Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | May 09, 2024 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
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 | 568 East 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 | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 47,446,051 | |
Entity Central Index Key | 0001682220 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Shares | ||
Document and Entity Information | ||
Title of 12(b) Security | Common Shares, par value $.001 per share | |
Trading Symbol | SACH | |
Security Exchange Name | NYSE | |
7.125% Notes due 2024 | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.125% Notes due 2024 | |
Trading Symbol | SCCB | |
Security Exchange Name | NYSE | |
6.875% Notes due 2024 | ||
Document and Entity Information | ||
Title of 12(b) Security | 6.875% Notes due 2024 | |
Trading Symbol | SACC | |
Security Exchange Name | NYSE | |
7.75% Notes due 2025 | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.75% Notes due 2025 | |
Trading Symbol | SCCC | |
Security Exchange Name | NYSE | |
6.00% Notes due 2026 | ||
Document and Entity Information | ||
Title of 12(b) Security | 6.00% Notes due 2026 | |
Trading Symbol | SCCD | |
Security Exchange Name | NYSE | |
6.00% Notes due 2027 | ||
Document and Entity Information | ||
Title of 12(b) Security | 6.00% Notes due 2027 | |
Trading Symbol | SCCE | |
Security Exchange Name | NYSE | |
7.125% Notes due 2027 | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.125% Notes due 2027 | |
Trading Symbol | SCCF | |
Security Exchange Name | NYSE | |
8.00% Notes 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 $25.00 per share | |
Trading Symbol | SACHPRA | |
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEETS (un
CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Cash and cash equivalents | $ 18,413,401 | $ 12,598,256 |
Investment securities (at fair value) | 38,432,752 | 37,776,032 |
Mortgages receivable | 490,743,670 | 499,235,371 |
Less: Allowance for credit losses | (8,053,252) | (7,523,160) |
Mortgages receivable, net of allowance for credit losses | 482,690,418 | 491,712,211 |
Investments in rental real estate, net | 11,266,309 | 10,554,461 |
Interest and fees receivable, net | 8,083,432 | 8,474,820 |
Due from borrowers, net | 5,241,976 | 5,596,883 |
Real estate owned | 3,703,519 | 3,461,519 |
Investments in partnerships | 46,221,719 | 43,035,895 |
Property and equipment, net | 3,330,653 | 3,373,485 |
Other assets | 9,143,300 | 8,955,250 |
Total assets | 626,527,479 | 625,538,812 |
Liabilities: | ||
Notes payable (net of deferred financing costs of $5,443,237 and $6,048,490, respectively) | 282,958,513 | 282,353,260 |
Repurchase facility | 25,860,601 | 26,461,098 |
Mortgage payable | 1,061,720 | 1,081,303 |
Lines of credit | 62,251,343 | 61,792,330 |
Accrued dividends payable | 5,144,203 | |
Accounts payable and accrued liabilities | 2,754,348 | 2,321,535 |
Advances from borrowers | 9,176,571 | 10,998,351 |
Below market lease intangible | 664,737 | 664,737 |
Deferred revenue | 4,356,605 | 4,647,302 |
Total liabilities | 389,084,438 | 395,464,119 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Preferred shares - $0.001 par value; 5,000,000 shares authorized; 2,903,000 shares designated as Series A Preferred Stock; 2,108,957 and 2,029,923 shares of Series A Preferred Stock issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 2,109 | 2,030 |
Common shares - $0.001 par value; 200,000,000 shares authorized; 47,446,051 and 46,765,483 issued and outstanding at March 31, 2024 and December 31, 2023 | 47,446 | 46,765 |
Paid-in capital | 253,669,954 | 249,825,780 |
Accumulated other comprehensive income | 190,329 | 315,614 |
Accumulated deficit | (16,466,797) | (20,115,496) |
Total shareholders' equity | 237,443,041 | 230,074,693 |
Total liabilities and shareholders' equity | $ 626,527,479 | $ 625,538,812 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Deferred financing costs | $ 5,443,237 | $ 6,048,490 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
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 | 47,446,051 | 46,765,483 |
Common shares, shares outstanding | 47,446,051 | 46,765,483 |
Series A Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | |
Preferred stock, shares authorized | 2,903,000 | 2,903,000 |
Preferred stock, shares issued | 2,108,957 | 2,029,923 |
Preferred stock, shares outstanding | 2,108,957 | 2,029,923 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenue: | ||
Interest income from loans | $ 12,641,444 | $ 10,983,326 |
Investment gain, net | 527,824 | 274,796 |
Income from partnership investments | 1,195,300 | 549,723 |
Origination and modification fees, net | 1,461,966 | 1,475,920 |
Fee and other income | 1,189,241 | 707,605 |
Unrealized gain on equity securities | 185,181 | 716,389 |
Total revenue | 17,200,956 | 14,707,759 |
Operating costs and expenses: | ||
Interest and amortization of deferred financing costs | 7,469,442 | 6,872,967 |
Compensation, fees and taxes | 1,943,197 | 1,779,318 |
General and administrative expenses | 1,238,574 | 898,115 |
Other expenses | 556,640 | 83,722 |
Loss (Gain) on sale of real estate and equipment, net | 10,854 | (148,100) |
Provision for credit losses related to loans | 1,312,024 | 101,515 |
Total operating costs and expenses | 12,530,731 | 9,587,537 |
Net income | 4,670,225 | 5,120,222 |
Preferred stock dividend | (1,021,526) | (924,762) |
Net income attributable to common shareholders | 3,648,699 | 4,195,460 |
Other comprehensive income (loss) | ||
Unrealized (loss) gain on debt securities | (125,285) | 91,637 |
Total comprehensive income | $ 3,523,414 | $ 4,287,097 |
Basic and diluted net income per common share outstanding: | ||
Basic (in dollars per share) | $ 0.08 | $ 0.10 |
Diluted (in dollars per share) | $ 0.08 | $ 0.10 |
Weighted average number of common shares outstanding: | ||
Basic (in shares) | 47,326,384 | 42,792,509 |
Diluted (in shares) | 47,326,384 | 42,792,509 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) - USD ($) | Series A Preferred Stock Preferred Shares | Series A Preferred Stock Additional Paid in Capital | Series A Preferred Stock | Preferred Shares | Common Shares | Additional Paid in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2022 | $ 1,903 | $ 41,094 | $ 226,220,990 | $ (561,490) | $ (7,995,143) | $ 217,707,354 | |||
Beginning balance (in shares) at Dec. 31, 2022 | 1,903,000 | 41,093,536 | |||||||
Cumulative effect of adoption of new accounting principle (ASU 2016-13) | (2,489,574) | (2,489,574) | |||||||
Issuance of Series A Preferred Stock, net of expenses | $ 6 | $ 136,699 | $ 136,705 | ||||||
Issuance of Series A Preferred Stock, net of expenses (in shares) | 6,187 | ||||||||
Issuance of Common Shares, net of expenses | $ 2,480 | 9,178,678 | 9,181,158 | ||||||
Issuance of Common Shares, net of expenses (in shares) | 2,479,798 | ||||||||
Stock - based compensation | $ 183 | 173,132 | 173,315 | ||||||
Stock - based compensation (in shares) | 183,390 | ||||||||
Unrealized gain or loss on investments | 91,637 | 91,637 | |||||||
Dividends paid on Series A Preferred Stock | (924,762) | (924,762) | |||||||
Net income | 5,120,222 | 5,120,222 | |||||||
Ending balance at Mar. 31, 2023 | $ 1,909 | $ 43,757 | 235,709,499 | (469,853) | (6,289,257) | 228,996,055 | |||
Ending balance (in shares) at Mar. 31, 2023 | 1,909,187 | 43,756,724 | |||||||
Beginning balance at Dec. 31, 2023 | $ 2,030 | $ 46,765 | 249,825,780 | 315,614 | (20,115,496) | 230,074,693 | |||
Beginning balance (in shares) at Dec. 31, 2023 | 2,029,923 | 46,765,483 | |||||||
Issuance of Series A Preferred Stock, net of expenses | $ 79 | $ 1,556,103 | $ 1,556,182 | ||||||
Issuance of Series A Preferred Stock, net of expenses (in shares) | 79,034 | ||||||||
Issuance of Common Shares, net of expenses | $ 569 | 2,049,471 | 2,050,040 | ||||||
Issuance of Common Shares, net of expenses (in shares) | 568,711 | ||||||||
Stock - based compensation | $ 112 | 238,600 | 238,712 | ||||||
Stock - based compensation (in shares) | 111,857 | ||||||||
Unrealized gain or loss on investments | (125,285) | (125,285) | |||||||
Dividends paid on Series A Preferred Stock | (1,021,526) | (1,021,526) | |||||||
Net income | 4,670,225 | 4,670,225 | |||||||
Ending balance at Mar. 31, 2024 | $ 2,109 | $ 47,446 | $ 253,669,954 | $ 190,329 | $ (16,466,797) | $ 237,443,041 | |||
Ending balance (in shares) at Mar. 31, 2024 | 2,108,957 | 47,446,051 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 4,670,225 | $ 5,120,222 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of deferred financing costs and bond discount | 623,788 | 600,215 |
Depreciation expense | 94,174 | 40,132 |
Stock-based compensation | 238,712 | 173,315 |
Provision for credit losses related to loans | 1,312,024 | 101,515 |
Loss (Gain) on sale of real estate and equipment, net | 10,854 | (148,100) |
Unrealized gain on equity securities | (185,181) | (716,389) |
Gain on sale of investment securities | (275,879) | |
Changes in operating assets and liabilities: | ||
Interest and fees receivable, net | 391,388 | (366,191) |
Other assets | (221,845) | (489,696) |
Due from borrowers, net | (1,037,945) | (783,302) |
Accounts payable and accrued liabilities | 432,813 | 10,483 |
Deferred revenue | (290,697) | 320,608 |
Advances from borrowers | (1,821,780) | 1,422,458 |
Total adjustments | (453,695) | (110,831) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 4,216,530 | 5,009,391 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of investment securities | (7,725,283) | (13,971,218) |
Proceeds from the sale of investment securities | 7,128,459 | 3,780,522 |
Purchase of interests in investment partnerships, net | (3,185,824) | (4,491,054) |
Proceeds from sale of real estate owned | 121,146 | 515,136 |
Acquisitions of and improvements to real estate owned, net | (103,136) | |
Purchases of property and equipment | (14,505) | (710,883) |
Purchases of rental real estate | (748,685) | |
Principal disbursements for mortgages receivable | (42,654,300) | (58,883,824) |
Principal collections on mortgages receivable | 51,398,181 | 39,884,300 |
Other assets - pre-offering costs | 25,111 | |
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 4,319,189 | (33,955,046) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net proceeds from lines of credit | 459,013 | 10,086,036 |
Net proceeds from (repayment of) repurchase facility | (600,497) | 11,522,349 |
Proceeds from (repayment of) mortgage | (19,583) | 910,000 |
Accounts payable and accrued liabilities - principal payments on other notes | (4,252) | |
Dividends paid on common shares | (5,144,203) | (5,342,160) |
Dividends paid on Series A Preferred Stock | (1,021,526) | (924,762) |
Proceeds from issuance of common shares, net of expenses | 2,050,040 | 9,181,158 |
Proceeds from issuance of Series A Preferred Stock, net of expenses | 1,556,182 | 136,705 |
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (2,720,574) | 25,565,074 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 5,815,145 | (3,380,581) |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 12,598,256 | 23,713,097 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 18,413,401 | 20,332,516 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION | ||
Cash paid during the period for interest | $ 6,851,147 | $ 6,191,398 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOW (Parenthetical) - USD ($) | Mar. 31, 2024 | Mar. 31, 2023 |
CONSOLIDATED STATEMENTS OF CASH FLOW | ||
Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable | $ 374,000 | $ 1,186,663 |
The Company
The Company | 3 Months Ended |
Mar. 31, 2024 | |
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 operates its business as one segment. The Company offers short-term (i.e., one |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Unaudited Consolidated Financial Statements The accompanying unaudited consolidated financial statements (“the consolidated 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 consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023 and the notes thereto included in the Company’s Annual Report on Form 10-K. Results of operations for the three months ended March 31, 2024, are not necessarily indicative of the operating results to be attained in the entire fiscal year, or for any subsequent period. Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases the use of estimates on (a) various assumptions that consider prior reporting results, (b) projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. 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 significant intercompany accounts and transactions have been eliminated in consolidation. 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. Investment Securities Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. Fair value is calculated based on publicly available market information or other estimates determined by management. If the cost of an investment exceeds its fair value, management evaluates, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. To determine credit losses, management may employ a systematic methodology that considers available quantitative and qualitative evidence. In addition, management may consider specific adverse conditions related to the financial health of, and business outlook for, the issuer of the debt security. If the Company plans to sell the security or it is more likely than not that it will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in net income and a new cost basis in the investment is established. If market, industry, and/or business and/or financial conditions relating to the issuer deteriorate, the Company may incur future losses and/or impairments. Equity investments with readily determinable fair values are measured at fair value. Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative). Management performs a qualitative assessment on a periodic basis and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are recorded in net income. Allowance for Current Expected Credit Losses The Company adopted the current expected credit loss (“CECL”) standard effective January 1, 2023 in accordance with ASU No. 2016-13. The initial CECL allowance (”Allowance for credit losses”) adjustment of $2,489,574 was recorded effective January 1, 2023 as a cumulative-effect of change in accounting principle through a direct charge to accumulated deficit on the consolidated statements of shareholders’ equity; however, subsequent changes to the CECL allowance will be recognized in the consolidated statements of comprehensive income in “Provision for credit losses related to loans”. The Company records an allowance for credit losses in accordance with the CECL standard on the Company’s loan portfolio, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics. This methodology, known as the “static pool methodology”, replaces the probable incurred loss impairment methodology. In addition, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are also analyzed for credit losses in accordance with the CECL standard, as they represent a financial asset that is subject to credit risk. As allowed under the CECL standard used by the Company, as a practical expedient, the fair value of the collateral at the reporting date is compared to the net carrying amount of the loan when determining the allowance for credit losses for loans in pending/pre-foreclosure status, as defined. Fair value of collateral is reduced by estimated cost to sell if the collateral is expected to be sold. The amount of loans in pending/pre-foreclosure as of March 31, 2024 and December 31, 2023 was approximately $72.9 million and $68.1 million, respectively. As of March 31, 2024 and December 31, 2023, the Company has taken reserves against loans subject to foreclosure of approximately $7.3 million and $6.2 million, respectively, which is included in “Allowance for credit losses” on the accompanying balance sheets. The CECL standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the economic environment. The Company utilizes a loss-rate method for estimating current expected credit losses. The loss rate method involves applying a loss rate to a pool of loans with similar risk characteristics to estimate the expected credit losses on that pool of loans. In determining the CECL allowance, the Company considers various factors including (1) historical loss experience in its portfolio, (2) loan specific losses for loans deemed collateral dependent based on excess amortized cost over the fair value of the underlying collateral, and (3) its current and future view of the macroeconomic environment. The Company utilizes a forecast of three years which approximates its longer-term loans, which are often the construction loans. Management estimates the allowance for credit losses using relevant information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. The allowance for credit losses is maintained at a level sufficient to provide for expected credit losses over the life of the loans based on evaluating historical credit loss experience and to make adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio. The Allowance for credit losses related to the principal outstanding is presented within “Mortgages receivable, net” and for unfunded commitments is within accounts payable and accrued liabilities in the Company’s consolidated balance sheets. The Allowance for credit losses related to the late payment fees are presented in “Interest and fees receivable, net”, and “Due from borrowers, net” in the Company’s consolidated balance sheets. Lastly, the allowance related to unfunded commitments for construction loans is presented in “Accounts payable and accrued liabilities” in the Company’s consolidated balance sheets. The below table represents the financial statement line items that are impacted by the Allowance for credit losses: Provision for credit Balance as of December 31, 2023 losses related to loans Balance as of March 31, 2024 Mortgages receivable $ 7,523,160 $ 530,092 $ 8,053,252 Interest receivable 901,957 207,846 1,109,803 Due from borrower 352,459 542,345 894,804 Unfunded commitments 508,600 31,741 540,341 Total Allowance for credit losses $ 9,286,176 $ 1,312,024 $ 10,598,200 As of March 31, 2024 and December 31, 2023 the Company had an allowance for credit losses on debt securities of approximately $0.8 million for each year, which is presented in “Investment securities (at fair value)” on the Company’s consolidated balance sheets. As of March 31, 2024 and 2023, fair market value of these securities was $821,052 and $1,130,518, respectively. The cost basis of these securities were $1,647,841. 