What changed in this filing

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Item 1. Financial Statements

2025-05-01 compared with 2024-11-14 · 477 added, 766 removed, 242 unchanged (84% of the section changed)

1 unchanged sentence

SACHEM CAPITAL CORP.

CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share data)

September 30, 2024

March 31, 2025

December 31, 2024

1 unchanged sentence

Investment securities (at fair value)

Mortgages receivable

Loans held for investment (net of deferred loan fees of $ 2,225 and $ 1,950 )

Allowance for credit losses

Mortgages receivable, net of allowance for credit losses

Interest and fees receivable, net

Due from borrowers, net

Real estate owned

Investments in partnerships

Investments in rental real estate, net

Loans held for investment, net

Loans held for sale (net of valuation allowance of $ 4,876 and $ 4,880 )

Interest and fees receivable (net of allowance of $ 2,981 and $ 3,133 )

Due from borrowers (net of allowance of $ 1,956 and $ 1,135 )

Real estate owned, net

Investments in limited liability companies

Investments in developmental real estate, net

Property and equipment, net

1 unchanged sentence

Notes payable (net of deferred financing costs of $ 3,232 and $ 3,713 )

Repurchase facility

Repurchase agreements

Mortgage payable

Lines of credit

Accrued dividends payable

Accounts payable and accrued liabilities

1 unchanged sentence

Below market lease intangible

Deferred revenue

Total liabilities

Commitments and Contingencies:

Commitments and Contingencies - Note 13

Shareholders’ equity:

2 unchanged sentences

2,903,000 shares designated as Series A Preferred Stock;

2,279,824 and 2,029,923 shares of Series A Preferred Stock issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Common stock - $ .001 par value;

2,306,748 shares of Series A Preferred Stock issued and outstanding at March 31, 2025 and December 31, 2024

Common Shares - $ 0.001 par value;

200,000,000 shares authorized;

47,011,349 and 46,765,483 issued and outstanding at September 30, 2024 and December 31, 2023, respectively

47,310,139 and 46,965,306 issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

Cumulative net earnings

Cumulative dividends paid

Total shareholders’ equity

Total liabilities and shareholders’ equity

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes, together with the Notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, are an integral part of these financial statements.

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(dollars in thousands, except share and per share data)

Three Months Ended

Nine Months Ended

September 30,

Interest income from loans

Fee income from loans

Income from partnership investments

Income from limited liability company investments

Other investment income

4 unchanged sentences

General and administrative expenses

Provision for (recovery of) credit losses related to loans

Impairment loss on real estate owned

Loss (gain) on sale of real estate and property and equipment, net

Provision for credit losses related to loans held for investment

Change in valuation allowance related to loans held for sale

Loss on sale of real estate owned and property and equipment, net

Other expenses

Total operating expenses

Operating income (loss) before other income (loss)

Other income (loss)

Gain (loss) on equity securities

Total other income (loss), net

Net income (loss)

Operating income

Other (loss) income, net

(Loss) gain on equity securities

Total other (loss) income, net

Preferred stock dividend

Net income (loss) attributable to common shareholders

Basic earnings (loss) per common share

Diluted earnings (loss) per common share

Basic weighted average common shares outstanding

Diluted weighted average common shares outstanding

The accompanying notes are an integral part of these consolidated financial statements.

Net (loss) income attributable to common shareholders

Basic and diluted (loss) earnings per Common Share

Basic and diluted weighted average Common Shares outstanding

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited)

(dollars in thousands, except share and per share data)

Three Months Ended

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss):

Unrealized gain (loss) on debt securities

Reversal of losses on debt securities from unrealized to realized

Comprehensive income (loss)

Other comprehensive income:

Reversal of losses from unrealized to realized

Unrealized holding losses on available for sale (“AFS”) securities

Comprehensive income

Preferred stock dividend

Total comprehensive income (loss) attributable to common shareholders

The accompanying notes are an integral part of these consolidated financial statements.

Total comprehensive (loss) income attributable to common shareholders

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited)

(dollars in thousands, except share data)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024

FOR THE THREE MONTHS ENDED MARCH 31, 2025

Preferred Shares

2 unchanged sentences

Income (Loss)

Balance, July 1, 2024

Issuance of Series A Preferred Stock, net of expenses

Stock buyback

Stock-based compensation, less shares forfeited

Dividends paid on Series A Preferred Stock

Dividends paid on Common Shares

Balance, September 30, 2024

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Shares

Common Shares

Comprehensive

Balance, July 1, 2023

Issuance of Series A Preferred Stock, net of expenses

Issuance of Common Shares, net of expenses

Dividends Paid

Balance, January 1, 2025

Stock-based compensation, less shares forfeited

Unrealized loss on debt securities

Dividends paid on Series A Preferred Stock

Dividends paid on Common Shares

Balance, September 30, 2023

The accompanying notes are an integral part of these consolidated financial statements.

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued) (unaudited)

(dollars in thousands, except share data)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024

Balance, March 31, 2025

FOR THE THREE MONTHS ENDED MARCH 31, 2024

Preferred Shares

2 unchanged sentences

Income (Loss)

Dividends Paid

Balance, January 1, 2024

1 unchanged sentence

Issuance of Common Shares, net of expenses

Stock buyback

Stock-based compensation, less shares forfeited

Unrealized loss on debt securities

Stock-based compensation

Reversal of losses from unrealized to realized

Dividends paid on Series A Preferred Stock

Dividends paid on Common Shares

Balance, September 30, 2024

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Shares

Common Shares

Comprehensive

Balance, January 1, 2023

Cumulative effect of adoption of new accounting principle (ASU 2016-13)

Issuance of Series A Preferred Stock, net of expenses

Issuance of Common Shares, net of expenses

Stock buyback

Stock-based compensation, less shares forfeited

Unrealized gain on debt securities

Unrealized holding losses on AFS securities

Dividends paid on Series A Preferred Stock

Dividends paid on Common Shares

Balance, September 31, 2023

The accompanying notes are an integral part of these consolidated financial statements.

Balance, March 31, 2024

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Amortization of deferred financing costs and bond discount

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of deferred financing costs

Depreciation expense

Write-off of other assets - pre-offering costs

Stock-based compensation

Provision for credit losses related to loans

Impairment loss

(Gain) loss on sale of real estate and property and equipment, net

(Gain) on equity securities

Provision for credit losses related to loans held for investment

Change in valuation allowance related to loans held for sale

Loss on sale of real estate owned and property and equipment, net

Loss (gain) on equity securities

Change in deferred loan fees

Changes in operating assets and liabilities:

2 unchanged sentences

Accounts payable and accrued liabilities

Deferred revenue

Advances from borrowers

Total adjustments

Total adjustments and operating changes

NET CASH PROVIDED BY OPERATING ACTIVITIES

2 unchanged sentences

Proceeds from the sale of investment securities

Purchase of interests in investment partnerships, net

Purchase of interests in limited liability companies

Proceeds from limited liability companies returns of capital

Proceeds from sale of real estate owned

Improvements to real estate owned, net

Purchases of property and equipment

Improvements in investment in rental real estate

Principal disbursements for mortgages receivable

Principal collections on mortgages receivable

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

Acquisitions of and improvements to real estate owned

Purchase of property and equipment

Improvements in investment in developmental real estate

Principal disbursements for loans

Principal collections on loans

NET CASH PROVIDED BY INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from (repayment of) lines of credit

Net proceeds from (repayment of) repurchase facility

Proceeds from (repayment of) mortgage payable

Proceeds from lines of credit

Repayments on lines of credit

Proceeds from repurchase agreements

Repayments of repurchase agreements

Repayment of mortgage payable

Dividends paid on Common Shares

1 unchanged sentence

Proceeds from issuance of Common Shares, net of expenses

Repurchase of common shares

Proceeds from issuance of Series A Preferred Stock, net of expenses

Gross proceeds from (repayment of) notes payable

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

NET INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS – END OF PERIOD

The accompanying notes are an integral part of these consolidated financial statements.

SACHEM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (unaudited)

(dollars in thousands)

Nine Months Ended

September 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION

Cash paid during the period for interest

Real estate acquired in connection with the foreclosure of certain mortgage loans during the nine months ended September 30, 2024 and 2023 totaled $ 2,991 and $ 1,187 , respectively.

Real estate owned decreased as a result of increases in mortgage loans that were financed by the Company to new borrowers during the nine months ended September 2024 and 2023, which totaled $ 2,414 and $ 2,488 , respectively.

The accompanying notes are an integral part of these consolidated financial statements.

Real estate acquired in connection with foreclosure of certain mortgages

Developmental real estate acquired in settlement of loan held for investment

Loans originated from sale of real estate owned

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

Sachem Capital Corp.

1 unchanged sentence

The Company operates its business as one segment.

The Company offers short-term (i.e., one to three years ), secured, non-bank loans (sometimes referred to as “hard money” loans) to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States.

The Company offers short-term (i.e., one to three years ), secured, non-bank loans to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States.

The properties securing the Company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment.

Each loan is secured by a first mortgage lien on real estate and may also be 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.

The Company does not lend to owner occupants of residential real estate.

The Company’s primary underwriting criteria is a conservative loan-to-value (“LTV”) ratio.

In addition, the Company may participate in real estate loans made by third parties or invest in third parties that make real estate loans, as well as make opportunistic real estate purchases apart from its lending activities.

Summary of Significant Accounting Policies

Unaudited Consolidated Financial Statements

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.

Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023 and the notes thereto included in the Company’s Annual Report on Form 10-K.

The Company’s primary underwriting criteria is a conservative loan to value ratio.

In addition, the Company makes opportunistic real estate purchases and investments apart from its lending activities.

Significant Accounting Policies

The significant accounting policies of the Company, unless further updated below, are consistent with those disclosed in Note 2 to the Company’s audited consolidated financial statements for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K, filed with the U.S.

Securities and Exchange Commission on March 31, 2025.

Unaudited Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements.

However, in the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation have been included.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2024 and the notes thereto included in the Company’s Annual Report on Form 10-K.

The balance sheet information as of December 31, 2024 is derived from audited financial statements, but does not include all disclosures required by GAAP.

Results of operations for the three months and nine month periods ended September 30, 2024, are not necessarily indicative of the operating results to be attained in the entire fiscal year or for any subsequent period.

Results of operations for the three month period ended March 31, 2025, is not necessarily indicative of the operating results to be attained in the entire fiscal year or for any subsequent period.

Basis of Presentation and Principles of Consolidation

The preparation of the accompanying unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of such financial statements and the reported amounts of revenues and expenses during the reporting period.

Management bases the use of estimates on (a) various assumptions that consider prior reporting results, (b) projections regarding future operations and (c) general financial market and local and general economic conditions.

Actual amounts could materially differ from those estimates.

The accompanying unaudited consolidated financial statements of the Company include the accounts of all subsidiaries in which the Company has control over significant operating, financial and investing decisions of the entity.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents.

Investment Securities

Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method.

Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income.

Fair value is calculated based on publicly available market information or other estimates determined by management.

If the cost of an investment exceeds its fair value, management evaluates, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost.

To determine credit losses, management may employ a

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

systematic methodology that considers available quantitative and qualitative evidence.

In addition, management may consider specific adverse conditions related to the financial health of, and business outlook for, the issuer of the debt security.

If the Company plans to sell the security or it is more likely than not that it will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in net income and a new cost basis in the investment is established.

If market, industry, and/or business and/or financial conditions relating to the issuer deteriorate, the Company may incur future losses and/or impairments.

Equity investments with readily determinable fair values are measured at fair value.

Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative).

Management performs a qualitative assessment on a periodic basis and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than the carrying value.

Changes in value are recorded in net income (loss).

Non-accrual loans

A loan is generally placed on non-accrual status when it is probable that principal and interest will not be collected under the original contractual terms.

At that time, interest income is no longer accrued.

Non-accrual loans consist of loans for which principal or interest has been delinquent for 90 days or more.

Interest income is subsequently recognized only to the extent it is received in cash or until the loan qualifies for return to accrual status.

Loans are restored to accrual status when contractually current and the collection of future payments is reasonably assured.

