Sachem Capital Corp. 10-Q

Item 1. FINANCIAL STATEMENTS SACHEM CAPITAL CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share data) June 30, 2025 December 31, 2024 (unaudited) (audited) Assets Cash and cash equivalents $ 22,474 $ 18,066 Investment securities (at fair value) 1,039 1,517 Loans held for investment (net of deferred loan fees of $ 2,631 and $ 1,950 ) 382,108 375,041 Allowance for credit losses ( 17,645 ) ( 18,470 ) Loans held for investment, net 364,463 356,571 Loans held for sale (net of valuation allowance of $ 541 and $ 4,880 ) 8,830 10,970 Interest and fees receivable (net of allowance of $ 3,074 and $ 3,133 ) 4,289 3,768 Due from borrowers (net of allowance of $ 1,676 and $ 1,135 ) 6,493 5,150 Real estate owned (net of impairment of $ 0 and $ 492 ) 18,626 18,574 Investments in limited liability companies 48,710 53,942 Investments in developmental real estate, net 16,664 14,032 Property and equipment, net 3,126 3,222 Other assets 7,049 6,164 Total assets $ 501,763 $ 491,976 Liabilities and Shareholders’ Equity Liabilities: Notes payable (net of deferred financing costs of $ 2,741 and $ 3,713 ) $ 227,498 $ 226,526 Senior secured notes payable (net of deferred financing costs of $ 3,556 and $ 0 ) 46,444 — Repurchase agreements 14,442 33,708 Mortgage payable 960 1,002 Lines of credit 26,238 40,000 Accounts payable and accrued liabilities 3,486 4,377 Advances from borrowers 4,146 4,047 Below market lease intangible 642 665 Total liabilities 323,856 310,325 Commitments and Contingencies - Note 14 Shareholders’ equity: Preferred shares - $ 0.001 par value; 5,000,000 shares authorized; 2,903,000 shares designated as Series A Preferred Stock; 2,306,748 shares of Series A Preferred Stock issued and outstanding at June 30, 2025 and December 31, 2024 2 2 Common Shares - $ 0.001 par value; 200,000,000 shares authorized; 47,310,139 and 46,965,306 issued and outstanding at June 30, 2025 and December 31, 2024, respectively 47 47 Additional paid-in capital 257,384 256,956 Cumulative net earnings 38,309 35,518 Cumulative dividends paid ( 117,835 ) ( 110,872 ) Total shareholders’ equity 177,907 181,651 Total liabilities and shareholders’ equity $ 501,763 $ 491,976 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. 1 Table of Contents SACHEM CAPITAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (dollars in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Revenues Interest income from loans $ 7,482 $ 11,754 $ 15,370 $ 24,395 Fee income from loans 1,771 2,083 3,196 4,699 Income from limited liability company investments 978 1,217 3,030 2,413 Other investment income 12 70 17 386 Other income 532 22 604 57 Total revenues 10,775 15,146 22,217 31,950 Operating expenses Interest and amortization of deferred financing costs 6,139 6,973 12,233 14,442 Compensation and employee benefits 1,821 1,365 3,592 3,308 General and administrative expenses 1,304 1,258 2,659 2,496 Provision for credit losses related to loans held for investment 925 8,503 1,977 9,868 Change in valuation allowance related to loans held for sale ( 1,043 ) — ( 1,047 ) — Gain on sale of real estate owned and property and equipment, net ( 131 ) ( 275 ) ( 131 ) ( 264 ) Other expenses 694 439 839 943 Total operating expenses 9,709 18,263 20,122 30,793 Operating income (loss) 1,066 ( 3,117 ) 2,095 1,157 Other income, net Gain on equity securities 821 61 696 458 Total other income, net 821 61 696 458 Net income (loss) 1,887 ( 3,056 ) 2,791 1,615 Preferred stock dividends ( 1,118 ) ( 1,068 ) ( 2,235 ) ( 2,091 ) Net income (loss) attributable to common shareholders $ 769 $ ( 4,124 ) $ 556 $ ( 476 ) Basic and diluted earnings (loss) per Common Share $ 0.02 $ ( 0.09 ) $ 0.01 $ ( 0.01 ) Basic and diluted weighted average number of Common Shares outstanding 46,875,187 47,504,875 46,830,215 47,415,630 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. 2 Table of Contents SACHEM CAPITAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) (dollars in thousands, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Net income (loss) $ 1,887 $ ( 3,056 ) $ 2,791 $ 1,615 Other comprehensive income (loss): Reversal of losses from unrealized to realized — ( 65 ) — ( 65 ) Unrealized holding losses on available for sale (“AFS”) securities — ( 126 ) — ( 251 ) Comprehensive income (loss) $ 1,887 $ ( 3,247 ) $ 2,791 $ 1,299 Preferred stock dividend $ ( 1,118 ) $ ( 1,068 ) $ ( 2,235 ) $ ( 2,091 ) Total comprehensive income (loss) attributable to common shareholders $ 769 $ ( 4,315 ) $ 556 $ ( 792 ) 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. 3 Table of Contents SACHEM CAPITAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited) (dollars in thousands, except share data) FOR THE THREE MONTHS ENDED JUNE 30, 2025 Preferred Shares Common Shares Additional Paid in Capital Accumulated Other Comprehensive Income (Loss) Cumulative Net Earnings Cumulative Dividends Paid Totals Shares Amount Shares Amount Balance, April 1, 2025 2,306,748 $ 2 47,310,139 $ 47 $ 257,220 $ — $ 36,422 $ ( 114,352 ) $ 179,339 Stock-based compensation, less shares forfeited — — — — 164 — — — 164 Dividends paid on Series A Preferred Stock — — — — — — — ( 1,118 ) ( 1,118 ) Dividends paid on Common Shares — — — — — — — ( 2,365 ) ( 2,365 ) Net income — — — — — — 1,887 — 1,887 Balance, June 30, 2025 2,306,748 $ 2 47,310,139 $ 47 $ 257,384 $ — $ 38,309 $ ( 117,835 ) $ 177,907 FOR THE THREE MONTHS ENDED JUNE 30, 2024 Preferred Shares Common Shares Additional Paid in Capital Accumulated Other Comprehensive Income (Loss) Cumulative Net Earnings Cumulative Dividends Paid Totals Shares Amount Shares Amount Balance, April 1, 2024 2,108,957 $ 2 47,446,051 $ 47 $ 253,670 $ 191 $ 79,760 $ ( 96,227 ) $ 237,443 . Issuance of Series A Preferred Stock, net of expenses 97,171 — — — 2,061 — — — 2,061 Issuance of Common Shares, net of expenses — — — — — — — — — Stock-based compensation — — 101,000 1 197 — — — 198 Reversal of losses from unrealized to realized — — — — — ( 65 ) — — ( 65 ) Unrealized holding losses on AFS securities — — — — — ( 126 ) — — ( 126 ) Dividends paid on Series A Preferred Stock — — — — — — — ( 1,068 ) ( 1,068 ) Dividends Paid on Common Shares — — — — — — — ( 5,219 ) ( 5,219 ) Net loss — — — — — — ( 3,056 ) — ( 3,056 ) Balance, June 30, 2024 2,206,128 $ 2 47,547,051 $ 48 $ 255,928 $ — $ 76,704 $ ( 102,514 ) $ 230,168 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. 