What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-05 · 142 added, 89 removed, 172 unchanged (57% of the section changed)

34 unchanged sentences

The change in the balances during the reporting period are recorded in our Condensed Consolidated Statements of Operations under the provision for credit losses.

Loans held for sale

Loans are classified as held for sale if there is an intent to sell in the near-term.

These loans are recorded at the lower of amortized cost or fair value.

If the fair value of a loan is determined to be less than its amortized cost, a non-recurring fair value adjustment will be recorded through a valuation allowance.

When a loan is transferred to the held for sale category, any previously recorded allowance for credit losses is reversed in the provision for credit losses related to loans and the loan is recorded at its amortized cost basis.

If the amortized cost basis exceeds the loan’s fair value at the date of transfer, a valuation allowance equal to the difference between amortized cost basis and fair value is recorded.

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 or recoveries are included in the Condensed Consolidated Statements of Operations.

Our Loan Portfolio

The following table highlights certain information regarding our real estate lending activities for the three and six months ended June 30, 2025:

Three Months Ended June 30, 2025 Six Months Ended June 30, 2025

The following table presents certain information regarding our real estate lending activities for the three and nine months ended September 30, 2025:

Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025

(in thousands, except number

3 unchanged sentences

Number of loans transferred to real estate owned 6 10

As of June 30, 2025 As of December 31, 2024

As of September 30, 2025 As of December 31, 2024

(in thousands, except number

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(2) Does not give effect to extensions.

At June 30, 2025, our outstanding mortgage loan portfolio included loans with outstanding principal balance amount up to $38.3 million.

The table below gives a breakdown of our loans held for investment by loan size as of June 30, 2025:

At September 30, 2025, our outstanding mortgage loan portfolio included loans with outstanding principal balance amount up to $38.3 million.

The table below presents our loans held for investment by loan size as of September 30, 2025:

Amount Number of

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Total 119 100.0 % $ 375,220 100.0 %

As of June 30, 2025, the primary markets in which we were exposed were Connecticut, Florida, Massachusetts and New York.

The table below gives a breakdown of our loans held for investment by state as of June 30, 2025:

As of September 30, 2025, the primary markets in which we were exposed were Connecticut, Florida, Massachusetts and New York.

The following table presents our loans held for investment by state as of September 30, 2025:

State Number of

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Maine 2 1.7 % 883 0.2 %

Maryland 4 3.0 % 3,231 0.8 %

Massachusetts 10 8.4 % 60,330 16.1 %

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Total 119 100.0 % $ 375,220 100.0 %

The following table details our loans held for investment as of June 30, 2025 by year of origination:

The following table presents our loans held for investment as of September 30, 2025 by year of origination:

Year of Origination Number of

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Total 119 100.0 % 375,220 100.0 %

The following tables set forth information regarding the types of properties securing loans held for investment as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024

The following table presents additional information regarding the types of properties securing loans held for investment as of September 30, 2025 and December 31, 2024:

September 30, 2025 December 31, 2024

(in thousands)

Aggregate Gross Principal

Amount Percentage Aggregate Gross Principal

Amount Percentage

Aggregate Gross Principal Amount Percentage Aggregate Gross Principal Amount Percentage

Residential $ 202,220 53.9 % $ 211,939 56.2 %

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A loan is considered non-performing once it has been delinquent on its monthly payments more than 90 days.

The following table presents the allowance for credit losses against unpaid principal balance of loans held for investment as of June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024

The following table presents the allowance for credit losses against unpaid principal balance of loans held for investment as of September 30, 2025 and December 31, 2024:

September 30, 2025 December 31, 2024

(in thousands)

Aggregate Gross

Principal Amount Allowance Percentage of

Principal Aggregate Gross

Principal Amount Allowance Percentage of

Aggregate Gross Principal Amount Allowance Percentage of

Principal Aggregate Gross Principal Amount Allowance Percentage of

Performing – General reserve $ 271,154 $ (5,205) 1.9 % $ 289,910 $ (5,051) 1.7 %

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Real Estate Owned

As of June 30, 2025, we owned nineteen properties, each of which previously served as collateral for first mortgage loans.

One and four properties were acquired during the three and six months ended June 30, 2025, respectively, in connection with foreclosure actions.

Three and four properties were sold during the three and six months ended June 30, 2025, respectively.

