Item 1. Business
Item 1. Business
Background
We were organized as a New York corporation in January 2016 under the name HML Capital Corp. On December 15, 2016, we changed our name to Sachem Capital Corp. Prior to February 8, 2017, our business operated as a Connecticut limited liability company under the name Sachem Capital Partners, LLC (“SCP”). On February 9, 2017, we completed our initial public offering (the “IPO”) in which we issued and sold 2.6 million common shares, $.001 par value per share, (“Common Shares”). We believe that since the consummation of the IPO, we have qualified as a real estate investment trust (“REIT”) and we elected to be taxed as a REIT beginning with our 2017 tax year. We believe that it is in the best interests of our shareholders that we continue to operate as a REIT. As a REIT, we are required to distribute at least 90% of our taxable income to our shareholders on an annual basis. To the extent we distribute less than 100% of our taxable income to our shareholders (but more than 90%), we will maintain our REIT status but the undistributed portion will be subject to regular corporate income taxes. As a REIT, we are also subject to federal excise taxes and minimum state taxes. We intend to continue to operate in a manner that will permit us to maintain our exemption from registration under the Investment Company Act.
Business Overview and Investment Strategy
We are a Connecticut-based real estate finance company that specializes in originating, underwriting, funding, servicing and managing a portfolio of short-term ( i.e., typically three years or less) loans secured by first mortgage liens on real property. In addition, our loans are usually further secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower. Our typical borrower is a real estate investor or developer who uses the proceeds of the loan to fund its acquisition, renovation, rehabilitation, development and/or improvement of residential or commercial properties and that are held for investment or sale. The mortgaged property may or may not be income producing. Our loans are referred to in the real estate finance industry as “hard money loans” primarily because they are secured by “hard” ( i.e., real estate) assets. Our mortgage loans are structured to fit the needs and business plans of the borrowers. Revenue is generated primarily from the interest borrowers pay on our loans and fees related to the origination, maintenance, service, modification, and extension of loans.
Our primary objective is to grow our loan portfolio while protecting and preserving capital in a manner that provides for attractive risk-adjusted returns to our shareholders over the long term through dividends. We intend to achieve this objective via a simple, yet compelling, two-prong strategy: accelerate profitable growth and drive operational excellence, thereby reducing general and administrative expenses as a percentage of revenue. We will continue to selectively originate loans and carefully manage our loan portfolio in a manner designed to generate attractive risk-adjusted returns across a variety of market conditions, economic cycles and high-growth geographies.
Management
John L. Villano, CPA, is our founder, Chairman, President and Chief Executive Officer. He is responsible for overseeing all aspects of our business operations, including investor relations, brand development and business development. Prior to starting Sachem, Mr. Villano was engaged in the private practice of accounting and auditing for almost 30 years.
In December 2024, Jeffery C. Walraven was appointed to serve as our Interim Chief Financial Officer. Mr. Walraven joined us in August 2024 as a member of the Board. Prior to his appointment as Interim Chief Financial Officer, he was also a member of the Audit, Compensation and Nominating and Corporate Governance Committees of the Board. In connection with this appointment, he resigned as a member of all the committees. He has extensive experience with private and public real estate companies working on matters including capital markets, accounting and finance.
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Our Origination Process and Underwriting Criteria
Our executive management team possesses extensive experience in both residential and commercial mortgage lending, navigating various economic and market conditions with expertise. A primary source of new transactions is repeat business from existing and former borrowers, along with referrals of new business. Additionally, we generate leads through strategic partnerships with banks, brokers, attorneys, and targeted web-based advertising.
When underwriting a loan, our primary focus is evaluating the value of the property that will secure the loan. Before making a final decision on a loan application, we conduct thorough due diligence on both the property, the borrower, and if the borrower is an entity, the principals of the borrower. We rely on readily available market data, including independent appraisals, Automated Valuation Models, trailing twelve month financial statements, rent rolls (if applicable), recent sales transactions, and broker insights, to assess the value of the collateral.