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”) Topic 820 are described as follows: Level 1 Level 2 ● quoted prices for similar assets or liabilities in active markets; ● quoted prices for identical or similar assets or liabilities in inactive markets; ● inputs other than quoted prices that are observable for the asset or liability; and ● inputs that are derived principally from or corroborated by observable market data by correlation to other means. If the asset or liability has a specified ( Level 3 Property and Equipment Land and building acquired in 2021 to serve as the Company’s corporate headquarters is stated at cost. Renovation of the building was completed in the first quarter of 2023 and the Company relocated its operations to the new building in March 2023. The building is being depreciated using the straight – line method over its estimated useful life of 40 years. The new building was placed in service during the three months ended March of 2023. The following tables represent the Company’s Property and Equipment, Net as of March 31, 2024 and December 31, 2023: March 31, 2024 Cost Accumulated Depreciation Property and Equipment, Net Building $ 2,541,214 $ (62,756) $ 2,478,458 Land 255,013 — 255,013 Furniture and fixtures 280,889 (80,051) 200,838 Computer hardware and software 284,578 (211,029) 73,549 Vehicles 435,180 (112,385) 322,795 Total property and equipment, net $ 3,796,874 $ (466,221) $ 3,330,653 December 31, 2023 (Audited) Cost Accumulated Depreciation Property and Equipment, Net Building $ 2,541,214 $ (50,694) $ 2,490,520 Land 262,631 — 262,613 Furniture and fixtures 319,898 (68,891) 251,098 Computer hardware and software 352,573 (227,687) 124,886 Vehicles 305,980 (61,612) 244,368 Total property and equipment, net $ 3,782,369 $ (408,884) $ 3,373,485 Investment in Rental Real Estate Real estate is carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized. Maintenance and repairs are expensed as incurred. For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment, including interest and debt expense, are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete. If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair value of the redeveloped property, the excess is charged to expense. Depreciation is recognized on a straight-line basis over the estimated useful lives of these assets which range from 7 to 40 years. Tenant allowances are amortized on a straight-line basis over the shorter of the lives of the related leases, or the useful lives of the assets. Upon the acquisition of real estate, the Company assesses whether the transaction should be accounted for as an asset acquisition or as a business combination. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. Acquisitions of real estate generally will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings, and related identified intangible assets). The Company allocates the purchase price of real estate to land and building (inclusive of site and tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases. The allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed involves subjectivity as the allocations are based on an analysis of the respective fair values. In determining the fair value of the real estate acquired, the Company utilized a third-party valuation which primarily utilizes cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. The Company assesses the fair value of the acquired leases based on estimated cash flow projections that utilize appropriate discount rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. The determined and allocated fair values to the real estate acquired will affect the amount of depreciation and amortization we record over the respective estimated useful lives or term of the lease. On June 23, 2023, the Company entered into a purchase and sale contract (the “Westport Purchase Agreement”) to acquire a commercial office building in Westport, CT (the “Westport Asset”) for $10,600,000. The transaction was completed on August 31, 2023. In connection with this transaction, which was accounted for as an asset acquisition, the Company allocated the purchase price and acquisition-related costs to the tangible and intangible assets acquired based on fair value. In addition, the Company recorded a lease liability stemming from below-market rental rates. Total consideration, including capitalized acquisition-related costs, was $10,725,237. See Note 5 – Investment in Rental Real Estate, net for further details surrounding the above acquisition as of March 31, 2024. Real Estate Owned (“REO”) REO acquired through foreclosure is initially measured at fair value and is thereafter subject to an ongoing impairment analysis. After an REO acquisition, events or circumstances may occur that result in a material and sustained decrease in the cash flows generated from the property or other market indicators including listing data may signal a decline in the liquidation value. REO is evaluated for recoverability when impairment indicators are identified. Any impairment losses are included in the consolidated statements of comprehensive income. Impairment of Long-Lived Assets The Company continually 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 is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Goodwill Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment. Goodwill at March 31, 2024 represents the excess of the consideration paid over the fair value of net assets acquired from Urbane New Haven, LLC in October 2022. In testing goodwill for impairment, the Company adheres to ASC Topic 350, “Intangibles—Goodwill and Other”, which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or the Company chooses not to perform the qualitative assessment, then it compares the fair value of that reporting unit with its carrying value, including goodwill. As of March 31, 2024 and 2023, goodwill was approximately $0.4 million, which is presented in other assets on the Company’s consolidated balance sheets. There was no impairment to goodwill during the three months ended March 31, 2024 and 2023. Deferred Financing Costs Costs incurred in connection with the Company’s revolving credit facilities, described in Note 8-Lines of Credit, Mortgage Payable 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 issuance of unsecured, unsubordinated notes, described in Note 9 – Unsecured Notes Payable, are being amortized over the term of the respective unsecured, unsubordinated 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 March 31, 2024 but collected prior to the issuance of this report is included in income for the three-month period ended March 31, 2024. 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 Topic 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. Other than taxes incurred by TRSs (see below), the Company does not expect to incur any corporate federal income tax liability outside of the TRSs, as it believes it has maintained its qualification as a REIT. The Company has elected, and may elect in the future, to treat certain of its existing or newly created corporate subsidiaries as taxable REIT subsidiaries (“TRSs”). In general, a TRS may hold assets that the Company cannot hold directly and generally may engage in any real estate or non-real estate related business. The TRSs generate income, resulting in federal and state income tax liability for these entities. During the three months ended March 31, 2024, the Company’s TRSs recognized provisions for federal and state income tax of $190,025, which is represented in other expenses on the Company’s consolidated statements of comprehensive income. During the three months ended March 31, 2023, there were no recognized provisions for federal income tax nor state tax. The income tax provision for the Company differs from the amount computed from applying the statutory federal income tax rate to income before income taxes due to non-taxable REIT income and other permanent differences including the non-deductibility of acquisition costs of business combinations for federal income tax reporting. 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 Topic 260 — “Earnings Per Share.” Under ASC Topic 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income. As of March 31, 2024, the Company had basic and diluted weighted average shares of 47,326,384 outstanding share outstanding share Recent Accounting Pronouncements In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” ASU 2022-03 was issued to (1) to clarify the guidance in FASB ASC Topic 820, “Fair Value Measurement”, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with FASB ASC Topic 820. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. This update did not have a material effect on the Company’s financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (FASB ASC Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provides new segment disclosure requirements for entities with a single reportable segment. This standard is effective for the Company beginning with its 2024 annual reporting. ASU 2023-07 is to be adopted retrospectively to all prior periods presented. The Company does not anticipate that this update will have a material impact on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s consolidated financial statements. Reclassifications Certain amounts included in the March 31, 2024 and December 31, 2023 consolidated financial statements have been reclassified to conform to the March 31, 2024 presentation. |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024: Level 1 Level 2 Total Stocks and ETFs $ — $ 1,942,897 $ 1,942,897 Mutual funds 16,461,721 — 16,461,721 Debt securities 19,207,082 821,052 20,028,134 Total investment securities $ 35,668,803 $ 2,763,949 $ 38,432,752 The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of December 31, 2023 (Audited): Level 1 Level 2 Total Stocks and ETF’s $ — $ 1,755,219 $ 1,755,219 Mutual funds 16,236,445 — 16,236,445 Debt securities 18,945,087 839,281 19,784,368 Total investment securities $ 35,181,532 $ 2,594,500 $ 37,776,032 Following is a description of the methodologies used for assets measured at fair value: Stocks and ETFs (Levels 1 and 2): Mutual funds (Levels 1 and 2): Debt securities Impact of Fair Value of Available-for-sale Securities on Other Comprehensive Income The carrying value of the Company’s financial instruments approximates fair value generally due to the relative short-term nature of such instruments. Other financial assets and financial liabilities have fair value that approximate their carrying value. Pursuant to ASC 326-30-50-4 and 50-5 the Company is required to disclose investment securities that have been in a continuous unrealized loss position for 12 months or more as of the balance sheet date. As of March 31, 2024 and December 31, 2023, the Company had a continuous unrealized losses over 12 months in Available-For-Sale (“AFS”) debt securities of approximately The following table presents the impact of the Company’s AFS securities - debt securities on its Other Comprehensive Income (“OCI”) for the three months ended March 31, 2024: Three Months Ended March 31, 2024 2023 OCI from AFS securities – debt securities: Unrealized (losses) on debt securities at beginning of period $ 315,614 $ (561,490) Reversal of losses from unrealized to realized 212,097 — Unrealized (losses) gain on debt securities (337,382) 91,637 Change in OCI from AFS debt securities (125,285) 91,637 Balance at end of period $ 190,329 $ (469,853) As of March 31, 2024 and 2023, the investment securities cost basis were approximately $41.1 million and $38.6 million, respectively. |
Mortgages Receivable, net
Mortgages Receivable, net | 3 Months Ended |
Mar. 31, 2024 | |
Mortgages Receivable, net | |
Mortgages Receivable, net | 4. Mortgages Receivable, net 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 the Northeastern United States and Florida. The Company’s lending standards typically require that the original principal amount of all mortgage receivable notes be secured by first mortgage liens on one or more properties owned by the borrower or related parties and that the maximum LTV be no greater than 70% of the appraised value of the underlying collateral, as determined by an independent appraiser at the time of the loan origination. The Company considers the maximum LTV as an indicator for the credit quality of a mortgage note receivable. In the case of properties undergoing renovation, the LTV ratio is calculated based on the estimated fair market value of the property after the renovations have been completed. However, the Company makes exceptions to this guideline if the facts and circumstances support the incremental risk. These factors include the additional collateral provided by the borrower, the credit profile of the borrower, the Company’s previous relationship, if any, with the borrower, the nature of the property, the geographic market in which the property is located and any other information the Company deems appropriate. The loans are generally for a term of one As of March 31, 2024 and December 31, 2023, loans on nonaccrual status had an outstanding principal balance of approximately $85.7 million and approximately $84.6 million, respectively. The nonaccrual loans are inclusive of loans pending foreclosure. For the three months ended March 31, 2024 and 2023, approximately $0.3 million and approximately $0.6 million of interest income was recorded on nonaccrual loans due to payments received, respectively. For the three months ended March 31, 2024 and 2023, the aggregate amounts of loans funded by the Company were approximately $42.7 million and approximately $58.9 million, respectively, offset by principal repayments of approximately $51.4 million and approximately $39.9 million, respectively. As of March 31, 2024, the Company’s mortgage loan portfolio includes loans ranging in size up to approximately $38.1 million with stated interest rates ranging from 5.0% to 15.0%, compared to loans ranging in size of up to approximately $29.9 million with stated interest rates ranging from 5.0% to 14.2% for the period ended March 31, 2023. The default interest rate is generally 18%, but could be more or less depending on state usury laws and other considerations deemed relevant by the Company. As of March 31, 2024, and December 31, 2023, the Company had one borrower representing 10.8% and 10.1% of the outstanding mortgage loan portfolio, or approximately $53.2 million and approximately $50.4 million, respectively. 