The following table details the carrying value of each of our real estate owned properties reflected on our Condensed Consolidated Balance Sheets as o f June 30, 2025:

As of September 30, 2025, we owned 19 properties, each of which previously served as collateral for first mortgage loans.

Six and ten properties were acquired during the three and nine months ended September 30, 2025, respectively, in connection with foreclosure actions.

Four and ten properties were sold during the three and nine months ended September 30, 2025, respectively.

Two properties were transferred from real estate owned to investment in developmental real estate during the three and nine months ended September 30, 2025.

The following table presents the carrying value of each of our real estate owned properties reflected on our Condensed Consolidated Balance Sheets as o f September 30, 2025:

Property Type Location Month of

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Land Stamford, CT May 2024 115

Land Cape Coral, FL October 2024 900

Land Cape Coral, FL October 2024 350

Residential - Multi Family Flagler Beach, FL October 2024 3,382

Residential - Single Family Gainsville, FL November 2024 250

Mixed Use New London, CT November 2024 1,750

Commerical - Office Windsor, CT December 2024 1,600

Commerical - Office Windsor, CT December 2024 2,250

Land New London, CT November 2024 2,500

Commercial - Office Windsor, CT December 2024 1,600

Commercial - Office Windsor, CT December 2024 2,250

Land Marathon, FL January 2025 410

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Residential - Single Family Old Lyme, CT May 2025 315

Commercial - Office Trumbull, CT July 2025 $ 3,550

Commercial - Office Baltimore, MD July 2025 $ 799

Mixed Use Cumberland Center, ME July 2025 $ 300

Commercial - Office Wilton, CT September 2025 $ 1,338

Commercial - Office Wilton, CT September 2025 $ 334

Total $ 18,912

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Results of Operations

Three months ended June 30, 2025 compared to three months ended June 30, 2024

Total revenue

Total revenue for the three months ended June 30, 2025 was $10.8 million compared to $15.1 million for the three months ended June 30, 2024, a decrease of $4.3 million, or 28.9%.

Three months ended September 30, 2025 compared to three months ended September 30, 2024

Three Months Ended September 30,

2025 2024 $ Change % Change % of 2025 Total Revenue % of 2024 Total Revenue

Interest income from loans 8,326 $ 11,420 $ (3,094) (27.1) % 69.4 % 77.2 %

Fee income from loans 1,964 1,843 121 6.6 % 16.4 % 12.5 %

Income from limited liability company investments 1,098 1,495 (397) (26.6) % 9.2 % 10.1 %

Other investment income 85 3 82 2733.3 % 0.7 % — %

Other income 527 24 503 2095.8 % 4.4 % 0.2 %

Total revenues 12,000 14,785 (2,785) (18.8) % 100.0 % 100.0 %

Operating expenses

Interest and amortization of deferred financing costs 6,565 6,836 (271) (4.0) % 54.7 % 46.2 %

Compensation and employee benefits 2,334 1,745 589 33.8 % 19.5 % 11.8 %

General and administrative expenses 1,679 2,301 (622) (27.0) % 14.0 % 15.6 %

Provision for credit losses related to loans held for investment 812 8,096 (7,284) (90.0) % 6.8 % 54.8 %

Change in valuation allowance related to loans held for sale 33 — 33 100.0 % 0.3 % — %

Impairment loss on real estate owned 185 320 (135) (42.2) % 1.5 % 2.2 %

Loss (gain) on sale of real estate owned and property and equipment, net 312 (30) 342 (1140.0) % 2.6 % (0.2) %

Other expenses 447 339 108 31.9 % 3.7 % 2.3 %

Total operating expenses 12,367 19,607 (7,240) (36.9) % 103.1 % 132.6 %

Operating (loss) income (367) (4,822) 4,455 92.4 % (3.1) % (32.6) %

Other income, net

Gain (loss) on equity securities 1,364 (229) 1,593 695.6 % 11.4 % (1.5) %

Total other income, net 1,364 (229) 1,593 695.6 % 11.4 % (1.5) %

Net income (loss) 997 (5,051) 6,048 119.7 % 8.3 % (34.2) %

Preferred stock dividends (1,117) (1,095) (22) 2.0 % (9.3) % (7.4) %

Net (loss) income attributable to common shareholders $ (120) $ (6,146) $ 6,026 98.0 % (1.0) % (41.6) %

Basic and diluted (loss) earnings per common share $ 0.00 $ (0.13) $ 0.13 98.0 %

Total revenues

The change in revenue was primarily due to the cumulative effect of materially lower net new origination over the last twelve months, resulting in a reduction in the unpaid principal balance of loans held for investment, in addition to a currently elevated amount of nonperforming loans and real estate owned.