Additionally, the asset management team reviews the construction aspects of the project. This team meets with the borrower, its principals, and the General Contractor to understand the project scope, timelines, and any potential constraints. The asset management team continues to monitor and oversee the project until its completion. We conduct thorough due diligence by ordering title, lien, and judgement searches. In most cases, we also perform an on-site visit to assess the subject property, as well as the surrounding real estate market. If an on-site visit is not feasible, we rely on an independent appraisal to evaluate the property’s as-is or after-repair value. Additionally, we review financial and operational data provided by the borrower and its principals, focusing on how they manage and maintain the property.
To evaluate the borrower and its principals, we obtain third-party credit reports from a major credit reporting agency, conduct background checks through LexisNexis, and request personal financial statements. We verify these statements by requesting supporting documents such as bank and brokerage statements, along with mortgage statements for any properties listed on their “Schedule of Real Estate Owned”, which is part of our loan application. All of this information is carefully analyzed before making a final decision.
Our decision to proceed with the funding of the loan is primarily driven by our comprehensive evaluation of the property’s value. This evaluation encompasses factors such as the local market conditions, the current and potential alternative uses of the property, the existing and projected net incomes, sales data for comparable properties, applicable zoning regulations, and the creditworthiness of the borrower and principals. Additionally, we assess the experience and qualifications of the borrower and their principals in real estate ownership, construction, development, and project management. As part of our due diligence, we engage third-party professionals and experts, including appraisers, engineers, title insurers, and attorneys, to ensure a thorough and informed decision- making process. Loan commitments are issued following a comprehensive review and approval process by our executive management team. In the event of any deviations from our standard guidelines, an exception report must be signed by the executive management team. Loan commitments are typically contingent upon thorough underwriting and the receipt of satisfactory title documentation and title reports for the underlying property.
The typical terms of our loans are as follows:
Principal amount. We have a policy that limits the maximum amount of our exposure to a single borrower or a group of affiliated borrowers to 10% of the aggregate amount of our loan portfolio, unless otherwise approved by the Board. Finally, any loan with an original principal amount exceeding $5 million must be approved by our board of directors (the “Board”).
Loan-to-Value Ratio; Loan to Cost Ratio. Our underwriting guidelines provide that the original principal amount of a loan should not exceed 70% of the fair market value of the property securing the loan. In the case of properties undergoing renovation, our underwriting guidelines provide that the original principal amount of a loan should not exceed 85% of the total cost of the project. However, we make exceptions to this guideline if the facts and circumstances support the incremental risk. The factors we will consider include the additional collateral provided by the borrower, the credit profile of the borrower, our 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 we deem appropriate.
Interest rate. Currently, a fixed rate is typically between 10.0% to 13.0% per annum with a default rate of up to 24% per annum.
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Origination fees. Generally, the range is from 1% to 3%. In addition, if the term of the loan is extended, additional points are payable upon the extension.
Term. The loan term typically ranges from one to three years, with early termination allowed in the event of a refinance or property sale. Extensions may be granted if the borrower complies with all covenants and the loan meets our current underwriting criteria. Extensions are generally for one year, but may vary based on the loan’s circumstances.
Prepayments. In most cases, a borrower may prepay the loan at any time without premium or penalty.
Covenants. To promptly pay real estate taxes, property insurance, general liability insurance, builder’s risk insurance, flood insurance (if applicable), and any similar charges related to the subject and collateral properties. Additionally, the borrower and its principals are responsible for ensuring the property remains secure and is not subject to deterioration, damage, or blight.
Events of default. Includes: (i) failure to make payment when due; and (ii) breach of a covenant.
Payment terms. Interest only is payable monthly in arrears. Principal is due in a “balloon” payment at the maturity date.
Escrow. Generally, none required.
Reserves. Depending on the particular cash flow of a property, we may require the borrower to establish reserves for interest, taxes and/or insurance, particularly with respect to larger loans.
Security. Each loan is evidenced by a promissory note, which is secured by a first mortgage lien on real property owned by the borrower. A loan may be further secured by additional property owned by the borrower, a pledge by the owners of the borrower of their equity interest in the borrower and/or personal guaranties from the borrower or a related party.
Fees and Expenses. Borrowers are responsible for various fees associated with securing a loan, which may include an application fee, inspection fee, wire fee, and a bounced check fee. In the case of construction loans, borrowers are also subject to check requisition fee for each draw made from the loan. Additionally, a construction servicing fee, ranging from 1% to 2% of the total construction budget, may apply.
