SACH - Earnings call transcript Q2 2020

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Operator

Good day, ladies and gentlemen, and welcome to the Sachem Capital Second Quarter 2020 Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host, Mr. David Waldman of Investor Relations. Sir, the floor is yours.

David Waldman

thank conference joining call. and second Capital everyone, XXXX quarter morning, you Sachem for Corp’s Good

Officer website, Yesterday, On date. of John its XX, Executive posted Financial XXXX Villano, is call operating The CPA, Sachem www.sachemcapitalcorp.com. the with quarter the financial on Chief press Officer us results for and and release ended company its XX, that the August today the is of company’s announced Capital. June Chief as condition

its Form Exchange at filed well with the XX, In can and company addition, SEC’s accessed www.sec.gov. as XX-Q U.S. Securities company’s Commission which website the as the website August on on also be the

Crescendo If call you the would the Communications have like contact or at questions information XXX-XXX-XXXX. any any after additional please about company,

as the identify in everyone reviews XXXX, regarding forward-looking and company’s current of words project, will, call plans this largely of terms financial XX-Q on and in the needs. statements and in condition events Mr. continue, of operations may affect XXXX should, forward-looking statements. operations Securities on not our and about uncertainties Form quarter condition, actual terms XX, are U.S. company’s words statements. forward-looking report may, forward-looking are results Exchange quarterly financial statements strategy, company’s could uncertainties historical the facts operations subject to may including those expectations remind the second Commission and expect, anticipated Form on on These other discussed position, for expectations and XXXX. for anticipate, likely, estimate, with and strategy, assumptions, for similar XX, and well the believes may short-term future plan, or and call this statements. at filed and These and The forward-looking than and differ and of March forward-looking these materially believe, risks assumptions, All as negative future events and August XX-K it XXXX several and conference this of intend, design, statements June contained occur, company’s filed in seek, risks, conference Because results Before our to trends and that the operating that adversely are might, future such report and could, intended XXXX call, its based business like annual as of expressions long-term results second of statements the in the results other financial financial statements. forward-looking statements circumstances are conference to of XX, projections objectives contain operations, and implied quarter its on would the we the described from Villano

as predictions forward-looking statements rely not should future events. You upon of

expectations that Although of the level achievements. reflected statements results, in future they the believes are activity, or company forward-looking guarantee reasonable, the cannot performance

forward-looking these statements. disclaims these company neither well in statements expressly these In as as by the made company to nor for the this All and other responsibility to entirety assumes forward-looking statements. conference statements completeness person others addition, company are The any update duty call. of in of any any any the their cautionary forward-looking accuracy attributable of qualified

Please and the John all by these evaluate call I’ll uncertainties. Villano. over in With should to the go of turn company risks John. You ahead, forward-looking context statements that, made the now

John Villano

performance another thanks strong -- I report quarterly joining and to everyone despite Sachem achieved very of pleased us I'm David, COVID-XX pandemic. you, impact the pleased Thank to today. for am

per share Specifically, million compared same share, million or revenue income increased $X.X to per $X.X XX% $X.XX XXXX. period $X.X and was net the $X.XX for million of to or

our mortgage we our increasing deploying capital call, on portfolio. and started year last strong, discussed the As loan

its realize impact we we However, potential once immediate the hold, overall on took environment, business took action. and COVID

we Specifically, maintenance portfolio. of careful our by risk capital, guidelines on existing preservation lending underwriting to and our of focusing reduce implemented new

guidelines by of to at new end one, XX% the increase Three, requiring not income. down loans. forbearance Our the growth new pleased quarter, the second XXXX quarter. the XX as payoffs. the just include pervasive of the first from the have to million greater Loans a review, an provisions mitigated March requests believe amount we at this report marketplace. by end strong received steps, net in generate of on to loan since reported decision. required was reserve and loans we our cash quarter the these impact limiting a XX dropped $X.X XXXX improvement still of steps temporary in XX%, in continue to July guidelines initially with end of on limited I'm Despite given restriction. loans at remain also to current $X LTV in our necessary reducing that although to by Two, the validation COVID-XX of removing XXXX, XX exceed some $X.X relaxed XX% loan strategy. right forbearance believe environment the the first dropped an and ratio fees from restrictive hindsight, from out a financial lending justified a and cash and we our We increase our of million. the board more substantially million X cautious. market income revenue and back We and activity Effective increasing QX performance, XX%. lend of loan-to-value We overall financial in conservative attribute interest this than underwriting finally to evidenced the these large the to our In we aspirations, And on business. uncertainty we XX% were

