SACH - Earnings call transcript Q1 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Sachem Capital Corp.

First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Stephen Swett, Investor Relations. Please go ahead.

Stephen Swett

thank Earnings joining Conference and First Capital everyone, XXXX Quarter Call. morning, you Sachem for Corp.'s Good

On the Villano, call Marcello. Executive President Officer from Finance Sachem Capital Interim of Financial today Chief Officer, Operations, John and CPA; Vice and and Nick is Chief

morning, date. operating for The company's is on ended announced press the financial condition website its and the XX, release XXXX, its company at as the quarter This results March of www.sachemcapitalcorp.com. that posted

may remarks include reminder, As made conference call statements. on forward-looking a today's

Forward-looking differ discussed uncertainties any results do statements or forward-looking risks may that information events. and undertake new our future are subject materially to statements cause actual of in obligation not today. to to update those light from We

that refer and results, may affect For more SEC most a the to this quarter earnings factors please release to for our filings. recent detailed discussion the our company's of

the call, GAAP our these this financial about certain discussing information SEC the During directly More to measures will measures. contained in company reconciliations measures are most financial non-GAAP non-GAAP filings. be and financial comparable

turn I'll John. over to that, the call With

John Villano

to and everyone joining us thanks you, Thank today. for

the managing underwriting remain banks are sheet balance our uncertainty To and to borrowers. inflation Reserve's estate prudently overall quality are on liquidity remain continue by ensure to financially the on and a and these policy. and evolving backdrop, strong many the have marked future transactions focused Sachem sidelines. the challenging rate we points, real In Federal as industry constrained macro loans face environment, real highly regarding we ample estate with this highest

largely well for projects as loans were loan borrowers through worked where and as or financing. back completed, $X.X restructured revenue, defaults been modifications in longer-term Loan extensions takeout but put cases in searching and added our million we as extended, extensions track. are have on quarter, the approximately During modifications

well capitalized. loans to and are re-underwritten and noted ensure that or extended have projects we still the collateral before, viable As are modified are

through to experience the appropriately. many necessary tools Our us provided environment with this navigate cycles has

often Importantly, of prove our other it has workouts believe story loans when term their loans fees troubled the income, often to our result and Furthermore, in low compared over interest profitable tells foreclosure, considered. how and we are loan a favorable been our experience REO balances, our that origination outcome.

discuss now detail. financials quarter our first Let's XXXX in more

but quarter compared growth For in revenue to million grew the prior the XX% quarter the $XX.X first first of XXXX, approximately $XX.X the to million Sachem Despite same year. revenue a in saw this in a loan of originations. To opportunities, our forward. steadfast loan resolve manage to lack not emphasize, quarter, rather sharp due we reduction from going to this was liquidity

as continue our to borrowers our borrowers, bonds We unavailable deep pipeline, we the for monitor mostly strong very due capital strong maintaining are liquidity With establish that XXXX. effectively a we remains said, long-term to focused scarce baby continue long-term upcoming navigate and and lending we and remain disciplined. the ongoing to on with in June notably relationships. payable while And to potential are that marketplace,

will continue selection, fee origination which originations, impact tight find will capital the of loan to efficient loan negatively income without to Further, and affected. be begins Our liquidity our environment and current until approach, lending earnings protection ease. strict new encompasses we funding

our attractive cost be liquidity a at protecting will to allow ways to We're impacted. always and continue pivot capital, offensive to we proactively future balanced earnings more opportunities. pursuing add may but Obviously, approach, priced which in would us be reasonably and invest comes

was factors. of approximately for first the prior expenses several due quarter. $XX.X year to operating the million quarter costs and XXXX million $X.X compared change approximately Total were in The to

first deferred of quarter compared million the approximately to approximately million quarter as first recorded and costs the $X.X $X.X interest of amortization we in Specifically, financing of in XXXX.

