest | 595,839 | 164,729 |
Total | $ 1,162,170 | $ 697,403 |
Fee And Other Income (Details)
Fee And Other Income (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fee And Other Income | ||||
Late and other fees | $ 92,098 | $ 202,572 | $ 338,638 | $ 300,471 |
Processing fees | 37,480 | 50,230 | 165,950 | 129,615 |
Rental income, net | 8,867 | 28,320 | 37,067 | 23,105 |
Extension fees | 212,608 | 86,671 | 415,128 | 232,886 |
Other Fees | 124,292 | 55,025 | 259,542 | 150,094 |
Legal fees | 91,115 | 69,800 | 253,055 | 181,600 |
Other income | 75,289 | 98,823 | 579,541 | 833,260 |
Total | $ 641,749 | $ 591,441 | $ 2,048,921 | $ 1,851,031 |
Commitments and Contingencies -
Commitments and Contingencies - Original maturities of deferred revenue (Details) - Deferred revenue | Sep. 30, 2022 USD ($) |
Commitments and Contingencies | |
Year ending December 31, 2022 | $ 1,583,313 |
Year ending December 31, 2023 | 2,687,114 |
Year ending December 31, 2024 | 201,373 |
Total | $ 4,471,800 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Details) | 1 Months Ended | 9 Months Ended | ||
Jul. 31, 2022 USD ($) | Apr. 30, 2022 USD ($) shares | Sep. 30, 2022 USD ($) property | Dec. 31, 2021 USD ($) | |
Commitments and Contingencies | ||||
Deferred revenue | $ 4,471,800 | $ 4,643,490 | ||
Employment agreements description | (i) the employment term is five years with extensions for successive one-year periods unless either party provides written notice at least 180 days prior to the next anniversary date of its intention to not renew the agreement; (ii) a base salary of $260,000, which was increased in April 2018, April 2021 and April 2022 to $360,000, $500,000 and $750,000, respectively; (iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s Board of Directors; (iv) participation in the Company’s employee benefit plans; (v) full indemnification to the extent permitted by law; (vi) a two-year non-competition period following the termination of employment without cause; and (vii) payments upon termination of employment or a change in control. In April 2022, the Company granted 98,425 restricted common shares (having a market value of approximately $500,000) to Mr. Villano. One-third of such shares will vest on January 1, 2023, and an additional one-third will vest on each of January 1, 2024 and 2025. | |||
Number of mortgage properties | property | 4 | |||
Mortgages receivable | $ 236,000 | |||
Base salary | $ 325,000 | |||
Unfunded Commitments | ||||
Commitments and Contingencies | ||||
Other commitments | $ 118,103,785 | |||
Minimum | ||||
Commitments and Contingencies | ||||
Loan origination and modification fees range as percentage of the original loan principal | 1% | |||
Maximum | ||||
Commitments and Contingencies | ||||
Loan origination and modification fees range as percentage of the original loan principal | 3% | |||
John Villano | ||||
Commitments and Contingencies | ||||
Restricted common shares issued | shares | 98,425 | |||
Market value of shares granted | $ 500,000 | |||
John Villano | Tranche one | ||||
Commitments and Contingencies | ||||
Vesting percentage | 0.33% | |||
John Villano | Tranche two | ||||
Commitments and Contingencies | ||||
Vesting percentage | 0.33% | |||
John Villano | Tranche three | ||||
Commitments and Contingencies | ||||
Vesting percentage | 0.33% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Shareholders | ||||
Related Party Transactions | ||||
Shareholders totaled | $ 20,932,994 | $ 13,200,972 | $ 20,932,994 | $ 13,200,972 |
Interest income earned | 416,275 | 252,050 | 1,248,826 | 573,446 |
Wife of Executive Officer | Accounting and Financial Services | ||||
Related Party Transactions | ||||
Compensation expenses | 2,115 | $ 29,250 | 62,865 | $ 85,634 |
Daughter of chief executive officer | ||||
Related Party Transactions | ||||
Compensation received | 35,727 | 106,327 | ||
Step-daughter of chief executive officer | Executive assistant and administrative services | ||||
Related Party Transactions | ||||
Compensation received | $ 8,313 | $ 43,929 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) - Credit Concentration Risk | 9 Months Ended |
Sep. 30, 2022 | |
Concentration of Credit Risk | |