actively begun deploy capital. diversification portfolio. and and We're we more our have to pursuing expansion However, also opportunistic prudently loan of

amounts touch returns, and as multifamily capital our highlights properties, very classes, We larger we asset cautiously sponsorship fix larger about higher is key of deploy we pleased like are on geographic potentially I some as heading talk half am our our believe are more and can and effectively of well higher forward. robust, as pipeline where end the year. into and would footprint lower I diversifying optimistic expanding such both moving financial and with to the into strategy additional loan second to flip we better now risk. report

need any into additional details, our If the financial and you insight XX-Q please review release. press filed recently

income income for for First, total approximately fees investment fees year. were sold. to to tighter volume. in approximately origination funding period all the interest on during rental Late reflecting and increased processing standards XXXX period. million, net Along last as and properties the revenue decreased lending $X.X second less a the reduction increased compared XX% rental of quarter Interest period and the million during fees $X.X same with

XX% months costs was million six operating to and revenue attributable respectively, $X.X performance XX the approximately and same in year-over-year. Total year. compared and million income The XX% quarter net expenses period XXXX, XX last and from to in in a our For by costs notes was XXXX. increased the from one-time representing credit primarily in $X for last approximately financing costs raised interest loan June income the expenses growth the XXXX, interest increase or XXXX. termination deferred reflects for of to line amortization stable ended June of operating ended the and expense November, June year utilization of sale the of cash an payoff The of increase relating in and XXX,XXX increase reduced

our we a comes cash and protection We deploying the as the this afforded balances However, liquidity forward with look pressure opportunities attractive earnings. to by in cost further on capital identify market.

the or $X.X income ended are or XX, our we improving we million the in $X.XX per estate months real approximately three XX, XXXX was believe June three share that June slowly are the Finally, to a sign for $X.X XXXX. financial markets million per where operate. results ended months for good share, compared net Overall, things $X.XX

However conditions adapt we we realized risks, still quickly evolve. to as able are our be there market strategy and must market

little In $XXX,XXX XXXX. equity change terms financial condition, $XX million. $XX.X XX, XXXX and million to $X.X million, December million approximately $X Sachem's XX, increased to of liabilities million, at June to approximately increased from increased assets $XXX by shareholders Total by overall

of XXXX, loan increased our sheet XX, notes. our million, approximately $XX June in million ended portfolio solid backing million months remains six $XXX assets by the balance over with During and $XX

REIT, providing stability extraordinarily times. these mortgage are a As difficult levels peers during debt thereby our low versus our

paper our shareholders. for is seller. note portfolio a not Sachem find the We is our it best can remember, believing all Let's return we adjusted risk

In do our garner not to addition, we lever higher over portfolio leveraged returns.

XXX X.X% of As or loans of June in foreclosure. the XXXX process mortgage our of XX, XX the were just portfolio, in approximately

the foreclosure foreclosure courts all Currently manner. are loans capital in are managed our expect, eviction a in As are actively goal state of as stalled invested proceedings with you unlocking and closed. timely would

XXXX as We this area expect through work starting to to in progress their begin large courts in backlog. October, see

the down in at representing loans included million forbearance quarter $X.X $X.X XX from earlier, million or our mortgages of mentioned As I XXXX. end COVID-XX of first XX receivable are of requests, XXX the

of million estate $X.X Net million As three to XX, year. operating ended months June to $X at loan providing June XXXX decreased for XXXX compared by period year-end. XX, approximately real million, cash activities million compared last the million $X.X to same by was $X.X $X for approximately the

July a on and authorized X, quarterly on paid of terms In declared XXXX, of This we August was XX, dividend, dividend our XXXX. $X.XXX.

we income XXXX. to you intend shareholders. XX% are each satisfy of minimum most required requirement taxable a for Sachem is its as to distribute read we of As And this aware, to of year

take excess credit equity investments from last our cash million me resources. $XX balance financing cash, balance our portfolio to and funds million We from net with now loan were million used transactions off entire for the raised remaining of capital. ended And proceeds capital million working of intended and $XX.X a $XX.X capital to proceeds debt short discuss and security. equivalents in our we These facility. moment on capital quarter outstanding grow and we Let The the are these liquidity $XX.X to year. pay approximately the June term

has last election Currently, bolster prior our growth. the generally in to to well have refinance sheet From strengthen effectively sheets with a timing decision we and participants, half aggressive our pursue year than financing balance capitalized its stringent better worked are sheet three competing to believe, perspective, second macro criteria. capitalized and our to lending we our as advantage, less loan term for is and pricing competitors. we Sachem we balance and market hand as Our

COVID lend assets economic strong to continue and believe, and a to mortgage bank's we money no the is lenders own almost our we lend. lending well these balance secured the less will capitalizing being is going than a entities on that on differentiator banks starved challenges, to continued we to unwillingness positioned competitive are cash X% fund of fact monitor Most by by able their major we advantage our balances Moving conditions with with and REITs, and and the with we large deployed competition of off bank us, expand funded of are forward, and Sachem’s lender creditors to compete own markets is area, our sheet through procedure.