4 Table of Contents SACHEM CAPITAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (unaudited) (dollars in thousands, except share data) FOR THE SIX MONTHS ENDED JUNE 30, 2025 Preferred Shares Common Shares Additional Paid in Capital Accumulated Other Comprehensive Income (Loss) Cumulative Net Earnings Cumulative Dividends Paid Totals Shares Amount Shares Amount Balance, January 1, 2025 2,306,748 $ 2 46,965,306 $ 47 $ 256,956 $ — $ 35,518 $ ( 110,872 ) $ 181,651 Stock-based compensation, less shares forfeited — — 344,833 — 428 — — — 428 Dividends paid on Series A Preferred Stock — — — — — — — ( 2,235 ) ( 2,235 ) Dividends paid on Common Shares — — — — — — — ( 4,728 ) ( 4,728 ) Net income — — — — — — 2,791 — 2,791 Balance, June 30, 2025 2,306,748 $ 2 47,310,139 $ 47 $ 257,384 $ — $ 38,309 $ ( 117,835 ) $ 177,907 FOR THE SIX MONTHS ENDED JUNE 30, 2024 Preferred Shares Common Shares Additional Paid in Capital Accumulated Other Comprehensive Income (Loss) Cumulative Net Earnings Cumulative Dividends Paid Totals Shares Amount Shares Amount Balance, January 1, 2024 2,029,923 $ 2 46,765,483 $ 47 $ 249,826 $ 316 $ 75,089 $ ( 95,204 ) $ 230,076 Issuance of Series A Preferred Stock, net of expenses 176,205 — — — 3,616 — — — 3,616 Issuance of Common Shares, net of expenses — — 568,711 1 2,049 — — — 2,050 Stock-based compensation — — 212,857 — 437 — — — 437 Reversal of losses from unrealized to realized — — — — — ( 65 ) — — ( 65 ) Unrealized holding losses on AFS securities — — — — — ( 251 ) — — ( 251 ) Dividends paid on Series A Preferred Stock — — — — — — — ( 2,091 ) ( 2,091 ) Dividends Paid on Common Shares — — — — — — — ( 5,219 ) ( 5,219 ) Net income — — — — — — 1,615 — 1,615 Balance, June 30, 2024 2,206,128 $ 2 47,547,051 $ 48 $ 255,928 $ — $ 76,704 $ ( 102,514 ) $ 230,168 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. 5 Table of Contents SACHEM CAPITAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (dollars in thousands) Six Months Ended June 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 2,791 $ 1,615 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of deferred financing costs 1,101 1,275 Depreciation and amortization expense 234 189 Stock-based compensation 428 437 Provision for credit losses related to loans held for investment 1,977 9,868 Change in valuation allowance related to loans held for sale ( 1,047 ) — Impairment loss on real estate owned — 77 Gain on sale of real estate owned and property and equipment, net ( 131 ) ( 264 ) Gain on equity securities ( 696 ) ( 458 ) Change in deferred loan fees 681 200 Changes in operating assets and liabilities: Interest and fees receivable, net ( 462 ) 411 Other assets ( 1,010 ) 80 Due from borrowers, net ( 2,277 ) ( 624 ) Accounts payable and accrued liabilities ( 996 ) 478 Advances from borrowers 99 ( 2,105 ) Total adjustments and operating changes ( 2,099 ) 9,564 NET CASH PROVIDED BY OPERATING ACTIVITIES 692 11,179 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities — ( 7,767 ) Proceeds from the sale of investment securities 1,174 43,964 Purchase of interests in limited liability companies ( 5,731 ) ( 5,110 ) Proceeds from investments in limited liability companies 10,963 1,194 Proceeds from sale of real estate owned 1,559 1,403 Purchase of property and equipment ( 43 ) ( 26 ) Investments in developmental real estate ( 1,022 ) ( 1,424 ) Principal disbursements for loans ( 80,952 ) ( 84,328 ) Principal collections on loans 71,394 79,628 NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES ( 2,658 ) 27,534 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from lines of credit 36,100 — Repayments on lines of credit ( 49,862 ) ( 6,792 ) Proceeds from repurchase agreements 11,693 — Repayments of repurchase agreements ( 30,959 ) ( 3,468 ) Repayment of mortgage payable ( 42 ) ( 39 ) Repayment of notes payable — ( 23,647 ) Dividends paid on Common Shares ( 4,728 ) ( 10,363 ) Dividends paid on Series A Preferred Stock ( 2,235 ) ( 2,091 ) Proceeds from issuance of Senior Secured Notes 50,000 — Payments of deferred financing costs ( 3,593 ) — Proceeds from issuance of Common Shares, net of expenses — 2,050 Proceeds from issuance of Series A Preferred Stock, net of expenses — 3,616 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 6,374 ( 40,734 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,408 ( 2,021 ) CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD 18,066 12,598 CASH AND CASH EQUIVALENTS – END OF PERIOD $ 22,474 $ 10,577 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. 6 Table of Contents SACHEM CAPITAL CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (unaudited) (dollars in thousands) Six Months Ended June 30, 2025 2024 SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION Cash paid during the period for interest $ 11,005 $ 13,208 Real estate acquired in connection with foreclosure of certain mortgages $ 6,298 $ 1,627 Loans held for sale transferred to loans held for investment $ 6,479 $ — Developmental real estate acquired in settlement of loan held for investment $ 1,696 $ — Loans originated from sale of real estate owned $ 840 $ 987 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. 7 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 1. The Company Sachem Capital Corp. (the “Company”), a New York corporation, specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company operates its business as one segment. 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’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. 2. 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 and six months ended June 30, 2025, are 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 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 condensed consolidated 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 differ from those estimates. Significant estimates include the provisions for Current Expected Credit Losses ("CECL"), 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 Entities 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 the2025 Needham Credit Facility, the Company terminated and repaid in full the outstanding balance under its previous credit facility with Needham Bank. 8 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 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 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 condensed consolidated financial statements. As of June 30, 2025, SN Holdings had total assets of $ 78.9 million and total liabilities of $ 28.4 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 2025 Needham Credit Facility. On June 11, 2025, Sachem Capital Corporation Holdings, LLC ("Holdings"), an indirect, wholly-owned subsidiary of the Company, consummated a private placement of $ 100.0 million aggregate principal amount of Senior Secured Notes due June 11, 2030 (the "Secured Notes") to various institutional investors under a Note Purchase and Guaranty Agreement (the "Agreement"). See Note 11 - Secured Notes Payable. Holdings was formed for the sole purpose of acting as the issuer of the Secured Notes. 