As of June 30, 2025, net loans held for investment totaled $364.5 million, compared to $485.7 million as of June 30, 2024, representing a decline of $121.2 million in the net principal balance.

On the other hand, other income increased by $0.5 million.

This was driven by the recognition of rental income from one project in 2025, which contributed $0.5 million during the quarter.

No such rental income was recorded in the prior year.

Operating costs and expenses

Total operating expenses for three months ended June 30, 2025 were $9.7 million compared to $18.3 million for the three months ended June 30, 2024, a decrease of $8.6 million or 46.8%.

The primary contributor to this decrease was the reduction in the provision for credit losses related to loans held for investment, which declined by $7.6 million or 89.1%.

This change was driven by a decrease in direct allowances related to foreclosures and non-performing loans.

Additionally, the change was due to reductions in interest and amortization expense of $0.8 million and change in valuation allowance related to loans held for sale of $1.1 million.

Such reductions were partially offset by an increase in compensation and employee benefits of $0.5 million and other expenses totaling $0.3 million.

Net income (loss) attributable to common shareholders and net income (loss) attributable to common shareholders per share

Net income attributable to common shareholders for the three months ended June 30, 2025 was $0.8 million, or $0.02 per common share, compared to net loss attributable to common shareholders of $4.1 million, or $0.09 per common share, for the three months ended June 30, 2024.

Utilizing the average performing loans held for investment balance for the three months ended September 30, 2025 of $268.1 million, the effective interest rate on loans held for investment was 12.4% for the three months ended September 30, 2025.

Comparatively, utilizing the average performing loans held for investment balance for the three months ended September 30, 2024 of $361.7 million, the effective interest rate on loans held for investment was 12.6% for the three months ended September 30, 2024.

Income from limited liability company investments has decreased as we have reduced our investments in limited liability companies by $12.8 million since December 31, 2024.

The Company used returns of capital from its investments in limited liability companies to fund additional loans held for investment during the period.

Operating expenses

Interest and amortization of deferred financing costs remained relatively consistent with the corresponding 2024 period in total dollars, but increased as a percentage of total revenues due to lower revenues in 2025 as the overall size of our loan portfolio decreased and nonperforming loans as a percentage of the loan portfolio increased.

The increase in compensation and employee benefits relates to one time cash bonuses of $0.4 million and additional headcount to build out the executive team due to the resignation of the prior chief financial officer and the hiring of his replacement and a new chief accounting officer.

The material decline in the provision for credit losses related to loans held for investment for the three months ended September 30, 2025 as compared to the corresponding 2024 period is a result of the prior year build up and recognition of credit loss allowance as the aggregate non-performing loan balances were rising materially.

The aggregate non-performing loan balance as of September 30, 2024 was $147.0 million, up $62.4 million from the December 31, 2023 balance of $84.6 million.

As the Company has been addressing the non-performing loan portfolio for the last year through certain loan sales primarily during the fourth quarter of 2024, ongoing foreclosure sales and conversions to real estate owned with subsequent sale, material additional new material credit loss allowance has not been required.

Book value per common share

The following table sets forth the calculation of our book value per common share (in thousands, except share and per share data):

June 30, 2025 March 31, 2025

The following table presents the calculation of our book value per common share (in thousands, except share and per share data):

September 30, 2025 June 30, 2025

Total shareholders’ equity $ 175,618 $ 177,907

3 unchanged sentences

Book value per common share $ 2.47 $ 2.54

Book value per common share as of June 30, 2025, was $2.54, a decrease of $0.03 from our book value per common share as of March 31, 2025 of $2.57.

Such decrease is primarily due to cash dividends declared and paid for the three months ended June 30, 2025 on issued and outstanding common shares and shares of Series A Preferred Stock totaling $3.5 million, or $0.07 per common share, partially offset by net income for the three months ended June 30, 2025 of $0.8 million, or $0.02 per common share.

Six months ended June 30, 2025 compared to six months ended June 30, 2024

Total revenue

Total revenue for the six month s ended June 30, 2025 was $22.2 million compared to $32.0 million for the six months ended June 30, 2024, a decrease of $9.8 million, or 30.7%.

