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Sachem Capital Corp. (SACH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered stabilizing results: Revenue was $11.44M (down 31.9% YoY) with GAAP EPS of $0.00; revenue was a slight miss vs S&P consensus (-1.97%), while EPS was a clear beat versus -$0.06 expected .
  • Management emphasized balance-sheet stability, book value per share of $2.57, and liquidity progress (Needham Bank $50M facility; two signed term sheets including a delayed-draw term loan targeting September retail notes) .
  • Portfolio headwinds persist: net non-performing loans increased to ~$124M (net) due to a large Naples, FL loan moving to non-performing; however, no material incremental markdowns in the quarter and Shem Creek LLC income rose ~71.7% YoY, boosting diversified cash flows .
  • Dividend cadence clarified; Q1 common dividend was $0.05 and Series A preferred dividend $0.484375; management reiterated REIT distribution intent and expects dividend growth as NPLs unlock capital .
  • Near-term stock catalysts: closing the two new credit facilities, repayment plan clarity for September notes, pace of NPL resolutions (especially Naples), and origination ramp in single-family/multifamily at standard pricing (12% interest, 2% origination) .

What Went Well and What Went Wrong

What Went Well

  • “The first quarter was one of stability…we remain focused on effectively managing our loan portfolio and protecting our capital” (CEO) .
  • Income from preferred LLC membership investments (Shem Creek) increased ~71.7% YoY; Q1 revenue of ~$2.0M from Shem funds at attractive low-risk double-digit yields .
  • Operating expenses fell 16.9% YoY (to $10.4M) primarily on lower interest/amortization, compensation, and credit losses; book value per share remained stable at $2.57 (down $0.07 due to dividends) .

What Went Wrong

  • Revenue contracted materially (31.9% YoY to $11.44M), reflecting fewer originations over the last 15 months and elevated NPLs/REO; revenue missed S&P consensus by 1.97% .
  • Net (loss) to common was $(0.213)M as preferred dividends ($1.117M) consumed GAAP net income; fee income from loans fell to $1.425M from $2.616M YoY .
  • Net NPLs rose to ~$124M (from ~$103M at year-end) driven by the Naples mortgage moving to non-performing and other loans totaling ~$25M; restrictive bank lending still limits borrower takeouts .

Financial Results

Quarterly overview

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$14.8 —$11.442
Net (Loss) to Common ($USD Millions)$(6.1) —$(0.213)
EPS ($USD)$(0.13) $(0.76) $0.00

Actual vs S&P consensus

MetricQ1 2025 ActualQ1 2025 ConsensusSurprise
Revenue ($USD Millions)$11.44 $11.67 -1.97% (Miss)
EPS (GAAP, $USD)$0.00 $(0.06) Beat

Margins

MetricQ1 2024Q1 2025
EBIT Margin %25.4% (EBIT $4.273 ÷ Rev $16.803) 9.0% (EBIT $1.029 ÷ Rev $11.442)
Net Income Margin %27.8% (NI $4.670 ÷ Rev $16.803) 7.9% (NI $0.904 ÷ Rev $11.442)

Revenue breakdown (components)

Revenue Component ($USD Thousands)Q1 2024Q1 2025
Interest income from loans$12,641 $7,887
Fee income from loans$2,616 $1,425
Income from LLC investments$1,195 $2,052
Other investment income$316 $6
Other income$35 $72
Total revenues$16,803 $11,442

KPIs and balance sheet

KPI / Balance MetricQ4 2024Q1 2025
Cash & equivalents ($USD Thousands)$18,066 $24,414
Loans held for investment, net ($USD Thousands)$356,571 $347,513
Allowance for credit losses ($USD Thousands)$(18,470) $(18,122)
Shareholders’ equity ($USD Thousands)$181,651 $179,339
Book value per common share ($)$2.64 $2.57
Total indebtedness ($USD Millions)$301.2 $305.6
Notes payable (net) ($USD Thousands)$226,526 $227,007
Repurchase agreements ($USD Thousands)$33,708 $41,519
Lines of credit ($USD Thousands)$40,000 $36,100
Asset-to-liability coverage (x)—1.57x
Net NPLs ($USD Millions)~$103 (Dec-31) ~$124 (Mar-31)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Common dividend per shareQ4 2024 / Q1 2025Declared $0.05 (Nov 2024) Declared $0.05 (paid Mar 31, 2025) Maintained
Series A Preferred dividend per shareQ1 2025Quarterly cadence $0.484375 (paid Mar 31, 2025) Maintained
Dividend timing cadence2025Quarterly declarations not alignedAligning common with preferred: Mar/Jun/Sep/Dec Clarified cadence
Needham Bank facilityMar 2025Prior facility resolved covenant issue Replacement $50M committed facility Maintained capacity
Sept 2025 retail notes (~$56M)2024–2025Confident to satisfy from ops/credit facilities Advanced docs on two facilities; delayed-draw term loan funds to repay notes Improved visibility
Asset coverage (leverage)2025 forwardBaby bonds covenant 1.5x through mid-2027 Expect 1.5x asset coverage covenant on new facilities Maintained discipline