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 Company. The Company has determined that it is the primary beneficiary of Holdings because it has both (i) the power to direct the activities that most significantly impact Holdings’ economic performance and (ii) the obligation to absorb losses or the right to receive benefits that could be significant to Holdings, primarily through its role as the guarantor of the Secured Notes and through its ability to direct all operational and financing decisions. Accordingly, Holdings has been consolidated in the Company’s condensed consolidated financial statements. As of June 30, 2025, Holdings had total assets of $ 217.6 million and total liabilities of $ 49.2 million, consisting primarily of collateralized mortgage loans and indebtedness evidenced by the Secured Notes. The assets of Holdings can only be used to settle obligations of Holdings and are not available to the Company or its creditors. Reclassifications Certain amounts included in the Company’s June 30, 2024 condensed consolidated financial statements have been reclassified to conform to the June 30, 2025 presentation. These reclassifications had no effect on net income for the three and six months ended June 30, 2024. 3. Fair Value Measurement The following table illustrates assets and liabilities measured at fair value on a recurring basis: Fair Value Measurement (in thousands) June 30, 2025 December 31, 2024 Level 1 Investment securities $ 1,039 $ 1,517 Level 3 Loans held for sale, net 8,830 10,970 9 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 The following table illustrates assets and liabilities measured at fair value on a nonrecurring basis: Fair Value Measurement (in thousands) June 30, 2025 December 31, 2024 Level 3 Individually evaluated loans, net of allowance for credit losses $ 83,564 $ 80,757 Real estate owned, net 18,626 18,574 There were no nonrecurring fair value adjustments to the above assets for the six months ended June 30, 2025. Carrying amounts and fair values of financial instruments at June 30, 2025 and December 31, 2024: Carrying Amount Fair Value Measurement (in thousands) June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024 Level 1 Cash and cash equivalents $ 22,474 $ 18,066 $ 22,474 $ 18,066 Notes payable (listed) – fixed rate debt 230,239 230,239 195,598 194,810 Investment securities 1,039 1,517 1,039 1,517 Level 2 Lines of credit and repurchase agreements – variable rate debt 40,680 73,708 40,680 73,708 Level 3 Loans held for investment, net 364,463 356,571 364,463 356,571 Loans held for sale, net 8,830 10,970 8,830 10,970 Interest and fees receivable and due from borrowers 10,782 8,918 10,782 8,918 Investments in limited liability companies 48,710 53,942 48,710 53,942 Advances from borrowers 4,146 4,047 4,146 4,047 Mortgage payable 960 1,002 960 1,002 Loans held for investment, net/Loans held for sale, net/Real estate owned, net (Level 3): The Company utilizes third-party appraisals of collateral in determining the fair value of the underlying asset, with unobservable inputs of appraised value adjustments made by management for qualitative factors such as economic conditions and estimated liquidation expenses. The Company estimates liquidation as a selling cost percentage in connection with the asset, which typically ranges from 1-8%. 10 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 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 and six months ended June 30, 2025 and 2024: Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 (in thousands) (in thousands) OCI from AFS securities – debt securities: Unrealized gain on debt securities at beginning of period $ — $ 191 $ — $ 316 Reversal of losses from unrealized to realized — ( 65 ) — ( 65 ) Unrealized holding losses on AFS securities — ( 126 ) — ( 251 ) Change in OCI from AFS debt securities — ( 191 ) — ( 316 ) Balance at end of period $ — $ — $ — $ — As of June 30, 2025 and December 31, 2024, the Company held no debt securities. 4. 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 June 30, 2025 and December 31, 2024, the Company had 135 and 157 loans held for investment, respectively. As of June 30, 2025 and December 31, 2024, the Company had direct reserves on outstanding principal for loans held for investment of $ 11.9 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. Nevertheless, as of June 30, 2025, the Company had designated seven loans as held for sale. These seven loans had a gross outstanding principal balance of $ 9.4 million and an aggregate valuation allowance of $ 0.5 million based on the lower of cost or market value. As of December 31, 2024, the Company had designated eleven loans as held for sale. These eleven loans had a gross outstanding principal balance of $ 15.9 million and an aggregate valuation allowance of $ 4.9 million based on the lower of cost or market value. As of both June 30, 2025 and December 31, 2024, such loans were on non-accrual status and pending foreclosure. The below table represents the Company's loans held for sale as of June 30, 2025: Balance as of December 31, 2024 Transfers in Change in valuation allowance Transfers out, net Balance as of June 30, 2025 (in thousands) Loans held for sale, net $ 10,970 $ — $ 1,047 $ ( 3,187 ) $ 8,830 Total loans held for sale, net $ 10,970 $ — $ 1,047 $ ( 3,187 ) $ 8,830 11 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 Loan portfolio As of June 30, 2025 and December 31, 2024, loans held for investment on non-accrual status had an outstanding principal balance of $ 119.6 million and $ 87.0 million, respectively. The non-accrual loans are inclusive of loans pending foreclosure and loans held for sale. The below table summarizes the Company’s loan portfolio by the past due status: Loans held for investment (in thousands) Current 30-59 days past due 60-89 days past due Greater than 90 days Total As of June 30, 2025 $ 257,780 $ 6,065 $ 1,295 $ 119,599 $ 384,739 As of March 31, 2025 $ 220,538 $ 37,617 $ 2,114 $ 107,591 $ 367,860 As of December 31, 2024 $ 223,513 $ 49,460 $ 16,936 $ 87,082 $ 376,991 As of June 30, 2025, the Company’s mortgage loan portfolio includes loans with an outstanding principal balance amount up to $ 38.3 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 June 30, 2025 and December 31, 2024, the Company had one borrower representing 13.1 % and 14.0 % of the outstanding mortgage