The decrease in book value per common share is primarily due to cash dividends declared and paid for the three months ended September 30, 2025 on issued and outstanding common shares and shares of Series A Preferred Stock totaling $3.5 million, or $0.07 per common share, partially offset by net income for the three months ended September 30, 2025 of $1.0 million, or $0.02 per common share.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024

Nine Months Ended September 30,

2025 2024 $ Change % Change % of 2025 Total Revenue % of 2024 Total Revenue

Interest income from loans $ 23,696 $ 35,816 $ (12,120) (33.8) % 69.3 % 76.6 %

Fee income from loans 5,160 6,543 (1,383) (21.1) % 15.1 % 14.0 %

Income from limited liability company investments 4,128 3,907 221 5.7 % 12.1 % 8.4 %

Other investment income 102 388 (286) (73.7) % 0.3 % 0.8 %

Other income 1,131 81 1,050 1296.3 % 3.3 % 0.2 %

Total revenues 34,217 46,735 (12,518) (26.8) % 100.0 % 100.0 %

Operating expenses

Interest and amortization of deferred financing costs 18,798 21,278 (2,480) (11.7) % 54.9 % 45.5 %

Compensation and employee benefits 5,926 5,053 873 17.3 % 17.3 % 10.8 %

General and administrative expenses 4,338 4,797 (459) (9.6) % 12.7 % 10.3 %

Provision for credit losses related to loans held for investment 2,788 17,964 (15,176) (84.5) % 8.1 % 38.4 %

Change in valuation allowance related to loans held for sale (1,014) — (1,014) 100.0 % (3.0) % — %

Impairment loss on real estate owned 185 397 (212) (53.4) % 0.5 % 0.8 %

Loss (gain) on sale of real estate owned and property and equipment, net 181 (294) 475 (161.6) % 0.5 % (0.6) %

Other expenses 1,287 1,205 82 6.8 % 3.8 % 2.6 %

Total operating expenses 32,489 50,400 (17,911) (35.5) % 94.9 % 107.8 %

Operating (loss) income 1,728 (3,665) 5,393 147.1 % 5.1 % (7.8) %

Other income, net

Gain (loss) on equity securities 2,060 229 1,831 799.6 % 6.0 % 0.5 %

Total other income, net 2,060 229 1,831 799.6 % 6.0 % 0.5 %

Net income (loss) 3,788 (3,436) 7,224 210.2 % 11.1 % (7.4) %

Preferred stock dividends (3,352) (3,187) (165) 5.2 % (9.8) % (6.8) %

Net (loss) income attributable to common shareholders $ 436 $ (6,623) $ 7,059 106.6 % 1.3 % (14.2) %

Basic and diluted (loss) earnings per common share $ 0.01 $ (0.14) $ 0.15 $ 1.07

Total revenues

As of June 30, 2025, net loans held for investment totaled $364.5 million, compared to $485.7 million as of June 30, 2024, representing a decline of $121.2 million in the net principal balance.

On the other hand, income from our preferred membership limited liability company investments increased by $0.6 million or 25.6% from the prior year.

Operating costs and expenses

Total operating e xpenses for six months ended June 30, 2025 were $20.1 million compared to $30.8 million for the six months ended June 30, 2024, a decrease of $10.7 million or 34.7% .

The largest contributors to this decrease was the decrease of $2.2 million in interest and amortization of deferred financing fees as a result of the repayment of $58.2 million of aggregate principal amount of our unsecured, unsubordinated notes in 2024, and a decrease in provision for credit losses related to loans held for investment of $7.9 million, as noted above.

Net income (loss) attributable to common shareholders and net income (loss) attributable to common shareholders per share

Net income attributable to common shareholders for the six months ended June 30, 2025 was $0.6 million, or $0.01 per common share, compared to net loss attributable to common shareholders of $0.5 million, or $0.01 per common share, for the six months ended June 30, 2024.

Utilizing the average performing loans held for investment balance for the nine months ended September 30, 2025 of $271.6 million, the effective interest rate on loans held for investment rate was 11.6% for the nine months ended September 30, 2025.

Comparatively, utilizing the average performing loans held for investment balance for the nine months ended September 30, 2024 of $385.8 million, the effective interest rate on loans held for investment was 12.4% for the nine months ended September 30, 2024.