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. If an interest reserve is established at the time a loan is funded, accrued interest is paid out of the interest reserve and recognized as interest income at the end of each month. If no reserve is established, the borrower is required to pay the interest monthly from its own funds. The deferred origination, loan servicing and amendment fee income represents amounts that will be recognized over the contractual life of the underlying mortgage notes receivable. Allowance for Credit Loss Allowance for credit losses are charged to income in amounts sufficient to maintain an allowance for credit losses inherent in the loans that are established systematically by management as of the reporting date. Management’s estimate of expected credit losses is based on an evaluation of relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the future collectability of the reported amounts. The Company uses static pool modeling techniques to determine the allowance for loan losses expected over the remaining life of the loans, which is supplemented by management’s judgment. Expected losses are estimated for groups of accounts aggregated by geographical location. The Company’s estimate of expected credit losses includes a reasonable and supportable forecast period equal to the contractual term of the loan plus any applicable short-term extensions that are reasonably expected for construction loans. The Company reviews charge-off experience factors, contractual delinquency, historical collection rates, the value of underlying collateral and other information to make the necessary judgments as to Allowance for credit losses expected in the portfolio as of the reporting date. While management utilizes the best information available to make its evaluations, changes in macroeconomic conditions, interest rate environments, or both, may significantly impact the assumptions and inputs used in determining the Allowance for credit losses. The Company’s charge-off policy is determined by a review of each delinquent loan. The Company has an accounting policy to not place loans on nonaccrual status unless they are more than 90 days delinquent. Accrual of interest income is generally resumed when the delinquent contractual principal and interest is paid in full or when a portion of the delinquent contractually payments are made and the ongoing required contractual payments have been made for an appropriate period. In assessing the Allowance for credit losses, the Company considers historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. The Company derived an annual historical loss rate based on its historical loss experience in its portfolio, adjusted to incorporate the risks of construction lending, other specific circumstances, and to reflect the Company’s expectations of the macroeconomic environment. The following table summarizes the activity in the mortgages receivable Allowance for credit losses from December 31, 2023 through March 31, 2024: Allowance for credit losses Allowance for credit losses as of Provision for credit losses as of March 31, (dollars in thousands) December 31, 2023 (Audited) related to loans 2024 Geographical Location New England $ 5,764 $ 350 $ 6,114 Mid-Atlantic 1,324 182 1,506 South 435 (2) 433 West — — — Total $ 7,523 $ 530 $ 8,053 Presented below is the Company’s loan portfolio by geographical location: March 31, 2024 December 31, 2023 (Audited) (dollars in thousands) Carrying Value % of Portfolio Carrying Value % of Portfolio Geographical Location New England $ 231,026 47.1 % $ 232,437 46.6 % Mid-Atlantic 90,678 18.5 % 99,288 19.9 % South 164,938 33.6 % 163,409 32.7 % West 4,101 0.8 % 4,101 0.8 % Total 490,743 100.0 % 499,235 100.0 % Less: Allowance for credit losses (8,053) (7,523) Carrying value, net $ 482,690 $ 491,712 Presented below are the carrying values by property type: March 31, 2024 December 31, 2023 (Audited) Outstanding Outstanding (dollars in thousands) Principal % of Portfolio Principal % of Portfolio Property Type Residential $ 243,965 49.7 % $ 246,520 49.4 % Commercial 179,122 36.5 % 186,524 37.4 % Pre-Development Land 37,210 7.6 % 35,920 7.2 % Mixed use 30,446 6.2 % 30,271 6.0 % Total 490,743 100.0 % 499,235 100.0 % Less: Allowance for credit losses (8,053) (7,523) Carrying value, net $ 482,690 $ 491,712 The following tables allocate the carrying value of the Company’s loan portfolio based on internal credit quality indicators in assessing estimated credit losses and vintage of origination at the dates indicated: March 31, 2024 Year Originated (1) Carrying % of FICO Score (2) (dollars in thousands) Value Portfolio 2024 2023 2022 2021 Prior Under 500 $ 403 0.1 % $ — $ — $ — $ — $ 403 501-550 3,698 0.8 % — — — 1,436 2,262 551-600 8,384 1.7 % — 290 2,629 3,716 1,749 601-650 33,989 6.9 % 1,138 5,545 4,053 11,955 11,298 651-700 77,436 15.8 % — 15,318 17,150 35,907 9,060 701-750 194,305 39.6 % 1,221 33,185 51,574 103,892 4,433 751-800 151,520 30.9 % 14,161 38,227 52,777 44,870 1,485 801-850 21,008 4.3 % 1,536 77 19,220 — 176 Total 490,743 100.0 % $ 18,056 $ 92,642 $ 147,403 $ 201,776 $ 30,866 Less: Allowance for credit losses (8,053) Carrying value, net $ 482,690 (1) Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2) The FICO Scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis. December 31, 2023 (Audited) Year Originated (1) Carrying % of FICO Score (2) (dollars in thousands) Value Portfolio 2023 2022 2021 2020 Prior Under 500 $ 1,764 1.3 % $ 216 $ — $ — $ — $ 1,548 501-550 6,555 1.3 % 2,331 1,440 1,864 — 920 551-600 33,723 6.8 % 15,019 9,839 6,854 1,127 884 601-650 103,601 20.8 % 16,053 26,981 52,073 3,988 4,506 651-700 97,284 19.5 % 17,862 40,318 30,203 3,662 5,239 701-750 167,977 33.6 % 19,935 51,276 83,946 7,411 5,409 751-800 64,313 11.9 % 14,461 20,806 27,027 592 1,427 801-850 24,018 4.8 % 865 23,096 — — 57 Total 499,235 100.0 % $ 86,742 $ 173,756 $ 201,967 $ 16,780 $ 19,990 Less: Allowance for credit losses (7,523) Carrying value, net $ 491,712 (1) Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2) The FICO Scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis. The following table sets forth the maturities of mortgages receivable as of March 31, 2024 and December 31, 2023: As of March 31, 2024 As of December 31, 2023 (Audited) (Dollars in thousands) 2024 and prior $ 346,167 $ 412,303 2025 126,654 86,836 2026 17,829 — Thereafter 93 96 Total 490,743 499,235 Less: Allowance for credit losses (8,053) (7,523) Total $ 482,690 $ 491,712 At March 31, 2024, of the 273 mortgage loans included in the Company’s loan portfolio, 72, or approximately 26.4%, representing approximately $140.7 million of mortgage receivables have matured but have not been repaid in full or extended. The 72 aforementioned loans are inclusive of loans in pending/pre-foreclosure status. These loans are in the process of modification and will be extended if the borrower can satisfy the Company’s underwriting criteria, including the proper LTV ratio, at the time of renewal. The Company treats renewals and extensions of existing loans as new loans. At December 31, 2023, of the 311 mortgage loans in the Company’s portfolio, 89, or approximately 28.6%, representing approximately $123.8 million of mortgage receivables, had matured in 2023 but were not repaid in full or extended. Loan modifications made to borrowers experiencing financial difficulty In certain situations, the Company may provide loan modifications to borrowers experiencing financial difficulty. These modifications may include term extensions, and adding unpaid interest, charges and taxes to the principal balance intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of collateral. The Company generally receives additional collateral as part of extending the terms of the loan for loans experiencing financial difficulty. The table below presents loan modifications made to borrowers experiencing financial difficulty: Three Months Ended March 31, 2024 % of Total Carrying Value of (in thousands) Carrying Value Loans, net Financial Effect Loans modified during the period ended Term extension $ 45,206 9.2 % A weighted average of 8.5 months were added to the life of the loans Other $ 16,848 3.4 % Unpaid interest/taxes/charges added to principal balance The Company monitors the performance of loans modified to borrowers experiencing financial difficulty. The table below presents the performance of loans that have been modified in the last three months to borrowers experiencing financial difficulty. The Company considers loans that are 90 days past due to be in payment default. Three Months Ended March 31, 2024 (in thousands) Current 90-119 days past due 120+ days past due Total Loans modified during the period ended Term extension $ 45,206 $ — $ — $ 45,206 Other $ 16,848 $ — $ — $ 16,848 Three Months Ended March 31, 2023 % of Total Carrying Value of (in thousands) Carrying Value Loans, net Financial Effect Loans modified during the period ended Term extension $ 17,250 3.6 % A weighted average of 8.5 months were added to the life of the loans Other $ 1,565 0.3 % Unpaid interest/taxes/charges added to principal balance The Company monitors the performance of loans modified to borrowers experiencing financial difficulty. The table below presents the performance of loans that have been modified in the last three months to borrowers experiencing financial difficulty. The Company considers loans that are 90 days past due to be in payment default. Three Months Ended March 31, 2023 (in thousands) Current 90-119 days past due 120+ days past due Total Loans modified during the period ended Term extension $ 17,250 $ — $ — $ 17,250 Other $ 1,565 $ — $ — $ 1,565 As of March 31, 2024 and 2023, the Company has committed to lend additional amounts totaling approximately $26.1 million and approximately $24.0 million to borrowers experiencing financial difficulty, respectively. |
Investment in Rental Real Estat
Investment in Rental Real Estate, net | 3 Months Ended |
Mar. 31, 2024 | |
Investment in Rental Real Estate, net | |
Investment in Rental Real Estate, net | 5. Investment in Rental Real Estate, net As of March 31, 2024 and December 31, 2023, investment in rental real estate, net consist of the following: Three months ended March 31, 2024 Cost Accumulated Depreciation Investment in Rental Real Estate, Net Land $ 4,556,786 $ — $ 4,556,786 Building 4,976,234 (61,698) 4,914,536 Site improvements 359,249 (11,975) 347,274 Tenant improvements 1,182,842 — 1,182,842 Construction in progress 264,871 — 264,871 Total $ 11,339,982 $ (73,673) $ 11,266,309 Year ended December 31, 2023 (Audited) Cost Accumulated Depreciation Investment in Rental Real Estate, Net Land $ 3,956,786 $ — $ 3,956,786 Building 4,935,715 (30,849) 4,904,866 Site improvements 359,249 (5,987) 353,262 Tenant improvements 1,182,842 — 1,182,843 Construction in progress 156,705 — 156,705 Total $ 10,591,297 $ (36,836) $ 10,554,461 Building and site improvements are being depreciated using the straight-line method over its estimated useful life of 40 years and 15 years, respectively. Tenant improvements are amortized over the life of the respective lease using the straight-line method. Lease in-place intangible assets, deferred leasing costs and acquired below-market leases are amortized on a straight-line basis over the respective life of the lease. For the three months ended March 31, 2024, depreciation and amortization related to the asset was $73,673. Tenant improvements and other intangibles associated with the tenant are not being amortized until the commencement of the lease which is not until 2025. Additionally, the Company leases space to a tenant under an operating lease. The lease provides for the payment of fixed base rent payable monthly in advance and periodic step-ups in rent over the term of the lease and a pass through to tenants their share of increases in real estate taxes and operating expenses over a base year. The lease also provides for free rent and a tenant improvement allowance of approximately $2.7 million. The rent concession period, or beginning of the lease term, begins January 2025 with a rent abatement period of 425 days. As of March 31, 2024, future minimum rents under non-cancelable operating leases were as follows: Years Ending December 31, Amount 2024 (9 months) $ — 2025 — 2026 1,039,922 2027 1,268,704 2028 1,294,078 Thereafter 10,061,513 Total $ 13,664,217 Estimated annual amortization of acquired below-market lease intangible is as follows: Years Ending December 31, Amount 2024 (9 months) $ — 2025 66,474 2026 66,474 2027 66,474 2028 66,474 Thereafter 398,841 Total $ 664,737 Estimated annual amortization of acquired in-place lease intangible is as follows: Years Ending December 31, Amount 2024 (9 months) $ — 2025 56,846 2026 56,846 2027 56,846 2028 56,846 Thereafter 341,076 Total $ 568,460 Estimated annual amortization of deferred leasing costs is as follows: Years Ending December 31, Amount 2024 (9 months) $ — 2025 38,692 2026 38,692 2027 38,692 2028 38,692 Thereafter 232,155 Total $ 386,923 In addition, the Westport Purchase Agreement contains a provision requiring the payment of an Additional Purchase Price, as defined, upon the earlier to occur of: ● The Company closing on any construction financing on the Project, as defined, or ● Twelve months following receipt of all zoning and other State and municipal permits and approvals necessary to construct certain residential units, as defined. These payments represent contingent consideration in connection with this acquisition, requiring accrual when the payments are deemed probable and reasonably estimable. In January 2024, the Company submitted a proposal to the town of Westport for eight market rate residential units and two affordable rate units. Those units were approved in March of 2024, subject to a 30 day appeal period. In April 2024, the 30 day appeal period for the Westport Asset land approval expired, and the Company deemed these events which would give rise to a payment of Additional Purchase Price allocated to land to be considered probable. Accordingly, the agreed payment of $75,000 per approved and sold or permitted market rate residential units has been recognized. The expected payment, of which is |
Real Estate Owned (REO)
Real Estate Owned (REO) | 3 Months Ended |
Mar. 31, 2024 | |
Real Estate Owned (REO) | |
Real Estate Owned (REO) | 6. Real Estate Owned (REO) Property acquired through foreclosure are included on the consolidated balance sheet as real estate owned and further categorized as held for sale or held for rental, described in detail below. As of March 31, 2024 and December 31, 2023, REO totaled $3,703,519 and $3,461,519, respectively. The Company recorded no impairment losses during the three months ended March 31, 2024 and 2023. The following table presents the Company’s REO as of March 31, 2024 and December 31, 2023: March 31, 2024 December 31, 2023 (Audited) Real estate owned at the beginning of year $ 3,461,519 $ 5,216,149 Principal basis transferred to real estate owned 374,000 1,756,125 Charges and building improvements — 229,587 Proceeds from sale of real estate owned (121,146) (3,039,749) Impairment loss — (794,462) Gain (loss) on sale of real estate owned (10,854) 93,869 Balance at end of year $ 3,703,519 $ 3,461,519 As of March 31, 2024, REO included $800,000 of real estate held for rental and $2,903,519 of real estate held for sale. As of December 31, 2023, REO included $800,000 of real estate held for rental and $2,661,519 of real estate held for sale. Properties Held for Sale During the three months ended March 31, 2024, the Company sold one property held for sale and recognized an aggregate loss of $10,854. During the three months ended March 31, 2023, the Company sold two properties held for sale and recognized an aggregate loss of $148,100. Properties Held for Rental As of March 31, 2024, one property, a commercial building, was held for rental. The tenant signed a five-year lease that commenced on August 1, 2021. As of March 31, 2024, future minimum rents under this lease were as follows: Years Ending December 31, Amount 2024 (9 months) $ 39,900 2025 53,200 2026 31,033 Total $ 124,133 |
Other Assets
Other Assets | 3 Months Ended |
Mar. 31, 2024 | |
Other Assets | |
Other Assets | 7. Other Assets As of March 31, 2024 and December 31, 2023, other assets consists of the following: March 31, 2024 December 31, 2023 (Audited) Prepaid expenses $ 429,041 $ 511,022 Other receivables 1,390,501 1,922,512 Other assets 235,290 229,074 Notes receivable 5,337,612 4,507,991 Deferred financing costs, net 274,073 307,868 Deferred leasing cost 386,923 386,923 Leases in place intangible 568,460 568,460 Goodwill 391,000 391,000 Intangible asset – trade name 130,400 130,400 Total $ 9,143,300 $ 8,955,250 |
Lines of Credit, Mortgage Payab
Lines of Credit, Mortgage Payable and Churchill Facility | 3 Months Ended |
Mar. 31, 2024 | |
Lines of Credit, Mortgage Payable and Churchill Facility | |
Lines of Credit, Mortgage Payable and Churchill Facility | 8. Lines of Credit, Mortgage Payable and Churchill Facility Line of Credit – Wells Fargo 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 (7.01% at March 31, 2024 and 6.77% at December 31, 2023). As of March 31, 2024 and December 31, 2023, the total outstanding balance on the Wells Fargo credit line was approximately $27.3 million and approximately $26.8 million, respectively. Line of Credit – Needham Bank On March 2, 2023, the Company entered into a Credit and Security Agreement (the “Credit Agreement”), with Needham Bank, a Massachusetts co-operative bank, as the administrative agent (the “Administrative Agent”) for the lenders party thereto (the “Lenders”) with respect to a $45 million revolving credit facility (the “Needham Credit Facility”). Under the Credit Agreement, the Company also has the right to request an increase in the size of the Needham Credit Facility up to $75 million, subject to certain conditions, including the approval of the Lenders. As of September 8, 2023, the Needham Credit Facility was increased to $65 million. Loans under the Needham Credit Facility accrue interest at the greater of (i) the annual rate of interest equal to the “prime rate,” as published in the “Money Rates” column of The Wall Street Journal minus one-quarter of one percent (0.25%), and (ii) four and one-half percent (4.50%). All amounts borrowed under the Needham Credit Facility are secured by a first priority lien on virtually all Company’s assets. Assets excluded from the lien include real estate owned by the Company (other than real estate acquired pursuant to foreclosure) and mortgages sold to Churchill under the Facility. The Needham Credit Facility expires March 2, 2026 but the Company has a right to extend the term for one year upon the consent of the Administrative Agent and the Lenders, which consent cannot be unreasonably withheld, and so long as it is not in default and satisfies certain other conditions. All outstanding revolving loans and accrued but unpaid interest are due and payable on the expiration date. The Company may terminate the Needham Credit Facility at any time without premium or penalty by delivering written notice to the Administrative Agent at least ten ( 10 The Company uses the proceeds from the Needham Credit Facility to finance the continued expansion of its lending business and for general corporate purposes. At March 31, 2024, the total amount outstanding under the Needham Credit Facility was $35.0 million, and the interest rate was 8.25%. Mortgage Payable In 2021, the Company obtained a $1.4 million adjustable-rate mortgage loan from New Haven Bank (the “NHB Mortgage”) of which $750,000 was funded at closing and remained outstanding as of December 31, 2022. The NHB Mortgage accrued interest at an initial rate of 3.75% per annum for the first 72 months and was due and payable in full on December 1, 2037. During the first 12 months, from December 1, 2021 to November 30, 2022, only interest was due and payable. Beginning on December 1, 2022 principal and interest on the NHB Mortgage were to be due and payable on a monthly basis. All payments under the NHB Mortgage was to be amortized based on a 20-year amortization schedule. The interest rate was to be adjusted on each of December 1, 2027 and 2032 to the then published 5-year Federal Home Loan Bank of Boston Classic Advance Rate, plus 2.60%. The NHB Mortgage was a non-recourse loan, secured by a first mortgage lien on each of the properties, located at 698 Main Street, Branford, Connecticut, and 568 East Main Street, Branford, Connecticut. The $750,000 of proceeds funded at closing were used to reimburse the Company for out-of-pocket costs relating to the acquisition of the East Main Street property. On February 28, 2023, the Company refinanced the NHB Mortgage with a new adjustable-rate mortgage loan from New Haven Bank (the “New NHB Mortgage”) in the original principal amount of $1,660,000. The new loan accrues interest at an initial rate of 5.75% per annum for the first 60 months. The interest rate will be adjusted on each of March 1, 2028 and March 1, 2033 to the then published 5-year Federal Home Loan Bank of Boston Classic Advance Rate, plus 1.75%. Beginning on April 1, 2023 and through March 1, 2038, principal and interest will be due and payable on a monthly basis. All payments under the new loan are amortized based on a 20-year amortization schedule. Over the next five years, the Company is scheduled to make principal payments ranging from approximately $47,000 to approximately $59,000 annually, with the remaining balance due thereafter. The unpaid principal amount of the loan and all accrued and unpaid interest are due and payable in full on March 1, 2038. The new loan is a non-recourse obligation, secured by a first mortgage lien on the property located at 568 East Main Street, Branford, Connecticut. Churchill MRA Funding I LLC Repurchase Financing Facility On July 21, 2021, the Company consummated a $200 million master repurchase financing facility (“Churchill 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 Churchill 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 factors. 