loan portfolio, or $ 50.4 million and $ 55.0 million, respectively. Presented below is the Company’s loans held for investment portfolio by geographical location as of June 30, 2025 and December 31, 2024: June 30, 2025 December 31, 2024 (in thousands) Carrying Value % of Portfolio Carrying Value % of Portfolio New England $ 173,756 45.2 % $ 179,421 47.6 % Mid-Atlantic 46,288 12.0 % 42,304 11.2 % South 164,695 42.8 % 151,165 40.1 % West — — % 4,101 1.1 % Total $ 384,739 100.0 % $ 376,991 100.0 % 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: June 30, 2025 Year Originated (1) FICO Score (2) (in thousands) Carrying Value 2025 2024 2023 2022 2021 Prior Loans held for investment: Under 500 $ 300 $ — $ 300 $ — $ — $ — $ — 501-550 2,860 — — — — 1,060 1,800 551-600 1,096 — 1,096 — — — — 601-650 26,474 2,336 7,066 1,163 1,795 7,447 6,667 651-700 58,286 1,783 3,609 6,861 12,799 31,891 1,343 701-750 152,735 18,443 6,696 38,858 15,625 72,138 975 751-800 134,228 24,943 23,847 39,735 24,841 20,862 — 801-850 8,760 2,534 — 1,541 4,685 — — Total $ 384,739 $ 50,039 $ 42,614 $ 88,158 $ 59,745 $ 133,398 $ 10,785 12 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 December 31, 2024 Year Originated (1) FICO Score (2) (in thousands) Carrying Value 2024 2023 2022 2021 2020 Prior Loans held for investment: Under 500 $ 140 $ 140 $ — $ — $ — $ — $ — 501-550 2,860 — — — 1,060 — 1,800 551-600 7,094 1,222 290 2,170 1,816 636 960 601-650 28,779 8,432 3,347 1,798 7,411 6,149 1,642 651-700 35,711 4,250 7,177 10,302 12,079 660 1,243 701-750 159,575 6,275 40,459 11,982 97,980 1,023 1,856 751-800 124,599 26,465 32,016 36,280 28,427 1,411 — 801-850 18,233 — 415 17,818 — — — Total $ 376,991 $ 46,784 $ 83,704 $ 80,350 $ 148,773 $ 9,879 $ 7,501 _______________________________________________________________ (1) Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2) 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. 13 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 Loan modifications made to borrowers experiencing financial difficulty The tables below present loan modifications during the periods indicated made to borrowers experiencing financial difficulty: (in thousands) Three Months Ended June 30, 2025 Carrying Value % of Total Carrying Value of Loans held for investment, net Financial Effect Principal modification, with no term extension $ 14,042 3.5 % Unpaid interest/taxes/charges added to principal balance Term extension $ 25,559 6.4 % A weighted average of 7.7 months were added to the life of the loans (in thousands) Three Months Ended June 30, 2024 Carrying Value % of Total Carrying Value of Loans held for investment, net Financial Effect Principal modification, with no term extension $ 3,408 0.7 % Unpaid interest/taxes/charges added to principal balance Term extension $ 61,008 12.2 % A weighted average of 12.0 months were added to the life of the loans (in thousands) Six Months Ended June 30, 2025 Carrying Value % of Total Carrying Value of Loans held for investment, net Financial Effect Principal modification, with no term extension $ 14,042 3.5 % Unpaid interest/taxes/charges added to principal balance Term extension $ 47,702 11.9 % A weighted average of 7.4 months were added to the life of the loans Six Months Ended June 30, 2024 Carrying Value % of Total Carrying Value of Loans held for investment, net Financial Effect Principal modification, with no term extension 21,373 4.3 % Unpaid interest/taxes/charges added to principal balance Term extension 104,452 20.9 % A weighted average of 10.5 months were added to the life of the loans As of June 30, 2025, the Company had commitments to lend additional amounts totaling approximately $ 7.7 million to borrowers experiencing financial difficulty. During the six months ended June 30, 2025, the Company modified the interest rate on five loans with an outstanding principal balance of $ 18.9 million. The change in the rate was due to taking the loan off default rate. 14 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 The table below presents the performance of loans that have been modified in the last 12 months to borrowers experiencing financial difficulty. Of the loans that were modified in the last 12 months to borrowers experiencing financial difficulty, none have defaulted during the period. As of June 30, 2025 (in thousands) Current 90-119 days past due 120+ days past due Total Principal modification, with no term extension $ 15,268 $ — $ — $ 15,268 Term extension 61,692 12,895 — 74,587 Deferred loan fees As of June 30, 2025 and December 31, 2024, the Company had $ 2.6 million and $ 2.0 million. respectively, of deferred loan fee revenue relating to loans held for investment. There were no such deferred fees for loans held for sale as of June 30, 2025 and December 31, 2024. Allowance for credit losses The below table represents the financial statement line items that are impacted by the allowance for credit losses for the three months ended June 30, 2025: Balance as of March 31, 2025 Provision for (recovery of) credit losses related to loans Reclassification of loans held for sale to loans held for investment Charge-offs Balance as of June 30, 2025 (in thousands) Loans held for investment $ 18,122 $ ( 3,256 ) $ 3,292 $ ( 513 ) $ 17,645 Interest and fees receivable 2,981 93 — — 3,074 Due from borrower 1,956 ( 55 ) — ( 225 ) 1,676 Unfunded commitments 864 165 — — 1,029 Real estate owned — 3,978 — ( 3,978 ) — Total allowance for credit losses $ 23,923 $ 925 $ 3,292 $ ( 4,716 ) $ 23,424 The below table represents the financial statement line items that are impacted by the allowance for credit losses for the six months ended June 30, 2025: Balance as of December 31, 2024 Provision for (recovery of) credit losses related to loans Reclassification of loans held for sale to loans held for investment Charge-offs Balance as of June 30, 2025 (in thousands) Loans held for investment $ 18,470 $ ( 2,983 ) $ 3,292 $ ( 1,134 ) $ 17,645 Interest and fees receivable 3,133 ( 59 ) — — 3,074 Due from borrower 1,135 936 — ( 395 ) 1,676 Unfunded commitments 924 105 — — 1,029 Real estate owned — 3,978 — ( 3,978 ) — Total allowance for credit losses $ 23,662 $ 1,977 $ 3,292 $ ( 5,507 ) $ 23,424 15 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 The following table summarizes the activity in the allowance for credit losses by geographic location with respect to loans held for investment for the three months ended June 30, 2025: Allowance for credit losses as of March 31, 2025 Provision for (recovery of) credit losses related to loans Reclassification of loans held for sale to loans held for investment