As is customary in real estate finance transactions, borrowers are expected to cover all expenses related to obtaining the loan. These expenses include, but are not limited to, the cost of a property appraisal, environmental assessment report (if applicable), credit report, and any title, recording, or legal fees incurred during the loan process.
Financing Strategy Overview
To continue to grow our business, we must increase the size of our loan portfolio, which requires that we use our existing working capital to fund new loans and raise additional debt and/ or equity capital. Our operating income in the future will depend on how much capital we raise and the spread between our cost of capital and the effective yield on our loan portfolio.
We do not have any formal policy limiting the amount of indebtedness we may incur, but under the terms of the loan documents related to our various credit facilities, including the indenture covering our unsecured unsubordinated five-year notes (the “Notes”), we are required to maintain total assets exceeding 150% of our total liabilities. Depending on various factors we may, in the future, decide to take on additional debt to expand our mortgage loan origination activities to increase the potential returns to our shareholders. The amount of leverage we deploy depends on our assessment of a variety of factors, which may include the liquidity of the real estate market in which most of our collateral is located, employment rates, general economic conditions, the cost of funds relative to the yield curve, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, our opinion regarding the creditworthiness of our borrowers, the value of the collateral underlying our portfolio, and our outlook for interest rates and property values. At December 31, 2024, debt represented 62.0% of our total capital compared to 60.4% at December 31, 2023. We expect to maintain our current level of debt and are always looking to attempt to reduce our cost of capital.
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Our Loan Portfolio
The following table highlights certain information regarding our real estate lending activities for the periods indicated:
As of and For the Years Ended
December 31,
(in thousands, except number of loans and weighted averages)
2024
2023
Loans disbursed
$
134,298
$
204,885
Loans repaid
$
190,971
$
167,036
Principal of loans sold
$
55,838
$
—
Number of loans sold
32
—
Principal of loans transferred to real estate owned
$
28,639
$
1,749
Number of loans transferred to real estate owned
22
4
Number of loans held for investment outstanding
157
311
Gross principal amount of loans held for investment
$
376,991
$
499,235
Weighted average contractual interest rate (1)
12.53
%
12.56
%
Weighted average term to maturity (in months) (2)
4
6
(1) Includes default interest.
(2) Does not give effect to extensions.
At December 31, 2024, our outstanding mortgage loan portfolio included loans ranging in size from $35,000 to $42.9 million. The table below gives a breakdown of our loans held for investment by loan size as of December 31, 2024:
Aggregate Gross
Number of
Principal
Amount
Loans
Percentage
Amount
Percentage
(in thousands)
$1,000,000 or less
75
47.8
%
$
30,629
8.1
%
$1,000,001 to $5,000,000
65
41.4
%
146,939
39.0
%
$5,00,001 to $10,000,000
8
5.1
%
51,831
13.7
%
$10,000,001 or more
9
5.7
%
147,592
39.2
%
Total
157
100.0
%
$
376,991
100.0
%
Most of our loans are funded in full at closing. However, where all or a portion of the loan proceeds are to be used to fund the costs of renovating or constructing improvements on the property, only a portion of the loan may be funded at closing. At December 31, 2024, our loan portfolio included 63 loans with future funding obligations, having a funded outstanding principal amount of $316.5 million and $49.9 million unfunded pending borrower performance. Advances under these loans are funded against requests supported by all required documentation (including lien waivers) as and when needed to pay contractors and other costs of construction. Most of the properties we finance are residential or commercial investment and have a construction component. However, in all instances the properties are held only for investment by the borrowers and may or may not generate cash flow.
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As of December 31, 2024, the primary markets in which we were exposed were Connecticut, Florida, Massachusetts and New York. The table below gives a breakdown of our loans held for investment by state as of December 31, 2024:
Number of
Gross Amount
State
Loans
Percentage
Outstanding
Percentage
(in thousands)
California
1
0.6
%
$
4,101
1.1
%
Connecticut
84
53.6
%
129,787
34.4
%
Florida
23
14.7
%
115,232
30.6
%
Georgia
1
0.6
%
3,840
1.0
%
Maine
1
0.6
%
1,625
0.4
%
Maryland
1
0.6
%
864
0.2
%
Massachusetts
9
5.8
%
46,121
12.2
%
New Jersey
1
0.6
%
2,240
0.6
%
New York
21
13.5
%
33,166
8.8
%
North Carolina
4
2.5
%
7,764
2.1
%
Pennsylvania
2
1.3
%
4,850
1.4
%
Rhode Island
3
1.9
%
1,888
0.5
%
South Carolina
4
2.5
%
12,461
3.3
%
Tennessee
1
0.6
%
11,868
3.1
%
Washington D.C.