Operating expenses

Interest and amortization of deferred financing costs decreased as we paid off $34.5 million of notes payable in December 2024 with proceeds from loans sold, but increased as a percentage of total revenues due to lower revenues in 2025 as the overall size of our loan portfolio decreased and nonperforming loans as a percentage of the loan portfolio increased.

The increase in compensation and employee benefits relates to additional headcount to build out the executive team due to resignation of our former chief financial officer and the hiring of his replacement and a new chief accounting officer.

The material decline in the provision for credit losses related to loans held for investment for the nine months ended September 30, 2025 as compared to the corresponding 2024 period is a result of the prior year build up and recognition of credit loss allowance due to a material increase in the aggregate non-performing loan balances.

The aggregate non-performing loan balance as of September 30, 2024 was $147.0 million, up $62.4 million from the December 31, 2023 balance of $84.6 million.

As the Company has been addressing the non-performing loan portfolio for the last year through loan sales, primarily during the fourth quarter of 2024, ongoing foreclosure sales and conversions to real estate owned with subsequent sale, material additional new material credit loss allowance has not been required.

Book value per common share

The following table sets forth the calculation of our book value per common share (in thousands, except share and per share data):

June 30, 2025 December 31, 2024

The following table presents the calculation of our book value per common share (in thousands, except share and per share data):

September 30, 2025 December 31, 2024

Total shareholders’ equity $ 175,618 $ 181,651

2 unchanged sentences

Number of common shares outstanding at period end 47,691,121 46,965,306

47,310,139 46,965,306

Book value per common share $ 2.47 $ 2.64

Book value per common share as of June 30, 2025, was $2.54, a decrease of $0.10 from our book value per common share as of December 31, 2024 of $2.64 .

Such decrease is primarily due to cash dividends declared and paid for the six months ended June 30, 2025 on issued and outstanding common shares and Series A Preferred Stock totaling $7.0 million, or $0.15 per common share, partially offset by net income for the six months ended June 30, 2025 of $2.8 million, or $0.06 per common share.

The decrease in book value per common share is primarily due to cash dividends declared and paid for the nine months ended September 30, 2025 on issued and outstanding common shares and Series A Preferred Stock totaling $10.4 million, or $0.22 per common share, partially offset by net income for the nine months ended September 30, 2025 of $3.8 million, or $0.08 per common share.

Liquidity and Capital Resources

Total assets at June 30, 2025 were $501.8 million compared to $492.0 million at December 31, 2024, an increase of $9.8 million, or 2.0%.

The net increase was due primarily to increase in cash and cash equivalents and loans held for investment from net proceeds available from our June 2025 private placement of senior secured notes that was not utilized in effective refinancing of existing debt on our balance sheet.

Total liabilities at June 30, 2025 were $323.9 million compared to $310.3 million at December 31, 2024, an increase of $13.5 million, or 4.4%.

This increase is primarily due to a $46.4 million increase in senior secured notes payable net of deferred financing costs of $3.6 million, offset by repayments of repurchase agreements of $19.2 million and lines of credit of $13.7 million.

Total shareholders’ equity at June 30, 2025 was $177.9 million compared to $181.7 million at December 31, 2024, a decrease of $3.7 million, or 2.1%.

This decrease was due primarily to an aggregate of $7.0 million of dividends paid to holders of Series A Preferred Stock and common shares, which was partially offset by $2.8 million of cumulative net earnings for the six month period and $0.4 million increase in additional paid-in capital related to stock-based compensation.

Total assets at September 30, 2025 were $484.4 milli on compared to $492.0 million at December 31, 2024, a decrease of $7.6 million, or 1.5%.

The net decrease was due primarily to decreases in cash and cash equivalents of $6.9 million and investments in limited liability companies of $12.8 million offset by increases in loans held for investment, net of $5.2 million and real estate owned of $4.6 million.

The Company used returns of capital from its investments in limited liability companies to fund additional loans held for investment during the period.

Total liabilities at September 30, 2025 were $308.8 million compared to $310.3 million at December 31, 2024, a decrease of $1.5 million, or 0.5%.

This decrease is primarily due to decreases in notes payable of $55.5 million, repurchase agreements of $25.9 million, and lines of credit of $7.3 million offset by a $86.4 million increase in senior secured notes payable net of deferred financing costs of $3.6 million.

The Company used the proceeds from sale of its senior secured notes to reduce other indebtedness.

Total shareholders’ equity at September 30, 2025 was $175.6 million compared to $181.7 million at December 31, 2024, a decrease of $6.0 million, or 3.3%.