Charge-offs Allowance for credit losses as of June 30, 2025 (in thousands) New England $ 12,878 $ ( 5,704 ) $ 3,292 $ — $ 10,466 Mid-Atlantic 1,864 2,658 — ( 466 ) 4,056 South 1,460 ( 123 ) — ( 47 ) 1,290 West 1,920 ( 87 ) — — 1,833 Total $ 18,122 $ ( 3,256 ) $ 3,292 $ ( 513 ) $ 17,645 The following table summarizes the activity in the allowance for credit losses by geographic location with respect to loans held for investment for the six months ended June 30, 2025: Allowance for credit losses as of December 31, 2024 Provision for (recovery of) credit losses related to loans Reclassification of loans held for sale to loans held for investment Charge-offs Allowance for credit losses as of June 30, 2025 (in thousands) New England $ 12,844 $ ( 5,670 ) $ 3,292 $ — $ 10,466 Mid-Atlantic 1,857 2,665 — ( 466 ) 4,056 South 1,802 156 — ( 668 ) 1,290 West 1,967 ( 134 ) — — 1,833 Total $ 18,470 $ ( 2,983 ) $ 3,292 $ ( 1,134 ) $ 17,645 The following table presents charge-offs on loan principal by fiscal year of origination for the three months ended June 30, 2025: 2025 2024 2023 2022 2021 Prior Total (in thousands) Current period charge-offs $ — $ — $ — $ — $ 513 $ — $ 513 Total $ — $ — $ — $ — $ 513 $ — $ 513 The following table presents charge-offs on loan principal by fiscal year of origination for the six months ended June 30, 2025: 2025 2024 2023 2022 2021 Prior Total (in thousands) Current period charge-offs $ — $ 134 $ — $ 487 $ 513 $ — $ 1,134 Total $ — $ 134 $ — $ 487 $ 513 $ — $ 1,134 16 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 5. Investment in Developmental Real Estate, net As of June 30, 2025 and December 31, 2024, investment in developmental real estate, net consisted of the following: June 30, 2025 Cost Accumulated Depreciation Investment in Developmental Real Estate, Net (in thousands) Land $ 6,476 $ — $ 6,476 Building 4,936 ( 185 ) 4,751 Site improvements 359 ( 42 ) 317 Tenant improvements 1,184 ( 40 ) 1,144 Construction in progress 3,898 — 3,898 Lease intangibles 81 ( 3 ) 78 Total $ 16,934 $ ( 270 ) $ 16,664 December 31, 2024 Cost Accumulated Depreciation Investment in Developmental Real Estate, Net (in thousands) Land $ 4,557 $ — $ 4,557 Building 4,936 ( 154 ) 4,782 Site improvements 359 ( 30 ) 329 Tenant improvements 1,182 — 1,182 Construction in progress 3,141 — 3,141 Lease intangibles 41 — 41 Total $ 14,216 $ ( 184 ) $ 14,032 For the six months ended June 30, 2025 and 2024, depreciation and amortization expense related to developmental real estate 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 began amortizing upon commencement of the lease that occurred in February 2025. Amortization related to tenant improvements and intangibles was $ 43,000 for the six months ended June 30, 2025 compared to no such amortization for the six months ended June 30, 2024. 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 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 lease commenced February 2025 with a cash rent abatement period of 425 days. 17 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 As of June 30, 2025, future minimum rents under non-cancelable operating leases were as follows: Years Ending December 31, Amount (in thousands) 2025 (remaining six months) $ — 2026 936 2027 1,267 2028 1,292 2029 1,318 Thereafter 8,852 Total $ 13,665 The Company acquired one property in investment in developmental real estate that was subject to an in place lease. In the purchase price allocation, the Company recorded an acquired below market lease intangible of $ 0.7 million. The estimated annual amortization of the below market lease intangible is $ 0.1 million per year. 6. Real Estate Owned (“REO”) 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 June 30, 2025 and December 31, 2024, real estate owned, net totaled $ 18.6 million. During the six months ended June 30, 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 June 30, 2025: June 30, 2025 (in thousands) Real estate owned at December 31, 2024 $ 18,574 Principal basis transferred to real estate owned 6,298 Charge-off’s on principal transferred ( 3,978 ) Proceeds from sale of real estate owned ( 1,559 ) Loans origination from sale of real estate owned ( 840 ) Gain on sale of real estate owned 131 Balance at end of period $ 18,626 As of June 30, 2025, REO included $ 0.8 million of real estate held for rental and $ 17.8 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 six months ended June 30, 2025, the Company sold six properties held for sale and recognized a gain on sale of $ 0.1 million. During the six months ended June 30, 2024, the Company sold eleven property held for sale and recognized a gain on sale of $ 0.3 million. Such sales are included in gain on sale of real estate owned and property and equipment, net on the Company’s Condensed Consolidated Statements of Operations. 18 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 Properties Held for Rental As of June 30, 2025 and December 31, 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 June 30, 2025, future minimum rents under this lease were as follows: Years Ending December 31, Amount (in thousands) 2025 (remaining six months) $ 27 2026 31 Total $ 58 7. Property and Equipment, net The following tables represent the Company’s property and equipment, net as of June 30, 2025 and December 31, 2024: June 30, 2025 Cost Accumulated Depreciation Property and Equipment, Net (in thousands) Building $ 2,594 $ ( 175 ) $ 2,419 Land 255 — 255 Furniture and fixtures 308 ( 151 ) 157 Computer hardware and software 300 ( 260 ) 40 Vehicles 435 ( 180 ) 255 Total property and equipment, net $ 3,892 $ ( 766 ) $ 3,126 December 31, 2024 Cost Accumulated Depreciation Property and Equipment, Net (in thousands) Building $ 2,557 $ ( 110 ) $ 2,447 Land 255 — 255 Furniture and fixtures 308 ( 117 ) 191 Computer hardware and software 295 ( 246 ) 49 Vehicles 435 ( 155 ) 280 Total property and equipment, net $ 3,850 $ ( 628 ) $ 3,222 19 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 8. Other Assets As of June 30, 2025 and December 31, 2024, other assets consisted of the following: June 30, 2025 December 31, 2024 (in thousands) Prepaid expenses $ 524 $ 575 Other receivables 1,935 1,793 Other assets 412 190 Notes receivable 2,130 2,130 Deferred financing costs, net 145 — Straight line rent receivable 459 — Deferred leasing costs, net 374 387 Acquired in-place lease intangible, net 549 568 Goodwill 391 391 Intangible asset – trade name 130 130 Total $ 7,049 $ 6,164 The estimated annual amortization of acquired in-place lease intangible is $ 57,000 per year. The estimated annual amortization of