1
0.6
%
1,184
0.3
%
Total
157
100.0
%
$
376,991
100.0
%
The following table details our loans held for investment as of December 31, 2024 by year of origination:
Aggregate Gross
Number of
Principal
Year of Origination
Loans
Percentage
Amount
Percentage
(in thousands)
2024
36
22.9
%
$
46,786
12.4
%
2023
31
19.7
%
83,704
22.2
%
2022
34
21.7
%
80,349
21.3
%
2021
33
21.0
%
148,773
39.5
%
2020
8
5.1
%
9,879
2.6
%
2019
6
3.9
%
3,752
1.0
%
2018 and prior
9
5.7
%
3,748
1.0
%
Total
157
100.0
%
$
376,991
100.0
%
The following tables set forth information regarding the types of properties securing loans held for investment at December 31, 2024 and 2023:
At December 31,
2024
2023
(in thousands)
Aggregate Gross Principal
Aggregate Gross Principal
Amount
Percentage
Amount
Percentage
Residential
$
211,939
56.2
%
$
246,520
49.4
%
Commercial
95,509
25.3
%
186,524
37.4
%
Pre-Development Land
23,466
6.2
%
35,920
7.2
%
Mixed Use
46,077
12.3
%
30,271
6.0
%
Total
$
376,991
100.0
%
$
499,235
100.0
%
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Allowance for Credit Losses
Our allowance for credit losses is influenced by historical loss experience, current exposure by geographical region, current expected credit losses on loans in foreclosure based on fair value less cost to sell, non-performing status, and other supportable forecasts of economic conditions. A loan is considered non-performing once it has been delinquent on its monthly payments past 90 days.
The following table presents the allowance for credit losses against unpaid principal balance of loans held for investment:
At December 31,
2024
2023
(in thousands )
Percentage of
Percentage of
Aggregate Gross
Respective
Aggregate Gross
Respective
Principal Amount
Allowance
Principal
Principal Amount
Allowance
Principal
Performing & Non-performing – General reserve
$
282,910
$
(5,147)
1.8
%
$
350,922
$
(2,360)
0.7
%
Non-performing – Direct reserves
57,808
(7,265)
12.6
%
84,592
—
—
%
Non-performing in Foreclosure – Direct reserves
36,273
(6,058)
16.7
%
63,721
(5,163)
8.1
%
Total
$
376,991
$
(18,470)
$
499,235
$
(7,523)
For further information, see Note 4 – Loans and Allowance for Credit Losses.
Investment in Rental Real Estate
As of December 31, 2024, we owned one property that was purchased for the sole purpose of an investment in rental real estate, and is currently in final phases of construction renovation. On February 15, 2025, we commenced a lease agreement for approximately 51% of the gross leasable space of 49,041 square feet. This property also has an approved residential development component, which as of the date of this report, is currently in the planning stage.
The following table details the carry value of our investment in rental real estate owned property reflected on our consolidated balance sheets as of December 31, 2024:
Month of
Carrying
Property Type
Location
Acquisition
Value
(in thousands)
Commercial – Office space and Condominiums
Westport, CT
June 2023
$
14,032
Total
$
14,032
For further information, see Note 5 – Investment in Rental Real Estate, Net.
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Real Estate Owned
As of December 31, 2024, we owned twenty properties, each of which previously served as collateral for first mortgage loans. Fifteen of such properties were acquired during the year ended December 31, 2024 in connection with foreclosure actions.