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 Churchill Facility is equal to the sum of (a) the greater of (i) 0.25% and (ii) the 90-day SOFR (which replaced the 90-day LIBOR) plus (b) 3%-4%, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time. The Churchill 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 Churchill 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 Churchill Facility to finance the continued expansion of its lending business and for general corporate purposes. At March 31, 2024, the total amount outstanding under the Churchill Facility was approximately $25.9 million. The collateral pledged to Churchill at March 31, 2024 was 12 mortgage loans that in the aggregate had unpaid principal balance of approximately $44.6 million. At December 31, 2023, the total amount outstanding under the Churchill Facility was $26,461,098. The collateral pledged to Churchill at December 31, 2023 was 14 mortgage loans that in the aggregate had unpaid principal balance of approximately $50.6 million. The New NHB Mortgage and the Churchill Facility contain cross-default provisions. |
Unsecured Notes Payable
Unsecured Notes Payable | 3 Months Ended |
Mar. 31, 2024 | |
Unsecured Notes Payable | |
Unsecured Notes Payable | 9. Unsecured Notes Payable At March 31, 2024, the Company had an aggregate of approximately $283.0 million of unsecured, unsubordinated notes payable outstanding, net of approximately $5.4 million of deferred financing costs (collectively, the “Notes”). Currently, the Company has seven series of Notes outstanding: (i) Notes having an aggregate principal amount of approximately $23.7 million bearing interest at 7.125% per annum and maturing June 30, 2024 (“the June 2024 Notes”); (ii) Notes having an aggregate principal amount of $34.5 million bearing interest at 6.875% per annum and maturing December 30, 2024 (the “December 2024 Notes”); (iii) Notes having an aggregate principal amount of approximately $56.4 million bearing interest at 7.75% per annum and maturing September 30, 2025 (the “September 2025 Notes”); (iv) Notes having an aggregate principal amount of approximately $51.8 million bearing interest at 6.0% per annum and maturing December 30, 2026 (the “December 2026 Notes”); (v) Notes having an aggregate principal amount of approximately $51.9 million bearing interest at 6.0% per annum and maturing March 30, 2027 (the “March 2027 Notes”); (vi) Notes having an aggregate principal amount of $30.0 million 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 approximately $40.3 million 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 90% of its taxable income, incurring any additional indebtedness or purchasing any shares of its capital stock unless it has an “Asset Coverage Ratio” of at least 150% after giving effect to the payment of such dividend, the incurrence of such indebtedness or the application of the net proceeds, as the case may be. The Company may redeem the Notes, in whole or in part, without premium or penalty, at any time after their second anniversary of issuance upon at least 30 days prior written notice to the holders of the Notes. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including the date of redemption. Currently, the June 2024 Notes, December 2024 Notes, the September 2025, the December 2026 Notes, the March 2027 Notes and the June 2027 Notes are callable at any time. The September 2027 Notes will be callable at any time after August 23, 2024. The following are the future principal payments on the notes payable as of March 31, 2024: Years ending December 31, Amount 2024 (9 months) $ 58,163,000 2025 56,363,750 2026 51,750,000 2027 122,125,000 Total principal payments 288,401,750 Deferred financing costs (5,443,237) Total notes payable, net of deferred financing costs $ 282,958,513 The estimated amortization of the deferred financing costs as of March 31, 2024 is as follows: Years ending December 31, Amount 2024 (9 months) $ 1,730,975 2025 1,807,606 2026 1,410,319 2027 494,337 Total deferred costs $ 5,443,237 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 3 Months Ended |
Mar. 31, 2024 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | 10. Accounts Payable and Accrued Liabilities As of March 31, 2024 and December 31, 2023, accounts payable and accrued liabilities include the following: March 31, 2024 December 31, 2023 (Audited) Accounts payable and accrued expenses $ 1,737,111 $ 1,330,546 Allowance for credit losses on unfunded commitments 540,341 508,600 Accrued interest 476,896 482,389 Total $ 2,754,348 $ 2,321,535 |
Fee and Other Income
Fee and Other Income | 3 Months Ended |
Mar. 31, 2024 | |
Fee and Other Income | |
Fee and Other Income | 11. Fee and Other Income For the three month periods ended March 31, 2024 and 2023, fee and other income consists of the following: Three Months Ended March 31, 2024 2023 Late and other fees $ 282,873 $ 113,132 Processing fees 35,150 32,070 Rental income, net 15,300 13,300 Extension fees 113,901 180,410 Construction servicing fees 438,054 167,174 Inspection fees 20,246 35,854 Legal fees 82,550 96,500 Other income 201,167 69,165 Total $ 1,189,241 $ 707,605 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies Origination, Modification, and Construction Servicing 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 consolidated balance sheet. At March 31, 2024, deferred revenue was $4,356,605, which will be recorded as income as follows: Years ending December 31, Amount 2024 (9 months) $ 3,416,066 2025 880,471 2026 60,068 Total $ 4,356,605 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 2021, the Company granted 89,928 restricted common shares (having a market value of approximately $500,000) to Mr. Villano. One 2023 one One-third one-third 2025 One-third one-third 2025 2026 One 2026 2027 Unfunded Commitments At March 31, 2024, the Company had future funding obligations totaling $95,457,791, which can be drawn by the borrowers when the conditions relating thereto have been satisfied. The unfunded commitments will be will be funded from loan payoffs and additional drawdowns under existing and future credit facilities and proceeds from sale of debt and equity securities. 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 March 31, 2024, there were five such properties. The unpaid principal balance on the properties that are subject to this proceeding was approximately $4.0 million. In accordance with the asset purchase agreement with Urbane New Haven, LLC (“Urbane”) in October 2022, under certain circumstances the Company will be required to pay Urbane 20% of the net proceeds, as defined, of certain real estate development projects completed by the Company until such time that the former principal owner of Urbane, who is currently employed by the Company, is no longer employed by the Company. Any future payments will be expensed. On September 11, 2023, the Company entered into a contract to acquire a residential property in Miami, FL. The purchase price for the property is $2,300,000. The Company paid $230,000 upon the execution and delivery of the contract, which amount is refundable if the seller fails to satisfy certain closing conditions or fails to transfer ownership of the property. The balance of the purchase price is due at closing. The closing occurred in April 2024. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024, and December 31, 2023, loans to known shareholders totaled approximately $23.8 million and approximately $25.6 million, respectively, which is included in mortgages receivables, net in the Company’s accompanying consolidated balance sheets. Interest income earned on these loans for the three months ended March 31, 2024 and 2023 totaled approximately $0.6 million and approximately $0.5 million, respectively, which is included in interest income in the Company’s accompanying consolidated statements of comprehensive income. 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 month period ended March 31, 2024 and 2023, she received compensation of $37,500 and $43,000, respectively. |
Concentrations of Credit Risk
Concentrations of Credit Risk | 3 Months Ended |
Mar. 31, 2024 | |
Concentrations of Credit Risk | |
Concentrations of Credit Risk | 14. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments in securities, investments in partnerships, and mortgage loans. The Company maintains its cash and cash equivalents with various financial institutions. Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, per depositor. The Company is potentially subject to concentration of credit risk in its investment securities. Currently, all of its 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. As of March 31, 2024, approximately 39.8% of the properties securing the Company’s mortgage loans were located in Connecticut, approximately 26.2% in Florida, and approximately 13.3% in New York. The Company’s mortgage loans are categorized into four property types, which as of March 31, 2024 were; Residential (49.7%), Commercial (36.5%), Pre-Development Land (7.6%), and Mixed Use (6.2%). These concentrations of credit risk may be affected by changes in economic or other conditions of the particular geographic area or particular asset type that collateralize the Company’s mortgage loans. Credit risks associated with the Company’s mortgage loan portfolio and related interest receivable are described in Note 4 - Mortgages Receivable, net. |
Stock-Based Compensation and Em
Stock-Based Compensation and Employee Benefits | 3 Months Ended |
Mar. 31, 2024 | |
Stock-Based Compensation and Employee Benefits | |
Stock-Based Compensation and Employee Benefits | 15. 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 March 31, 2024 was 882,262. During the three months ended March 31, 2024 and 2023, the Company granted an aggregate of 111,857 and 183,390, respectively, restricted common shares under the Plan (including restricted common shares granted to the Company’s Chief Executive Officer, see Note 12). Such shares during the three months ended March 31, 2024 and 2023 had a fair value of approximately $0.5 million and approximately $0.7 million, respectively. With respect to the restricted common shares granted during the three months ended March 31, 2024, (i) 37,285 shares will vest on January 1, 2025 and (ii) an additional 37,286 shares will vest on January 1, 2025 and 2026, respectively. Stock-based compensation expense for the three months ended March 31, 2024 and 2023 was approximately $0.2 million and approximately $0.2 million, respectively, which is included in compensation, fees, and taxes on the accompanying consolidated statements of comprehensive income. As of March 31, 2024, there was unrecorded stock based compensation expense of approximately $1.0 million. 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 three months ended March 31, 2024 and 2023, the 401(k) Plan expense was $48,210 and $44,696, respectively, which is included within compensation, fees, and taxes in the accompanying consolidated statements of comprehensive income. |
Equity Offerings
Equity Offerings | 3 Months Ended |
Mar. 31, 2024 | |
Equity Offerings | |
Equity Offerings | 16. Equity Offerings On August 24, 2022, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $75.0 million of its common shares and its Series A Preferred Stock (as defined in Note 19 below) with an aggregate liquidation preference of up to $25.0 million in an “at-the market” offering, which is ongoing. During the three months ended March 31, 2024, under this offering, the Company sold an aggregate of 568,711 common shares, realizing gross proceeds of approximately $2.1 million and 79,034 shares of its Series A Preferred Stock having an aggregate liquidation preference of approximately $2.0 million, realizing gross proceeds of approximately $1.6 million (representing a discount of approximately 20% from the liquidation preference). The Company’s issuance costs for both common shares and Series A Preferred Stock shares sold during the three months ended March 31, 2024 were nominal. |
Partnership Investments
Partnership Investments | 3 Months Ended |
Mar. 31, 2024 | |
Partnership Investments | |
Partnership Investments | 17. Partnership Investments As of March 31, 2024, the Company had invested an aggregate of approximately $46.2 million in five limited liability companies in which it held non-controlling interests. The Company’s ownership interest in four of the limited liability companies ranges from approximately 7% to 49% and one of the partnerships is owned 100% by the Company. The Company accounts for these investments at cost because the Company does not manage the entities and thus, has no control or have significant influence over the investments. The third-party manager of the investments is 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 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. The Company’s partnership investments can be categorized into two fund structures, fund investments and direct loan investments. The fund investments primarily include investments in two partnerships that invest in mortgage loans. The direct loan investments are through three partnerships whereby the Company directly invests in the participation of individual loans. Both the fund and direct loan structure primarily invest in mortgage loans to borrowers with a majority of the deals being leveraged by a bank. These loans are primarily two- to three- year collateralized mortgage loans, often with contractual extension options for the borrowers of an additional year. The Company receives quarterly dividends from the partnerships that are composed of a preferred return, return of capital and promote depending on each loan’s waterfall calculation, as defined by the loan agreements. The Company’s interests in the funds are not redeemable at any time, as its investment will be repaid as the underlying loans are repaid. The Company expects to be repaid on its current investments by December 31, 2027. For the three months ended March 31, 2024 and 2023, the partnerships generated approximately $1.2 million and approximately $0.5 million, respectively, of income for the Company. At March 31, 2024, the Company had unfunded partnership commitments totaling approximately $2.4 million. |
Series A Preferred Stock
Series A Preferred Stock | 3 Months Ended |
Mar. 31, 2024 | |
Series A Preferred Stock | |
Series A Preferred Stock | 18. Series A Preferred Stock The Company has designated 2,903,000 shares of its authorized preferred shares, par value $0.001 per share, as shares of Series A Preferred Stock (the “Series A Preferred Stock”) with the powers, designations, preferences and other rights as set forth in an Amended and Restated Certificate of Designation (the “Series A Designation Certificate”). The Series A Designation Certificate provides that the Company will pay quarterly cumulative dividends on the Series A Preferred Stock, in arrears, on the 30th day of each of March, June, September and December, and including, the date of original issuance of the Series A Preferred Stock until redeemed 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 is not redeemable before June 29, 2026, except upon the occurrence of a Change of Control (as defined in the Series A Designation Certificate). 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 Series A Designation Certificate) 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 Series A Designation Certificate, including provisions for the receipt, under specified circumstances, of alternative consideration as described in the Series A Designation Certificate. Except under limited circumstances, holders of the Series A Preferred Stock generally do not have any voting rights. The Company has reserved 72,575,000 common shares for issuance upon conversion of the Series A Preferred Stock. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events | |