deferred leasing costs is $ 39,000 per year. 9. Lines of Credit, Mortgage Payable and Churchill Facility Line of Credit – Needham Bank 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 June 30, 2025 and December 31, 2024, respectively. On March 20, 2025, the Company entered into a new Credit Agreement with Needham, replacing the prior Needham Credit Facility, which was fully repaid and terminated on the same date. The 2025 Needham Credit 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, a wholly owned subsidiary of the Company, serves as the borrower, and the Company serves as guarantor of all obligations. The 2025 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 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 2025 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 June 30, 2025 and December 31, 2024, the total outstanding principal balances on the respective Needham Credit Facilities were $ 26.2 million and $ 40.0 million, respectively, with interest rates of 7.25 % and 7.25 %, respectively. Loans under the 2025 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 %). Interest is paid monthly. All outstanding revolving loans and accrued 20 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 but unpaid interest are due and payable on the maturity date. As of June 30, 2025, SN Holdings had $ 78.9 million of assets pledged to Needham. The Company was in compliance with all facility covenants as of June 30, 2025. Mortgage Payable– New Haven Bank The Company has financed its headquarters property located at 568 East Main Street, Branford, Connecticut with an adjustable-rate first lien non-recourse mortgage loan from New Haven Bank in the original principal amount of $ 1.7 million (the “NHB Mortgage”). The NHB Mortgage 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 NHB Mortgage are amortized based on a 20 -year amortization schedule. Over the next five years, the Company is scheduled to make principal payments of approximately $ 50,000 to $ 64,000 annually. The unpaid principal amount of the loan and all accrued and unpaid interest are due and payable in full on March 1, 2038. As of June 30, 2025 and December 31, 2024, the total outstanding principal balance on the NHB Mortgage was $ 1.0 million and $ 1.0 million, respectively. Churchill MRA Funding I LLC Repurchase Financing Facility On July 21, 2021, the Company consummated a $ 200 million master repurchase financing facility (“Churchill Facility”) with Churchill MRA Funding I LLC (“Churchill”), a subsidiary of Churchill Real Estate, a vertically integrated real estate finance company based in New York, New York. The Company uses the proceeds from the Churchill Facility to finance the continued expansion of its lending business and for general corporate purposes. Under the terms of the Churchill Facility, the Company has the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans. In addition, the Company has the right and, in some instances the obligation, to repurchase those loans from Churchill. The amount that Churchill will pay for each mortgage loan it purchases will vary based on the attributes of the loan and various other factors. The repurchase price is calculated by applying an interest factor, as defined, to the purchase price of the mortgage loan. The Company has also pledged the mortgage loans sold to Churchill to secure its repurchase obligation. 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 June 30, 2025 and December 31, 2024, the effective interest rate charged under the facility was 8.32 % 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. Under one such covenant, the Company (A) is prohibited from (i) paying any dividends or making distributions in excess of 90 % of its taxable income, (ii) incurring any indebtedness or (iii) purchasing any of its capital stock, unless, it has an asset coverage ratio of at least 150 %; 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 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 following table summarizes the outstanding balances under the Churchill Facility: June 30, 2025 December 31, 2024 Total Outstanding Rate Total Outstanding Rate (in thousands) (in thousands) Repurchase Agreement $ 14,442 8.32 % $ 33,708 8.69 % Total $ 14,442 $ 33,708 21 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 The following table summarizes loans held for investment pledged as collateral under the Churchill Facility: June 30, 2025 December 31, 2024 Total Carrying Value Loans Pledged Number of Loans Total Carrying Value Loans Pledged Number of Loans (in thousands) (in thousands) Loans held for investment sold under the repurchase agreement $ 34,144 10 $ 66,365 17 Total $ 34,144 $ 66,365 The following table summarizes the contractual maturities for loans held for investment sold under the Churchill Facility agreement: June 30, 2025 December 31, 2024 (in thousands) Maturing within one year $ 27,174 $ 56,050 After one but within two years 6,970 10,315 Total $ 34,144 $ 66,365 The NHB Mortgage and the Churchill Facility contain cross-default provisions. 10. Unsecured Notes Payable At June 30, 2025, the Company h ad an aggregate of $ 230.2 million of unsecured, unsubordinated notes payable outstanding, net of deferred financing costs (collectively, the “Notes”). At June 30, 2025, the Company had five series of Notes outstanding: (i) Notes having an aggregate principal amount of $ 56.3 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 $ 51.7 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”); and (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. Interest on the Notes is payable quarterly on each March 30, June 30, September 30 and December 30 that they are outstanding. So long as the Notes are outstanding, the Company is prohibited from making distributions in excess of 90 % of its taxable income, incurring any additional indebtedness or purchasing any shares of its capital stock unless it has an “Asset Coverage Ratio” of at least 150 % after giving effect to the payment of such dividend, the incurrence of such indebtedness or the application of the net proceeds, as the case may be. The Company may redeem the Notes, in whole or in part, without premium or penalty, at any time after their second anniversary of issuance upon at least 30 days prior written notice to the holders of the Notes. The redemption price will be 22 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 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. Currently, all the Notes are callable at any time. The following are the future principal payments on the notes payable as of June 30, 2025: Years ending