In healthy. report and personnel, our terms of COVID-XX I to impact our direct the employees that am all pleased safe to remain of

furloughed implemented on not sustainable period. anyone, to It continued these team Despite a I'd all the hard difficult and members this thank the challenges, to we have all we hands prudent for for during grow We in was have nor manner. business our of cuts. deck pay moment work company. like their an truly

estate and approaching still real as with our lender, COVID-XX, borrowers cautiously in we squeeze this tighten products market market are So their the and our or for current credit to our around we positioned ahead. sheets, criteria with see weak we the the competitors results. given We And That remains and to the up, balance the to uniquely demand have we conditions, strict intend said, The strong. exists are summarize, requirements. while we uncertainty seen to go seize opportunities that comply believe prudence. non-bank services shore lending to

the with our we as focus this We To as July of Dr. and such see Executive are Florida company's developing such Florida our capital new Vice opportunities operations Cuozzo projects and Sachem’s portfolio risk I'm multifamily, returns. with deploy and borrowers. geographic company's markets in to in invest Pete Operating Officer, we include capital to diversing XXXX. can also where oversight to Texas, President as expanding markets. expanding end, adjusted entire responsibilities X, include Pete’s attractive Texas, Chief will creditworthy pleased our where effectively business to effective welcome include more larger We're

Decker work created accelerate have extensive in GE, he three operational value joining, companies In drive and early Hess. his and our and our addition IPO time executive In Pete’s guidance experience within as to growing HP, of short Sachem execute days, decades over to organization, Syngenta, brings us at our look excellence. we strategy Black assistance profitable senior growth since such pre we to Stanley on the forward well-known and contributions and continued as

thank have would As to have steps the the the confident, grow point, market. like I to from the profits I cash pandemic scalable taken have built quarter navigate continue to the necessary years which stated flow, for in drive current the increased all At am will to in competitive you today. joining model I would I a ongoing for operating business revenue emerge strong the highly the and and we with we like ahead. will to very we questions. past, call call position. this open for we am in pleased believe dividends results a and I we our believe

Operator

Rommel Capital. We'll go to Aegis at Instructions] first [Operator Dionisio

Rommel Dionisio

of for you. couple questions John, a quick

maybe and just break seen in estate market, also cities the of you into obviously there. overall a parts kind interest headwinds. seeing weeks? perhaps some this value I all trends of of lot you're economic few moving lot moving that First, of rates, that out real wonder in last Connecticut, I've maybe Could these low people share property moving a down parts, the but

John Villano

migration of are now And and So the listings XX% we cities. different what real in the this have were a estate they Yes, seeing changed we Real estate of trends is become business, are in has from where from Connecticut quickly. dramatically. moving estate we seeing Real popular. have quite January December XXXX. our

We people rates. advantage affordable. is are Once housing becoming the seeing of interest low again take

time are seeing $XXX,XXX. market of loan our And a this up quickly. snapped also in priced somewhere vicinity average we really We lower the of and is gets balance a homes this is that lot spend in

Renters lower REO point ended million now time So interest kind I June And property. first the in direct some buying homebuyers beneficiary nice be are expect months as call, in prices unreachable. and people move headwinds we property. of you've become where six X.X the some heard with down And trend. a was XX. there are of rates will buying our a at It's

for As but estate investments. that have right change, markets borrowers on lookout. we're fact we're of comes all the our real a And when now, it to liquidity the lot their enjoying selling

Rommel Dionisio

Okay.

if follow-up may. I Just a quick

on. with that COO Obviously, roadmap a into mentioned a Florida, potential just look that your Could give recent in maybe releases you You for press what us expansion that's pretty terms goal? that's mean, COVID maybe of especially in hit might executive and, new you're bringing see like? the a by year? we really been just in hard more the a I it Thanks. of half timing. Is could be of long-term second of some yes, region that

John Villano

benefits. South, families, is we're Florida the is What We slow Florida heading in some quite have a tax climates, into area some families started of move expansion. systematic and in of in market with a estate few search real quite a Northern the and search and robust warmer Canadian Midwestern doing

in marketing are Florida. Southern We

advertising We web have running.