Earnings Call Themes & Trends

TopicPrevious (Q3 2024)Previous (Q4 2024)Current (Q1 2025)Trend
Capital/financingPlanned loan sale; focus on avoiding dilutive capital $56.6M baby bonds confidence; Needham facility renewed Two signed term sheets; $50M Needham facility; delayed-draw term note to repay Sept notes Visibility improving
NPLs resolutionElevated NPLs incl. Naples; plan to sell ~$78.8M pool Resolved $25.1M net UPB in 2024; NPLs ~$102.9M net Net NPLs ~$124M; no material markdowns; focus on unlocking for dividend growth Elevated but stabilized
Dividend policyIndicated potential $0.05 in near term Continued common/preferred dividends $0.05 common; cadence alignment; dividend growth tied to NPL unlock Stable; path to growth
Macro rates/tariffs/supply chainRate cuts supportive; banks sidelined Banks restrictive; pipeline robust Tariff uncertainty and supply chain product shortages; rates expected to decline Headwinds persist
Portfolio focusLarger loans; better sponsors; residential bias Focus on SF/multifamily; reduce office exposure Selective lending, SF/multifamily preferred; standard pricing 12%+2% Consistent focus
Shem Creek/Urbane20% stake in manager; diversification Ownership expanded; double-digit yields $51.4M invested; ~$2M Q1 revenue; strengthens multifamily exposure Growing contribution

Management Commentary

  • “Our goal is to grow our balance sheet…while maintaining a prudent capital allocation approach…we are confident that cash flow and dividend growth will return” (CEO) .
  • “We have 2 signed term sheets…initial funding for working capital…and a delayed draw [to] provide funds directly related to the payment of the unsecured notes in September” (CEO) .
  • “Income from our preferred membership in Shem Creek LLC increased approximately 71.7%…these investments generated approximately $2 million in revenue, representing an attractive low-risk double-digit yield” (CEO/CFO) .
  • “Book value per common share…was $2.57…[decline] nearly solely driven by $3.5 million in preferred and common dividends” (CFO) .
  • “We will remain focused on single-family and multifamily residential assets…our success…unlock significant capital to drive earnings and cash flow growth” (CEO) .

Q&A Highlights

  • Facilities mix: one fixed-rate delayed-draw term note earmarked for September baby bond repayment; a new facility similar to Churchill targeting growth assets .
  • Rate sensitivity: one facility floating—company would benefit if rates are cut; advance rates currently 60–70% at Churchill, with potential up to 75–80% on specific resi/multifamily assets .
  • Lending pricing: mixed-use residential/retail maintains standard pricing of 12% interest and 2% origination; construction service fees continue where applicable .
  • Leverage discipline: expect asset coverage covenant ~1.5x on new facilities; baby bonds also impose 1.5x coverage through mid-2027 .
  • Pipeline and capital: pipeline remains robust; capital availability continues to constrain origination pace—hence prioritizing accretive sources .

Estimates Context

  • Q1 2025 vs S&P Global consensus: EPS beat ($0.00 vs -$0.06); revenue slight miss ($11.44M vs $11.67M, -1.97%) .
  • Prior quarters: EPS missed in Q4 2024 (-$0.76 vs -$0.47) and Q3 2024 (-$0.13 vs $0.10), underscoring the importance of NPL resolution and cost-of-capital improvements for earnings normalization .
  • Implications: Consensus likely to lift EPS trajectory modestly if term facilities close and NPL monetization accelerates, but revenue estimates may remain cautious given originations lag and elevated NPLs .

Key Takeaways for Investors

  • Stabilization achieved; EPS outperformed expectations despite revenue headwinds—focus shifts to execution on accretive financing and NPL monetization to restore fee and interest income streams .
  • Two pending facilities (including delayed-draw term loan) should de-risk September maturities and enable selective growth; closing them is a key near-term catalyst .
  • Shem Creek partnership diversifies earnings with ~$2M Q1 revenue at double-digit yields; continued scaling can offset lower loan-originations income .
  • Elevated NPLs (~$124M net) are the principal drag; successful resolution (esp. Naples) directly boosts cash flow and supports dividend growth .
  • Dividend cadence aligned; $0.05 common and $0.484375 preferred paid in March—future growth tied to unlocking problem assets and securing accretive capital .
  • Macro risks (tariffs, supply chain) and restrictive bank lending continue to challenge borrower takeouts; monitoring rate path and market liquidity remains crucial .
  • Trading setup: watch for facility close announcements, NPL sale/resolution updates, and origination ramp in SF/multifamily at standard pricing (12% + 2%) for sentiment inflection .