December 31, Amount (in thousands) 2025 (remaining six months) $ 56,364 2026 51,750 2027 122,125 Total principal payments $ 230,239 Deferred financing costs ( 2,741 ) Total notes payable, net of deferred financing costs $ 227,498 The estimated amortization of the deferred financing costs as of June 30, 2025 is as follows: Years ending December 31, Amount (in thousands) 2025 (remaining six months) $ 837 2026 1,410 2027 494 Total deferred costs $ 2,741 11. Secured Notes Payable On June 11, 2025, Holdings, an indirect, wholly-owned subsidiary of the Company, consummated a private placement of $ 100.0 million aggregate principal amount of Senior Secured Notes due June 11, 2030 (the "Senior Secured Notes") to various institutional investors under a Note Purchase and Guaranty Agreement (the "Agreement"). An initial draw of $ 50.0 million was made at closing, and the remaining $ 50.0 million may be drawn at any time on or prior to May 15, 2026. The Senior Secured Notes bear interest at a fixed rate of 9.875 % per annum, with interest only payable quarterly on the 1st day of March, June, September and December, and include a commitment fee of 1.0 % on the undrawn portion of the Senior Secured Notes. The Company paid an approximately $ 1.5 million original issue discount on the $ 100.0 million aggregate principal amount which is part of the $ 3.6 million of deferred financing costs recorded related to the Senior Secured Notes. The deferred financing costs will be amortized over the five year term of the Senior Secured Notes at $ 0.7 million per year. The Senior Secured Notes allow optional prepayment subject to a declining make-whole amount during the first three years , a declining prepayment premium in the fourth year, and then no make-whole payment or prepayment premium after the fourth year through maturity. Upon a change of control, holders of the Senior Secured Notes have the right to prepayment, if accepted, at 101 % of the outstanding principal. The Agreement contains affirmative and negative covenants customary for similar secured debt instruments, including: •Minimum asset coverage ratio, •Leverage and liquidity requirements, •Restrictions on additional indebtedness, asset sales, and distributions under certain conditions, and •Maintenance of REIT status by the Company. The Agreement includes customary events for similar secured debt instruments. Payment of the amounts due on the Senior Secured Notes is fully and unconditionally guaranteed by the Company and Sachem Capital Corporation Intermediate, LLC, a wholly-owned subsidiary of the Company. 23 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 12. Accounts Payable and Accrued Liabilities As of June 30, 2025 and December 31, 2024, accounts payable and accrued liabilities include the following: June 30, 2025 December 31, 2024 (in thousands) Accounts payable and accrued expenses $ 1,832 $ 2,928 Allowance for credit losses on unfunded commitments 1,029 924 Accrued interest 625 525 Total $ 3,486 $ 4,377 13. Fee Income from Loans For the three and six months ended June 30, 2025 and 2024, fee income from loans consisted of the following: Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 (in thousands) (in thousands) Origination and modification fees $ 761 $ 1,194 $ 1541 $ 2,656 Extension fees 184 271 462 385 Late and other fees 147 226 226 509 Processing fees 30 36 51 71 Construction servicing fees 104 70 241 249 Legal fees 71 75 134 157 Other fees 474 211 541 672 Total $ 1,771 $ 2,083 $ 3,196 $ 4,699 14. Commitments and Contingencies Unfunded Commitments At June 30, 2025, the Company had future funding obligations on loans held for investment totaling $ 54.6 million and obligations relating to investments in limited liability companies totaling $ 2.4 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 accounting rules relating to allowances for credit losses. (See Note 4 – Loans and Allowance for Credit Losses for further details.) Litigation 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 24 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 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. Other 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 June 30, 2025, there were two such properties. The unpaid principal balance of the loans secured by the properties that are subject to these proceedings was $ 1.9 million. 15. Related Party Transactions In the ordinary course of business, the Company may originate, fund, manage and service loans to shareholders. The underwriting process on these loans adheres to prevailing Company policy. 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 June 30, 2025, and December 31, 2024, loans to known shareholders totaled $ 19.2 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 these amounts, $ 18.9 million and $ 17.0 million, respectively, were loaned to 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. Interest income earned on all related party loans for the three and six months ended June 30, 2025 totaled $ 0.3 million and $ 0.8 million, respectively. Interest income earned on all related party loans for the three and six months ended June 30, 2024 totaled $ 0.5 million and $ 1.1 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 and six months ended June 30, 2025, she received compensation of $ 60,587 and $ 103,857 , respectively. For the three and six months ended June 30, 2024, she received compensation of $ 37,500 and $ 74,792 , respectively. 16. Stock-Based Compensation and Employee Benefits Stock-Based Compensation On October 27, 2016, the Company adopted the 2016 Equity Compensation Plan (the “Plan”), the purpose of which is to align the interests of the Company’s officers, other employees, advisors and consultants or any subsidiary, if any, with those of the Company’s shareholders and to afford an incentive to such officers, employees, consultants and advisors to continue as such, to increase their efforts on the Company’s behalf and to promote the success of the Company’s business. The Plan is administered by the Company's Compensation Committee (the "Compensation Committee"). The maximum number of Common Shares reserved for the grant of awards under the Plan was 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 June 30, 2025 was 435,054 . 