Subsequent Events | 19. Subsequent Events On April 1, 2024, the Company declared a dividend of $0.11 per share, or $5,219,066 in the aggregate, to shareholders of record as of April 9, 2024, which was paid on April 16, 2024. Between April 1, 2024 and May 9, 2024, through the Company’s at-the-market offering facility, the Company sold no Common Shares, and 69,431 shares of its Series A Preferred Stock having an aggregate liquidation preference of $1,735,775, realizing gross proceeds of $1,519,944 (representing a discount of approximately 12% from the liquidation preference.) |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Significant Accounting Policies | |
Unaudited Consolidated Financial Statements | Unaudited Consolidated Financial Statements The accompanying unaudited consolidated financial statements (“the consolidated 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 consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023 and the notes thereto included in the Company’s Annual Report on Form 10-K. Results of operations for the three months ended March 31, 2024, are not necessarily indicative of the operating results to be attained in the entire fiscal year, or for any subsequent period. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases the use of estimates on (a) various assumptions that consider prior reporting results, (b) projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. 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 significant intercompany accounts and transactions have been eliminated in consolidation. |
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. |
Investment Securities | Investment Securities Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. Fair value is calculated based on publicly available market information or other estimates determined by management. If the cost of an investment exceeds its fair value, management evaluates, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. To determine credit losses, management may employ a systematic methodology that considers available quantitative and qualitative evidence. In addition, management may consider specific adverse conditions related to the financial health of, and business outlook for, the issuer of the debt security. If the Company plans to sell the security or it is more likely than not that it will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in net income and a new cost basis in the investment is established. If market, industry, and/or business and/or financial conditions relating to the issuer deteriorate, the Company may incur future losses and/or impairments. Equity investments with readily determinable fair values are measured at fair value. Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative). Management performs a qualitative assessment on a periodic basis and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are recorded in net income. |
Allowance for Current Expected Credit Losses | Allowance for Current Expected Credit Losses The Company adopted the current expected credit loss (“CECL”) standard effective January 1, 2023 in accordance with ASU No. 2016-13. The initial CECL allowance (”Allowance for credit losses”) adjustment of $2,489,574 was recorded effective January 1, 2023 as a cumulative-effect of change in accounting principle through a direct charge to accumulated deficit on the consolidated statements of shareholders’ equity; however, subsequent changes to the CECL allowance will be recognized in the consolidated statements of comprehensive income in “Provision for credit losses related to loans”. The Company records an allowance for credit losses in accordance with the CECL standard on the Company’s loan portfolio, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics. This methodology, known as the “static pool methodology”, replaces the probable incurred loss impairment methodology. In addition, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are also analyzed for credit losses in accordance with the CECL standard, as they represent a financial asset that is subject to credit risk. As allowed under the CECL standard used by the Company, as a practical expedient, the fair value of the collateral at the reporting date is compared to the net carrying amount of the loan when determining the allowance for credit losses for loans in pending/pre-foreclosure status, as defined. Fair value of collateral is reduced by estimated cost to sell if the collateral is expected to be sold. The amount of loans in pending/pre-foreclosure as of March 31, 2024 and December 31, 2023 was approximately $72.9 million and $68.1 million, respectively. As of March 31, 2024 and December 31, 2023, the Company has taken reserves against loans subject to foreclosure of approximately $7.3 million and $6.2 million, respectively, which is included in “Allowance for credit losses” on the accompanying balance sheets. The CECL standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the economic environment. The Company utilizes a loss-rate method for estimating current expected credit losses. The loss rate method involves applying a loss rate to a pool of loans with similar risk characteristics to estimate the expected credit losses on that pool of loans. In determining the CECL allowance, the Company considers various factors including (1) historical loss experience in its portfolio, (2) loan specific losses for loans deemed collateral dependent based on excess amortized cost over the fair value of the underlying collateral, and (3) its current and future view of the macroeconomic environment. The Company utilizes a forecast of three years which approximates its longer-term loans, which are often the construction loans. Management estimates the allowance for credit losses using relevant information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. The allowance for credit losses is maintained at a level sufficient to provide for expected credit losses over the life of the loans based on evaluating historical credit loss experience and to make adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio. The Allowance for credit losses related to the principal outstanding is presented within “Mortgages receivable, net” and for unfunded commitments is within accounts payable and accrued liabilities in the Company’s consolidated balance sheets. The Allowance for credit losses related to the late payment fees are presented in “Interest and fees receivable, net”, and “Due from borrowers, net” in the Company’s consolidated balance sheets. Lastly, the allowance related to unfunded commitments for construction loans is presented in “Accounts payable and accrued liabilities” in the Company’s consolidated balance sheets. The below table represents the financial statement line items that are impacted by the Allowance for credit losses: Provision for credit Balance as of December 31, 2023 losses related to loans Balance as of March 31, 2024 Mortgages receivable $ 7,523,160 $ 530,092 $ 8,053,252 Interest receivable 901,957 207,846 1,109,803 Due from borrower 352,459 542,345 894,804 Unfunded commitments 508,600 31,741 540,341 Total Allowance for credit losses $ 9,286,176 $ 1,312,024 $ 10,598,200 As of March 31, 2024 and December 31, 2023 the Company had an allowance for credit losses on debt securities of approximately $0.8 million for each year, which is presented in “Investment securities (at fair value)” on the Company’s consolidated balance sheets. As of March 31, 2024 and 2023, fair market value of these securities was $821,052 and $1,130,518, respectively. The cost basis of these securities were $1,647,841. |
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”) Topic 820 are described as follows: Level 1 Level 2 ● quoted prices for similar assets or liabilities in active markets; ● quoted prices for identical or similar assets or liabilities in inactive markets; ● inputs other than quoted prices that are observable for the asset or liability; and ● inputs that are derived principally from or corroborated by observable market data by correlation to other means. If the asset or liability has a specified ( Level 3 |
Property and Equipment | Property and Equipment Land and building acquired in 2021 to serve as the Company’s corporate headquarters is stated at cost. Renovation of the building was completed in the first quarter of 2023 and the Company relocated its operations to the new building in March 2023. The building is being depreciated using the straight – line method over its estimated useful life of 40 years. The new building was placed in service during the three months ended March of 2023. The following tables represent the Company’s Property and Equipment, Net as of March 31, 2024 and December 31, 2023: March 31, 2024 Cost Accumulated Depreciation Property and Equipment, Net Building $ 2,541,214 $ (62,756) $ 2,478,458 Land 255,013 — 255,013 Furniture and fixtures 280,889 (80,051) 200,838 Computer hardware and software 284,578 (211,029) 73,549 Vehicles 435,180 (112,385) 322,795 Total property and equipment, net $ 3,796,874 $ (466,221) $ 3,330,653 December 31, 2023 (Audited) Cost Accumulated Depreciation Property and Equipment, Net Building $ 2,541,214 $ (50,694) $ 2,490,520 Land 262,631 — 262,613 Furniture and fixtures 319,898 (68,891) 251,098 Computer hardware and software 352,573 (227,687) 124,886 Vehicles 305,980 (61,612) 244,368 Total property and equipment, net $ 3,782,369 $ (408,884) $ 3,373,485 |
Investment in Rental Real Estate | Investment in Rental Real Estate Real estate is carried at cost, net of accumulated depreciation and amortization. Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized. Maintenance and repairs are expensed as incurred. For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment, including interest and debt expense, are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete. If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair value of the redeveloped property, the excess is charged to expense. Depreciation is recognized on a straight-line basis over the estimated useful lives of these assets which range from 7 to 40 years. Tenant allowances are amortized on a straight-line basis over the shorter of the lives of the related leases, or the useful lives of the assets. Upon the acquisition of real estate, the Company assesses whether the transaction should be accounted for as an asset acquisition or as a business combination. Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions. Acquisitions of real estate generally will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings, and related identified intangible assets). The Company allocates the purchase price of real estate to land and building (inclusive of site and tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases. The allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed involves subjectivity as the allocations are based on an analysis of the respective fair values. In determining the fair value of the real estate acquired, the Company utilized a third-party valuation which primarily utilizes cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts. The Company assesses the fair value of the acquired leases based on estimated cash flow projections that utilize appropriate discount rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property. The determined and allocated fair values to the real estate acquired will affect the amount of depreciation and amortization we record over the respective estimated useful lives or term of the lease. On June 23, 2023, the Company entered into a purchase and sale contract (the “Westport Purchase Agreement”) to acquire a commercial office building in Westport, CT (the “Westport Asset”) for $10,600,000. The transaction was completed on August 31, 2023. In connection with this transaction, which was accounted for as an asset acquisition, the Company allocated the purchase price and acquisition-related costs to the tangible and intangible assets acquired based on fair value. In addition, the Company recorded a lease liability stemming from below-market rental rates. Total consideration, including capitalized acquisition-related costs, was $10,725,237. See Note 5 – Investment in Rental Real Estate, net for further details surrounding the above acquisition as of March 31, 2024. |
Real Estate Owned ("REO") | Real Estate Owned (“REO”) REO acquired through foreclosure is initially measured at fair value and is thereafter subject to an ongoing impairment analysis. After an REO acquisition, events or circumstances may occur that result in a material and sustained decrease in the cash flows generated from the property or other market indicators including listing data may signal a decline in the liquidation value. REO is evaluated for recoverability when impairment indicators are identified. Any impairment losses are included in the consolidated statements of comprehensive income. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company continually 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 is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. |
Goodwill | Goodwill Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment. Goodwill at March 31, 2024 represents the excess of the consideration paid over the fair value of net assets acquired from Urbane New Haven, LLC in October 2022. In testing goodwill for impairment, the Company adheres to ASC Topic 350, “Intangibles—Goodwill and Other”, which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or the Company chooses not to perform the qualitative assessment, then it compares the fair value of that reporting unit with its carrying value, including goodwill. As of March 31, 2024 and 2023, goodwill was approximately $0.4 million, which is presented in other assets on the Company’s consolidated balance sheets. There was no impairment to goodwill during the three months ended March 31, 2024 and 2023. |
Deferred Financing Costs | Deferred Financing Costs Costs incurred in connection with the Company’s revolving credit facilities, described in Note 8-Lines of Credit, Mortgage Payable 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 issuance of unsecured, unsubordinated notes, described in Note 9 – Unsecured Notes Payable, are being amortized over the term of the respective unsecured, unsubordinated 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 March 31, 2024 but collected prior to the issuance of this report is included in income for the three-month period ended March 31, 2024. 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 Topic 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. Other than taxes incurred by TRSs (see below), the Company does not expect to incur any corporate federal income tax liability outside of the TRSs, as it believes it has maintained its qualification as a REIT. The Company has elected, and may elect in the future, to treat certain of its existing or newly created corporate subsidiaries as taxable REIT subsidiaries (“TRSs”). In general, a TRS may hold assets that the Company cannot hold directly and generally may engage in any real estate or non-real estate related business. The TRSs generate income, resulting in federal and state income tax liability for these entities. During the three months ended March 31, 2024, the Company’s TRSs recognized provisions for federal and state income tax of $190,025, which is represented in other expenses on the Company’s consolidated statements of comprehensive income. During the three months ended March 31, 2023, there were no recognized provisions for federal income tax nor state tax. The income tax provision for the Company differs from the amount computed from applying the statutory federal income tax rate to income before income taxes due to non-taxable REIT income and other permanent differences including the non-deductibility of acquisition costs of business combinations for federal income tax reporting. 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 Topic 260 — “Earnings Per Share.” Under ASC Topic 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income. As of March 31, 2024, the Company had basic and diluted weighted average shares of 47,326,384 outstanding share outstanding share |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” ASU 2022-03 was issued to (1) to clarify the guidance in FASB ASC Topic 820, “Fair Value Measurement”, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with FASB ASC Topic 820. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. This update did not have a material effect on the Company’s financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (FASB ASC Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provides new segment disclosure requirements for entities with a single reportable segment. This standard is effective for the Company beginning with its 2024 annual reporting. ASU 2023-07 is to be adopted retrospectively to all prior periods presented. The Company does not anticipate that this update will have a material impact on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s consolidated financial statements. |