the the to to prior integration to compared the support up our was strong and of necessary team ensure added due year resources controls to $XXX,XXX to full Haven as internal quarter, G&A strengthen our we efforts approximately New acquisition. Urbane

relatively the period in taxes. increases to expenses over were same stagnant, other and depreciation up expenses due Compensation were and

the $X.X Lastly, office a we to million provision also for had loan which of majority losses, asset. related an

Looking of is asset to but our possibility team value a through our maximizing initiatives. remains and provisions incremental ahead, seasoned there noncash focused impairments, committed management

attributable share. million XXXX As quarter million was income $X.XX for a net common were first $X.X same of compared last per to share year, quarter as approximately to $X.XX and in shareholders result, per $X.X the the to earnings approximately compared

ongoing our regularly dividend in evaluates an prior our importance flexibility. the our of discussed maintaining operational tax requirements financial on distribution balancing and policy quarters, basis, As Board long-term federal performance,

our has dividend will dividend We Board's and are to attractive maintain over subject consistent to of forward, strive the we our going years, remained how proud oversight. an

Turning to portfolio activities.

our are participants earlier are current mentioned challenging banks demand rise as continues not I loans similar originations As borrowers. standby, lenders financial with and low facing, very industry mid-sized our their in hard remain and on nonperforming capital but and many institutions in the what to for on other are money struggle to environment, loan loans support

lack residential, of our We And have many opportunities remained are supply where stable markets. for prices us. targeted believe due in efforts our origination industry housing as primarily in single-family focused ahead, our of to on creates and relatively and the we a struggle look multifamily demand

were net loan fundings quarter, approximately $XX.X principal including the of and of paydowns. that draws had million modifications approximately we $XX.X million from offset loans, by construction For mortgage

company $X.X quarter, XX a the of modified loans. of During or These total gross in the modifications resulted approximately extended income first million. fee

portfolio. whole our at Looking

average of XXX of million, balance XX.X%, XX, fees March with principal weighted had with of interest loans, of earned. noninclusive a $XXX.X rate approximately XXXX, total a As we

office. XX in is are real portfolio, states, with single-family Further, Loan encompass and types, spanning other markets. property a including Our across continue loan assets. only of commercial our geographically on growth variety portfolio a focus Southeastern within diverse, of estate to originations multifamily, XX.X% investments our

was loans pending foreclosure representing charges. March but we including in loans company, includes $X.X accrued and principal interest the outstanding principal $X.X $XX.X sale. $XX.X status, of as million XX, rental had by end, the held quarter approximately approximately which million owned with for $XXX,XXX XXXX, unpaid in and approximately of approximately estate of held XX for balance balance, approximately million nonaccrual including a At Real borrower million

now company. our discuss a balance sheet Let's as strong and where position, to financial maintain the continue focus liquidity of we primary

approximately approximately million securities, in in As million, of assets total March offset million equivalents $XX.X debt investment total by $XX.X $XXX.X $XXX.X XX, XXXX, cash, outstanding. of we had of and cash including million

liquidity facility. at end, on $XX available credit our of million Additionally, we quarter had

managing continue maintain we closing, our approach to In our business. to disciplined

and together, give as markets. lending confidence financial foundation, us to ahead we look portfolio Our strong diversified unrestricted

to back getting As we believe prudently growing can continue we intently we pivot the protect time where business. our more to our is capital, closer

thank believe shareholders. value for a balance to our performance. I shift want and contributions for firmly ultimately their entire work strategic of our Sachem liquidity to lending long-term market team our We hard in to this lead the will to and

open for We will now Operator? questions. call the

Operator

The today comes Thalmann. Nolan first question Instructions] Ladenburg from with Christopher [Operator

Christopher Nolan

that On of lowering the on topic leverage we going liquidity, sheet? that, balance should the the balancing, read you're lending be to and into

John Villano

truth, in to no. say, ratio, covenants Chris, a like on leverage in we would unsecured I but our covenant are, yes, X.Xx unfortunately, debt by business. debt our debt our notes, We're are really limited coverage. we

coverage to does on business. And easy at governor kind fast it's while grow we us allow ratio, how our a the at can So limiting times, night. sleep of

it's not a aggressive very So covenant.