The following table details the carrying value of each of our real estate owned properties reflected on our consolidated balance sheets as of December 31, 2024:
Month of
Carrying
Property Type
Location
Acquisition
Value
(in thousands)
Commercial – Restaurant
Bristol, CT
March 2019
$
750
Land
Bristol, CT
December 2019
1,406
Land
Derby, CT
March 2022
30
Land
Sturbridge, MA
November 2022
110
Residential – Single Family
Bellingham, MA
December 2023
293
Land
Stamford, CT
May 2024
115
Land
Stamford, CT
May 2024
115
Residential – Multi Family
Westbrook, ME
September 2024
298
Residential – Multi Family
South Portland, ME
September 2024
550
Mixed Use
Casco, ME
September 2024
300
Land
Cape Coral, FL
October 2024
600
Land
Cape Coral, FL
October 2024
900
Land
Cape Coral, FL
October 2024
350
Land
Cape Coral, FL
October 2024
350
Residential – Multi Family
Flagler Beach, FL
October 2024
3,382
Residential – Single Family
Gainesville, FL
November 2024
925
Mixed Use
New London, CT
November 2024
1,750
Land
New London, CT
November 2024
2,500
Commercial – Office
Windsor, CT
December 2024
1,600
Commercial – Office
Windsor, CT
December 2024
2,250
Total
$
18,574
For further information, see Note 6 – Real Estate Owned (REO).
Investments in limited liability companies
As of December 31, 2024, we had investments in limited liability companies of $53.9 million, consisting of limited liability membership equity investments in real estate note-on-note mortgage investment vehicles, direct investments in real estate, and a direct investment in an real estate asset manager.
For further information, see Note 17 – Limited Liability Company Investments.
Competition
The real estate finance markets in which we operate are highly competitive. Competition is becoming more of a factor as we implement our strategy to focus on larger loans and more sophisticated borrowers. Over the last few years, as banks have pulled back from the lending market, non-traditional lenders, such as non - bank real estate companies, hedge funds, private equity funds and insurance companies, have stepped into the void.
Our competitors include traditional lending institutions such as regional and local banks, savings and loan institutions, credit unions and other financial institutions as well as other market participants such as specialty finance companies, REITs, investment banks, insurance companies, hedge funds, private equity funds, family offices and high net worth individuals. In addition, there are numerous lenders of significant size serving the markets in which we currently operate and those in which we plan to operate in the future. Many of these competitors enjoy competitive advantages over us, including greater name recognition, established lending relationships with customers, financial resources, and access to accretive capital. Our principal competitive advantages include our experience, our reputation, our size and our ability to address the needs of borrowers in terms of timing and structuring loan transactions.
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Notwithstanding intense competition and some of our competitive disadvantages, we believe we have carved a niche for ourselves among small and mid-size real estate developers, owners and contractors in the markets in which we operate because we are well-capitalized, we have demonstrated flexibility to structure loans to suit the needs of the individual borrower and we can act quickly. In addition, through our marketing efforts, we are beginning to develop a brand identity in some of the other markets in which we operate, particularly those along the eastern seaboard. We believe we have developed a reputation among these borrowers for offering reasonable terms and providing outstanding customer service. We further believe our future success will depend on our ability to maintain and capitalize on our existing relationships with borrowers and brokers and to expand our borrower base by continuing to offer attractive loan products, remain competitive in pricing and terms, and provide superior service.
Sales and Marketing
We utilize a single third-party vendor for Search Engine Optimization (“SEO”) and Google advertisement analysis. However, all market analysis and targeted location strategies are conducted in-house by our marketing department. Additionally, all SEO and advertising efforts managed by the third-party vendor requires internal approval from our marketing department. In addition, a principal source of new transactions has been repeat business from prior customers and their referral of new leads.
We have established a comprehensive digital marketing strategy to drive loan origination through multiple targeted campaigns. Digital marketing and online advertising have proven to be effective and cost-efficient methods for lead generation. These initiatives are designed to engage potential borrowers actively seeking lending solutions online. By leveraging diverse digital advertising platforms, we have successfully identified and cultivated a new borrower segment. Furthermore, we have strategically partnered with various online platforms to be recognized as a “listed lender,” enhancing our market presence and distinguishing our services from competitors in the evolving digital landscape.
