0001682220-26-000014
SEC filingSachem Capital Corp. reported net income of $6.3 million for FY 2025, a significant improvement from a net loss of $39.6 million in FY 2024. Net income attributable to common shareholders was $1.8 million, compared to a loss of $43.9 million in the prior year. Key drivers included a substantial reduction in credit-related charges, with provision for credit losses decreasing to $3.3 million from $26.9 million, and the absence of large loan sale losses. Net interest income declined to $11.7 million from $20.5 million due to lower average loan balances and higher funding costs, resulting in net interest margin compression to 3.1% from 4.4%. The company strengthened its capital structure by issuing $90.0 million in Senior Secured Notes and extending its Needham Credit Facility. Forward-looking significance centers on managing elevated non-performing loans ($117.6 million at year-end), addressing $173.3 million in note maturities through 2027, and stabilizing net interest margin through disciplined origination and asset resolution.
Sachem Capital Corp. returned to profitability in FY 2025 with net income of $6.3 million, a significant improvement from a net loss of $39.6 million in FY 2024. Net income attributable to common shareholders was $1.8 million compared to a loss of $43.9 million in the prior year. This turnaround was primarily driven by a substantial reduction in credit-related charges, with provision for credit losses decreasing to $3.3 million from $26.9 million, and the absence of large loan sale losses that impacted the prior year. Net interest income declined to $11.7 million from $20.5 million due to lower average loan balances and higher funding costs, resulting in net interest margin compression to 3.1% from 4.4%. The company's total assets decreased 6.5% to $460.0 million, while total liabilities decreased 8.1% to $285.1 million.
Interest income from loans decreased 25.3% to $32.2 million in FY 2025 from $43.2 million in FY 2024, primarily reflecting lower average loan balances. Average loans held for investment were $376.4 million in 2025 compared to $468.8 million in 2024. The effective yield on total loans held for investment was 8.6% in 2025 versus 9.2% in 2024. Interest income from limited liability company investments decreased 5.6% to $4.8 million. Total other income remained relatively stable at $9.9 million, with fee income from loans decreasing 30.4% to $6.0 million due to lower origination volume, offset by increases in gain on investment securities ($1.6 million) and other income ($1.7 million).
Net interest margin declined 130 basis points to 3.1% in FY 2025 from 4.4% in FY 2024. This compression resulted from both structural factors (higher funding costs due to refinancing activity) and cyclical factors (lower average earning assets and higher concentration of non-accrual loans). The effective yield on performing loans was 12.0% in 2025 compared to 11.8% in 2024. Operating expenses decreased 16.4% to $13.1 million, with compensation and employee benefits increasing 12.3% to $7.7 million while general and administrative expenses decreased 5.2% to $6.5 million. The company recorded a $1.1 million impairment loss on real estate owned and a $4.1 million gain on sale of investments in developmental real estate, real estate owned, and property and equipment.
Net cash provided by operating activities was $2.7 million in FY 2025, a decrease from $12.9 million in FY 2024. Net cash provided by investing activities was $29.4 million, primarily from proceeds from limited liability company returns of capital ($21.3 million), proceeds from sale of investments in developmental real estate and property and equipment ($19.9 million), and proceeds from sale of real estate owned ($7.5 million). Net cash used in financing activities was $39.2 million, including dividends paid on common shares ($9.5 million) and Series A Preferred Stock ($4.5 million), and repayment of notes payable ($56.8 million). The company ended the period with $10.9 million in cash and cash equivalents. Total shareholders' equity decreased 3.7% to $174.9 million, with book value per common share declining to $2.46 from $2.64.
Management notes that non-performing loans remain elevated at $117.6 million as of December 31, 2025, up from $87.0 million a year earlier. The company faces significant debt maturities, with $173.3 million in notes payable due between December 2026 and September 2027. Management intends to address these maturities through operating cash flow, asset resolutions, and capital market activity. The company extended its Needham Credit Facility to March 2028, enhancing liquidity flexibility. Strategic priorities include continued resolution of non-performing assets, stabilization of net interest margin, and disciplined capital allocation. Risk factors include potential defaults under credit facilities, declining real estate valuations, and competitive pressures in the real estate finance market.