In certain instances, the Company may make exceptions to placing a loan on non-accrual status if the loan is in the process of modification.

Loan modifications made to borrowers experiencing financial difficulty.

In situations where economic or legal circumstances may cause a borrower to experience significant financial difficulties, the Company may grant concessions for a period of time to the borrower that it would not otherwise consider.

These modified terms may include interest rate reductions, principal forgiveness, term extensions, and other-than-insignificant payment delays intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of collateral.

The Company monitors the performance of all loans, including loans modified to borrowers experiencing financial difficulty, and considers loans that are 90 days past due to be in payment default.

Allowance for Credit Losses

The Company adopted the current expected credit loss (“CECL”) standard effective January 1, 2023 in accordance with ASU 2016-13, “Financial Instruments – Credit Losses”.

The initial CECL adjustment of $ 2.5 million was recorded effective January 1, 2023 as a cumulative-effect of change in accounting principle through a direct charge to accumulated deficit on the consolidated statements of shareholders’ equity.

Subsequent changes to the CECL allowance will be recognized in the consolidated statements of operations in “Provision for credit losses related to loans”.

The Company records an “Allowance for credit losses” on the consolidated balance sheets with respect to its loan portfolio, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics.

This methodology, known as the “static pool methodology,” replaces the “probable incurred loss impairment” methodology.

In addition, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are also analyzed for credit losses in accordance with ASU 2016-13, as they represent a financial asset that is subject to credit risk.

As allowed under the CECL standard used by the Company, as a practical expedient, the fair value of the collateral at the reporting date is compared to the net carrying amount of the loan when determining the allowance for credit losses for loans in pending/pre-foreclosure status, as defined.

Fair value of collateral is reduced by estimated cost to sell if the collateral is expected to be sold.

The aggregate outstanding principal balance and the accrued but unpaid interest and borrower charges of loans in pending/pre-foreclosure as of September 30, 2024 and December 31, 2023 was $ 81.8 million and $ 68.1 million, respectively.

As of September 30, 2024 and December 31, 2023, the Company has reserved $ 16.1 million and $ 6.2 million, respectively, against loans subject to foreclosure which is included in “Allowance for credit losses” on the consolidated balance sheets included in the accompanying consolidated financial statements.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

The CECL standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the economic environment.

The Company utilizes a loss-rate method for estimating current expected credit losses.

The loss rate method involves applying a loss rate to a pool of loans with similar risk characteristics to estimate the expected credit losses on that pool of loans.

In determining the CECL allowance, the Company considers various factors including (1) historical loss experience in its portfolio, (2) loan specific losses for loans deemed collateral dependent based on excess amortized cost over the fair value of the underlying collateral, and (3) its current and future view of the macroeconomic environment.

The Company utilizes a forecast of three years which approximates its longer-term loans, which are often the construction loans.

Management estimates the allowance for credit losses using relevant information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts.

The “Allowance for credit losses” is maintained at a level sufficient to provide for expected credit losses over the life of the loans based on evaluating historical credit loss experience and to make adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio.

The “Allowance for credit losses” related to the principal outstanding is presented within “Mortgages receivable, net” and for unfunded commitments is within accounts payable and accrued liabilities in the Company’s consolidated balance sheets.

The “Allowance for credit losses” related to the late payment fees are presented in “Interest and fees receivable, net”, and “Due from borrowers, net” in the Company’s consolidated balance sheets.

Lastly, the allowance related to unfunded commitments for construction loans is presented in “Accounts payable and accrued liabilities” on the Company’s consolidated balance sheets.

The below table represents the financial statement line items that are impacted by the Allowance for credit losses:

Provision for credit

Balance as of December 31, 2023

losses related to loans

Balance as of September 30, 2024

(in thousands)

Mortgages receivable

Interest and fees receivable

Due from borrower

Unfunded commitments

Total Allowance for credit losses

For the nine months ended September 30, 2024, the Company recorded an $ 18.0 million provision for credit losses related to mortgage loans on its consolidated statements of operations.

This amount includes $ 54,000 of direct charge-offs as a result of losses on settlement of loans.

There was no such allowance created in relation to theses charge-offs.

There were no such charge-offs related to loans that were settled for the three and nine months period ended September 30, 2023.

As of September 30, 2024 and December 31, 2023 the Company recorded an “Allowance for credit losses” on debt securities of $ 0 and $ 0.8 million, respectively, which is presented in “Investment securities (at fair value)” on the Company’s consolidated balance sheets.

During the three months ended June 30, 2024, the Company sold all of its debt securities, as such, as of September 30, 2024 the balance of these securities was $ 0 .

As of December 31, 2023, the fair value of these securities was $ 0.8 million.

The cost basis of these securities was $ 1.6 million.

Fair Value Measurements

The framework for measuring fair value provides a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

The three levels of the fair value hierarchy under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurement” are described as follows:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company can access.

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Management bases the use of estimates on (a) various assumptions that consider prior reporting results, (b) the Company’s projections regarding future operations and (c) general financial market and local and general economic conditions.

Actual amounts could differ from those estimates.

Significant estimates include the provisions for current expected credit losses, loans held for sale at fair value and real estate owned.

The accompanying unaudited condensed consolidated financial statements of the Company include the accounts of all subsidiaries in which the Company has control over significant operating, financial and investing decisions of the entity.

All intercompany accounts and transactions have been eliminated in consolidation.

Variable Interest Entity

On March 20, 2025, the Company formed SN Holdings LLC (“SN Holdings”), a wholly owned subsidiary of the Company, for the sole purpose of acting as the borrower under a new revolving credit facility with Needham Bank (the “2025 Needham Credit Facility”).

Simultaneously with the execution of the new facility, the Company terminated and repaid in full the outstanding balance under its previous facility with Needham Bank.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

Level 2 Inputs to the valuation methodology include:

● quoted prices for similar assets or liabilities in active markets;

● quoted prices for identical or similar assets or liabilities in inactive markets;

● inputs other than quoted prices that are observable for the asset or liability;

● inputs that are derived principally from or corroborated by observable market data by correlation to other means.

If the asset or liability has a specified ( i.e., contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Property and Equipment

Land and building acquired in 2021 to serve as the Company’s corporate headquarters is stated at cost.

Renovation of the building was completed in the first quarter of 2023 and the Company relocated its operations to the building in March 2023.

The building is being depreciated using the straight – line method over its estimated useful life of 40 years .

The building was placed in service during the three months ended March 31, 2023.

The following tables represent the Company’s property and equipment, net as of September 30, 2024 and December 31, 2023:

September 30, 2024

Accumulated Depreciation

Property and Equipment, Net

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

SN Holdings is a variable interest entity (“VIE”) under the guidance of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810-10, Consolidation , as it was established with insufficient equity at risk and does not have independent operations apart from the parent company.

The Company has determined that it is the primary beneficiary of SN Holdings because it has both (i) the power to direct the activities that most significantly impact SN Holdings’ economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could be significant to SN Holdings, primarily through its role as the guarantor of the 2025 Needham Credit Facility and through its ability to direct all operational and financing decisions.

Accordingly, SN Holdings has been consolidated in the Company’s financial statements.

As of March 31, 2025, SN Holdings had total assets of $ 83.5 million and total liabilities of $ 36.1 million, consisting primarily of collateralized mortgage loans and borrowings under the 2025 Needham Credit Facility.

The assets of SN Holdings can only be used to settle obligations of SN Holdings and are not available to the Company or its creditors, other than as permitted under the intercompany guaranty and lien release provisions of the Credit Agreement.

Fair Value Measurement

The following table illustrates assets and liabilities measured at fair value on a recurring basis :

Fair Value Measurement

(in thousands)

Furniture and fixtures

Computer hardware and software

Total property and equipment, net

March 31, 2025

December 31, 2024

Accumulated Depreciation

Property and Equipment, Net

(in thousands)

Furniture and fixtures

Computer hardware and software

Total property and equipment, net

Investment in Rental Real Estate

Real estate is carried at cost, net of accumulated depreciation and amortization.

Betterments, major renewals and certain costs directly related to the improvement and leasing of real estate are capitalized.

Maintenance and repairs are expensed as incurred.

For redevelopment of existing operating properties, the net book value of the existing property under redevelopment plus the cost for the construction and improvements incurred in connection with the redevelopment, including interest and debt expense, are capitalized to the extent the capitalized costs of the property do not exceed the estimated fair value of the redeveloped property when complete.

If the cost of the redeveloped property, including the net book value of the existing property, exceeds the estimated fair value of the redeveloped property, the excess is charged to expense.

Depreciation is recognized on a straight-line basis over the estimated useful

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

lives of these assets which range from 7 to 40 years .

Tenant allowances are amortized on a straight-line basis over the shorter of the lives of the related leases, or the useful lives of the assets.

Upon the acquisition of real estate, the Company assesses whether the transaction should be accounted for as an asset acquisition or as a business combination.

Acquisitions of integrated sets of assets and activities that do not meet the definition of a business are accounted for as asset acquisitions.

Acquisitions of real estate generally will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings, and related identified intangible assets).

The Company allocates the purchase price of real estate to land and building (inclusive of site and tenant improvements) and, if determined to be material, intangibles, such as the value of above- and below-market leases and origination costs associated with the in-place leases.

The allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed involves subjectivity as the allocations are based on an analysis of the respective fair values.

In determining the fair value of the real estate acquired, the Company utilized a third-party valuation which primarily utilizes cash flow projections that apply, among other things, estimated revenue and expense growth rates, discount rates and capitalization rates, as well as sales comparison approach, which utilizes comparable sales, listings and sales contracts.

The Company assesses the fair value of the acquired leases based on estimated cash flow projections that utilize appropriate discount rates and available market information.

Estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions that may affect the property.

The determined and allocated fair values to the real estate acquired will affect the amount of depreciation and amortization we record over the respective estimated useful lives or term of the lease.

On June 23, 2023, the Company entered into a purchase and sale contract (the “Westport Purchase Agreement”) to acquire a commercial office building in Westport, CT (the “Westport Asset”) for $ 10.6 million.

The transaction was completed on August 31, 2023.

In connection with this transaction, which was accounted for as an asset acquisition, the Company allocated the purchase price and acquisition-related costs to the tangible and intangible assets acquired based on fair value.

In addition, the Company recorded a lease liability stemming from below-market rental rates.

Total consideration, including capitalized acquisition-related costs, was $ 10.7 million.

See Note 6 – Investment in Rental Real Estate, net for further details surrounding the above acquisition as of September 30, 2024.

Real Estate Owned (“REO”)

REO acquired through foreclosure is initially measured at fair value and is thereafter subject to an ongoing impairment analysis.

After an REO acquisition, events or circumstances may occur that result in a material and sustained decrease in the cash flows generated from the property or other market indicators including listing data may signal a decline in the liquidation value.

REO is evaluated for recoverability when impairment indicators are identified.

Any impairment losses are included in the consolidated statements of operations.

Impairment of Long-Lived Assets

The Company continually monitors events or changes in circumstances that could indicate the carrying amounts of long-lived assets may not be recoverable.

When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.

If the undiscounted cash flow is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment.

Goodwill at September 30, 2024 represents the excess of the consideration paid over the fair value of net assets acquired from Urbane New Haven, LLC in October 2022.

In testing goodwill for impairment, the Company adheres to ASC Topic 350, “Intangibles—Goodwill and Other,” which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill.

If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit.

However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or the Company chooses not to perform the qualitative assessment, then it compares the fair value of that reporting unit with its carrying value, including goodwill.

As of September 30, 2024 and December 31, 2023, goodwill was $ 0.4 million, respectively, which is presented in other assets on the Company’s consolidated balance sheets.

There was no impairment to goodwill during the three and nine months ended September 30, 2024 and 2023.

Deferred Financing Costs

Costs incurred in connection with the Company’s revolving credit facilities, described in Note 8 – Lines of Credit, Mortgage Payable Churchill Facility – are amortized over the term of the applicable facility using the straight-line method.

Costs incurred by the Company in connection with the issuance of unsecured, unsubordinated notes, described in Note 9 – Unsecured Notes Payable – are being amortized over the term of the respective unsecured, unsubordinated notes.