Reclassifications | Reclassifications Certain amounts included in the March 31, 2024 and December 31, 2023 consolidated financial statements have been reclassified to conform to the March 31, 2024 presentation. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Significant Accounting Policies | |
Schedule of allowance for credit losses | Provision for credit Balance as of December 31, 2023 losses related to loans Balance as of March 31, 2024 Mortgages receivable $ 7,523,160 $ 530,092 $ 8,053,252 Interest receivable 901,957 207,846 1,109,803 Due from borrower 352,459 542,345 894,804 Unfunded commitments 508,600 31,741 540,341 Total Allowance for credit losses $ 9,286,176 $ 1,312,024 $ 10,598,200 |
Schedule of Property and Equipment | March 31, 2024 Cost Accumulated Depreciation Property and Equipment, Net Building $ 2,541,214 $ (62,756) $ 2,478,458 Land 255,013 — 255,013 Furniture and fixtures 280,889 (80,051) 200,838 Computer hardware and software 284,578 (211,029) 73,549 Vehicles 435,180 (112,385) 322,795 Total property and equipment, net $ 3,796,874 $ (466,221) $ 3,330,653 December 31, 2023 (Audited) Cost Accumulated Depreciation Property and Equipment, Net Building $ 2,541,214 $ (50,694) $ 2,490,520 Land 262,631 — 262,613 Furniture and fixtures 319,898 (68,891) 251,098 Computer hardware and software 352,573 (227,687) 124,886 Vehicles 305,980 (61,612) 244,368 Total property and equipment, net $ 3,782,369 $ (408,884) $ 3,373,485 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024: Level 1 Level 2 Total Stocks and ETFs $ — $ 1,942,897 $ 1,942,897 Mutual funds 16,461,721 — 16,461,721 Debt securities 19,207,082 821,052 20,028,134 Total investment securities $ 35,668,803 $ 2,763,949 $ 38,432,752 The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of December 31, 2023 (Audited): Level 1 Level 2 Total Stocks and ETF’s $ — $ 1,755,219 $ 1,755,219 Mutual funds 16,236,445 — 16,236,445 Debt securities 18,945,087 839,281 19,784,368 Total investment securities $ 35,181,532 $ 2,594,500 $ 37,776,032 |
Schedule of company's available-for-sale (AFS) securities and other comprehensive income (OCI) | Three Months Ended March 31, 2024 2023 OCI from AFS securities – debt securities: Unrealized (losses) on debt securities at beginning of period $ 315,614 $ (561,490) Reversal of losses from unrealized to realized 212,097 — Unrealized (losses) gain on debt securities (337,382) 91,637 Change in OCI from AFS debt securities (125,285) 91,637 Balance at end of period $ 190,329 $ (469,853) |
Mortgages Receivable, net (Tabl
Mortgages Receivable, net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Mortgages Receivable, net | |
Summary of the activity in the Mortgages receivable allowance for credit losses | Allowance for credit losses Allowance for credit losses as of Provision for credit losses as of March 31, (dollars in thousands) December 31, 2023 (Audited) related to loans 2024 Geographical Location New England $ 5,764 $ 350 $ 6,114 Mid-Atlantic 1,324 182 1,506 South 435 (2) 433 West — — — Total $ 7,523 $ 530 $ 8,053 March 31, 2024 December 31, 2023 (Audited) (dollars in thousands) Carrying Value % of Portfolio Carrying Value % of Portfolio Geographical Location New England $ 231,026 47.1 % $ 232,437 46.6 % Mid-Atlantic 90,678 18.5 % 99,288 19.9 % South 164,938 33.6 % 163,409 32.7 % West 4,101 0.8 % 4,101 0.8 % Total 490,743 100.0 % 499,235 100.0 % Less: Allowance for credit losses (8,053) (7,523) Carrying value, net $ 482,690 $ 491,712 March 31, 2024 December 31, 2023 (Audited) Outstanding Outstanding (dollars in thousands) Principal % of Portfolio Principal % of Portfolio Property Type Residential $ 243,965 49.7 % $ 246,520 49.4 % Commercial 179,122 36.5 % 186,524 37.4 % Pre-Development Land 37,210 7.6 % 35,920 7.2 % Mixed use 30,446 6.2 % 30,271 6.0 % Total 490,743 100.0 % 499,235 100.0 % Less: Allowance for credit losses (8,053) (7,523) Carrying value, net $ 482,690 $ 491,712 |
Schedule of allocation of the carrying value of Company's loan portfolio based on our internal credit quality indicators in assessing estimated credit losses and vintage of origination at the dates indicated | March 31, 2024 Year Originated (1) Carrying % of FICO Score (2) (dollars in thousands) Value Portfolio 2024 2023 2022 2021 Prior Under 500 $ 403 0.1 % $ — $ — $ — $ — $ 403 501-550 3,698 0.8 % — — — 1,436 2,262 551-600 8,384 1.7 % — 290 2,629 3,716 1,749 601-650 33,989 6.9 % 1,138 5,545 4,053 11,955 11,298 651-700 77,436 15.8 % — 15,318 17,150 35,907 9,060 701-750 194,305 39.6 % 1,221 33,185 51,574 103,892 4,433 751-800 151,520 30.9 % 14,161 38,227 52,777 44,870 1,485 801-850 21,008 4.3 % 1,536 77 19,220 — 176 Total 490,743 100.0 % $ 18,056 $ 92,642 $ 147,403 $ 201,776 $ 30,866 Less: Allowance for credit losses (8,053) Carrying value, net $ 482,690 (1) Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2) The FICO Scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis. December 31, 2023 (Audited) Year Originated (1) Carrying % of FICO Score (2) (dollars in thousands) Value Portfolio 2023 2022 2021 2020 Prior Under 500 $ 1,764 1.3 % $ 216 $ — $ — $ — $ 1,548 501-550 6,555 1.3 % 2,331 1,440 1,864 — 920 551-600 33,723 6.8 % 15,019 9,839 6,854 1,127 884 601-650 103,601 20.8 % 16,053 26,981 52,073 3,988 4,506 651-700 97,284 19.5 % 17,862 40,318 30,203 3,662 5,239 701-750 167,977 33.6 % 19,935 51,276 83,946 7,411 5,409 751-800 64,313 11.9 % 14,461 20,806 27,027 592 1,427 801-850 24,018 4.8 % 865 23,096 — — 57 Total 499,235 100.0 % $ 86,742 $ 173,756 $ 201,967 $ 16,780 $ 19,990 Less: Allowance for credit losses (7,523) Carrying value, net $ 491,712 (1) Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2) The FICO Scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis. |
Schedule of maturities of mortgages receivable | As of March 31, 2024 As of December 31, 2023 (Audited) (Dollars in thousands) 2024 and prior $ 346,167 $ 412,303 2025 126,654 86,836 2026 17,829 — Thereafter 93 96 Total 490,743 499,235 Less: Allowance for credit losses (8,053) (7,523) Total $ 482,690 $ 491,712 |
Schedule of loan modifications made to borrowers experiencing financial difficulty | Three Months Ended March 31, 2024 % of Total Carrying Value of (in thousands) Carrying Value Loans, net Financial Effect Loans modified during the period ended Term extension $ 45,206 9.2 % A weighted average of 8.5 months were added to the life of the loans Other $ 16,848 3.4 % Unpaid interest/taxes/charges added to principal balance Three Months Ended March 31, 2024 (in thousands) Current 90-119 days past due 120+ days past due Total Loans modified during the period ended Term extension $ 45,206 $ — $ — $ 45,206 Other $ 16,848 $ — $ — $ 16,848 Three Months Ended March 31, 2023 % of Total Carrying Value of (in thousands) Carrying Value Loans, net Financial Effect Loans modified during the period ended Term extension $ 17,250 3.6 % A weighted average of 8.5 months were added to the life of the loans Other $ 1,565 0.3 % Unpaid interest/taxes/charges added to principal balance Three Months Ended March 31, 2023 (in thousands) Current 90-119 days past due 120+ days past due Total Loans modified during the period ended Term extension $ 17,250 $ — $ — $ 17,250 Other $ 1,565 $ — $ — $ 1,565 |
Investment in Rental Real Est_2
Investment in Rental Real Estate, net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Line Items] | |
Schedule of investment in rental real estate | As of March 31, 2024 and December 31, 2023, investment in rental real estate, net consist of the following: Three months ended March 31, 2024 Cost Accumulated Depreciation Investment in Rental Real Estate, Net Land $ 4,556,786 $ — $ 4,556,786 Building 4,976,234 (61,698) 4,914,536 Site improvements 359,249 (11,975) 347,274 Tenant improvements 1,182,842 — 1,182,842 Construction in progress 264,871 — 264,871 Total $ 11,339,982 $ (73,673) $ 11,266,309 Year ended December 31, 2023 (Audited) Cost Accumulated Depreciation Investment in Rental Real Estate, Net Land $ 3,956,786 $ — $ 3,956,786 Building 4,935,715 (30,849) 4,904,866 Site improvements 359,249 (5,987) 353,262 Tenant improvements 1,182,842 — 1,182,843 Construction in progress 156,705 — 156,705 Total $ 10,591,297 $ (36,836) $ 10,554,461 |
Schedule of estimated annual amortization of acquired below-market leases | Years Ending December 31, Amount 2024 (9 months) $ — 2025 66,474 2026 66,474 2027 66,474 2028 66,474 Thereafter 398,841 Total $ 664,737 |
Schedule of estimated annual amortization of acquired in-place lease intangible | Years Ending December 31, Amount 2024 (9 months) $ — 2025 56,846 2026 56,846 2027 56,846 2028 56,846 Thereafter 341,076 Total $ 568,460 |
Schedule of estimated annual amortization of deferred leasing costs | Years Ending December 31, Amount 2024 (9 months) $ — 2025 38,692 2026 38,692 2027 38,692 2028 38,692 Thereafter 232,155 Total $ 386,923 |
Leases space to a tenant | |
Property, Plant and Equipment [Line Items] | |
Schedule of future minimum rents under non-cancelable operating leases | As of March 31, 2024, future minimum rents under non-cancelable operating leases were as follows: Years Ending December 31, Amount 2024 (9 months) $ — 2025 — 2026 1,039,922 2027 1,268,704 2028 1,294,078 Thereafter 10,061,513 Total $ 13,664,217 |
Real Estate Owned (REO) (Tables
Real Estate Owned (REO) (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Line Items] | |
Schedule of real estate owned | March 31, 2024 December 31, 2023 (Audited) Real estate owned at the beginning of year $ 3,461,519 $ 5,216,149 Principal basis transferred to real estate owned 374,000 1,756,125 Charges and building improvements — 229,587 Proceeds from sale of real estate owned (121,146) (3,039,749) Impairment loss — (794,462) Gain (loss) on sale of real estate owned (10,854) 93,869 Balance at end of year $ 3,703,519 $ 3,461,519 |
Properties Held For Rental | |
Property, Plant and Equipment [Line Items] | |
Schedule of rental payments due from real estate held for rental | Years Ending December 31, Amount 2024 (9 months) $ 39,900 2025 53,200 2026 31,033 Total $ 124,133 |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Other Assets | |
Schedule of other assets | March 31, 2024 December 31, 2023 (Audited) Prepaid expenses $ 429,041 $ 511,022 Other receivables 1,390,501 1,922,512 Other assets 235,290 229,074 Notes receivable 5,337,612 4,507,991 Deferred financing costs, net 274,073 307,868 Deferred leasing cost 386,923 386,923 Leases in place intangible 568,460 568,460 Goodwill 391,000 391,000 Intangible asset – trade name 130,400 130,400 Total $ 9,143,300 $ 8,955,250 |
Unsecured Notes Payable (Tables
Unsecured Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Unsecured Notes Payable | |
Summary of future principal payments on the notes payable | The following are the future principal payments on the notes payable as of March 31, 2024: Years ending December 31, Amount 2024 (9 months) $ 58,163,000 2025 56,363,750 2026 51,750,000 2027 122,125,000 Total principal payments 288,401,750 Deferred financing costs (5,443,237) Total notes payable, net of deferred financing costs $ 282,958,513 |
Summary of estimated amortization of the deferred financing costs | The estimated amortization of the deferred financing costs as of March 31, 2024 is as follows: Years ending December 31, Amount 2024 (9 months) $ 1,730,975 2025 1,807,606 2026 1,410,319 2027 494,337 Total deferred costs $ 5,443,237 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounts Payable and Accrued Liabilities | |
Schedule of accounts payable and accrued liabilities | March 31, 2024 December 31, 2023 (Audited) Accounts payable and accrued expenses $ 1,737,111 $ 1,330,546 Allowance for credit losses on unfunded commitments 540,341 508,600 Accrued interest 476,896 482,389 Total $ 2,754,348 $ 2,321,535 |
Fee and Other Income (Tables)
Fee and Other Income (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fee and Other Income | |
Schedule of fees and other income | Three Months Ended March 31, 2024 2023 Late and other fees $ 282,873 $ 113,132 Processing fees 35,150 32,070 Rental income, net 15,300 13,300 Extension fees 113,901 180,410 Construction servicing fees 438,054 167,174 Inspection fees 20,246 35,854 Legal fees 82,550 96,500 Other income 201,167 69,165 Total $ 1,189,241 $ 707,605 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies | |
Schedule of original maturities of deferred revenue | Years ending December 31, Amount 2024 (9 months) $ 3,416,066 2025 880,471 2026 60,068 Total $ 4,356,605 |
The Company (Details)
The Company (Details) | 3 Months Ended |
Mar. 31, 2024 segment | |
The Company | |
Number of Operating Segments | 1 |
Minimum | |
The Company | |
Term of debt | 1 year |
Maximum | |
The Company | |
Term of debt | 3 years |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |||||
Jun. 23, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Jan. 31, 2023 | Jan. 01, 2023 | |
Significant Accounting Policies | ||||||
CECL Allowance | $ 8,053,252 | $ 7,523,160 | $ 7,523,160 | |||
Loan pending/pre-foreclosure amount | 72,900,000 | 68,100,000 | ||||
Loan of allowance for credit loss | 7,300,000 | 6,200,000 | ||||
Goodwill | 391,000 | $ 400,000 | $ 391,000 | |||
Goodwill Impairment | 0 | 0 | ||||
Provisions for income tax | 190,025 | 0 | ||||
Uncertain tax positions | $ 0 | $ 0 | ||||
Basic weighted average shares | 47,326,384 | 42,792,509 | ||||
Diluted weighted average shares | 47,326,384 | 42,792,509 | ||||
Basic earnings per share | $ 0.08 | $ 0.10 | ||||
Diluted earnings per share | $ 0.08 | $ 0.10 | ||||
Wesport, CT | ||||||
Significant Accounting Policies | ||||||
Agreed amount to acquire a commercial building | $ 10,600,000 | |||||
Total consideration, including capitalized acquisition-related costs | $ 10,725,237 | |||||
Adjustment | ASU 2016-13 | ||||||
Significant Accounting Policies | ||||||
CECL Allowance | $ 2,489,574 | |||||
Building Acquired In 2021 [Member] | ||||||
Significant Accounting Policies | ||||||
Property plant and equipment, useful life | 40 years | |||||
Minimum | ||||||
Significant Accounting Policies | ||||||
Estimated useful lives | 7 days | |||||
Percentage of origination and modification fee revenue | 1% | |||||
Maximum | ||||||
Significant Accounting Policies | ||||||
Estimated useful lives | 40 years | |||||
Percentage of origination and modification fee revenue | 3% |
Significant Accounting Polici_5
Significant Accounting Policies - CECL allowance (Details) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Jan. 31, 2023 | Jan. 01, 2023 | |
Significant Accounting Policies | |||||
Mortgages receivable | $ 8,053,252 | $ 7,523,160 | $ 7,523,160 | ||
Interest receivable | 1,109,803 | 901,957 | |||
Due from borrower | 894,804 | 352,459 | |||
Unfunded commitments | 540,341 | 508,600 | 508,600 | ||
Total Allowance for credit losses | 10,598,200 | $ 9,286,176 | |||
Provision for losses related to loans, Mortgages receivable | 530,092 | ||||
Provision for losses related to loans, Interest receivable | 207,846 | ||||
Provision for losses related to loans, Due from borrower | 542,345 | ||||
Provision for losses related to loans, Unfunded commitments | 31,741 | ||||
Provision for losses related to loans, Total CECL allowance | 1,312,024 | $ 101,515 | |||
Investment securities (available-for-sale debt securities) | 800,000 | $ 800,000 | |||
Fair market value of securities | 821,052 | 1,130,518 | |||
Cost basis of securities | $ 1,647,841 | $ 1,647,841 | |||
Adjustment | ASU 2016-13 | |||||
Significant Accounting Policies | |||||
Mortgages receivable | $ 2,489,574 |
Significant Accounting Polici_6
Significant Accounting Policies - Property and Equipment (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Accounting Policies [Line Items] | ||
Cost | $ 3,796,874 | $ 3,782,369 |
Accumulated Depreciation | (466,221) | (408,884) |
Total property and equipment, net | 3,330,653 | 3,373,485 |
Building | ||
Accounting Policies [Line Items] | ||
Cost | 2,541,214 | 2,541,214 |
Accumulated Depreciation | (62,756) | (50,694) |
Total property and equipment, net | 2,478,458 | 2,490,520 |
Land | ||
Accounting Policies [Line Items] | ||
Cost | 255,013 | 262,631 |
Total property and equipment, net | 255,013 | 262,613 |
Furniture and fixtures | ||
Accounting Policies [Line Items] | ||
Cost | 280,889 | 319,898 |
Accumulated Depreciation | (80,051) | (68,891) |
Total property and equipment, net | 200,838 | 251,098 |
Computer hardware and software | ||
Accounting Policies [Line Items] | ||
Cost | 284,578 | 352,573 |
Accumulated Depreciation | (211,029) | (227,687) |
Total property and equipment, net | 73,549 | 124,886 |
Vehicles | ||
Accounting Policies [Line Items] | ||
Cost | 435,180 | 305,980 |
Accumulated Depreciation | (112,385) | (61,612) |
Total property and equipment, net | $ 322,795 | $ 244,368 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) | 3 Months Ended | 15 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | |
Fair Value Measurement | |||
Available-For-Sale debt securities | $ 826,789 | $ 826,789 | $ 808,561 |
Debt securities | 800,000 | 800,000 | 800,000 |
Provision of credit losses | 0 | ||
Debt Securities, Available-for-Sale, Current | 19,200,000 | 19,200,000 | |
Unrealized gain | 190,328 | ||
Level 1 | |||
Fair Value Measurement | |||
Mutual funds | 16,461,721 | 16,461,721 | 16,236,445 |
Debt securities | 19,207,082 | 19,207,082 | 18,945,087 |
Total investment securities | 35,668,803 | 35,668,803 | 35,181,532 |
Level 2 | |||
Fair Value Measurement | |||
Stocks and ETFs | 1,942,897 | 1,942,897 | 1,755,219 |