selective properties. do in on ground have any in that we to the boots We We loans unbelievably accept are review that area.

firms. build We We're structure Again, steady. a have slow to there. it law and is beginning

Our capital Florida just allow to is Texas. and doesn't a in at moment become significant for the the true us yet, the same player market

boots have ground. on We the

dollars. some have in those loans And portfolio, expand invested portfolio. area And, looking diversify of better We we to that we're our all. look to and just sponsorship from explicitly. have trust That's we again, for that in our we operator them our ones

Operator

We'll Instructions] at Aviation go next Altschul Jim Advisors. [Operator to

Jim Altschul

questions. of Couple

P&L revenue among to you according I recording you something? are and forbearance Or First of receivable? doing? What the how doing mean, sheet? are you balance full the request, all, your the with amount the are regard reflecting to

John Villano

Okay.

are when we others. they some property their damage So our to family I XX we do We however requests or specifically Because than relief XX, think, provide the of extension. demonstrate are incurred. treat has forbearance we day that to a our different somewhat required could grant lender, borrowers commercial XX, they did not

you is forbearance help. The the be late be first ask In look and thing then to XX a request, we order for current. can't get for must borrower days

borrower So to of proper paying had value extend agreed. we that we foremost, did The so and sure the to we the our borrower. the that has credit be was as property to first thing could LTV make next

And so, we now what current if the and borrower to we borrower's is we have did win, is availability the note. modified

of balance escrowed funded and a took days of actually interest. it day days each signed took So XX our a in interest that requested the borrower documents. have They for period, of we XX legal portion closing. we effect, sheet took the day XX that a we We in and if XX as revenue. we had formal had We and forbearance, interest

properties borrowers know final And to And our be late a if that, our important is the pay, how not refinanced. fact payment at move will operate. borrowers point. be to all So, some here of or look deficiency some these we able there is banks

sure complicate COVID So the we made not we did further situation.

So we for an with us could yeah, say, open have now a when a calls history, payment these been made. heart, payments bank

not and not free so chamber of free Okay, of -- granting XX-day we're with a no open. air deal an just money. with like it's open It's a

clearly are people demonstrated So clear. be loans working through to perfectly These us not assistance. to need for bad issues, these are the they've

Jim Altschul

were I which I very mean to I appreciate. -- accounting wanted the didn’t for in you explain understand which detail how so say you bad, would I

Next question.

instruments or investments the guess, that of of loans, the the I the I it on side asset of type you mean of investing? proceeds amount some from are what notes securities significant deployed have guess, a you have You ledger, I

John Villano

say me. These investments are have statement in are of I'll this because are don't I bomb that proof. front These -- this,

individual bonds investments. not in These are risk. in X.X% on the some are of not corporate a our somewhere would there. that we're there's So few there's margin, our have high CDs These any investment at stocks. range it's point, in There's Right and June cash the nothing vicinity no year. from that's million But no of with or XX. again, ’XX, now million $XX $XX balance is earning driving for somewhere

bombproof. our our to to sleep it and managed we're put we're we've But again, So as on it's, see it money. a through We and can starting well, the position gains not that money. by work incurred But in again, income and it. it's way want investment, gambling we at night you the is

Jim Altschul

I time, other just the tell Got you was much little in it. don’t could us want And take thing. there a to one that please? quarter of impairment your but an charge, about

John Villano

know we don't see like we and We damage are how in let impairment And assets. to the feel ball property when smaller is inspect and a Sure. the an law get do go garbage to than be in us nobody a try the or anticipate, to but that as on speak come And that's fairly to good as try properties, to shape for consistently in we they and actively good loans me easy. this, compared that. carrying that that will trying in shape, market we crystal value really be but have this we is our environment its going gives foreclosure, bought. not honestly We And, in and may make back trouble the us. in impairment, trick monitor what an a we -- effort to larger it's cost to a trick The that foreclosure proactive. property properties in we're through things

losses, accurate crystal as charges to to take try we earnings don't a again, be sometimes we smooth can. potential as have we anticipate So, ball, but really we impairment to

Operator

Mr. holdings. with any back you conference And to for additional comments. turn the questions Villano, or I'll closing no other

John Villano

We're like First and thank doing can. what shareholders. foremost, we I'd our to

We have challenging times.

that stewards best are dollars. of good your We We come. you you. invested have Thank think the

Operator

your Ladies and gentlemen that participation will We conclude today's appreciate conference. today.

at You disconnect and a day. great have time this may

Sachem Capital (SACH) 11 Aug 202020 Q2 Earnings call transcript