In addition to our digital marketing efforts, we maintain a steady flow of loan originations through borrower retention and referrals, which continue to be a significant driver of new business. Our strong borrower relationships and commitment to customer service contribute to repeat business and word-of-mouth referrals, reinforcing our lending platform’s reliability and trustworthiness. Additionally, we have solidified strategic partnerships with banks and brokers, further expanding our network and providing a consistent pipeline of potential borrowers. These combined efforts ensure a balanced approach to loan origination, leveraging both digital innovation and established industry relationships to support sustainable growth.
Intellectual Property
Our business does not depend on exploiting or leveraging any intellectual property rights. To the extent we own any rights to intellectual property, we rely on a combination of federal, state and common law trademarks, service marks and trade names, copyrights and trade secret protection. We have not registered any trademarks, trade names, service marks or copyrights in the United States Patent and Trademark Office.
Employees
As of December 31, 2024, we had 29 employees, of which 28 were full-time.
Taxation - REIT Qualification
We believe that we have qualified as a REIT since the consummation of the IPO and that it is in the best interests of our shareholders that we continue to operate as a REIT. As a REIT, we are required to distribute at least 90% of our taxable income to our shareholders on an annual basis.
Our qualification as a REIT depends on our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Code, relating to, among other things, the sources of our gross income, the composition and values of our assets, our compliance with the distribution requirements applicable to REITs and the diversity of ownership of our outstanding Common Shares.
So long as we qualify as a REIT, we, generally, will not be subject to U.S. federal income tax on our taxable income that we distribute currently to our shareholders. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate income tax rates and may be precluded from electing to be treated as a REIT for four taxable years following the year during which we lose our REIT qualification. Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income.
Furthermore, we have a taxable REIT subsidiary (“TRS”), which pays U.S. federal, state, and local taxes on its net taxable income. See Item 1A – Risk Factors for additional REIT qualification and tax status information.
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Regulation
Our operations are subject, in certain instances, to supervision and regulation by state and federal governmental authorities and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions. In addition, we may rely on exemptions from various requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Investment Company Act and ERISA. These exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third parties who we do not control.
Regulation of Commercial Real Estate Lending Activities
Although most states do not regulate commercial finance, certain states impose limitations on interest rates and other charges and on certain collection practices and creditor remedies and require licensing of lenders and financiers and adequate disclosure of certain contract terms. We also are required to comply with certain provisions of, among other statutes and regulations, certain provisions of the Equal Credit Opportunity Act that are applicable to commercial loans, the USA PATRIOT Act, regulations promulgated by the Office of Foreign Asset Control and federal and state securities laws and regulations.
Investment Company Act Exemption
Although we reserve the right to modify our business methods at any time, we are not currently required to register as an investment company under the Investment Company Act. However, we cannot assure you that our business strategy will not evolve over time in a manner that could subject us to the registration requirements of the Investment Company Act.
Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis, which we refer to as the 40% test. Real estate mortgages are excluded from the term “investment securities.”
We rely on the exception set forth in Section 3(c)(5)(C) of the Investment Company Act which excludes from the definition of investment company “any person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses . . . (C) purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” The U.S. Securities and Exchange Commission (the “SEC”) generally requires that, for the exception provided by Section 3(c)(5)(C) to be available, at least 55% of an entity’s assets be comprised of mortgages and other liens on and interests in real estate, also known as “qualifying interests,” and at least another 25% of the entity’s assets must be comprised of additional qualifying interests or real estate-type interests (with no more than 20% of the entity’s assets comprised of miscellaneous assets). We believe we qualify for the exemption under this section and our current intention is to continue to focus on originating short term loans secured by first mortgages on real property. However, if, in the future, we do acquire non-real estate assets without the acquisition of substantial real estate assets, we may qualify as an “investment company” and be required to register as such under the Investment Company Act, which could have a material adverse effect on us.
If we were required to register as an investment company under the Investment Company Act, we would be subject to substantial regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration, and other matters.
Qualification for exclusion from the definition of an investment company under the Investment Company Act will limit our ability to make certain investments. In addition, complying with the tests for such exclusion could restrict the time at which we can acquire and sell assets.
Available Information
We maintain a website at www.sachemcapitalcorp.com . We are providing the address to our website solely for information purposes. The information on our website is not a part of, and is it incorporated by reference into, this Report. Through our website, we make available, free of charge, our annual proxy statement, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish them to, the SEC.
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