Revenue Recognition

Interest income from the Company’s loan portfolio is earned over the loan period and is calculated using the simple interest method on principal amounts outstanding.

Generally, the Company’s loans provide for interest to be paid monthly in arrears.

The Company, generally, does not accrue interest income on loans that are more than 90 days past due or interest charged at default rates.

However, interest income not accrued at September 30, 2024 but collected prior to the issuance of this Report is included in income for the three and nine month periods ended September 30, 2024.

Origination and modification fee revenue, generally 1 % – 3 % of either the original loan principal or the modified loan balance, is collected at loan funding and is recognized ratably over the contractual life of the loan in accordance with ASC Topic 310, “Receivables”.

The Company believes it qualifies as a real estate investment trust (“REIT”) for federal income tax purposes and operates accordingly.

It made the election to be taxed as a REIT on its 2017 Federal income tax return.

The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding capital stock.

So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S.

federal income tax on its taxable income distributed to its shareholders.

However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S.

federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification.

Other than taxes incurred by TRSs (see below), the Company does not expect to incur any corporate federal income tax liability outside of the TRSs, as it believes it has maintained its qualification as a REIT.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

The Company has elected, and may elect in the future, to treat certain of its existing or newly created corporate subsidiaries as taxable REIT subsidiaries (“TRSs”).

In general, a TRS may hold assets that the Company cannot hold directly and generally may engage in any real estate or non-real estate related business.

The TRSs generate income, resulting in federal and state income tax liability for these entities.

During the three and nine months ended September 30, 2024, the Company’s TRSs recognized provisions for federal and state income tax of $ 0 and $ 0.2 million, respectively, which is represented in other expenses on the Company’s consolidated statements of operations.

During the three and nine months ended September 30, 2023, there were no recognized provisions for federal income tax nor state tax.

The income tax provision for the Company differs from the amount computed from applying the statutory federal income tax rate to income before income taxes due to non-taxable REIT income and other permanent differences including the non-deductibility of acquisition costs of business combinations for federal income tax reporting.

ASC Sub-Topic 740-10 “Accounting for Uncertainty in Income Taxes ” prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and disclosure required.

Under this standard, an entity may only recognize or continue to recognize tax positions that meet a “ more likely than not ” threshold.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in interest expense.

The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying consolidated financial statements as of September 30, 2024 and 2023.

Earnings (Losses) Per Share

Basic and diluted earnings (losses) per share are calculated in accordance with ASC Topic 260 — “Earnings Per Share.” Under ASC Topic 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period.

The computation of diluted earnings (losses) per share is similar to basic earnings (losses) per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method.

The numerator in calculating both basic and diluted earnings (losses) per common share for each period is the reported net income (loss).

For the three and nine months ended September 30, 2024, the Company had basic and diluted weighted average shares of 47,339,635 and 47,390,113 outstanding , resulting in basic and diluted losses per share of $ 0.13 and $ 0.14 , respectively .

For the three and nine months ended September 30, 2023, the Company had basic and diluted weighted averages shares of 44,754,921 and 43,805,310 outstanding, resulting in basic and diluted earnings per share of $ 0.12 and $ 0.32 , respectively .

Recent Accounting Pronouncements

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2023-03”).

ASU 2022-03 was issued to (1) to clarify the guidance in ASC Topic 820, “Fair Value Measurement”, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with ASC Topic 820.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

This update did not have a material effect on the accompanying unaudited consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (ASC Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”).

ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provides new segment disclosure requirements for entities with a single reportable segment.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024.

ASU 2023-07 applies retrospectively to all prior periods presented.

This update is not expected to have a material effect on the accompanying consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted, would have a material effect on the Company’s unaudited consolidated financial statements.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

Reclassifications

Certain amounts included in the Company’s December 31, 2023 and September 30, 2023 consolidated financial statements have been reclassified to conform to the presentation in the accompanying unaudited consolidated financial statements.

Investment securities

Loans held for sale, net

The following table illustrates assets and liabilities measured at fair value on a nonrecurring basis:

Fair Value Measurement

The fair value measurement level within the fair value hierarchy of an asset or liability is based on the lowest level of any input that is significant to the fair value measurement.

Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of September 30, 2024:

(in thousands)

Stocks and ETFs

Total investment securities, at fair value

The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of December 31, 2023:

March 31, 2025

December 31, 2024

Individually evaluated loans, net of allowance for credit losses

Real estate owned, net

There were no nonrecurring fair value adjustments to the above assets for the three months ended March 31, 2025.

Carrying amounts and fair values of financial instruments at March 31, 2025 and December 31, 2024:

Carrying Amount

Fair Value Measurement

(in thousands)

Stocks and ETF’s

Debt securities

Total investment securities, at fair value

Following is a description of the methodologies used for assets measured at fair value:

Stocks and ETFs (Levels 1 and 2):

Valued at the closing price reported in the active market in which the individual securities are traded.

Mutual funds (Levels 1 and 2):

Valued at the daily closing price reported by the fund.

Mutual funds held by the Company are open-end mutual funds that are registered with the U.S.

Securities and Exchange Commission.

These funds are required to publish their daily net asset values and to transact at that price.

The mutual funds held by the Company are deemed to be actively traded.

Debt securities :

Valued at the closing price reported in the active market in which the individual securities are traded.

Impact of Fair Value of Available-for-sale Securities on Other Comprehensive Income

The carrying value of the Company’s financial instruments approximates fair value generally due to the relative short-term nature of such instruments.

Other financial assets and financial liabilities have fair value that approximate their carrying value.

Pursuant to ASC Topic 326-30-50-4 and 50-5 the Company is required to disclose investment securities that have been in a continuous unrealized loss position for 12 months or more as of the balance sheet date.

As of September 30, 2024 and December 31, 2023, the Company had a continuous unrealized losses over 12 months in Available-For-Sale (“AFS”) debt securities of $ 0 and $ 0.8 million, respectively.

The Company reviewed a number of factors to assess the credit quality of the debt instruments including, but not limited to, current cash position, operating cash flow, corporate earnings and the impending maturity date of said securities, as of the most recently filed financial statements.

As such, at September 30, 2024 and December 31, 2023, the Company has an allowance for credit losses regarding AFS debt securities totaling $ 0 and $ 0.8 million, respectively, of which is included in investment securities (at fair value) on the consolidated balance sheets included in the accompanying consolidated financial statements.

There was no such

March 31, 2025

December 31, 2024

March 31, 2025

December 31, 2024

Cash and cash equivalents

Notes payable (listed) – fixed rate debt

Investment securities

Lines of credit and repurchase agreements – variable rate debt

Loans held for investment, net

Loans held for sale, net

Interest and fees receivable and due from borrowers

Investments in limited liability companies

Advances from borrowers

Mortgage payable

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

related provision of credit losses for the three and nine month periods ended September 30, 2024 and 2023.

During the nine months ended September 30, 2024, the Company sold all of the remaining AFS debt securities.

The following table presents the impact of the Company’s AFS securities - debt securities on its Other Comprehensive Income (“OCI”) for the three and nine months ended September 30, 2024 and 2023:

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

Impact of Fair Value of Available-for-sale Securities on Other Comprehensive Income

The following table presents the impact of the Company’s AFS securities - debt securities on its Other Comprehensive Income (“OCI”) for the three months ended March 31, 2025 and 2024:

Three Months Ended

Nine months Ended

September 30,

(in thousands)

OCI from AFS securities – debt securities:

Unrealized (losses) on debt securities at beginning of period

Unrealized gain on debt securities at beginning of period

Reversal of losses from unrealized to realized

Unrealized (loss) gain

Unrealized holding losses on AFS securities

Change in OCI from AFS debt securities

Balance at end of period

As of September 30, 2024 and 2023, the investment securities cost basis was $ 3.1 million and $ 39.0 million, respectively.

Mortgages receivable

The Company offers secured, non-bank loans to real estate owners and investors (also known as “hard money” loans) to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the Northeastern and Southeastern United States.

The Company’s lending standards typically require that the original principal amount of all mortgage receivable notes be secured by first mortgage liens on one or more properties owned by the borrower or related parties and that the principal amount of the loan be no greater than 70% of the appraised value of the underlying collateral, as determined by an independent appraiser at the time of the loan origination.

In the case of properties undergoing renovation, the LTV ratio is calculated based on the estimated fair market value of the property after the renovations have been completed.

Generally, the Company considers a maximum loan-to-value ratio of 70% as an indicator for the credit quality of a mortgage note receivable.

However, the Company makes exceptions to this guideline if the facts and circumstances support the incremental risk.

These factors include the additional collateral provided by the borrower, the credit profile of the borrower, the Company’s 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 the Company deems appropriate.

The loans are generally for a term of one to three years .

The loans are initially recorded and carried thereafter, in the financial statements, at cost.

Most of the loans provide for monthly payments of interest only (in arrears) during the term of the loan and a “balloon” payment of the principal on the maturity date.

As of September 30, 2024 and December 31, 2023, loans on nonaccrual status had an outstanding principal balance of $ 147.0 million and $ 84.6 million, respectively.

Nonaccrual loans include loans pending foreclosure.

For the three and nine months ended September 30, 2024, $ 0.5 million and $ 0.8 million of interest income, respectively, was recorded on nonaccrual loans due to payments received.

For the three and nine months ended September 30, 2023, $ 0.06 million and $ 0.4 million of interest income, respectively, was recorded on nonaccrual loans.

Real estate owned decreased as a result of increases in mortgages receivable that were financed by the Company to new borrowers during the nine months ended September 30, 2024 and 2023, which amounted to $ 2.4 million and $ 2.5 million, respectively.

For the nine months ended September 30, 2024 and 2023, the aggregate amounts of loans funded by the Company were $ 115.7 million and $ 159.7 million, respectively, offset by principal repayments of $ 135.3 million and $ 123.5 million, respectively.

As of September 30, 2024, the Company’s mortgage loan portfolio includes loans ranging in size up to $ 42.0 million with stated interest rates ranging from 5.0 % to 15.0 %, compared to loans ranging in size of up to $ 37.4 million with stated interest rates ranging from 5.0 % to 15.0 % as of December 31, 2023.

The default interest rate is generally 18 %, but could be more or less depending on state usury laws and other considerations deemed relevant by the Company.

As of March 31, 2025 and December 31, 2024, the Company held no debt securities.

Loans and Allowance for Credit Losses

Loans include loans held for investment that are accounted for at amortized cost net of allowance for credit losses and loans held for sale that are accounted for at the lower of cost or market net of a valuation allowance.

The classification for a loan is based on management’s strategy for the loan.

Loans held for investment

As of March 31, 2025 and December 31, 2024, the Company had 143 and 157 loans held for investment, respectively.

As of March 31, 2025 and December 31, 2024, the Company had direct reserves on outstanding principal for loans held for investment of $ 13.1 million and $ 13.3 million, respectively.

Loans held for sale

The Company offers mortgage notes receivable to be sold in real estate capital markets.

The Company does not originate loans with the intent to designate them as loans held for sale.

As of both March 31, 2025 and December 31, 2024, the Company maintained eleven loans held for sale with a gross outstanding principal balance of $ 15.9 million, of which had an aggregate valuation allowance of $ 4.9 million in connection with pricing based on lower of cost or market.

As of both March 31, 2025 and December 31, 2024, such loans were on nonaccrual status and in pending/pre-foreclosure.

Loan portfolio

As of March 31, 2025 and December 31, 2024, loans held for investment on nonaccrual status had an outstanding principal balance of $ 107.6 million and $ 87.0 million, respectively.

The nonaccrual loans are inclusive of loans pending foreclosure and loans held for sale.

Interest income recorded on nonaccrual loans due to payments received for the three months ended March 31, 2024 was $ 0.3 million, while such income for the three months ended March 31, 2025 was nominal.

The below table summarizes the Company’s loan portfolio by the past due status:

Loans held for investment

(in thousands)

30-59 days past due

60-89 days past due

Greater than 90 days

As of March 31, 2025

As of December 31, 2024

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

As of September 30, 2024, and December 31, 2023, the Company had one borrower representing 11.3 % and 10.1 % of the outstanding mortgage loan portfolio, or $ 54.1 million and $ 50.4 million, respectively.