to this What demand is wrong much affects And clear, that forward discussion, there vest. we're going we now. just see lending script, uncertainty was very so clarity, we're in want we doing as And close to side. days we And were what just we're to to until the close the of very forward. cautious be going say, basically concerning. in We we're where I the the Needless uncertainty. being profits. play to just we're vest. is collect. be then. goes want being mentioned early strong strong on going And It's really our caught it don't conservative our is playing to the very back And to COVID, But

Christopher Nolan

higher in wider of as your loans there? developing in next see reprice? you -- do the trend then sort got what that Or Understood. And quarter, this yields yields see the in you more quarter up the step should we investments on another

John Villano

past of And say, the lot construction if or in ability I'll as service back coming again, now fee. repriced. COVID we have X% not they're raise staying a are year Those loans interest, era as or have fees. to. the we -- our we XX% would our, are so, through steadfast. going construction Once a much those as for rate like forward, era, don't to We're -- there's really a component, X% Over origination rates low getting interest basic X%

point, rates, the damaging at hand. mean I at the some to become project

is and opportunities, yielding for And a think really good forward lower to clear. I X chasing So be XX the we're benchmark us. not going also,

Operator

next from The with Alliance Gaurav Global question comes Partners. Mehta

Gaurav Mehta

I on on one some ask more color on to this that office provision you loan. wanted about get that talked an to the you quarter. Hoping asset

John Villano

failed. Yes, may Maine, little the Marcello and I up We could ask but provide clarity, more in Nick asset project I take. here's a help and an bit. did to my

borrower not could Our perform.

outcome the and a We can change up a friendly we change structure project buyer, use have asset. a of of great and And purchased the had that us. shown of feel be for

say, And time. it's as a I going take to roses things the show like these Gaurav, as bit. at all down Unfortunately, end, would to much up much the road it's so

positive. of change is very the So use

the funds have work. We available to do

project. all worked so, next have how the to contractors to reporting be We or year And as out. back the that finish in we'll

Gaurav Mehta

Okay.

funding. Second question net on the

I of funding think net you quarter. said $XX.X this million

loan number? And no just new of was so originations was draws? to loan all in clarify, and modifications that There want construction I that

John Villano

No, you there exact have the Nick, the significant. originations. do loan was were quarter? It for originations loan not new new tremendously

Nicholas Marcello

the fundings that Yes. only million. net million really originations about quarter, We of did for was and number $XX loan $XX gross on

light. very So

Gaurav Mehta

that just the of Maybe maybe being quality prepared pipeline? wanted Are to are a you seeing lastly, pipeline borrowers I Or -- you're in color, but in I get think, there borrowers. And of in borrowers, your is strong have change same remarks, some you quality? seeing mentioned the cautious. of the you Okay. you on quality more any

John Villano

quality it's this better at up looking had borrowers quality our good lot that It's what moment. the in a industry for tremendous. feel of a and result is projects whole And lot of pipeline a than good the is And a quality We of the past. really home. locked we've

regular Liquidity is to uncertain. having available lending scarce It to right? accustomed to continue their truly great are borrowers and They're on livelihood. respect Banks service And work. good capital projects. with to searching, is are

great time now it's into lot too certainly And we're of projects. we some the getting So deep are not than dig accustomed. opportunities, what a larger to bigger

Operator

JonesTrading. next with Your from comes question Matthew Erdner

Matthew Erdner

$XX and I'm a wrong you in this But nonaccruals talk in expand million if could with on money-wise $XX said million foreclosure. plan? you little bit. a you correct or me. going issue believe bit I a this? there, a little on it's construction if please it's If what's about just borrower Could Whether

John Villano

are small loans or number are material We number in that and the is require complete, What for total past not have is us. The we labor over into $XX that cleansing quarters too Yes. been our renewed do do broke delays. have going two being just doing caused a We the pieces extended -- time shortages through few is some million. Those to The loans for where cases. we've of really portfolio. you. have

construction pricing has Urbane budgets, and redirect. of have kind get of track We labor and back and out on those to assistance blown our require material unit projects the where