Debt securities | 821,052 | 821,052 | 839,281 |
Total investment securities | 2,763,949 | 2,763,949 | 2,594,500 |
Level 3 | |||
Fair Value Measurement | |||
Stocks and ETFs | 1,942,897 | 1,942,897 | 1,755,219 |
Mutual funds | 16,461,721 | 16,461,721 | 16,236,445 |
Debt securities | 20,028,134 | 20,028,134 | 19,784,368 |
Total investment securities | $ 38,432,752 | $ 38,432,752 | $ 37,776,032 |
Fair Value Measurement - Compan
Fair Value Measurement - Company's available-for-sale (AFS) securities and other comprehensive income (OCI) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
OCI from AFS securities - debt securities: | ||
Unrealized (losses) on securities at beginning of period | $ 315,614 | $ (561,490) |
Reversal of losses from unrealized to realized | 212,097 | |
Unrealized (losses) gain on debt securities | (337,382) | 91,637 |
Change in OCI from AFS debt securities | (125,285) | 91,637 |
Balance at end of period | 190,329 | (469,853) |
Fair market value of securities | $ 41,100,000 | $ 38,600,000 |
Mortgages Receivable, net - CEC
Mortgages Receivable, net - CECL Allowance by Geographical Location (Details) | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Mortgages Receivable | |
Allowance for credit losses beginning balance | $ 7,523,160 |
Provision for credit losses related to loans | 530,092 |
Allowance for credit losses ending balance | 8,053,252 |
New England | |
Mortgages Receivable | |
Allowance for credit losses beginning balance | 5,764,000 |
Provision for credit losses related to loans | 350,000 |
Allowance for credit losses ending balance | 6,114,000 |
Mid-Atlantic | |
Mortgages Receivable | |
Allowance for credit losses beginning balance | 1,324,000 |
Provision for credit losses related to loans | 182,000 |
Allowance for credit losses ending balance | 1,506,000 |
South | |
Mortgages Receivable | |
Allowance for credit losses beginning balance | 435,000 |
Provision for credit losses related to loans | (2,000) |
Allowance for credit losses ending balance | $ 433,000 |
Mortgages Receivable, net - C_2
Mortgages Receivable, net - CECL Allowance by CECL Allowances by loan portfolio geographical location (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Jan. 31, 2023 |
Mortgages Receivable | |||
Total | $ 490,743,000 | $ 499,235,000 | |
Less: Allowance for credit losses | (8,053,252) | (7,523,160) | $ (7,523,160) |
Carrying value, net | $ 482,690,418 | $ 491,712,211 | |
% of Portfolio | 100% | 100% | |
New England | |||
Mortgages Receivable | |||
Total | $ 231,026,000 | $ 232,437,000 | |
Less: Allowance for credit losses | $ (6,114,000) | $ (5,764,000) | |
% of Portfolio | 47.10% | 46.60% | |
Mid-Atlantic | |||
Mortgages Receivable | |||
Total | $ 90,678,000 | $ 99,288,000 | |
Less: Allowance for credit losses | $ (1,506,000) | $ (1,324,000) | |
% of Portfolio | 18.50% | 19.90% | |
South | |||
Mortgages Receivable | |||
Total | $ 164,938,000 | $ 163,409,000 | |
Less: Allowance for credit losses | $ (433,000) | $ (435,000) | |
% of Portfolio | 33.60% | 32.70% | |
West | |||
Mortgages Receivable | |||
Total | $ 4,101,000 | $ 4,101,000 | |
% of Portfolio | 0.80% | 0.80% |
Mortgages Receivable, net - C_3
Mortgages Receivable, net - CECL Allowance by Property Type (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Jan. 31, 2023 |
Mortgages Receivable | |||
Total | $ 490,743,000 | $ 499,235,000 | |
Less: Allowance for credit losses | (8,053,252) | (7,523,160) | $ (7,523,160) |
Carrying value, net | $ 482,690,418 | $ 491,712,211 | |
% of Portfolio | 100% | 100% | |
Residential | |||
Mortgages Receivable | |||
Total | $ 243,965,000 | $ 246,520,000 | |
% of Portfolio | 49.70% | 49.40% | |
Commercial | |||
Mortgages Receivable | |||
Total | $ 179,122,000 | $ 186,524,000 | |
% of Portfolio | 36.50% | 37.40% | |
Pre-Development Land | |||
Mortgages Receivable | |||
Total | $ 37,210,000 | $ 35,920,000 | |
% of Portfolio | 7.60% | 7.20% | |
Mixed Use | |||
Mortgages Receivable | |||
Total | $ 30,446,000 | $ 30,271,000 | |
% of Portfolio | 6.20% | 6% |
Mortgages Receivable, net - Int
Mortgages Receivable, net - Internal credit quality indicators (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Jan. 31, 2023 |
Mortgages Receivable | |||
Total | $ 490,743,000 | $ 499,235,000 | |
Less: Allowance for credit losses | (8,053,252) | (7,523,160) | $ (7,523,160) |
Carrying value, net | $ 482,690,418 | $ 491,712,211 | |
% of Portfolio | 100% | 100% | |
Year Originated, 2024 | $ 18,056,000 | $ 86,742,000 | |
Year Originated, 2023 | 92,642,000 | 173,756,000 | |
Year Originated, 2022 | 147,403,000 | 201,967,000 | |
Year Originated, 2021 | 201,776,000 | 16,780,000 | |
Year Originated, Prior | 30,866,000 | 19,990,000 | |
Under 500 | |||
Mortgages Receivable | |||
Total | $ 403,000 | $ 1,764,000 | |
% of Portfolio | 0.10% | 1.30% | |
Year Originated, 2024 | $ 216,000 | ||
Year Originated, Prior | $ 403,000 | 1,548,000 | |
501-550 | |||
Mortgages Receivable | |||
Total | $ 3,698,000 | $ 6,555,000 | |
% of Portfolio | 0.80% | 1.30% | |
Year Originated, 2024 | $ 2,331,000 | ||
Year Originated, 2023 | 1,440,000 | ||
Year Originated, 2022 | 1,864,000 | ||
Year Originated, 2021 | $ 1,436,000 | ||
Year Originated, Prior | 2,262,000 | 920,000 | |
551-600 | |||
Mortgages Receivable | |||
Total | $ 8,384,000 | $ 33,723,000 | |
% of Portfolio | 1.70% | 6.80% | |
Year Originated, 2024 | $ 15,019,000 | ||
Year Originated, 2023 | $ 290,000 | 9,839,000 | |
Year Originated, 2022 | 2,629,000 | 6,854,000 | |
Year Originated, 2021 | 3,716,000 | 1,127,000 | |
Year Originated, Prior | 1,749,000 | 884,000 | |
601-650 | |||
Mortgages Receivable | |||
Total | $ 33,989,000 | $ 103,601,000 | |
% of Portfolio | 6.90% | 20.80% | |
Year Originated, 2024 | $ 1,138,000 | $ 16,053,000 | |
Year Originated, 2023 | 5,545,000 | 26,981,000 | |
Year Originated, 2022 | 4,053,000 | 52,073,000 | |
Year Originated, 2021 | 11,955,000 | 3,988,000 | |
Year Originated, Prior | 11,298,000 | 4,506,000 | |
651-700 | |||
Mortgages Receivable | |||
Total | $ 77,436,000 | $ 97,284,000 | |
% of Portfolio | 15.80% | 19.50% | |
Year Originated, 2024 | $ 17,862,000 | ||
Year Originated, 2023 | $ 15,318,000 | 40,318,000 | |
Year Originated, 2022 | 17,150,000 | 30,203,000 | |
Year Originated, 2021 | 35,907,000 | 3,662,000 | |
Year Originated, Prior | 9,060,000 | 5,239,000 | |
701-750 | |||
Mortgages Receivable | |||
Total | $ 194,305,000 | $ 167,977,000 | |
% of Portfolio | 39.60% | 33.60% | |
Year Originated, 2024 | $ 1,221,000 | $ 19,935,000 | |
Year Originated, 2023 | 33,185,000 | 51,276,000 | |
Year Originated, 2022 | 51,574,000 | 83,946,000 | |
Year Originated, 2021 | 103,892,000 | 7,411,000 | |
Year Originated, Prior | 4,433,000 | 5,409,000 | |
751-800 | |||
Mortgages Receivable | |||
Total | $ 151,520,000 | $ 64,313,000 | |
% of Portfolio | 30.90% | 11.90% | |
Year Originated, 2024 | $ 14,161,000 | $ 14,461,000 | |
Year Originated, 2023 | 38,227,000 | 20,806,000 | |
Year Originated, 2022 | 52,777,000 | 27,027,000 | |
Year Originated, 2021 | 44,870,000 | 592,000 | |
Year Originated, Prior | 1,485,000 | 1,427,000 | |
801-850 | |||
Mortgages Receivable | |||
Total | $ 21,008,000 | $ 24,018,000 | |
% of Portfolio | 4.30% | 4.80% | |
Year Originated, 2024 | $ 1,536,000 | $ 865,000 | |
Year Originated, 2023 | 77,000 | 23,096,000 | |
Year Originated, 2022 | 19,220,000 | ||
Year Originated, Prior | $ 176,000 | $ 57,000 |
Mortgages Receivable, net - Mat
Mortgages Receivable, net - Maturities of mortgages receivable (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 USD ($) loan | Dec. 31, 2023 USD ($) loan | Jan. 31, 2023 USD ($) | |
Mortgages Receivable, net | |||
2024 and prior | $ 346,167,000 | $ 412,303,000 | |
2025 | 126,654,000 | 86,836,000 | |
2026 | 17,829,000 | ||
Thereafter | 93,000 | 96,000 | |
Total | 490,743,000 | 499,235,000 | |
Less: Allowance for credit losses | (8,053,252) | (7,523,160) | $ (7,523,160) |
Carrying value, net | $ 482,690,418 | $ 491,712,211 | |
Mortgage loan portfolio number of loans | loan | 273 | 311 | |
Number of loans matured but not have been repaid in full or extended | loan | 72 | 89 | |
Amount of loans matured but not have been repaid in full or extended | $ 140,700,000 | $ 123,800,000 | |
Percentage of loans matured but not have been repaid in full or extended | 26.40% | 28.60% |
Mortgages Receivable, net - Loa
Mortgages Receivable, net - Loan modifications made to borrowers experiencing financial difficulty (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Loans modified during the period ended | ||
Financial Effect, weighted average months added to the life of the loans | 8 months 15 days | 8 months 15 days |
Term extension | ||
Loans modified during the period ended | ||
Carrying Value | $ 45,206 | $ 17,250 |
% of Total Carrying Value of Loans, net | 9.20% | 3.60% |
Other | ||
Loans modified during the period ended | ||
Carrying Value | $ 16,848 | $ 1,565 |
% of Total Carrying Value of Loans, net | 3.40% | 0.30% |
Mortgages Receivable, net - Per
Mortgages Receivable, net - Performance of loans that have been modified in the last 12 months to borrowers experiencing financial difficulty (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Loans modified during the period ended | ||
Additional amount committed to lend to borrowers experiencing financial difficulty | $ 26,100 | $ 24,000 |
Term extension | ||
Loans modified during the period ended | ||
Carrying Value | 45,206 | 17,250 |
Term extension | Current | ||
Loans modified during the period ended | ||
Carrying Value | 45,206 | 17,250 |
Other | ||
Loans modified during the period ended | ||
Carrying Value | 16,848 | 1,565 |
Other | Current | ||
Loans modified during the period ended | ||
Carrying Value | $ 16,848 | $ 1,565 |
Mortgages Receivable, net - Add
Mortgages Receivable, net - Additional Information (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 USD ($) borrower | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) borrower | |
Mortgages Receivable | |||
Aggregate amounts of loans funded | $ 42,654,300 | $ 58,883,824 | |
Principal collections on mortgages receivable | 51,398,181 | 39,884,300 | |
Face amount of mortgages | $ 38,100,000 | 29,900,000 | |
Default interest rate on mortgage loans | 18% | ||
One borrower | |||
Mortgages Receivable | |||
Number Of Borrowers | borrower | 1 | 1 | |
Outstanding mortgage loan portfolio | $ 53,200,000 | $ 50,400,000 | |
Nonaccrual loans | |||
Mortgages Receivable | |||
Loans on nonaccrual status | 85,700,000 | $ 84,600,000 | |
Interest income on nonaccrual loans | $ 300,000 | $ 600,000 | |
Mortgage Concentration Risk | Revenue Benchmark | One borrower | |||
Mortgages Receivable | |||
Loans outstanding (in percent) | 10.80% | 10.10% | |
Minimum | |||
Mortgages Receivable | |||
Term of debt | 1 year | ||
Interest rate (as a percent) | 5% | 5% | |
Maximum | |||
Mortgages Receivable | |||
Term of debt | 3 years | ||
Interest rate (as a percent) | 15% | 14.20% |
Investment in Rental Real Est_3
Investment in Rental Real Estate, net (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Property, Plant and Equipment [Line Items] | ||
Cost | $ 11,339,982 | $ 10,591,297 |
Accumulated Depreciation | (73,673) | (36,836) |
Investment in Rental Real Estate, Net | 11,266,309 | 10,554,461 |
Depreciation, Depletion and Amortization | $ 73,673 | |
Land and Land Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property plant and equipment, useful life | 15 years | |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Cost | $ 4,556,786 | 3,956,786 |
Investment in Rental Real Estate, Net | 4,556,786 | 3,956,786 |
Building | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 4,976,234 | 4,935,715 |
Accumulated Depreciation | (61,698) | (30,849) |
Investment in Rental Real Estate, Net | $ 4,914,536 | 4,904,866 |
Property plant and equipment, useful life | 40 years | |
Site improvements | ||
Property, Plant and Equipment [Line Items] | ||
Cost | $ 359,249 | 359,249 |
Accumulated Depreciation | (11,975) | (5,987) |
Investment in Rental Real Estate, Net | 347,274 | 353,262 |
Tenant improvements | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 1,182,842 | 1,182,842 |
Investment in Rental Real Estate, Net | 1,182,842 | 1,182,843 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Cost | 264,871 | 156,705 |
Investment in Rental Real Estate, Net | $ 264,871 | $ 156,705 |
Investment in Rental Real Est_4
Investment in Rental Real Estate, net - Future minimum rents under non-cancelable operating leases (Details) - Leases space to a tenant | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Property, Plant and Equipment [Line Items] | |
Lease provides for free rent and tenant improvement allowance | $ 2,700,000 |
2026 | 1,039,922 |
2027 | 1,268,704 |
2028 | 1,294,078 |
Thereafter | 10,061,513 |
Total | $ 13,664,217 |
Investment in Rental Real Est_5
Investment in Rental Real Estate, net-Estimated annual amortization of acquired below market lease intangible (Details) - Wesport, CT | Mar. 31, 2024 USD ($) |
Asset Acquisition [Line Items] | |
2025 | $ 66,474 |
2026 | 66,474 |
2027 | 66,474 |
2028 | 66,474 |
Thereafter | 398,841 |
Total | $ 664,737 |
Investment in Rental Real Est_6
Investment in Rental Real Estate, net-Estimated annual amortization of acquired in-place lease intangible (Details) - Wesport, CT - Leases, Acquired-in-Place | Mar. 31, 2024 USD ($) |
Asset Acquisition [Line Items] | |
2025 | $ 56,846 |
2026 | 56,846 |
2027 | 56,846 |
2028 | 56,846 |
Thereafter | 341,076 |
Total | $ 568,460 |
Investment in Rental Real Est_7
Investment in Rental Real Estate, net-Estimated annual amortization of deferred leasing costs (Details) - Wesport, CT | Mar. 31, 2024 USD ($) |
Asset Acquisition [Line Items] | |
2025 | $ 38,692 |
2026 | 38,692 |
2027 | 38,692 |
2028 | 38,692 |
Thereafter | 232,155 |
Total | $ 386,923 |
Investment in Rental Real Est_8
Investment in Rental Real Estate, net- Additional information (Details) - Wesport, CT | 1 Months Ended | 3 Months Ended |
Jan. 31, 2024 item | Mar. 31, 2024 USD ($) | |
Asset Acquisition [Line Items] | ||
Number of market rate residential units | item | 8 | |
Number of affordable rate units | item | 2 | |
Agreed Payment Amount Approved And Sold Residential Units | $ | $ 75,000 | |
Minimum | ||
Asset Acquisition [Line Items] | ||
Potential payment for residential units | $ | $ 600,000 |
Real Estate Owned (REO) (Detail
Real Estate Owned (REO) (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 USD ($) property | Mar. 31, 2023 USD ($) property | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Real Estate Owned (REO) | ||||
Investments in real estate own, net | $ 3,703,519 | $ 3,461,519 | $ 5,216,149 | |
Operating Lease, Impairment Loss | 0 | $ 0 | ||
Impairment loss | $ (794,462) | |||
Real estate on owned | 800,000 | 800,000 | ||
Real estate held-for-sale | $ 2,903,519 | $ 2,661,519 | ||
Number of properties held for sale | property | 1 | 2 | ||
Net (Gain) Loss on property held for sale | $ 10,854 | $ (148,100) | ||
Number of properties held for rental | property | 1 | |||
Lease term of rental property held for rental | 5 years |
Real Estate Owned (REO) - Activ
Real Estate Owned (REO) - Activity of the Company's real estate owned (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Real Estate Owned (REO) | ||
Real estate owned at the beginning of year | $ 3,461,519 | $ 5,216,149 |
Principal basis transferred to real estate owned | 374,000 | 1,756,125 |
Charges and building improvements | 229,587 | |
Proceeds from sale of real estate owned | (121,146) | (3,039,749) |
Impairment loss | (794,462) | |
Gain (loss) on sale of real estate owned | (10,854) | 93,869 |
Balance at end of year | $ 3,703,519 | $ 3,461,519 |
Real Estate Owned (REO) - Renta
Real Estate Owned (REO) - Rental payments due from real estate (Details) - Properties Held For Rental | Mar. 31, 2024 USD ($) |
Property, Plant and Equipment [Line Items] | |
2024 (9 months) | $ 39,900 |
2025 | 53,200 |
2026 | 31,033 |
Total | $ 124,133 |
Other Assets (Details)
Other Assets (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 |
Other Assets | |||
Prepaid expenses | $ 429,041 | $ 511,022 | |
Other receivables | 1,390,501 | 1,922,512 | |
Other assets | 235,290 | 229,074 | |
Notes receivable | 5,337,612 | 4,507,991 | |
Deferred financing costs, net | 274,073 | 307,868 | |
Deferred leasing cost | 386,923 | 386,923 | |
Leases in place intangible | 568,460 | 568,460 | |
Goodwill | 391,000 | 391,000 | $ 400,000 |
Intangible asset - trade name | 130,400 | 130,400 | |
Total | $ 9,143,300 | $ 8,955,250 |
Lines of Credit, Mortgage Pay_2
Lines of Credit, Mortgage Payable and Churchill Facility (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Sep. 08, 2023 USD ($) | Mar. 02, 2023 USD ($) | Feb. 28, 2023 USD ($) | Jul. 21, 2021 USD ($) | Feb. 28, 2023 USD ($) | Mar. 31, 2024 USD ($) loan | Dec. 31, 2023 USD ($) loan | Dec. 31, 2021 USD ($) | Dec. 31, 2020 | Dec. 31, 2022 USD ($) | |
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Spread on variable rate | 7.01% | 6.77% | ||||||||
Outstanding balance | $ 62,251,343 | $ 61,792,330 | ||||||||
Amount outstanding | 288,401,750 | |||||||||
Amortization schedule | 20 years | |||||||||
Term of Federal Home Loan Bank of Boston Classic Advance Rate | 5 years | |||||||||
Unpaid principal balance | $ 44,600,000 | $ 50,600,000 | ||||||||
Threshold asset coverage ratio | 150% | |||||||||
Number of first line mortgage loans | loan | 12 | 14 | ||||||||
Maximum borrowing capacity | $ 10,000,000 | |||||||||
Percentage of asset coverage ratio | 150% | |||||||||
Revolving Credit Facility | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Outstanding balance | $ 35,000,000 | |||||||||