The Company may agree to extend the term of a loan if, at the time of the extension, the loan and the borrower meet all the Company’s then underwriting requirements.

The Company treats a loan extension as a new loan.

If an interest reserve is established at the time a loan is funded, accrued interest is paid out of the interest reserve and recognized as interest income at the end of each month.

If no reserve is established, the borrower is required to pay the interest monthly from its own funds.

The deferred origination, loan servicing and amendment fee income represents amounts that will be recognized over the contractual life of the underlying mortgage notes receivable.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

As of March 31, 2025, the Company’s mortgage loan portfolio includes loans ranging in size of $ 0.03 million up to $ 37.9 million with stated interest rates ranging from 6.5 % to 15.0 %.

The default interest rate is generally 18.0 % but could be more or less depending on state usury laws and other considerations deemed relevant by the Company.

As of March 31, 2025 and December 31, 2024, the Company had one borrower representing 13.6 % and 14.0 % of the outstanding mortgage loan portfolio, or $ 50.0 million and $ 55.0 million, respectively.

Deferred loan fees

As of March 31, 2025 and December 31, 2024, the Company had $ 2.2 million and $ 2.0 million of deferred loan fee revenue relating to loans held for investment, respectively.

There were no such deferred fees for loans held for sale as of March 31, 2025 and December 31, 2024.

Allowance for credit losses

Allowance for credit losses are charged to income in amounts sufficient to maintain an allowance for credit losses inherent in the loans that are established systematically by management as of the reporting date.

Management’s estimate of expected credit losses is based on an evaluation of relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the future collectability of the reported amounts.

The Company uses static pool modeling techniques to determine the allowance for loan losses expected over the remaining life of the loans, which is supplemented by management’s judgment.

Expected credit losses are estimated for groups of accounts aggregated by geographical location.

The Company’s estimate of expected credit losses includes a reasonable and supportable forecast period equal to the contractual term of the loan plus any applicable short-term extensions that are reasonably expected for construction loans.

The Company reviews charge-off experience factors, contractual delinquency, historical collection rates, the value of underlying collateral and other information to make the necessary judgments as to allowance for credit losses expected in the portfolio as of the reporting date.

While management utilizes the best information available to make its evaluations, changes in macroeconomic conditions, interest rate environments, or both, may significantly impact the assumptions and inputs used in determining the allowance for credit losses.

The Company’s charge-off policy is determined by a review of each delinquent loan.

The Company has an accounting policy to not place loans on nonaccrual status unless they are more than 90 days delinquent.

Accrual of interest income is generally resumed when the delinquent contractual principal and interest is paid in full or when a portion of the delinquent contractually payments are made, and the ongoing required contractual payments have been made for an appropriate period.

In assessing the allowance for credit losses, the Company considers historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment.

The Company derived an annual historical loss rate based on its historical loss experience in its portfolio, adjusted to incorporate the risks of construction lending, other specific circumstances, and to reflect the Company’s expectations of the macroeconomic environment.

The following table summarizes the activity in the mortgages receivable allowance for credit losses from December 31, 2023 through September 30, 2024:

The below table represents the financial statement line items that are impacted by the allowance for credit losses for the three months ended March 31, 2025:

Balance as of

Provision for (recovery of) credit

Balance as of

December 31, 2024

losses related to loans

March 31, 2025

(in thousands)

Interest and fees receivable

Due from borrower

Unfunded commitments

Total allowance for credit losses

The following table summarizes the activity in the loans held for investment allowance for credit losses by geographic location for the three months ended March 31, 2025:

Provision for

Allowance for credit losses

Allowance for credit losses as of

Provision for credit losses

as of September 30,

(recovery of) credit losses

as of March 31,

December 31, 2024

1 unchanged sentence

(in thousands)

Geographical Location

The following table presents charge-offs by fiscal year of origination for the three months ended March 31, 2025:

(in thousands)

Current period charge-offs

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

Presented below is the Company’s loan portfolio by geographical location:

September 30, 2024

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

Presented below is the Company’s loans held for investment portfolio by geographical location:

March 31, 2025

December 31, 2024

(in thousands)

Carrying Value

2 unchanged sentences

% of Portfolio

(in thousands)

Geographical Location

Allowance for credit losses

Carrying value, net

Presented below are the carrying values by property type:

September 30, 2024

December 31, 2023

% of Portfolio

(in thousands)

Property Type

Pre-development land

Allowance for credit losses

Carrying value, net

The following tables allocate the carrying value of the Company’s loan portfolio based on internal credit quality indicators in assessing estimated credit losses and vintage of origination at the dates indicated:

September 30, 2024

The following tables allocate the carrying value of the Company’s loan portfolio based on credit quality indicators in assessing estimated credit losses and vintage of origination at the dates indicated:

March 31, 2025

Year Originated (1)

FICO Score (2)

(in thousands)

Allowance for credit losses

Carrying value, net

Represents the year of origination or amendment where the loan was subject to a full re-underwriting.

The FICO scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

FICO Score (2) (in thousands)

Loans held for investment:

December 31, 2024

Year Originated (1)

FICO Score (2)

(in thousands)

Allowance for credit losses

Carrying value, net

FICO Score (2) (in thousands)

Loans held for investment:

Represents the year of origination or amendment where the loan was subject to a full re-underwriting.

The FICO Scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis.

The following table sets forth the maturities of mortgages receivable as of September 30, 2024:

For the years ended December 31,

(in thousands)

2024 (9 months) and prior

Allowance for credit losses

At September 30, 2024, of the 226 mortgage loans included in the Company’s loan portfolio, 74 , or 32.7 %, having an aggregate outstanding principal balance of $ 130.1 million have matured but have not been repaid in full or extended.

The 74 aforementioned loans are inclusive of loans in pending/pre-foreclosure status.

These loans are in the process of modification and will be extended if the borrower can satisfy the Company’s underwriting criteria, including the proper LTV ratio, at the time of renewal.

The Company treats renewals and extensions of existing loans as new loans.

At December 31, 2023, of the 311 mortgage loans in the Company’s portfolio, 89 , or 28.6 %, representing $ 123.8 million of mortgages receivable, had matured by 2023 but were not repaid in full or extended.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

Loan modifications made to borrowers experiencing financial difficulty

In certain situations, the Company may provide loan modifications to borrowers experiencing financial difficulty.

These modifications may include term extensions, and adding unpaid interest, charges and taxes to the principal balance intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of collateral.

The Company generally receives additional collateral as part of extending the terms of the loan for loans experiencing financial difficulty.

The Company monitors the performance of loans modified to borrowers experiencing financial difficulty.

The tables below presents loan modifications during the period made to borrowers experiencing financial difficulty:

Three Months Ended March 31, 2025

Carrying Value of

(in thousands)

Carrying Value

Loans held for investment, net

Financial Effect

Term extension

A weighted average of 6.7 months were added to the life of the loans

The Company monitors the performance of loans modified during the period to borrowers experiencing financial difficulty.

The table below presents the performance of loans that have been modified in the last 12 months to borrowers experiencing financial difficulty.

The Company considers loans that are 90 days past due to be in payment default.

For the three months ended September 30, 2024 and 2023, $ 16.1 million, or 3.5 %, and $ 32.8 million, or 6.6 %, of total mortgages receivable were modified for borrowers experiencing financial difficulty, respectively.

For the nine months ended September 30, 2024 and 2023, $ 103.6 million, or 22.7 %, and $ 63.0 million, or 12.7 %, of total mortgages receivable were modified for borrowers experiencing financial difficulty, respectively.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

As of September 30, 2024, the Company was committed to lend additional amounts totaling $ 8.5 million to borrowers experiencing financial difficulty.

Investment in Rental Real Estate

As of September 30, 2024 and December 31, 2023, investment in rental real estate, net consist of the following:

Nine months ended September 30, 2024

Three Months Ended March 31, 2025

(in thousands)

90-119 days past due

120+ days past due

Term extension

The Company has committed to lend additional amounts totaling approximately $ 0.8 million to borrowers experiencing financial difficulty.

Of the loans that were modified that experienced financial difficulties during the three months ended March 31, 2025, no loans defaulted within the three months of the modification.

Of the loans that were modified that experienced financial difficulties during the period, one loan with an outstanding principal balance of $ 0.6 million experienced a rate decrease due to the modification.

The change in the rate was taking the loan off default rate.

Investment in Developmental Real Estate, net

As of March 31, 2025 and December 31, 2024, investment in developmental real estate, net consisted of the following:

Investment in Rental

March 31, 2025

Accumulated Depreciation

Investment in Rental Real Estate, Net

Real Estate, Net

(in thousands)

2 unchanged sentences

Construction in progress

Year ended December 31, 2023

Investment in Rental

December 31, 2024

Accumulated Depreciation

Investment in Rental Real Estate, Net

Real Estate, Net

(in thousands)

2 unchanged sentences

Construction in progress

Building and site improvements are being depreciated using the straight-line method over its estimated useful life of 40 years and 15 years , respectively.

Tenant improvements are amortized over the life of the respective lease using the straight-line method.

Lease in-place intangible assets, deferred leasing costs and acquired below-market leases are amortized on a straight-line basis over the respective life of the lease.

For the nine months ended September 30, 2024, depreciation and amortization related to the asset was $ 0.1 million.

Tenant improvements and other intangibles associated with the tenant are not being amortized until the commencement of the lease which is not until 2025.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

For the three months ended March 31, 2025 and 2024, depreciation and amortization related to the asset was $ 0.1 million and $ 0.1 million, respectively, which is presented in other expenses on the Company’s condensed consolidated statements of operations.

Tenant improvements and other intangibles associated with the tenant have begun amortizing in connection with the commencement of the lease that occurred in February 2025.

The amounts of amortized costs were nominal for the three months ended March 31, 2025.

Additionally, the Company leases space to a tenant under an operating lease.

The lease provides for the payment of fixed base rent payable monthly in advance and periodic step-ups in rent over the term of the lease and a pass through to tenants of their share of increases in real estate taxes and operating expenses over a base year.

The lease provides for the payment of fixed base rent payable monthly in advance and periodic step-ups in rent over the term of the lease and a pass through to tenants their share of increases in real estate taxes and operating expenses over a base year.

The lease also provides for free rent and a tenant improvement allowance of $ 2.7 million.

The rent concession period, or beginning of the lease term, begins January 2025 with a rent abatement period of 425 days.

As of September 30, 2024, future minimum rents under non-cancelable operating leases were as follows:

The lease commenced February 2025 with a cash rent abatement period of 425 days.

As of March 31, 2025, future minimum rents under non-cancelable operating leases were as follows:

Years Ending December 31,

(in thousands)

2024 (3 months)

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

Estimated annual amortization of acquired below-market lease intangible is as follows:

2025 (remaining nine months)

As of March 31, 2025, estimated annual amortization of acquired below-market lease intangible is as follows:

Years Ending December 31,

(in thousands)

2024 (3 months)

Estimated annual amortization of acquired in-place lease intangible is as follows:

2025 (remaining nine months)

As of March 31, 2025, estimated annual amortization of acquired in-place lease intangible is as follows:

Years Ending December 31,

(in thousands)

2024 (3 months)

Estimated annual amortization of deferred leasing costs is as follows:

2025 (remaining nine months)

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

As of March 31, 2025, estimated annual amortization of deferred leasing costs is as follows:

Years Ending December 31,

(in thousands)

2024 (3 months)

In addition, the Westport Purchase Agreement contains a provision requiring the payment of an Additional Purchase Price, as defined, upon the earlier to occur of:

● The Company closing on any construction financing on the Project, as defined, or

● Twelve months following receipt of all zoning and other State and municipal permits and approvals necessary to construct certain residential units, as defined.

These payments represent contingent consideration in connection with this acquisition, requiring accrual when the payments are deemed probable and reasonably estimable.

In January 2024, the Company submitted a proposal to the town of Westport for eight market rate residential units and two affordable rate units.

Those units were approved in March 2024, subject to a 30-day appeal period.