This decrease was due primarily to an aggregate increase of $10.5 million of dividends paid to holders of Series A Preferred Stock and common shares, which was partially offset by an aggregate increase of $3.8 million of cumulative net earnings for the nine month period and $0.6 million increase in additional paid-in capital related to stock-based compensation.

Sources and Uses of Funds

2 unchanged sentences

These sources and uses of cash are reflected in our Condensed Consolidated Statements of Cash Flows as summarized below:

Six Months Ended One Year-Change

Nine Months Ended One Year-Change

Amount 2025 2024 Amount Percentage

2 unchanged sentences

Net cash provided by operating activities 5,624 13,510 (7,886) (58.4) %

Net cash (used in) provided by investing activities (2,658) 27,534 (30,192) (109.7) %

Net cash provided by (used in) financing activities 6,374 (40,734) 47,108 (115.6) %

Cash and cash equivalents, June 30 $ 22,474 $ 10,577 $ 11,897 112.5 %

For a detailed breakdown of our cash flows during the six months ended June 30, 2025 and 2024, see our Condensed Consolidated Statement of Cash Flows.

Net cash provided by investing activities 1,589 44,262 (42,673) (96.4) %

Net cash used in financing activities (14,107) (64,489) 50,382 (78.1) %

Cash and cash equivalents, September 30 $ 11,172 $ 5,881 $ 5,291 90.0 %

For a detailed breakdown of our cash flows during the nine months ended September 30, 2025 and 2024, see our Condensed Consolidated Statement of Cash Flows.

We project anticipated cash requirements for our operating needs as well as cash flows generated from operating activities available to meet these needs.

Our short-term cash requirements primarily include funding of loans, dividend payments, interest and principal payments on our indebtedness, including repayment/refinancing of the unsecured notes payable maturing in September 2025, and payments for usual and customary operating and administrative expenses, such as employee compensation and sales and marketing expenses.

Our short-term cash requirements primarily include funding of loans, dividend payments, interest and principal payments on our indebtedness, and payments for usual and customary operating and administrative expenses, such as employee compensation and sales and marketing expenses.

Based on this analysis, we believe that our current cash balances, availability on our debt facilities, and our anticipated cash flows from operations will be sufficient to fund the operations for the next 12 months.

Our long-term cash needs will include principal and interest payments on outstanding indebtedness maturing late in 2026 and early 2027, preferred stock dividends and funding of new mortgage loans.

Our long-term cash needs will include principal and interest payments on outstanding indebtedness maturing in late 2026 and early 2027, preferred stock dividends and funding of new mortgage loans.

Funding for long-term cash needs will come from unused net proceeds from financing activities, operating cash flows, refinancing existing debt, and proceeds from sales of real estate owned.

On March 20, 2025, we 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.

On March 20, 2025, we entered into a new Credit Agreement with Needham Bank (the "New Credit Agreement"), 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”), our wholly owned subsidiary, serves as the borrower, and we serve as guarantor of all SN Holdings' obligations under the New Credit Agreement.

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.

The new 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 million or the full drawn balance on the facility.

We, as guarantor, have also granted Needham a lien on substantially all of our 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;

The new 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 New Credit Agreement) to Debt Service (as defined in the New 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, SN Holdings had borrowed $26.2 million under the new facility and was in compliance with all covenants under the Credit Agreement.

On June 11, 2025, Sachem Capital Corporation Holdings, LLC ("Holdings"), our indirect, wholly-owned subsidiary, 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 Company expects that it will draw the remaining $50.0 million during September 2025 immediately prior to its maturity redemption payment of $56.3 million of unsecured notes payable due September 30, 2025.

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.

As of September 30, 2025, SN Holdings had borrowed $32.7 million under the new facility and was in compliance with all covenants under the New Credit Agreement.

An initial draw of $50.0 million was made at closing, an additional draw of $40.0 million was made in September 2025, and the remaining $10.0 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.

Off-Balance Sheet Arrangements

1 unchanged sentence

Contractual Obligations

As of June 30, 2025, our contractual obligations include unfunded amounts of any outstanding construction loans and unfunded commitments for loans and limited liability company investments.

As of September 30, 2025, our contractual obligations include unfunded amounts of any outstanding construction loans and unfunded commitments for loans and limited liability company investments.

Total Less than

9 unchanged sentences

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 2. Management’s Discussion and Analysis