Concentration risk, description | SIPC protects clients against the custodial risk of a member investment firm becoming insolvent by replacing missing securities and cash up to $500,000, including up to $250,000 in cash, per client in accordance with SIPC rules. |
First Mortgage Liens On Real Property | |
Concentration of Credit Risk | |
Concentration of risk threshold percentage | 43% |
Florida | First Mortgage Liens On Real Property | |
Concentration of Credit Risk | |
Concentration of risk threshold percentage | 21.70% |
New York | First Mortgage Liens On Real Property | |
Concentration of Credit Risk | |
Concentration of risk threshold percentage | 14.20% |
Outstanding Warrants (Details)
Outstanding Warrants (Details) | 1 Months Ended | |||
Jan. 31, 2022 shares | Sep. 30, 2022 shares | Oct. 31, 2017 $ / shares shares | Feb. 28, 2017 item $ / shares shares | |
Outstanding Warrants | ||||
Number of Public Offerings | item | 2 | |||
IPO | ||||
Outstanding Warrants | ||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 130,000 | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 6.25 | |||
Follow-on public offering | ||||
Outstanding Warrants | ||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 93,750 | 49,219 | 187,500 | |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 5 | |||
Common stock shares issued upon exercise of warrants | 19,658 |
Stock-Based Compensation and _2
Stock-Based Compensation and Employee Benefits (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Apr. 16, 2018 | Jan. 31, 2024 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Oct. 27, 2016 | |
Stock-Based Compensation and Employee Benefits: | |||||||
Percentage of employer contribution | 3% | ||||||
401(k) Plan expenses | $ 21,924 | $ 13,814 | $ 71,925 | $ 46,276 | |||
2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Maximum number of common shares reserved for the grant of awards | 1,500,000 | ||||||
Aggregate shares available for grants in period | 1,198,468 | 1,198,468 | |||||
Stock based compensation | $ 127,000 | $ 64,219 | $ 357,167 | $ 126,538 | |||
Unrecorded stock based compensation expense | $ 842,604 | $ 842,604 | |||||
Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Shares granted | 15,000 | 0 | 153,967 | 94,681 | |||
Vested immediately on the grant date | Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Shares vested | 17,264 | ||||||
Vested on first anniversary | Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Stock grants in period, gross | 17,264 | ||||||
Vested on second anniversary | Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Stock grants in period, gross | 17,264 | ||||||
Vested on fourth anniversary | Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Shares vested | 3,750 | ||||||
Vested on January 1, 2022 | Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Shares vested | 29,976 | ||||||
Vested on January 1, 2023 | Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Shares vested | 29,976 | ||||||
Stock grants in period, gross | 32,808 | ||||||
Vested on January 1, 2024 | Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Stock grants in period, gross | 32,808 | 29,976 | |||||
Vested on January 1, 2025 | Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Stock grants in period, gross | 32,809 | ||||||
Vested when waived the restrictions | Restricted Stock | 2016 Equity Compensation plan | |||||||
Stock-Based Compensation and Employee Benefits: | |||||||
Shares vested | 4,753 |
Equity Offerings (Details)
Equity Offerings (Details) - USD ($) | 9 Months Ended | |||
Aug. 24, 2022 | Dec. 06, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Equity Offerings: | ||||
Proceeds from issuance of common shares, net of expenses | $ 36,654,419 | $ 30,883,928 | ||
ATM | ||||
Equity Offerings: | ||||
Number of shares issued during the period | 7,177,043 | |||
Proceeds from issuance of common shares, net of expenses | $ 36,654,419 | |||
Common stock issued under prospectus supplement dated December 6, 2021 | ||||
Equity Offerings: | ||||
Number of shares issued during the period | 7,177,043 | |||
Proceeds from issuance of common shares, net of expenses | $ 36,654,419 | |||
Common stock issued under prospectus supplement dated December 6, 2021 | ATM | ||||
Equity Offerings: | ||||
Authorized amount to be issued | $ 44,925,000 | |||
Common shares under prospectus supplement Dated August 24, 2022 | ||||