In April 2024, the 30-day appeal period for the Westport Asset land approval expired, and the Company deemed these events which would give rise to a payment of Additional Purchase Price allocated to land to be considered probable.

Accordingly, the agreed payment of $ 0.1 million per certain approved and sold or permitted market rate residential units has been recognized.

The expected payment, of which is $ 0.6 million, has been accrued as of September 30, 2024 and is included in accounts payable and accrued liabilities on the consolidated balance sheets included in the accompanying unaudited consolidated financial statements.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

2025 (remaining nine months)

Real Estate Owned (“REO”)

Property acquired through foreclosure are included on the Company’s consolidated balance sheets as real estate owned and further categorized as held for sale or held for rental, described in detail below.

As of September 30, 2024 and December 31, 2023, REO totaled $ 4.3 million and $ 3.5 million, respectively.

For the three months ended September 30, 2024 and 2023, the Company recorded an impairment loss of $ 0.3 million and $ 0.2 million, respectively.

For the nine months ended September 30, 2024 and 2023, the Company recorded an impairment loss of $ 0.4 million and $ 0.6 million, respectively.

The following table presents the Company’s REO as of September 30, 2024 and December 31, 2023:

September 30, 2024

December 31, 2023

Property acquired through foreclosure are included on the condensed consolidated balance sheets as real estate owned and further categorized as held for sale or held for rental, described in detail below.

As of March 31, 2025 and December 31, 2024, real estate owned, net totaled $ 18.9 million and $ 18.6 million, respectively.

During the three months ended March 31, 2025, the Company’s real estate owned portfolio recorded no impairment loss compared to an impairment loss of $ 0.5 million for the year ended December 31, 2024, which is considered a Level 3 non-recurring fair market value adjustment.

The following table presents the Company’s REO as of March 31, 2025 (in thousands):

March 31, 2025

(in thousands)

1 unchanged sentence

Principal basis transferred to real estate owned

Charges and building improvements

Proceeds from sale of real estate owned

Impairment loss

Gain on sale of real estate owned

Balance at end of period

As of September 30, 2024, REO included $ 0.8 million of real estate held for rental and $ 3.5 million of real estate held for sale.

As of March 31, 2025, REO included $ 0.8 million of real estate held for rental and $ 18.1 million of real estate held for sale.

As of December 31, 2024, REO included $ 0.8 million of real estate held for rental and $ 17.8 million of real estate held for sale.

Properties Held for Sale

During the three months ended September 30, 2024, the Company sold two properties held for sale and recognized a net gain of $ 0.02 million.

During the nine months ended September 30, 2024, the Company sold 13 properties held for sale and recognized a net gain of $ 0.3 million.

During the three months ended September 30, 2023, the Company sold one property held for sale and recognized a net loss of $ 0.01 million.

During the nine months ended September 30, 2023, the Company sold five properties held for sale and recognized a net gain of $ 0.1 million.

During the three months ended March 31, 2025, the Company sold five properties held for sale and recognized a gain on sale that was nominal.

During the three months ended March 31, 2024, the Company sold one property held for sale and recognized a gain on sale that was nominal.

Such sales are included in, “Loss on sale of real estate owned and property and equipment, net” on the Company’s condensed consolidated Statements of Operations.

Properties Held for Rental

As of September 30, 2024, one property, a commercial building, was held for rental.

The tenant signed a five-year lease that commenced on August 1, 2021.

As of September 30, 2024, future minimum rents under this lease were as follows:

As of March 31, 2025 and December 31, 2024, one property, a commercial building, was held for rental.

The tenant signed a 5-year lease that commenced on August 1, 2021.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

As of March 31, 2025, future minimum rents under this lease were as follows:

Years Ending December 31,

(in thousands)

2024 (3 months)

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

As of September 30, 2024 and December 31, 2023, other assets consist of the following:

September 30, 2024

2025 (remaining nine months)

Property and Equipment, net

The following tables represent the Company’s property and equipment, net as of March 31, 2025 and December 31, 2024:

March 31, 2025

Accumulated Depreciation

Property and Equipment, Net

(in thousands)

Furniture and fixtures

Computer hardware and software

Total property and equipment, net

December 31, 2024

Accumulated Depreciation

Property and Equipment, Net

(in thousands)

Furniture and fixtures

Computer hardware and software

Total property and equipment, net

As of March 31, 2025 and December 31, 2024, other assets consisted of the following:

March 31, 2025

December 31, 2024

(in thousands)

Prepaid expenses

5 unchanged sentences

Intangible asset – trade name

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

Lines of Credit, Mortgage Payable and Churchill Facility

Line of Credit – Wells Fargo

During the year ended December 31, 2020, the Company established a margin loan account at Wells Fargo Advisors that is secured by the Company’s portfolio of short-term securities.

The credit line bears interest at a rate equal to 1.75 % below the prime rate ( 6.25 % at September 30, 2024 and 6.77 % at December 31, 2023).

During the second quarter of 2024, the Company sold all of its investment securities that collateralized the line of credit.

As such, the balance as of September 30, 2024 was $ 0 .

At December 31, 2023 the total outstanding balance on the Wells Fargo credit line was $ 26.8 million.

Line of Credit – Needham Bank

On March 2, 2023, the Company entered into a Credit and Security Agreement (the “Credit Agreement”), with Needham Bank, a Massachusetts co-operative bank, as the administrative agent (“Needham”) for the lenders party thereto (the “Lenders”) with respect to a $ 45 million revolving credit facility (the “Needham Credit Facility”).

Under the Credit Agreement, the Company also has the right to request an increase in the size of the Needham Credit Facility up to $ 75 million, subject to certain conditions, including the approval of the Lenders.

As of September 8, 2023, the Needham Credit Facility was increased to $ 65 million.

The Company has maintained a Credit and Security Agreement (the “Credit Agreement”) with Needham Bank, a Massachusetts co-operative bank, as the administrative agent (“Needham”) for the lenders party thereto (the “Lenders”) with respect to revolving credit facility (“Needham Credit Facility”) with commitments of $ 50.0 million and $ 65.0 million, subject to borrowing base limitations and covenant compliance, at March 31, 2025 and December 31, 2024, respectively.

On March 20, 2025, the Company entered into a new Credit Agreement with Needham Bank, replacing the prior Needham Credit Facility, which was fully repaid and terminated on the same date.

The new facility matures on March 2, 2026, and includes an option to extend the term by one year upon satisfaction of certain conditions.

Under the new agreement, SN Holdings LLC (“SN Holdings”), a wholly owned subsidiary of the Company, serves as the borrower, and the Company, Sachem Capital Corp., serves as guarantor of all obligations.

The Needham Credit Facility is secured by a first priority lien on all the assets of SN Holdings, and includes a requirement that SN Holdings maintain assets equal to at least two times the outstanding principal balance under the facility.

In addition, SN Holdings is required to collaterally assign to Needham Bank a portfolio of mortgage loans with an outstanding principal balance of no less than the greater of $ 30.0 million or the full drawn balance on the facility.

The Company, as guarantor, has also granted Needham a blanket lien on substantially all of its assets, with the ability to request lien releases to facilitate other financings.

The Needham Credit Facility, at the subsidiary borrower level, is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements, including a covenant that requires SN Holdings to maintain:

(A) a ratio of Adjusted EBITDA (as defined in the Credit Agreement) to Debt Service (as defined in the Credit Agreement) of not less than 1.40 to 1.0 , tested on a trailing-twelve-month basis at the end of each fiscal quarter;

(B) a sum of cash, cash equivalents (at the consolidated guarantor level) and availability under the facility equal to or greater than $ 10 million;

and (C) an Asset Coverage Ratio (as defined) of at least 150 %.

As of March 31, 2025 and December 31, 2024, the total outstanding principal balances on the respective Needham Credit Facilities were $ 36.1 million and $ 40.0 million, respectively, with interest rates of 7.25 % and 7.25 %, respectively.

Loans under the Needham Credit Facility accrue interest at the greater of (i) the annual rate of interest equal to the “prime rate,” as published in the “Money Rates” column of The Wall Street Journal minus one-quarter of one percent ( 0.25 %), and (ii) four and one-half percent ( 4.50 %).

All amounts borrowed under the Needham Credit Facility are secured by a first priority lien on virtually all of the Company’s assets.

Assets excluded from the lien include real estate owned by the Company (other than real estate acquired pursuant to foreclosure) and mortgages sold under the Churchill Facility (as defined below).

The Needham Credit Facility expires March 2, 2026 but the Company has a right to extend the term for one year upon the consent of Needham and the Lenders, which consent cannot be unreasonably withheld, and so long as it is not in default and satisfies certain other conditions.

Interest is paid monthly.

All outstanding revolving loans and accrued but unpaid interest is due and payable on the expiration date.

The Company may terminate the Needham Credit Facility at any time without premium or penalty by delivering written notice to Needham at least ten ( 10 ) days prior to the proposed date of termination.

The Needham Credit Facility is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements, including a covenant that requires the Company to maintain:

(A) a ratio of Adjusted EBITDA (as defined in the Credit Agreement) to Debt Service (as defined in the Credit Agreement) of less than 1.40 to 1.0 , tested on a trailing-twelve-month basis at the end of each fiscal quarter;

(B) a sum of cash, cash equivalents and availability under the facility equal to or greater than $ 10 million;

and (C) an asset coverage ratio of at least 150 %.

As of September 30, 2024, the Company was not in compliance with the debt service coverage ratio covenant described above.

The Company’s inability to comply with this covenant is directly related to the provision for credit losses, which is a non-cash

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

charge that adversely impacts earnings.

Unlike other non-cash charges against earnings, such as depreciation and amortization, provision for credit losses is not added back to earnings under the definition of EBITDA.

Needham is aware of the situation and has informed the Company that it is considering granting a waiver on the debt service covenant ratio.

Per the Credit Agreement, the breach of a covenant can result in a default which, if left uncured for more than 30 days , allows Needham to terminate the Needham Credit Facility.

The Company uses the proceeds from the Needham Credit Facility to finance the continued expansion of its lending business and for general corporate purposes.

As of September 30, 2024 and December 31, 2023, the total outstanding principal balance on the Needham Credit Facility was $ 35.5 million and $ 35.0 million, respectively, with an interest rate of 7.75 % and 8.25 %, respectively.

Mortgage Payable

In 2021, the Company obtained a $ 1.4 million adjustable-rate mortgage loan from New Haven Bank (the “NHB Mortgage”) of which $ 750,000 was funded at closing to reimburse the Company for out-of-pocket costs relating to the acquisition of the property located at 568 East Main Street, Branford, Connecticut, which now serves as the Company’s headquarters.

The NHB Mortgage accrued interest at an initial rate of 3.75 % per annum for the first 72 months and was due and payable in full on December 1, 2037.

The NHB Mortgage was a non-recourse loan, secured by a first mortgage lien on the Company’s prior headquarters, which was located at 698 Main Street, Branford, Connecticut and the property located at 568 East Main Street, Branford, Connecticut.

On February 28, 2023, the Company refinanced the NHB Mortgage with a new adjustable-rate mortgage loan from New Haven Bank (the “New NHB Mortgage”) in the original principal amount of $ 1.66 million.

The new loan accrues interest at an initial rate of 5.75 % per annum for the first 60 months .

As of March 31, 2025, SN Holdings had $ 72.9 million of assets pledged to Needham.

The Company was in compliance with all facility covenants as of March 31, 2025.

Mortgage Payable – New Haven Bank

The Company has financed its headquarters property located at 568 East Main Street, Branford, Connecticut with New Haven Bank with an adjustable-rate first lien non-recourse mortgage loan in the original principal amount of $ 1.7 million (the “NHB Mortgage”).

The loan accrues interest at an initial rate of 5.75 % per annum for the first 60 months .

The interest rate will be adjusted on each of March 1, 2028, and March 1, 2033, to the then published 5-year Federal Home Loan Bank of Boston Classic Advance Rate, plus 1.75 %.

Beginning on April 1, 2023, and through March 1, 2038, principal and interest will be due and payable on a monthly basis.

All payments under the new loan are amortized based on a 20 -year amortization schedule.