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. On July 9, 2025, the Company adopted the 2025 Omnibus Incentive Plan (the "2025 Plan"), which replaced the Plan. The purpose of the 2025 Plan is consistent with that of the Plan and the maximum number of Common Shares reserved for grant of awards under the 2025 Plan is 2,936,762 . No additional awards will be made under the Plan. During the six months ended June 30, 2025 and 2024, the Company granted an aggregate of 767,668 and 111,857 , respectively, restricted Common Shares under the Plan. Of the 767,668 shares granted during the six months ended June 30, 2025, a grant of 420,168 shares was rescinded immediately after the grant as discussed further below. On March 10, 2025, the 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- 25 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 time bonus grant of 20,000 restricted Common Shares to each of the Company’s directors other than Mr. Villano. Each of the grantees, 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 . One director elected the cash option. Subsequent to the Compensation Committee's action on March 10, 2025, authorizing the issuance of 420,168 shares of restricted stock to John L. Villano under the Plan, the Company realized that the grant exceeded the 100,000 share limit on grants to any single individual in any one year set forth in the Plan by 320,168 shares. In addition, upon further investigation, the Company determined that restricted stock grants made to Mr. Villano with respect to calendar years 2023 and 2024, exceeded the Plan's 100,000 share limit by 30,890 and 11,857 shares, respectively. Thus, in the aggregate, 362,915 restricted shares were issued in excess of Plan limitations. All such shares were unvested and subject to restriction. In an immediate full and in excess of necessary remediation of this matter, on March 24, 2025, the Compensation Committee rescinded the March 10, 2025 award to Mr. Villano ab initio. No other over issuances have been identified and no applicable adjustment have been identified. Stock-based compensation for the three and six months ended June 30, 2025 was $ 0.2 million and $ 0.4 million, respectively. Stock-based compensation for the three and six months ended June 30, 2024 was $ 0.2 million and $ 0.4 million, respectively. As of June 30, 2025, there was unrecognized stock-based compensation expense of $ 0.9 million. Employee Benefits On April 16, 2018, the Company’s Board of Directors approved the adoption of the Sachem Capital Corp. 401(k) Profit Sharing Plan (the “401(k) Plan”). All employees, who meet the participation criteria, are eligible to participate in the 401(k) Plan. 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 and six months ended June 30, 2025, the 401(k) Plan expense was $ 23,655 and $ 60,147 , respectively, and for the three and six months ended June 30, 2024, the 401(k) Plan expense was $ 27,252 and $ 75,462 , respectively, which is included within compensation and employee benefits in the accompanying Condensed Consolidated Statements of Operations. 17. Equity 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 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. In February 2025, the effectiveness of the S-3 Registration Statement expired and, as a result, the ATM Offering terminated. During the six months ended June 30, 2025, the Company did not sell any shares under the ATM Offering. 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. 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. 26 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 18. Earnings (Losses) Per Share Basic and diluted earnings (lo sses) 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 and six months ended June 30, 2025, the Company had basic and diluted weighted average Common Shares outstanding of 46,875,187 and 46,830,215 , respectively, resulting in basic and diluted earnings per share of $ 0.02 and $ 0.01 , respectively. For the three and six months ended June 30, 2024, the Company had basic and diluted weighted average Common Shares outstanding of 47,504,875 and 47,415,630 , respectively, resulting in basic and diluted loss per share of $ 0.09 and $ 0.01 , respectively. 19. Limited Liability Company (“LLC”) Investments The following table details the carrying value of each investment reflected on our Condensed Consolidated Balance Sheets as of June 30, 2025: June 30, 2025 December 31, 2024 Investment Carrying Value Ownership Percentage Carrying Value Ownership Percentage (in thousands) (in thousands) Shem Creek Capital Fund V LLC $ 1,112 7.6 % $ 1,143 7.6 % Shem Creek Capital Fund VI LLC 3,698 9.9 % 4,290 9.9 % Shem Creek Capital Fund VII LLC 2,900 16.2 % 2,580 16.2 % Shem Creek Sachem V LLC 2,512 49.0 % 2,569 49.0 % Shem Creek Sachem VI LLC 19,631 45.1 % 24,756 45.9 % Shem Creek Sachem 100 LLC 11,357 100.0 % 13,604 100.0 % Shem Creek Capital LLC 5,000 20.0 % 2,500 20.0 % Total Shem LLC Investments $ 46,210 $ 51,442 Cordo CLT Investors LLC $ 2,500 7.2 % $ 2,500 7.2 % Total investments in LLC’s $ 48,710 $ 53,942 Shem Creek (“Shem”) For the three and six months ended June 30, 2025, the Shem LLC investments generated $ 1.0 million and $ 3.0 million, respectively, of income for the Company. For the three and six months ended June 30, 2024, the Shem LLC investments generated $ 1.2 million and $ 2.4 million, respectively, of income for the Company. At June 30, 2025, the Company had unfunded commitments totaling $ 2.4 million to the Shem LLC entities. Cordo CLT Investors LLC In September 2024, the Company, through its wholly owned subsidiary Urbane Capital, LLC, acquired a 21.6 % interest in Cordo CLT Investors LLC for a one time contribution of $ 2.5 million. As of June 30, 2025 and December 31, 2024, the Company held 7.2 % 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 construction to be completed by the end of 2026, with monetization of the Company's investment in the first half of 2028 upon rent stabilization of the project. 27 Table of Contents SACHEM CAPITAL CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 20. Income Taxes 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 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. For the three and six months ended June 30, 2025, the Company’s TRSs recognized provisions for federal and state income tax of $ 0 and $ 0 , respectively, and for the three and six months ended June 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 Condensed Consolidated Statements of Operations. 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. 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 June 30, 2025 and December 31, 2024. 21. Subsequent Events The Company evaluated subsequent events from July 1, 2025 until the condensed consolidated financial statements were available to be issued. Based on the evaluation, no adjustments were required in the accompanying condensed consolidated financial statements. 28 Table of Contents