Equity Offerings: | ||||
Authorized amount to be issued | $ 75,000,000 | |||
Common shares available for future sale | 75,000,000 | |||
Common shares under prospectus supplement Dated August 24, 2022 | ATM | Series A Preferred Stock | ||||
Equity Offerings: | ||||
Preferred stock liquidation preference value | $ 25,000,000 | |||
Preferred stock available for future sale | $ 25,000,000 |
Partnership Investments (Detail
Partnership Investments (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 STD (Db) | |
Partnership Investments | |||
Partnership investment, total | $ 22,500,000 | $ 22,500,000 | Db 4 |
Income from partnership investment | 523,067 | 1,112,560 | |
Unfunded partnership commitments | $ 3,600,000 | $ 3,600,000 | |
Maximum | |||
Partnership Investments | |||
Participation interest in mortgage loans | 49 | 49 | 49 |
Special Purpose Acquisition C_2
Special Purpose Acquisition Corporation (Details) - USD ($) | 9 Months Ended | ||
Jul. 14, 2021 | Mar. 24, 2021 | Sep. 30, 2022 | |
Special Purpose Acquisition Corporation | |||
Registration and legal fees | $ 472,800 | ||
Sachem Acquisition Corp | |||
Special Purpose Acquisition Corporation | |||
Sale of units | 5,750,000 | ||
Price per unit | $ 10 | ||
Aggregate sale price | $ 57,500,000 | ||
Sachem Sponsor LLC | |||
Special Purpose Acquisition Corporation | |||
Loan to related party | $ 25,000 | ||
Common Class A | |||
Special Purpose Acquisition Corporation | |||
Number of shares in a unit | 1 | ||
Number of warrants in a unit | 0.5 | ||
Number of shares issuable for warrant | 1 | ||
Common Class B | Sachem Sponsor LLC | |||
Special Purpose Acquisition Corporation | |||
Number of shares issued during the period | 1,437,500 |
Series A Preferred Stock (Detai
Series A Preferred Stock (Details) - $ / shares | Jun. 25, 2021 | Sep. 30, 2022 | Dec. 31, 2021 |
Series A Preferred Stock | |||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Series A Preferred Stock | |||
Series A Preferred Stock | |||
Preferred stock, shares authorized | 1,955,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | ||
Dividend rate | 7.75% | ||
Share price | $ 25 | ||
Liquidation preference per annum | 1.9375 | ||
Preferred stock, redemption price per share | $ 25 | ||
Redemption period for preference stock | 120 days |
Charter Amendment (Details)
Charter Amendment (Details) - shares | Sep. 30, 2022 | Aug. 23, 2022 | Jul. 19, 2022 | Dec. 31, 2021 |
Charter Amendment | ||||
Common shares, shares authorized | 200,000,000 | 200,000,000 | ||
Maximum | ||||
Charter Amendment | ||||
Common shares, shares authorized | 200,000,000 | |||
Minimum | ||||
Charter Amendment | ||||
Common shares, shares authorized | 100,000,000 | |||
At-the Market Offering | Series A Preferred Stock | ||||
Charter Amendment | ||||
Number of common shares to be reserved upon conversion | 72,575,000 | |||
At-the Market Offering | Series A Preferred Stock | Maximum | ||||
Charter Amendment | ||||
Common shares, shares authorized | 2,903,000 | |||
At-the Market Offering | Series A Preferred Stock | Minimum | ||||
Charter Amendment | ||||
Common shares, shares authorized | 1,955,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | ||||||
Oct. 26, 2024 | Oct. 26, 2023 | Oct. 26, 2022 | Nov. 09, 2022 | Oct. 27, 2022 | Oct. 07, 2022 | Oct. 05, 2022 | |
Subsequent Events | |||||||
Shares repurchased | $ 7.5 | ||||||
At The Market Offering | |||||||
Subsequent Events | |||||||
Shares granted | 405,037 | ||||||
Gross proceeds from sale of shares | $ 1.6 | ||||||
Restricted Stock | |||||||
Subsequent Events | |||||||
Dividend payable per common share | $ 0.13 | ||||||
Restricted Stock | Employee | |||||||
Subsequent Events | |||||||
Shares granted | 10,000 | ||||||
Share price | $ 3.83 | ||||||
Restricted Stock | Employee | Tranche one | |||||||
Subsequent Events | |||||||
Shares vested | 3,334 | ||||||
Restricted Stock | Employee | Tranche two | |||||||
Subsequent Events | |||||||
Shares vested | 3,333 | ||||||
Restricted Stock | Employee | Tranche three | |||||||
Subsequent Events | |||||||
Shares vested | 3,333 | ||||||
Urbane New Haven, LLC | |||||||
Subsequent Events | |||||||
Purchase price of assets (in shares) | 300,000 | ||||||
Purchase price of assets | $ 1.1 | ||||||
Share price | $ 3.68 |