Over the next five years, the Company is scheduled to make principal payments ranging from $ 47,000 to $ 59,000 annually, with the remaining balance due thereafter.

All payments under the loan are amortized based on a 20 -year amortization schedule.

Over the next five years, the Company is scheduled to make principal payments ranging from approximately $ 51,000 to $ 64,000 annually, with the remaining balance due thereafter.

The unpaid principal amount of the loan and all accrued and unpaid interest are due and payable in full on March 1, 2038.

The new loan is a non-recourse obligation, secured by a first mortgage lien on the property located at 568 East Main Street, Branford, Connecticut.

As of September 30, 2024 and December 31, 2023, the total outstanding principal balance on the New NHB Mortgage was $ 1.0 million and $ 1.1 million, respectively.

As of March 31, 2025 and December 31, 2024, the total outstanding principal balance on the NHB Mortgage was $ 1.0 million and $ 1.0 million, respectively.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

Churchill MRA Funding I LLC Repurchase Financing Facility

6 unchanged sentences

The cost of capital under the Churchill Facility is equal to the sum of (a) the greater of (i) 0.25 % and (ii) the 90 -day SOFR (which replaced the 90 -day LIBOR) plus (b) 3 %- 4 %, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time.

As of September 30, 2024 and December 31, 2023, the effective interest rate charged under the facility was 8.95 % and 9.47 %, respectively.

As of March 31, 2025 and December 31, 2024, the effective interest rate charged under the facility was 8.31 % and 8.69 %, respectively.

The Churchill Facility is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements.

1 unchanged sentence

and (B) must maintain unencumbered cash and cash equivalents in an amount equal to or greater than 2.50 % of the amount of its repurchase obligations.

Churchill has the right to

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

terminate the Churchill Facility at any time upon 180 days prior notice to the Company.

Churchill has the right to terminate the Churchill Facility at any time upon 180 days prior notice to the Company.

The Company then has an additional 180 days after termination to repurchase all the mortgage loans held by Churchill.

The Company uses the proceeds from the Churchill Facility to finance the continued expansion of its lending business and for general corporate purposes.

At September 30, 2024, the total amount outstanding under the Churchill Facility was $ 23.5 million.

The collateral pledged to Churchill at September 30, 2024 was 11 mortgage loans that in the aggregate had unpaid principal balance of $ 45.8 million.

At December 31, 2023, the total amount outstanding under the Churchill Facility was $ 26.5 million.

The collateral pledged to Churchill at December 31, 2023 was 14 mortgage loans that in the aggregate had unpaid principal balance of $ 50.6 million.

The New NHB Mortgage and the Churchill Facility contain cross-default provisions.

The following table summarizes the outstanding balances under the Churchill Facility agreement:

March 31, 2025

December 31, 2024

(in thousands)

Repurchase Agreement

The following table summarizes loans held for investment pledged as collateral under the Churchill Facility agreement:

March 31, 2025

December 31, 2024

Total Carrying Value

Loans Pledged

Number of Loans

Loans Pledged

Number of Loans

(in thousands)

Loans held for investment sold under the repurchase agreement

The following table summarizes the contractual maturities for loans held for investment sold under the repurchase agreement:

March 31, 2025

December 31, 2024

(in thousands)

Maturing within 1 year

After 1 but within 2 years

The NHB Mortgage and the Churchill Facility contain cross-default provisions.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

Unsecured Notes Payable

At September 30, 2024, the Company had an aggregate of $ 260.5 million of unsecured, unsubordinated notes payable outstanding, net of $ 4.3 million of deferred financing costs (collectively, the “Notes”).

During the nine months ended September 30, 2024, the Company redeemed its 7.125 % unsecured, unsubordinated Notes due June 30, 2024 in the aggregate principal amount of $ 23.7 million plus the accrued interest thereon.

At September 30, 2024, the Company had six series of Notes outstanding:

(i) Notes having an aggregate principal amount of $ 34.5 million bearing interest at 6.875 % per annum and maturing December 30, 2024 (the “December 2024 Notes”);

(ii) Notes having an aggregate principal amount of $ 56.4 million bearing interest at 7.75 % per annum and maturing September 30, 2025 (the “September 2025 Notes”);

(iii) Notes having an aggregate principal amount of $ 51.8 million bearing interest at 6.0 % per annum and maturing December 30, 2026 (the “December 2026 Notes”);

(iv) Notes having an aggregate principal amount of $ 51.9 million bearing interest at 6.0 % per annum and maturing March 30, 2027 (the “March 2027 Notes”);

(v) Notes having an aggregate principal amount of $ 30.0 million bearing interest at 7.125 % per annum and maturing June 30, 2027 (the “June 2027 Notes”);

(vi) Notes having an aggregate principal amount of $ 40.3 million bearing interest at 8.00 % per annum and maturing September 30, 2027 (the “September 2027 Notes”).

The Notes were sold in underwritten public offerings, were issued in denomination of $ 25.00 each and are listed on the NYSE American and trade under the symbols “SACC,” “SCCC,” “SCCD,” “SCCE,” “SCCF” and “SCCG,” respectively.

At March 31, 2025, the Company had an aggregate of $ 230.2 million of unsecured, unsubordinated notes payable outstanding, net of $ 3.2 million of deferred financing costs (collectively, the “Notes”).

At March 31, 2025, the Company had five series of Notes outstanding:

(i) Notes having an aggregate principal amount of $ 56.4 million bearing interest at 7.75 % per annum and maturing September 30, 2025 (the “September 2025 Notes”);

(ii) Notes having an aggregate principal amount of $ 51.8 million bearing interest at 6.0 % per annum and maturing December 30, 2026 (the “December 2026 Notes”);

(iii) Notes having an aggregate principal amount of $ 51.9 million bearing interest at 6.0 % per annum and maturing March 30, 2027 (the “March 2027 Notes”);

(iv) Notes having an aggregate principal amount of $ 30.0 million bearing interest at 7.125 % per annum and maturing June 30, 2027 (the “June 2027 Notes”);

(v) Notes having an aggregate principal amount of $ 40.3 million bearing interest at 8.00 % per annum and maturing September 30, 2027 (the “September 2027 Notes”).

The Notes were sold in underwritten public offerings, were issued in denomination of $ 25.00 each and are listed on the NYSE American and trade under the symbols “SCCC,” “SCCD,” “SCCE,” “SCCF” and “SCCG,” respectively.

All the Notes were issued at par except for the last tranche of the September 2025 notes, in the original principal amount of $ 28 million, which were issued at $ 24.75 each.

3 unchanged sentences

The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including the date of redemption.

As of September 30, 2024, all of the Notes are callable at any time.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

The following are the future principal payments on the notes payable as of September 30, 2024:

Currently, all the Notes are callable at any time.

The following are the future principal payments on the notes payable as of March 31, 2025:

Years ending December 31,

(in thousands)

Remainder of 2024

2025 (remaining nine months)

Total principal payments

1 unchanged sentence

Total notes payable, net of deferred financing costs

The estimated amortization of the deferred financing costs as of September 30, 2024 is as follows:

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

The estimated amortization of the deferred financing costs as of March 31, 2025 is as follows:

Years ending December 31,

(in thousands)

Remainder of 2024

2025 (remaining nine months)

Total deferred costs

Accounts Payable and Accrued Liabilities

As of September 30, 2024 and December 31, 2023, accounts payable and accrued liabilities include the following:

September 30, 2024

As of March 31, 2025 and December 31, 2024, accounts payable and accrued liabilities include the following:

March 31, 2025

December 31, 2024

4 unchanged sentences

Fee Income from Loans

For the three and nine month periods ended September 30, 2024 and 2023, fee income from loans consists of the following:

ended September 30,

For the three months ended March 31, 2025 and 2024, fee and other income consisted of the following:

Three Months Ended

(in thousands)

4 unchanged sentences

Construction servicing fees

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

Commitments and Contingencies

Origination, Modification, and Construction Servicing Fees

Loan origination and modification fees generally range from 1 % - 3 % each of the original loan principal or the modified loan balance and, generally, are payable at the time the loan is funded or modified.

The unamortized portion is recorded as deferred revenue on the consolidated balance sheet.

At September 30, 2024, deferred revenue was $ 3.4 million, which will be recorded as income as follows:

Years ending December 31,

(in thousands)

Remainder of 2024

In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in full at the time of repayment.

Employment Agreements and Arrangements

In February 2017, the Company entered into an employment agreement with John Villano, the material terms of which are as follows:

(i) the employment term is five years with extensions for successive one-year periods unless either party provides written notice at least 180 days prior to the next anniversary date of its intention to not renew the agreement;

(ii) a base salary of $ 260,000 , which was increased in April 2018, April 2021 and April 2022 to $ 360,000 , $ 500,000 and $ 750,000 , respectively;

(iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s Board of Directors;

(iv) participation in the Company’s employee benefit plans;

(v) full indemnification to the extent permitted by law;

(vi) a two-year non-competition period following the termination of employment without cause;

and (vii) payments upon termination of employment or a change in control.

In April 2021, the Company granted 89,928 restricted common shares (having a market value of $ 500,000 ) to Mr.

One -third of such shares vested on each of January 1, 2022 and 2023 , and the remaining one -third will vest on January 1, 2024.

In April 2022, the Company granted 98,425 restricted common shares (having a market value of $ 500,000 ) to Mr.

One-third of such shares vested on January 1, 2023, and an additional one-third will vest on each of January 1, 2024 and 2025 .

In February 2023, the Company granted 130,890 restricted common shares (having a market value of $ 500,000 ) to Mr.

One-third of such shares vested as of January 1, 2024 and one-third of such shares will vest on each of January 1, 2025 and 2026 .

In March 2024, the Company granted 111,857 restricted common shares (having a market value of $ 500,000 ) to Mr.

One -third of such shares will vest on each of January 1, 2025, 2026 and 2027 .

All shares granted under John Villano’s employment contract are restricted until the respective vesting periods lapse.

As of September 30, 2024, 231,926 restricted common shares remain unvested.

Effective as of September 1, 2024, the Company entered into a new employment arrangement with Nicholas M.

Marcello, the Company’s Chief Financial Officer, the material terms of which are as follows:

(i) an annual base salary of $ 300,000 ;

(ii) a one - time payment of $ 20,000 ;

(iii) entitlement to an annual time - based equity award of $ 125,000 , payable in restricted common shares, commencing on January 1, 2025 and on January 1st of each year thereafter;

(iii) he will be entitled to an annual cash bonus of up to 50 % of his base salary, the exact amount to be determined by the Compensation Committee of the Company’s Board of Directors;

and (iv) he has continued eligibility to participate in the Company’s health insurance plan and the perquisites and other fringe benefits in accordance with prevailing Company policy.

Unfunded Commitments

At September 30, 2024, the Company had future funding obligations totaling $ 71.9 million, which can be drawn by the borrowers when the conditions relating thereto have been satisfied.

At March 31, 2025, the Company had future funding obligations on loans held for investment totaling $ 46.4 million and obligations relating to investments in limited liability companies totaling $ 4.8 million, which can be drawn by the borrowers when the conditions relating thereto have been satisfied.

The unfunded commitments will be funded from loan payoffs and additional drawdowns under existing and future credit facilities and proceeds from sale of debt and equity securities.

The Company’s unfunded commitments are subject to allowances under the scope of CECL, see Note 4 – Loans and Allowance for Credit Losses for further details.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

The Company incurred a net loss attributable to common shareholders of $ 6.6 million during the nine months ended September 30, 2024.

The loss was driven primarily from the increase in non-accrual loans which had significant increases in provisions for credit losses related to loans.

In addition, as of September 30, 2024, the Company breached its covenant related to the Needham Credit Facility (see Note 8 - Line of Credit – Needham Bank), and has unsecured, unsubordinated notes payable due of $ 34.5 million coming due in December 30, 2024 and another tranche of $ 56.4 million due in September 2025.

These factors raised economic uncertainty from a liquidity standpoint.