And the a But contract these as the sold foreclosure. had earlier, back X mentioned that week, week, take were portfolio. came plan the past through and unfortunately, ongoing properties time. just things within an for our great to question results on getting us. we've And asset. the cleansing what of hands doing, we're in under I with it's And They continue it's

The in and fears square biggest very once slow And out to a date. get failed a help they some that in things sometimes move again, project, to we're the pick get this we're it's on they're work this honestly, back game And up able slowly them, to our borrower problem courts phone. to usually And realize track. cases.

of elsewhere into They're than see It's project. same our But not that It's it's of a lot you'll running issues. things. always borrower, significantly a which they're it's of our been think larger industry not combination a process. And type the the us. lot I of the competition, a in

into projects And day a problem it very say, problem. planning is sold I you "Hey, it's look, material expensive. costs." refinanced, into turns tough or could game. because get turns zoning. the and and sit here can't a Real It's And And all if a we're quick estate it

to our loans borrowers to honest. So in a of putting a lot quite counterparty having jeopardy, is really not refinance be

great do back will our to We We'll cutting back. think having bit. when for happens, on counterparty rates, us. It little the that borrowers get track. tied But be us these of a will a stride not us get keeps a

to continue work we forward. them, our assets to we So protect and continue with going

Matthew Erdner

talk That's expect modeling from securities some for a Right. bit to bonds? a And should little portfolio? the helpful. can then And we baby you the upcoming of decrease in the quarters investment perspective, that about

John Villano

closed, That happened that and whole April. portfolio and early has been liquidated

Operator

comes question Muller Chris next from JMP. The with

Christopher Muller

Or of do cycle? bulk be? feel ongoing problems this more of how you are like XXXX? you guess, we do I this to the where be going own able most So are portfolio, looking current stress into do to been of will far your you you've for an think process think those And at identify

John Villano

it's in feel that up. think that get ongoing. very cleaned that are a be me It's we into Properties I to to going interesting problem. super distress run properties

to I It think be to requires have it's a approach. us hands-on going ongoing.

We are very thankful.

in loans of That a problem. buyers is bulk. not are We huge

actively borrowers. contact our with stuff to know them gives that us manage ability in the portfolio, and consistently. the We up. We clean We're this

a loans not. kind that are is we here of about, that So there's joke good all they're until little saying

us. a And bad just but response good bad sometimes, news, maybe surprised or a the turns we bad out get pretty with from for stuff sometimes borrower

Christopher Muller

question that like, fresh here. guys it. you Just does put a And borrowers looks just you typically leads second my then Are Got I to I look about in? typical guess modification Can talk That's into a what guess? like? helpful. require typical what modification equity

John Villano

should letting point. out here for this the starts watching mod to way. just end aware contacting that we're us, and them term their typical A that loan, at of days know our some is their be they We start going prior XX it loan borrowers to

And the this. discussion then goes something like

a We have refinance.

have you. a sale, what We have

terming problem. We a a early. out, we have When At we action is loan the start least have the plan.

before So we've loan started on terms. this working the

partners budget this at it loan. going long needs becomes if could But You're out then capital, to a the it's borrower if before be in if -- we're it least loan new issue, it's project figure defaulted terms, the technically, terms. construction And hands-on that partnership. once

doing end seeing So numbers are -- that's what modifications is COVID, due, quarter. XXX And during these of little a now loans elevated. we're and coming those back kind the towards why bit we were of are a

are So we're that working all off loan huge maturing now. volumes of closings

that, guy that And push to range. quality down XXX so to have the trying were that." I And our quality at of from on have loans really with in to portfolio. We our loan bankable. want and excess is XXX used not away to to the projects We're also mention "Look borrowers we count. our don't small deal get We it's who

Operator

Thank for call. concludes This conference attending you the concludes our and presentation. session question-and-answer today's

disconnect. now may You

Sachem Capital (SACH) 10 May 242024 Q1 Earnings call transcript