Wells Fargo Credit line | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Spread on variable rate | 1.75% | |||||||||
Outstanding balance | 27,300,000 | $ 26,800,000 | ||||||||
New Haven Bank Mortgage | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Principal Amount | $ 1,660,000 | $ 1,660,000 | $ 1,400,000 | |||||||
Amount outstanding | $ 750,000 | |||||||||
Fixed annual rate | 5.75% | 5.75% | 3.75% | |||||||
Interest accrued period | 60 months | 72 months | ||||||||
Period for which only interest is payable | 12 months | |||||||||
Amortization schedule | 20 years | |||||||||
Term of Federal Home Loan Bank of Boston Classic Advance Rate | 5 years | |||||||||
Unpaid principal balance | $ 750,000 | |||||||||
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 | 1.75% | 2.60% | ||||||||
Master Repurchase Agreement | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Outstanding balance | $ 25,900,000 | $ 26,461,098 | ||||||||
Fixed annual rate | 0.25% | |||||||||
Repurchase face amount | $ 200,000,000 | |||||||||
Notes callable period | 90 days | |||||||||
Threshold asset coverage ratio | 150% | |||||||||
Percentage amount of repurchase obligation of unencumbered cash and cash equivalents | 2.50% | |||||||||
Term of debt | 180 days | |||||||||
Credit and Security Agreement with Needham Bank | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Fixed annual rate | 8.25% | |||||||||
Credit and Security Agreement with Needham Bank | Revolving Credit Facility | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Right to extend the term (in years) | 1 year | |||||||||
Interest rate | 4.50% | |||||||||
Maximum borrowing capacity | $ 65,000,000 | $ 75,000,000 | ||||||||
Amount of credit facility | $ 45,000,000 | |||||||||
Credit and Security Agreement with Needham Bank | Prime Rate | Revolving Credit Facility | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Percentage reduced from prime rate for calculating annual interest rate | 0.25% | |||||||||
Minimum | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Repayment of long-term loan | $ 47,000 | |||||||||
Term of debt | 1 year | |||||||||
Adjusted EBITDA coverage ratio | 1 | |||||||||
Minimum | Master Repurchase Agreement | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Fixed annual rate | 3% | |||||||||
Minimum | Credit and Security Agreement with Needham Bank | Revolving Credit Facility | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Notice period for terminating the Credit Facility, prior to the proposed date of termination | 10 days | |||||||||
Maximum | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Repayment of long-term loan | $ 59,000 | |||||||||
Term of debt | 3 years | |||||||||
Adjusted EBITDA coverage ratio | 1.40 | |||||||||
Maximum | Master Repurchase Agreement | ||||||||||
Line of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Fixed annual rate | 4% |
Unsecured Notes Payable (Detail
Unsecured Notes Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Unsecured Notes Payable | ||
Deferred financing costs | $ 5,443,237 | $ 6,048,490 |
Notes issued denomination | $ 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 | ||
Unsecured Notes Payable | ||
Aggregate amount outstanding | $ 283,000,000 | |
Deferred financing costs | 5,400,000 | |
June 2024 Notes | ||
Unsecured Notes Payable | ||
Aggregate amount outstanding | $ 23,700,000 | |
Fixed annual rate | 7.125% | |
December 2024 Notes | ||
Unsecured Notes Payable | ||
Aggregate amount outstanding | $ 34,500,000 | |
Fixed annual rate | 6.875% | |
September 2025 Notes | ||
Unsecured Notes Payable | ||
Aggregate amount outstanding | $ 56,400,000 | |
Fixed annual rate | 7.75% | |
Notes issued denomination | $ 24.75 | |
Principal Amount | $ 28,000,000 | |
December 2026 Notes | ||
Unsecured Notes Payable | ||
Aggregate amount outstanding | $ 51,800,000 | |
Fixed annual rate | 6% | |
March 2027 Notes | ||
Unsecured Notes Payable | ||
Aggregate amount outstanding | $ 51,900,000 | |
Fixed annual rate | 6% | |
June 2027 Notes | ||
Unsecured Notes Payable | ||
Aggregate amount outstanding | $ 30,000,000 | |
Fixed annual rate | 7.125% | |
September 2027 Notes | ||
Unsecured Notes Payable | ||
Aggregate amount outstanding | $ 40,300,000 | |
Fixed annual rate | 8% |
Unsecured Notes Payable - Futur
Unsecured Notes Payable - Future principal payments (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Unsecured Notes Payable | ||
2024 (9 months) | $ 58,163,000 | |
2025 | 56,363,750 | |
2026 | 51,750,000 | |
2027 | 122,125,000 | |
Total principal payments | 288,401,750 | |
Deferred financing costs | (5,443,237) | $ (6,048,490) |
Total notes payable, net of deferred financing costs | $ 282,958,513 |
Unsecured Notes Payable - Estim
Unsecured Notes Payable - Estimated amortization of the deferred financing costs (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Unsecured Notes Payable | ||
2024 (9 months) | $ 1,730,975 | |
2025 | 1,807,606 | |
2026 | 1,410,319 | |
2027 | 494,337 | |
Total deferred costs | $ 5,443,237 | $ 6,048,490 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Jan. 31, 2023 |
Accounts Payable and Accrued Liabilities | |||
Accounts payable and accrued expenses | $ 1,737,111 | $ 1,330,546 | |
Allowance for credit losses on unfunded commitments | 540,341 | 508,600 | $ 508,600 |
Accrued interest | 476,896 | 482,389 | |
Total | $ 2,754,348 | $ 2,321,535 |
Fee and Other Income (Details)
Fee and Other Income (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Fee and Other Income | ||
Late and other fees | $ 282,873 | $ 113,132 |
Processing fees | 35,150 | 32,070 |
Rental income, net | 15,300 | 13,300 |
Extension fees | 113,901 | 180,410 |
Construction servicing fees | 438,054 | 167,174 |
Inspection fees | 20,246 | 35,854 |
Legal fees | 82,550 | 96,500 |
Other income | 201,167 | 69,165 |
Total | $ 1,189,241 | $ 707,605 |
Commitments and Contingencies -
Commitments and Contingencies - Original maturities of deferred revenue (Details) - Deferred revenue | Mar. 31, 2024 USD ($) |
Commitments and Contingencies | |
2024 (9 months) | $ 3,416,066 |
2025 | 880,471 |
2026 | 60,068 |
Total | $ 4,356,605 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Details) | 1 Months Ended | 3 Months Ended | |||||||||
Sep. 11, 2023 USD ($) | Mar. 31, 2024 USD ($) shares | Feb. 28, 2023 USD ($) shares | Oct. 31, 2022 | Apr. 30, 2022 USD ($) shares | Apr. 30, 2021 USD ($) shares | Apr. 30, 2018 USD ($) | Feb. 28, 2017 USD ($) | Mar. 31, 2024 USD ($) property shares | Mar. 31, 2023 shares | Dec. 31, 2023 USD ($) | |
Commitments and Contingencies | |||||||||||
Deferred revenue | $ 4,356,605 | $ 4,356,605 | $ 4,647,302 | ||||||||
Base salary | $ 750,000 | $ 500,000 | $ 360,000 | $ 260,000 | |||||||
Number of mortgage properties | property | 5 | ||||||||||
Mortgages receivable | $ 4,000,000 | $ 4,000,000 | |||||||||
Employment agreement, Term | 5 years | ||||||||||
Employment agreement, extension term | 1 year | ||||||||||
Employment agreement, notice period for non renewal | 180 days | ||||||||||
Employment agreement, non-competition period | 2 years | ||||||||||
Urbane New Haven, LLC | |||||||||||
Commitments and Contingencies | |||||||||||
Payment to seller as percent of net proceeds from real estate development projects | 20% | ||||||||||
Amount of purchase and sale contract to acquire a commercial building | $ 2,300,000 | ||||||||||
Non-refundable deposit | $ 230,000 | ||||||||||
Restricted Stock | |||||||||||
Commitments and Contingencies | |||||||||||
Number of unvested shares | shares | 231,926 | 231,926 | |||||||||
Unrecorded stock based compensation expense | $ 1,011,885 | $ 1,011,885 | |||||||||
Restricted Stock | 2016 Equity Compensation plan | |||||||||||
Commitments and Contingencies | |||||||||||
Number of shares granted | shares | 111,857 | 183,390 | |||||||||
Unfunded Commitments | |||||||||||
Commitments and Contingencies | |||||||||||
Deferred revenue | 4,356,605 | $ 4,356,605 | |||||||||
Other commitments | 95,457,791 | $ 95,457,791 | |||||||||
Minimum | |||||||||||
Commitments and Contingencies | |||||||||||
Percentage of origination and modification fee revenue | 1% | ||||||||||
Maximum | |||||||||||
Commitments and Contingencies | |||||||||||
Percentage of origination and modification fee revenue | 3% | ||||||||||
John Villano | Restricted Stock | |||||||||||
Commitments and Contingencies | |||||||||||
Market value of shares granted | $ 500,000 | $ 500,000 | $ 500,000 | $ 500,000 | |||||||
Restricted common shares issued | shares | 111,857 | 130,890 | 98,425 | 89,928 | |||||||
John Villano | Vested on January 1, 2022 | Restricted Stock | |||||||||||
Commitments and Contingencies | |||||||||||
Vesting percentage | 33.33% | ||||||||||
John Villano | Vested on January 1, 2023 | Restricted Stock | |||||||||||
Commitments and Contingencies | |||||||||||
Vesting percentage | 33.33% | 33.33% | 33.33% | ||||||||
John Villano | Vested on January 1, 2024 | Restricted Stock | |||||||||||
Commitments and Contingencies | |||||||||||
Vesting percentage | 33.33% | 33.33% | 33.33% | ||||||||
John Villano | Vested on January 1, 2025 | Restricted Stock | |||||||||||
Commitments and Contingencies | |||||||||||
Vesting percentage | 33.33% | 33.33% | 33.33% | ||||||||
John Villano | Vested on January 1, 2026 | Restricted Stock | |||||||||||
Commitments and Contingencies | |||||||||||
Vesting percentage | 33.33% | 33.33% | |||||||||
John Villano | Vested on January 1, 2027 | Restricted Stock | |||||||||||
Commitments and Contingencies | |||||||||||
Vesting percentage | 33.33% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Shareholders | |||
Related Party Transactions | |||
Shareholders totaled | $ 23,800,000 | $ 25,600,000 | |
Interest income | 600,000 | $ 500,000 | |
Daughter of chief executive officer | |||
Related Party Transactions | |||
Compensation provided | $ 37,500 | $ 43,000 |
Concentrations of Credit Risk (
Concentrations of Credit Risk (Details) | 3 Months Ended |
Mar. 31, 2024 USD ($) property | |
Concentrations of Credit Risk | |
Percentage of mortgage loan | 39.80% |
Florida | |
Concentrations of Credit Risk | |
Percentage of mortgage loan | 26.20% |
New York | |
Concentrations of Credit Risk | |
Percentage of mortgage loan | 13.30% |
Credit concentration risk | |
Concentrations of Credit Risk | |
Cash and cash equivalents insured by the federal deposit insurance corporation | $ | $ 250,000 |
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 $250,000 in cash, per client in accordance with SIPC rules. |
Type of Property Concentration Risk | First mortgage liens on real property | |
Concentrations of Credit Risk | |
Number of properties categorized | property | 4 |
Type of Property Concentration Risk | Residential Real Estate | First mortgage liens on real property | |
Concentrations of Credit Risk | |
Loans outstanding (in percent) | 49.70% |
Type of Property Concentration Risk | Commercial Real Estate | First mortgage liens on real property | |
Concentrations of Credit Risk | |
Loans outstanding (in percent) | 36.50% |
Type of Property Concentration Risk | Pre-Development Land | First mortgage liens on real property | |
Concentrations of Credit Risk | |
Loans outstanding (in percent) | 7.60% |
Type of Property Concentration Risk | Mixed Use | First mortgage liens on real property | |
Concentrations of Credit Risk | |
Loans outstanding (in percent) | 6.20% |
Stock-Based Compensation and _2
Stock-Based Compensation and Employee Benefits (Details) - USD ($) | 3 Months Ended | |||
Apr. 16, 2018 | Mar. 31, 2024 | Mar. 31, 2023 | Oct. 27, 2016 | |
Stock-Based Compensation and Employee Benefits | ||||
Stock based compensation expense | $ 1,000,000 | |||
Percentage of employer contribution | 3% | |||
401(k) Plan expenses | 48,210 | $ 44,696 | ||
Compensation, fees and taxes | $ 1,943,197 | 1,779,318 | ||
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 | 882,262 | |||
Stock based compensation expense | $ 200,000 | $ 200,000 | ||
Restricted Stock | ||||
Stock-Based Compensation and Employee Benefits | ||||
Number of unvested shares | 231,926 | |||
Restricted Stock | 2016 Equity Compensation plan | ||||
Stock-Based Compensation and Employee Benefits | ||||
Shares granted | 111,857 | 183,390 | ||
Fair value of shares granted | $ 500,000 | $ 700,000 | ||
Vested on January 1, 2022 | Restricted Stock | 2016 Equity Compensation plan | ||||
Stock-Based Compensation and Employee Benefits | ||||
Shares vested | 37,285 | |||
Vested on January 1, 2023 | Restricted Stock | 2016 Equity Compensation plan | ||||
Stock-Based Compensation and Employee Benefits | ||||
Stock grants in period, gross | 37,286 |
Equity Offerings (Details)
Equity Offerings (Details) - USD ($) | 3 Months Ended | ||
Aug. 24, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | |
Equity Offerings | |||
Proceeds from Issuance of Common Stock | $ 2,050,040 | $ 9,181,158 | |
Proceeds from issuance of Series A Preferred Stock, net of expenses | 1,556,182 | 136,705 | |
Series A Preferred Stock | |||
Equity Offerings | |||
Aggregate purchase price for sale of shares | $ 1,556,182 | $ 136,705 | |
At the market offering | Series A Preferred Stock | |||
Equity Offerings | |||
Gross proceeds from common shares | 568,711 | ||
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 | $ 2,100,000 | ||
Common shares under prospectus supplement Dated August 24, 2022 | At the market offering | Series A Preferred Stock | |||
Equity Offerings | |||
Preferred stock liquidation preference value | $ 25,000,000 | ||
Gross proceeds from common shares | 79,034 | ||
Preferred stock available for future sale | $ 2,000,000 | ||
Proceeds from issuance of Series A Preferred Stock, net of expenses | $ 1,600,000 | ||
Percent of discount from liquidation preference | 20% | ||
Common Shares | |||
Equity Offerings | |||
Gross proceeds from common shares | 568,711 | 2,479,798 |
Partnership Investments (Detail
Partnership Investments (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 USD ($) company | Mar. 31, 2023 USD ($) | |
Partnership Investments | ||
Partnership investment, total | $ | $ 46.2 | |
Number of limited liability companies managed by a commercial real estate finance company | company | 5 | |
Income from partnership investment | $ | $ 1.2 | $ 0.5 |
Unfunded partnership commitments | $ | $ 2.4 | |
Four of Limited liability companies | ||
Partnership Investments | ||
Number of limited liability companies managed by a commercial real estate finance company | company | 4 | |
One of limited liability companies | ||
Partnership Investments | ||
Number of limited liability companies managed by a commercial real estate finance company | company | 1 | |
Ownership interest | 100% | |
Maximum | Four of Limited liability companies | ||
Partnership Investments | ||
Participation interest in mortgage loans | 49 | |
Minimum | Four of Limited liability companies | ||
Partnership Investments | ||
Participation interest in mortgage loans | 7 |
Series A Preferred Stock (Detai
Series A Preferred Stock (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
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 |
Preferred stock conversion, shares issued | 72,575,000 | |
Series A Preferred Stock | ||
Series A Preferred Stock | ||
Preferred stock, shares authorized | 2,903,000 | 2,903,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | |
Share price | 25 | |
Liquidation preference per annum | 1.9375 | |
Preferred stock, redemption price per share | $ 25 | |
Redemption period for preference stock | 120 days | |
Percentage of preferred stock redeemed | 7.75% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||||||
May 09, 2024 | Apr. 01, 2024 | Mar. 31, 2024 | Feb. 28, 2023 | Apr. 30, 2022 | Apr. 30, 2021 | Mar. 31, 2024 | Mar. 31, 2023 | |
Subsequent Events | ||||||||
Proceeds from issuance of Series A Preferred Stock, net of expenses | $ 1,556,182 | $ 136,705 | ||||||
Common shares under prospectus supplement Dated August 24, 2022 | ||||||||
Subsequent Events | ||||||||
Common shares available for future sale | $ 2,100,000 | $ 2,100,000 | ||||||
John Villano | Restricted Stock | ||||||||
Subsequent Events | ||||||||
Market value of shares granted | 500,000 | $ 500,000 | $ 500,000 | $ 500,000 | ||||
At the market offering | Series A Preferred Stock | ||||||||
Subsequent Events | ||||||||
Issuance of Common Shares, net of expenses (in shares) | 568,711 | |||||||
At the market offering | Series A Preferred Stock | Common shares under prospectus supplement Dated August 24, 2022 | ||||||||
Subsequent Events | ||||||||
Issuance of Common Shares, net of expenses (in shares) | 79,034 | |||||||
Preferred stock available for future sale | $ 2,000,000 | $ 2,000,000 | ||||||
Proceeds from issuance of Series A Preferred Stock, net of expenses | $ 1,600,000 | |||||||
Percent of discount from liquidation preference | 20% | |||||||
Subsequent Events | ||||||||
Subsequent Events | ||||||||
Dividend paid (in dollars per share) | $ 0.11 | |||||||
Payment of ordinary dividends | $ 5,219,066 | |||||||
Subsequent Events | At the market offering | Series A Preferred Stock | ||||||||
Subsequent Events | ||||||||
Issuance of Common Shares, net of expenses (in shares) | 0 | 0 | ||||||
Subsequent Events | At the market offering | Series A Preferred Stock | Common shares under prospectus supplement Dated August 24, 2022 | ||||||||
Subsequent Events | ||||||||
Issuance of Common Shares, net of expenses (in shares) | 69,431 | 69,431 | ||||||
Preferred stock available for future sale | $ 1,735,775 | $ 1,735,775 | ||||||
Proceeds from issuance of Series A Preferred Stock, net of expenses | $ 1,519,944 | $ 1,519,944 | ||||||
Percent of discount from liquidation preference | 12% | 12% |