Management believes the ability to utilize the Company’s existing $ 200 million Churchill Facility (see Note 8 - Churchill MRA Funding I LLC Repurchase Financing Facility), cash and cash equivalents of $ 5.9 million, investment securities at fair value of $ 1.6 million, continued cash flows from operations, sales of Series A Preferred Stock through the Company’s at-the-market offering facility, and proceeds from the potential sale of mortgage loans in the secondary market (see Note 19 - Subsequent Events) would alleviate the uncertainty.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

The Company is subject to various pending and threatened legal proceedings or other matters arising out of the normal conduct of business in which claims for monetary damages are asserted.

As of the date of this report, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of such pending or threatened matters will be material to the Company’s consolidated financial position.

On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with such matters.

For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its condensed consolidated financial statements.

To the extent such matters could result in exposure in excess of that liability, the amount of such excess is not currently estimable.

The range of losses for matters where an exposure is not currently estimable or considered probable is not believed to be material in the aggregate.

This is based on information currently available to the Company and involves elements of judgment and significant uncertainties.

While the Company does not believe that the outcome of pending or threatened litigation or other matters will be material to the Company’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.

In addition, regardless of the ultimate outcome of any such legal proceeding, inquiry or investigation, any such matter could cause the Company to incur additional expenses, which could be significant, and possibly material, to the Company’s results of operations in any future period.

In the normal course of its business, the Company is named as a party-defendant in connection with tax foreclosure proceedings against properties on which it holds a first mortgage lien.

The Company actively monitors these actions and, in all cases, believes there remains sufficient value in the subject property to assure that no loan impairment exists.

At September 30, 2024, there were two such properties.

At March 31, 2025, there were two such properties.

The unpaid principal balance on the properties that are subject to these proceedings was $ 1.9 million.

In accordance with the asset purchase agreement with Urbane New Haven, LLC (“Urbane”) in October 2022, under certain circumstances the Company will be required to pay Urbane 20 % of the net proceeds, as defined, of certain real estate development projects completed by the Company until such time that the former principal owner of Urbane, who is currently employed by the Company, is no longer employed by the Company.

Any future payments will be expensed.

Related Party Transactions

2 unchanged sentences

The terms of such loans, including the interest rate, income, origination fees, and other closing costs are the same as those applicable to loans made to unrelated third parties in the portfolio.

As of September 30, 2024, and December 31, 2023, loans to known shareholders totaled $ 15.7 million and $ 25.6 million, respectively, which is included in mortgages receivable, net in the Company’s accompanying consolidated balance sheets.

Of the $ 15.7 million and $ 25.6 million loans to known shareholders as of September 30, 2024 and December 31, 2023, $ 9.9 million and $ 23.2 million, respectively, related to Mod 21, LLC, which is a wholly owned entity of the Company’s Senior Vice President of Asset Management and Vice President of Asset Management.

Interest income earned on all related party loans for the three months ended September 30, 2024 and 2023 totaled $ 0.3 million and $ 0.5 million, respectively, and for the nine months ended September 30, 2024 and 2023 totaled $ 1.0 million and $ 1.6 million, respectively, which is included in interest income in the Company’s accompanying consolidated statements of operations.

In December 2021, the Company hired the daughter of the Company’s chief executive officer to perform certain credit and compliance services.

For the three-month periods ended September 30, 2024 and 2023, she received compensation of $ 0.04 million for each period.

For the nine-month periods ended September 30, 2024 and 2023, she received compensation of $ 0.1 million for each period.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments in securities, investments in partnerships, and mortgage loans.

The Company maintains its cash and cash equivalents with various financial institutions.

Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $ 250,000 , per depositor.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

As of September 30, 2024, 34.0 % of the properties securing the Company’s mortgage loans were located in Connecticut, 29.6 % in Florida, and 13.5 % in New York.

The Company’s mortgage loans are categorized into four property types, which as of September 30, 2024 were;

Residential ( 59.3 %), Commercial ( 28.0 %), Pre-development land ( 6.1 %), and Mixed Use ( 6.6 %).

These concentrations of credit risk may be affected by changes in economic or other conditions of the particular geographic area or particular asset type that collateralize the Company’s mortgage loans.

Credit risks associated with the Company’s mortgage loan portfolio and related interest receivable are described in Note 4 – Mortgages receivable, net.

As of March 31, 2025, and December 31, 2024, loans to known shareholders totaled $ 17.2 million and $ 17.2 million, respectively, which is included in loans held for investment, net in the Company’s accompanying condensed consolidated balance sheets.

Of the $ 17.2 million and $ 17.2 million loans to known shareholders as of March 31, 2025 and December 31, 2024, respectively, $ 16.9 million and $ 17.0 million, respectively, related to Mod 21, LLC, which is a wholly owned entity of the Company’s Senior Vice President of Asset Management and Vice President of Asset Management.

All such loans are performing and interest income earned on all related party loans for the three months ended March 31, 2025 and 2024 totaled $ 0.3 million and $ 0.6 million, respectively.

In December 2021, the Company hired the daughter of the Company’s chief executive officer to perform certain internal audit and compliance services.

For the three months ended March 31, 2025 and 2024, she received compensation of $ 43,269 and $ 37,500 , respectively.

Stock-Based Compensation and Employee Benefits

3 unchanged sentences

The maximum number of Common Shares reserved for the grant of awards under the Plan is 1,500,000 , subject to adjustment as provided in Section 5 of the Plan.

The number of securities remaining available for future issuance under the Plan as of September 30, 2024 was 781,262 .

During the nine months ended September 30, 2024 and 2023, the Company granted an aggregate of 212,857 and 201,390 , respectively, restricted common shares under the Plan, including restricted common shares granted to the Company’s Chief Executive Officer (see Note 13).

The fair value of each block of shares at the time of grant was approximately $ 0.8 million.

There were no such shares granted to the Company’s Chief Executive Officer during the three months ended September 30, 2024 and 2023.

With respect to the restricted common shares granted during the nine months ended September 30, 2024, (i) 33,666 shares vested on May 9, 2024;

(ii) 33,667 shares will vest on May 1, 2025 and 2026, respectively;

(iii) 37,285 shares will vest on January 1, 2025;

and (iv) 37,286 shares will vest on January 1, 2026 and 2027 , respectively.

Stock-based compensation for the three months ended September 30, 2024 and 2023 was $ 0.2 million and $ 0.2 million, respectively, which is included in compensation and employee benefits on the accompanying consolidated statements of operations.

Stock-based compensation for the nine months ended September 30, 2024 and 2023 was $ 0.7 million and $ 0.6 million, respectively.

As of September 30, 2024, there was unrecorded stock-based compensation expense of $ 0.9 million.

Additionally, during the nine months ended September 30, 2024 and 2023, the Company had 333 and 5,333 unvested restricted common shares forfeited to the Company as a result of the termination of former employees, respectively.

The number of securities remaining available for future issuance under the Plan as of March 31, 2025 was 436,762 .

The number of shares issuable to any one individual in a plan year is also limited to 100,000 shares, subject to adjustment as provided for in the Plan.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

During the three months ended March 31, 2025 and 2024, the Company granted an aggregate of 767,668 and 111,857 , respectively, restricted Common Shares under the Plan.

Such shares during the three months ended March 31, 2025 and 2024 had a fair value of $ 0.9 million and $ 0.5 million, respectively.

Of the 767,668 shares granted, 420,168 shares were forfeited immediately as discussed further below.

On March 10, 2025, the Company’s Compensation Committee authorized (i) a grant of 420,168 restricted Common Shares to John L.

Villano, which shares had a fair market value on the date of grant of approximately $ 0.5 million;

and (ii) a one-time bonus grant of 20,000 restricted Common Shares to each of the Company’s non-employee directors, Arthur Goldberg, Brian Prinz, Leslie Bernhard and Jeffery Walraven.

Each of the Company’s non-employee directors, with the except for Mr.

Walraven, also had the option, at his or her election, to receive the fair market value equivalent of his or her grant in a lump sum cash payment of $ 23,800 .

An aggregate of 60,000 restricted Common Shares were granted to the Company’s non-employee directors, which shares had an aggregate fair market value on the date of grant of approximately $ 71,400 .

Bernhard elected to receive the lump sum cash payment.

The Company identified subsequent to the above March 10, 2025 action of the Company’s Compensation Committee regarding authorization of issuance of 420,168 share of restricted stock to John L.

Villano under the effective 2016 Equity Compensation Plan that it had over authorized on the total issuance by 320,168 shares.

The over issuance is a result of a specified limitation in the Plan that no more than 100,000 shares of restricted Common Shares may be made subject to awards to a single individual in a single plan year, subject to adjustments as provided.

No identified adjustment provisions were deemed applicable.

In result of this identification it was also determined that in calendar 2023 and 2024 there were additional similar over issuances of 30,890 and 11,857 , respectively.

In total there were 362,915 restricted shares which have been issued in excess of Plan limitations, all of which still remain unvested and restricted.

No other plan years have identified any additional over issuances.

In an immediate full and in excess of necessary remediation of this matter on March 25, 2025, John L.

Villano voluntarily forfeited the 420,168 shares that were granted on March 10, 2025.

Stock-based compensation for the three months ended March 31, 2025 and 2024 was $ 0.3 million and $ 0.2 million, respectively.

As of March 31, 2025, there was unrecognized stock-based compensation expense of $ 0.9 million.

Additionally, during the three months ended March 31, 2025, the Company had 2,667 of unvested restricted Common Shares forfeited to the Company as a result of the resignation of a former employee.

Employee Benefits

3 unchanged sentences

Under the terms of the 401(k) Plan, the Company is obligated to contribute 3 % of a participant’s compensation to the 401(k) Plan on behalf of an employee-participant.

For the three months ended September 30, 2024 and 2023, the 401(k) Plan expense was $ 0.3 million and $ 0.05 million, respectively, which is included within compensation and employee benefits in the accompanying consolidated statements of operations.

For the nine months ended September 30, 2024 and 2023, the 401 (k) Plan expense was $ 0.1 million and $ 0.1 million, respectively, which is included within compensation and employee benefits in the accompanying consolidated statements of operations.

On August 24, 2022, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $ 75.0 million of its common shares and its Series A Preferred Stock (as defined in Note 18 below) with an aggregate liquidation preference of up to $ 25.0 million in an “at-the market” offering, which is ongoing (the “ATM Offering”).

On June 17, 2024, the

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

Company filed a new prospectus supplement (the “New Prospectus Supplement”) which modified the ATM Offering by reducing the amount of common shares the Company may offer and sell to up to an aggregate of $ 48.7 million, including the common shares the Company has already sold in the ATM Offering prior to the date of the New Prospectus Supplement.

For the three months ended March 31, 2025 and 2024, the 401(k) Plan expense was $ 24,293 and $ 48,210 , respectively, which is included within compensation, fees, and taxes in the accompanying condensed consolidated statements of comprehensive income.

On August 24, 2022, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $ 75.0 million of its Common Shares and shares of its Series A Preferred Stock with an aggregate liquidation preference of up to $ 25.0 million in an “at-the market” offering (the “ATM Offering”).

On June 17, 2024, the Company filed a new prospectus supplement (the “New Prospectus Supplement”) which modified the ATM Offering by reducing the amount of Common Shares the Company may offer and sell to up to an aggregate of $ 48.7 million, including the Common Shares the Company has already sold in the ATM Offering prior to the date of the New Prospectus Supplement.

All the other terms of the ATM Offering remained the same.

During the nine months ended September 30, 2024, under this offering, the Company sold no common shares and 249,901 shares of its Series A Preferred Stock having an aggregate liquidation preference of approximately $ 6.2 million, realizing gross proceeds of $ 5.3 million (representing a discount of 15.8 % from the liquidation preference).

The Company’s issuance costs for both common shares and Series A Preferred Stock shares sold during the nine months ended September 30, 2024 were $ 0.1 million.

In October 2022, the Board adopted a stock repurchase plan (the “Original Repurchase Plan”), pursuant to which the Company may repurchase up to an aggregate of $ 7,500,000 of its common shares.

During the three months ended March 31, 2025, the Company did not sell any shares under the ATM Offering.

In February 2025, the effectiveness of the S-3 Registration Statement expired and, as a result, the ATM Offering terminated.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

In October 2022, the Board adopted a stock repurchase plan (the “Original Repurchase Plan”), pursuant to which the Company may repurchase up to an aggregate of $ 7.5 million of its Common Shares.

Under the Original Repurchase Plan, share repurchases were made from time to time on the open market at prevailing market prices or in negotiated transactions off the market in accordance with applicable federal securities laws, including Rule 10b-18 and 10b5-1 of the Exchange Act.

During the nine months ended September 30, 2024 and 2023, under this program, the Company repurchased 535,369 and 71,000 common shares at a total cost of $ 1.4 million and $ 0.2 million, respectively.

Partnership Investments

As of September 30, 2024, the Company had invested an aggregate of $ 51.6 million in seven limited liability companies (all of which have elected to be taxed as partnerships) managed by Shem Creek Capital, LLC (“Shem”).

The Company’s interest in each of these entities is “non-controlling”.

The Company’s ownership interest in six of the limited liability companies ranges from 7 % to 49 % and one entity is owned 100 % by the Company.

In September 2024, the Company acquired a seventh ownership interest, a 20 % membership interest in Shem.

At close, the Company paid $ 2.5 million in cash.

The balance of the purchase price is due and payable on or before September 6, 2025.

If the Company fails to make the deferred payment when due, it will forfeit half of its interest in Shem and all proceeds received therefrom, if any.

In addition, the Company has the right to acquire an additional 10 % interest in Shem (increasing its stake to 30 %) in two separate 5 % options of $ 1.4 million and $ 1.5 million at any time prior to March 31, 2027.

The Company is allowed one board member of Shem, but has no management rights in Shem.

The Company accounts for these investments at cost because the Company does not manage the entities in which it holds an interest and thus has no control or have significant influence over the investments.

Shem is a commercial real estate finance company that provides debt capital solutions to local and regional commercial real estate owners in the Northeastern United States.

The Company’s withdrawal from each limited liability company may only be granted by Shem.

The Company’s investments can be categorized into three fund structures:

fund investments, direct loan investments (co-invest vehicles) and the manager investment.

The fund investments primarily include investments in two entities that invest in mortgage loans.

The direct loan investments are through three entities whereby the Company directly invests in the participation of individual loans.

Both the fund and direct loan structure primarily invest in mortgage loans to borrowers with a majority of the deals being leveraged by a bank.

These loans are primarily two- to three- year collateralized mortgage loans, often with contractual extension options for the borrowers of an additional year.

The Company receives quarterly distributions from the entities that are comprised of a preferred return, return of capital, and the incentive fee depending on each loan’s waterfall calculation, as defined by the loan agreements.

The Company’s interests in the entities are not redeemable at any time, as its investment will be repaid as the underlying loans are repaid.

The Company expects to be repaid on its current investments by December 31, 2027.

Shem’s compensation includes senior financing fees, incentive fees, and management fees that are charged to each entity that it manages, including the seven entities in which the Company has an investment.

The Company expects to receive quarterly distributions from the respective entities operating cash flows.

For the three months ended September 30, 2024 and 2023, the Shem investments generated, in the aggregate, $ 1.5 million and $ 0.8 million, respectively, of income for the Company.

For the nine months ended September 30, 2024 and 2023, the Shem investments generated $ 3.9 million and $ 2.3 million, respectively, of income for the Company.

The Original Repurchase Plan expired on October 9, 2024.

Effective on October 10, 2024, the Board replaced the Original Repurchase Plan with a new stock repurchase plan (the “New Repurchase Plan”).

Under the New Repurchase Plan, the Company may repurchase up to an aggregate of $ 5,802,959 (the amount remaining under the Original Purchase Plan) of Common Shares and share repurchases will be made from time to time on the open market at prevailing market prices in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act.

During the three months ended March 31, 2025, the Company did not repurchase any Common Shares under the New Repurchase Plan.

Earnings (Losses) Per Share

Basic and diluted earnings (losses) per share are calculated in accordance with FASB ASC 260 (Earnings Per Share).

Under FASB ASC 260, basic earnings per share is computed by dividing net income (loss) available to the common shareholders by the weighted-average number of Common Shares outstanding for the period.

The computation of diluted earnings (losses) per share is similar to basic earnings (losses) per share, except that the denominator is increased to include the potential dilution from our unvested restricted stock awards that contain non-forfeitable rights to dividends so therefore deemed to participating securities for Common Shares using the treasury stock method.

The numerator in calculating both basic and diluted earnings (losses) per common share for each period is the reported net income (loss) available to common shareholders.

For the three months ended March 31, 2025, the Company had basic and diluted weighted average Common Shares of 46,784,744 outstanding, resulting in basic and diluted loss per share of $ 0.00 .

For the three months ended March 31, 2024, the Company had basic and diluted weighted average Common Shares of 47,128,511 outstanding, resulting in basic and diluted earnings per share of $ 0.08 .

Limited Liability Company (“LLC”) Investments

The following table details the carrying value of each investment reflected on our condensed consolidated balance sheets as of March 31, 2025:

March 31, 2025

December 31, 2024

Ownership Percentage

(in thousands)

Shem Creek Capital Fund V LLC

Shem Creek Capital Fund VI LLC

Shem Creek Capital Fund VII LLC

Shem Creek Sachem V LLC

Shem Creek Sachem VI LLC

Shem Creek Sachem 100 LLC

Shem Creek Capital LLC

Total Shem LLC Invemestments

Cordo CLT Investors LLC

Total investments in LLC’s

Shem Creek (“Shem”)

For the three months ended March 31, 2025 and 2024, the Shem LLC investments generated $ 2.1 million and $ 1.2 million, respectively, of income for the Company.

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

At September 30, 2024, the Company had unfunded partnership commitments totaling $ 4.5 million in the Shem entities.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2025

At March 31, 2025, the Company had unfunded commitments totaling $ 4.8 million in the Shem LLC entities.

Cordo CLT Investors LLC

In September 2024, the Company, through its wholly owned subsidiary Urbane Capital, LLC, acquired a 7.2 % partnership interest in Cordo CLT Investors LLC for $ 2.5 million.

In September 2024, the Company, through its wholly owned subsidiary Urbane Capital, LLC, initially acquired a 21.6 % interest in Cordo CLT Investors LLC for a one time contribution of $ 2.5 million.

As of March 31, 2025 and December 31, 2024, the Company held 7.2 % and 7.2 %, respectively, of total common member equity.

This entity was formed for the sole purpose of developing a commercial multifamily property in Charlotte, North Carolina.

The Company anticipates the project to be completed by the end of 2026.

The Company accounts for this investment at cost because the Company does not manage the entities in which it holds an interest and thus has no control or have significant influence over the investments.

Series A Preferred Stock

The Company has designated 2,903,000 shares of its authorized preferred shares, par value $ 0.001 per share, as shares of Series A Preferred Stock (the “Series A Preferred Stock”) with the powers, designations, preferences and other rights as set forth in an Amended and Restated Certificate of Designation (the “Series A Designation Certificate”).

The Series A Designation Certificate provides that the Company will pay quarterly cumulative dividends on the Series A Preferred Stock, in arrears, on the 30th day of each of March, June, September and December, and including, the date of original issuance of the Series A Preferred Stock until redeemed at 7.75 % of the $ 25.00 per share liquidation preference per annum (equivalent to $ 1.9375 per annum per share).

The Series A Preferred Stock is not redeemable before June 29, 2026, except upon the occurrence of a Change of Control (as defined in the Series A Designation Certificate).

On or after June 29, 2026, the Company may, at its option, redeem any or all of the shares of the Series A Preferred Stock at $ 25.00 per share plus any accumulated and unpaid dividends to, but not including the redemption date.

Upon the occurrence of a Change of Control, the Company may, at its option, redeem any or all of the shares of Series A Preferred Stock within 120 days after the first date on which such Change of Control occurred at $ 25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date.

The Series A Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by the Company or converted into common shares in connection with a Change of Control by the holders of the Series A Preferred Stock.

Upon the occurrence of a Change of Control, each holder of Series A Preferred Stock will have the right (subject to the Company’s election to redeem the Series A Preferred Stock in whole or in part, as described above, prior to the Change of Control Conversion Date as defined in the Series A Designation Certificate) to convert some or all of the Series A Preferred Stock held by such holder on the Change of Control Conversion Date into a number of the common shares determined by formula, in each case, on the terms and subject to the conditions described in the Series A Designation Certificate, including provisions for the receipt, under specified circumstances, of alternative consideration as described in the Series A Designation Certificate.

Except under limited circumstances, holders of the Series A Preferred Stock generally do not have any voting rights.

The Company has reserved 72,575,000 common shares for issuance upon conversion of the Series A Preferred Stock.

The Company believes it qualifies as a real estate investment trust (“REIT”) for federal income tax purposes and operates accordingly.

It made the election to be taxed as a REIT on its 2017 Federal income tax return.

The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs, and the diversity of ownership of its outstanding capital stock.

So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S.

federal income tax on its taxable income distributed to its shareholders.

However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S.

Other than taxes incurred by the Company’s taxable REIT subsidiary (“TRS”), the Company does not expect to incur any corporate federal income tax liability, as it believes it has maintained its qualification as a REIT.

The Company has elected, and may elect in the future, to treat certain of its existing or newly created corporate subsidiaries as TRSs.

In general, a TRS may hold assets that the Company cannot hold directly and generally may engage in any real estate or non-real estate related business.

The TRSs generate income, resulting in federal and state income tax liability for these entities.

During the three months ended March 31, 2025 and 2024, the Company’s TRSs recognized provisions for federal and state income tax of $ 0.0 million and $ 0.2 million, respectively, which is represented in Other expenses on the Company’s condensed consolidated statements of operations.

FASB ASC Sub-Topic 740-10 “Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and disclosure required.

Under this standard, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in interest expense.

The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying condensed consolidated financial statements as of March 31, 2025 and December 31, 2024.

Subsequent Events

On November 7, 2024 , the Company declared a dividend of $ 0.05 per share, or $ 2.3 million in the aggregate, to shareholders of record as of November 18, 2024 , which is to be paid on November 26, 2024 .

Between October 1, 2024 and November 13, 2024, the Company transferred approximately $ 16.9 million of mortgages receivable, net to real estate owned.

Between October 1, 2024 and November 13, 2024, through the Company’s at-the-market offering facility, the Company sold no common shares, and 6,802 shares of its Series A Preferred Stock having an aggregate liquidation preference of $ 0.2 million, realizing gross proceeds of $ 0.1 million (representing a discount of 14.3 % from the liquidation preference.)

Effective on October 10, 2024, the Company’s Board of Directors adopted a new stock repurchase plan (the “New Repurchase Plan”) to replace the Original Repurchase Plan, pursuant to which the Company may repurchase up to an aggregate of $ 5,802,959.45 of its common shares.

Under the New Repurchase Plan, share repurchases will be made from time to time on the open market at prevailing market prices in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

The New Repurchase Plan is expected to continue until the earlier of the repurchase of all the

SACHEM CAPITAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024

common shares under the plan or termination with its terms.

Ladenburg Thalmann & Co.

and Janney Montgomery Scott LLC will act as the Company’s exclusive purchasing agents under the New Repurchase Plan.

On October 5, 2024, the Company retained the services of Mission Capital (“Mission”), a subsidiary of Marcus and Millichap, which is a real estate capital markets firm, to act as its sole and exclusive advisor in connection with the proposed sale by the Company of a pool of mortgage loans having an aggregate principal amount of approximately $ 78.8 million.

A majority of the loans offered for sale are designated by the Company as “non-accrual” loans, which means payments due under such loans are more than 90 days in arrears.

The sale process formally commenced in early October when Mission began to solicit indications of interest from potential buyers.

Indications of Interest were due by November 5, 2024.

Final bids are due by December 4, 2024.

The Company expects to consummate the sale before December 31, 2024.

The net proceeds from the proposed sale of the mortgage loans will be used for working capital and general corporate purposes.

All or a portion of such net proceeds may also be used to repay the December 2024 Notes.

Between October 1, 2024 and November 13, 2024, the Company repurchased 46,043 of its common shares through the Original Repurchase Plan.

The Company evaluated subsequent events from April 1, 2025 until the financial statements were available to be issued.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements