What changed in this filing

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Item 1. Business

2026-03-13 compared with 2025-03-31 · 124 added, 87 removed, 196 unchanged (52% of the section changed)

7 unchanged sentences

To the extent we distribute less than 100% of our taxable income to our shareholders (but more than 90%), we will maintain our REIT status but the undistributed portion will be subject to regular corporate income taxes.

As a REIT, we are also subject to federal excise taxes and minimum state taxes.

As a REIT, we may also be subject to federal excise taxes and minimum state taxes.

We intend to continue to operate in a manner that will permit us to maintain our exemption from registration under the Investment Company Act.

Business Overview and Investment Strategy

We are a Connecticut-based real estate finance company that specializes in originating, underwriting, funding, servicing and managing a portfolio of short-term ( i.e., typically three years or less) loans secured by first mortgage liens on real property.

We are a Connecticut-based real estate finance company that specializes in originating, underwriting, funding, servicing and managing a portfolio of short-term (i.e.

, one to three years) loans secured by first mortgage liens on real property.

In addition, our loans are usually further secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower.

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The mortgaged property may or may not be income producing.

Our loans are referred to in the real estate finance industry as “hard money loans” primarily because they are secured by “hard” ( i.e., real estate) assets.

Our loans are referred to in the real estate finance industry as “hard money loans” primarily because they are secured by “hard” assets (i.e., real estate).

Our mortgage loans are structured to fit the needs and business plans of the borrowers.

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We will continue to selectively originate loans and carefully manage our loan portfolio in a manner designed to generate attractive risk-adjusted returns across a variety of market conditions, economic cycles and high-growth geographies.

In addition to originating and servicing loans, we may from time to time reposition and develop real estate acquired through foreclosure or intentional acquisition where management believes value creation opportunities exist.

Villano, CPA, is our founder, Chairman, President and Chief Executive Officer.

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Walraven was appointed to serve as our Interim Chief Financial Officer.

Walraven joined us in August 2024 as a member of the Board.

Prior to his appointment as Interim Chief Financial Officer, he was also a member of the Audit, Compensation and Nominating and Corporate Governance Committees of the Board.

In connection with this appointment, he resigned as a member of all the committees.

He has extensive experience with private and public real estate companies working on matters including capital markets, accounting and finance.

He was named Executive Vice President and Chief Financial Officer effective September 1, 2025.

Walraven joined us in August 2024 as a member of our board of directors (the "Board")and a member of the Board's Audit, Compensation and Nominating and Corporate Governance committees.

In connection with his interim appointment, he resigned as a member of all the committees and in connection with his permanent appointment, he resigned his board membership.

Walraven has extensive experience with private and public real estate companies working on matters including capital markets, accounting and finance.

Our Origination Process and Underwriting Criteria

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We rely on readily available market data, including independent appraisals, Automated Valuation Models, trailing twelve month financial statements, rent rolls (if applicable), recent sales transactions and broker insights, to assess the value of the collateral.

Additionally, the asset management team reviews the construction aspects of the project.

This team meets with the borrower, its principals, and the General Contractor to understand the project scope, timelines, and any potential constraints.

Additionally, if the property securing our loan is in development or being renovated, our asset management team reviews the construction aspects of the project.

The members of the asset management team meet with the borrower, its principals, and the general contractor to understand the project scope, timelines, and any potential risks associated with the project.

The asset management team continues to monitor and oversee the project until its completion.

We conduct thorough due diligence by ordering title, lien, and judgement searches.

We conduct thorough due diligence by ordering title, lien, and judgment searches.

In most cases, we also perform an on-site visit to assess the subject property, as well as the surrounding real estate market.

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Our decision to proceed with the funding of the loan is primarily driven by our comprehensive evaluation of the property’s value.

This evaluation encompasses factors such as the local market conditions, the current and potential alternative uses of the property, the existing and projected net incomes, sales data for comparable properties, applicable zoning regulations, and the creditworthiness of the borrower and principals.

Additionally, we assess the experience and qualifications of the borrower and their principals in real estate ownership, construction, development, and project management.

This evaluation considers multiple factors that impact value, including, without limitation, local market conditions, the current and potential alternative uses of the property, the existing and projected net income generated by the property, sales data for comparable properties, applicable zoning regulations and the creditworthiness of the borrower and its principals.

Additionally, we assess the experience and qualifications of the borrower and its principals in real estate ownership, construction, development, and project management.

As part of our due diligence, we engage third-party professionals and experts, including appraisers, engineers, title insurers, and attorneys, to ensure a thorough and informed decision- making process.

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We have a policy that limits the maximum amount of our exposure to a single borrower or a group of affiliated borrowers to 10% of the aggregate amount of our loan portfolio, unless otherwise approved by the Board.

Finally, any loan with an original principal amount exceeding $5 million must be approved by our board of directors (the “Board”).

In addition, any loan with an original principal amount exceeding $5 million must be approved by the Board.

Loan-to-Value Ratio;

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Generally, none required.

Depending on the particular cash flow of a property, we may require the borrower to establish reserves for interest, taxes and/or insurance, particularly with respect to larger loans.

Depending on various factors, particularly the cash flow of a property, we may require the borrower to establish reserves for interest, taxes and/or insurance, particularly with respect to larger loans.

Each loan is evidenced by a promissory note, which is secured by a first mortgage lien on real property owned by the borrower.

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Our operating income in the future will depend on how much capital we raise and the spread between our cost of capital and the effective yield on our loan portfolio.

We do not have any formal policy limiting the amount of indebtedness we may incur, but under the terms of the loan documents related to our various credit facilities, including the indenture covering our unsecured unsubordinated five-year notes (the “Notes”), we are required to maintain total assets exceeding 150% of our total liabilities.

Depending on various factors we may, in the future, decide to take on additional debt to expand our mortgage loan origination activities to increase the potential returns to our shareholders.

The amount of leverage we deploy depends on our assessment of a variety of factors, which may include the liquidity of the real estate market in which most of our collateral is located, employment rates, general economic conditions, the cost of funds relative to the yield curve, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, our opinion regarding the creditworthiness of our borrowers, the value of the collateral underlying our portfolio, and our outlook for interest rates and property values.

We do not have any formal policy limiting the amount of indebtedness we may incur.

However, under the terms of the loan documents related to our various credit facilities, including the indenture covering our unsecured unsubordinated five-year notes (the “Notes”), we are required to maintain total assets exceeding 150% of our total liabilities.

We may, in the future, decide to take on additional debt to expand our mortgage loan origination activities to increase the potential returns to our shareholders.

The amount of leverage we deploy depends on our assessment of a variety of factors, which may include the liquidity of the real estate market in which most of our collateral is located, employment rates, the cost of funds relative to the yield curve, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, our opinion regarding the creditworthiness of our borrowers, the value of the collateral underlying our portfolio, our outlook for interest rates and property values, and general economic conditions.

At December 31, 2025, debt represented 61.4% of our total capital compared to 62.4% at December 31, 2024.

We expect to maintain our current level of debt and are always looking to attempt to reduce our cost of capital.

We have no current plans to increase our leverage;

however, we are always open to reducing our cost of capital.

Our Loan Portfolio

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Loans disbursed (1)

Principal of loans sold

$152,616 $134,298

Loans originated

Loan repayments

$162,689 $184,853

Principal amount of loans sold

$5,085 $55,838

Number of loans sold 3 32

Principal of loans transferred to real estate owned

Principal amount of loans transferred to real estate owned

$22,141 $28,639

Number of loans transferred to real estate owned 13 22

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Weighted average contractual interest rate (2)

13.10% 12.53%

Weighted average term to maturity (in months) (3)

__________________________

(1) Includes new originations, modifications, and draws.

(2) Includes default interest.

(3) Does not give effect to extensions.

At December 31, 2024, our outstanding mortgage loan portfolio included loans ranging in size from $35,000 to $42.9 million.

The table below gives a breakdown of our loans held for investment by loan size as of December 31, 2024:

Aggregate Gross

(in thousands)

At December 31, 2025 and 2024, our outstanding mortgage loan portfolio included loans with outstanding principal balances up to $38.3 million.

The table below gives a breakdown of our loans held for investment by loan size as of December 31, 2025 and 2024:

December 31, 2025 December 31, 2024

Amount Number of

Loans Percentage Aggregate Gross

Amount Percentage Number of

Loans Percentage Aggregate Gross

Amount Percentage

(in thousands) (in thousands)

$1,000,000 or less 49 42.6 % $ 21,109 5.6 % 75 47.8 % $ 30,629 8.1 %

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$10,000,001 or more 10 8.7 % 183,348 48.6 % 9 5.7 % 147,592 39.2 %

Total 115 100.0 % $ 377,418 100.0 % 157 100.0 % $ 376,991 100.0 %

Most of our loans are funded in full at closing.

However, where all or a portion of the loan proceeds are to be used to fund the costs of renovating or constructing improvements on the property, only a portion of the loan may be funded at closing.

At December 31, 2024, our loan portfolio included 63 loans with future funding obligations, having a funded outstanding principal amount of $316.5 million and $49.9 million unfunded pending borrower performance.

At December 31, 2025, our loan portfolio included 43 loans with future funding obligations, having a funded outstanding principal amount of $198.8 million and unfunded obligations of $37.2 million pending borrower performance.

Advances under these loans are funded against requests supported by all required documentation (including lien waivers) as and when needed to pay contractors and other costs of construction.

Most of the properties we finance are residential or commercial investment and have a construction component.

However, in all instances the properties are held only for investment by the borrowers and may or may not generate cash flow.

However, for all loans, the properties are held only for investment by the borrowers and may or may not generate cash flow.

As of December 31, 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 December 31, 2025:

State Number of

Loans Percentage Gross Principal

Outstanding Percentage

(in thousands)

Connecticut 48 41.8 % $ 101,019 26.9 %

Florida 16 13.9 % 114,198 30.3 %

Georgia 2 1.7 % 5,040 1.3 %

Maine 2 1.7 % 914 0.2 %

Maryland 2 1.7 % 3,073 0.8 %

Massachusetts 10 8.7 % 59,569 15.8 %

New Jersey 3 2.6 % 3,581 0.9 %

New York 17 14.8 % 30,944 8.2 %

North Carolina 4 3.5 % 25,374 6.7 %

Pennsylvania 3 2.6 % 4,969 1.3 %

Rhode Island 2 1.7 % 1,547 0.4 %

South Carolina 4 3.5 % 12,603 3.3 %

Tennessee 1 0.9 % 13,227 3.5 %

Washington D.C.

1 0.9 % 1,360 0.4 %

Total 115 100.0 % $ 377,418 100.0 %

The following table details our loans held for investment as of December 31, 2025 by year of origination:

Aggregate Gross

Year of Origination

Year of Origination Number of

Loans Percentage Aggregate Gross

Amount Percentage

(in thousands)

2025 24 20.9 % $ 87,991 23.3 %

2024 17 14.8 % 31,430 8.3 %

2023 21 18.3 % 83,379 22.1 %

2022 19 16.5 % 43,547 11.5 %

2021 24 20.9 % 122,525 32.5 %

2020 4 3.5 % 6,255 1.7 %

2019 and prior 6 5.1 % 2,291 0.6 %

Total 115 100.0 % $ 377,418 100.0 %

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

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(in thousands)

Aggregate Gross Principal

Aggregate Gross Principal Amount Percentage Aggregate Gross Principal Amount Percentage

Residential $ 202,234 53.6 % $ 211,939 56.2 %

Commercial 110,178 29.2 % 95,509 25.3 %

Pre-Development Land 17,977 4.8 % 23,466 6.3 %

Mixed Use 47,029 12.4 % 46,077 12.2 %

Total $ 377,418 100.0 % $ 376,991 100.0 %

Allowance for Credit Losses

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(in thousands )

Percentage of

Aggregate Gross

Principal Amount

Performing & Non-performing – General reserve

Aggregate Gross Principal Amount Allowance Percentage of

Principal Aggregate Gross Principal Amount Allowance Percentage of

Performing – General reserve $ 259,833 $ (4,785) 1.8 % $ 289,909 $ (5,051) 1.7 %

Non-performing – General reserve 25,945 (477) 1.8 % 5,396 (96) 1.8 %

Non-performing – Direct reserves 54,134 (2,054) 3.8 % 57,808 (7,265) 12.6 %

Non-performing in Foreclosure – Direct reserves 37,506 (4,194) 11.2 % 23,878 (6,058) 25.4 %

Non-performing subtotal $ 117,585 $ (6,725) 5.7 % $ 87,082 $ (13,419) 15.4 %

Total $ 377,418 $ (11,510) 3.0 % $ 376,991 $ (18,470) 4.9 %

For further information, see Note 4 – Loans and Allowance for Credit Losses.

Investment in Rental Real Estate

As of December 31, 2024, we owned one property that was purchased for the sole purpose of an investment in rental real estate, and is currently in final phases of construction renovation.

On February 15, 2025, we commenced a lease agreement for approximately 51% of the gross leasable space of 49,041 square feet.

This property also has an approved residential development component, which as of the date of this report, is currently in the planning stage.

Investment in Developmental Real Estate

As of December 31, 2025, we owned seven properties that were classified as investments in developmental real estate.

The projects are in various phases of completion.

The following table details the carry value of our investment in rental real estate owned property reflected on our Consolidated Balance Sheets as of December 31, 2025:

Property Type

Property Type Location Month of

Acquisition Carrying

(in thousands)

Commercial – Office space and Condominiums

For further information, see Note 5 – Investment in Rental Real Estate, Net.

Commercial Branford, CT July 2025 $ 1,541

Residential - Single family (3 parcels) Old Lyme, CT May 2025 1,910

Residential - Multifamily (1 parcel) East Windsor, CT March 2025 2,037

Residential - Multifamily (2 parcels) New London, CT November 2024 4,250

Accumulated depreciation (19)

Total $ 9,719

For further information, see Note 5 – Investment in Developmental Real Estate, Net — to our consolidated financial statements for the year ended December 31, 2025.

Real Estate Owned

As of December 31, 2024, we owned twenty properties, each of which previously served as collateral for first mortgage loans.

Fifteen of such properties were acquired during the year ended December 31, 2024 in connection with foreclosure actions.

As of December 31, 2025, we owned fourteen properties, each of which previously served as collateral for first mortgage loans.

Thirteen properties were acquired during the year ended December 31, 2025 in connection with foreclosure actions.

Thirteen properties were sold during the year ended December 31, 2025.

Five properties were transferred from real estate owned to investment in developmental real estate during the year ended December 31, 2025.

The following table details the carrying value of each of our real estate owned properties reflected on our Consolidated Balance Sheets as of December 31, 2025:

Property Type

Property Type Location Month of

Acquisition Carrying

(in thousands)

Commercial – Restaurant

December 2019

Sturbridge, MA

November 2022

Residential – Single Family

Bellingham, MA

December 2023

Residential – Multi Family

Westbrook, ME

September 2024

Residential – Multi Family

South Portland, ME

September 2024

Cape Coral, FL

Residential – Multi Family

Flagler Beach, FL

Residential – Single Family

Gainesville, FL

November 2024

New London, CT

November 2024

New London, CT

November 2024

Commercial – Office

December 2024

Commercial – Office

December 2024

For further information, see Note 6 – Real Estate Owned (REO).

Commercial - Restaurant Bristol, CT March 2019 $ 750

Land Bristol, CT December 2019 1,050

Residential - Single Family Bellingham, MA December 2023 293

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

Commercial - Office Windsor, CT December 2024 1,400

Commercial - Office Windsor, CT December 2024 2,000

Land Marathon, FL January 2025 410

Commercial - Office Baltimore, MD July 2025 644

Mixed Use Cumberland Center, ME July 2025 270

Commercial - Office Wilton, CT September 2025 1,338

Commercial - Office Wilton, CT September 2025 334

Residential - Multi Family Jacksonville, FL October 2025 2,400

Residential - Multi Family Daytona Beach, FL October 2025 2,038

Residential - Single Family Ansonia, CT December 2025 93

Total $ 16,402

For further information, see Note 6 – Real Estate Owned (REO) — to our consolidated financial statements for the year ended December 31, 2025.

Investments in limited liability companies

As of December 31, 2025, we had investments in limited liability companies of $39.1 million, consisting of limited liability membership equity investments in real estate note-on-note mortgage investment vehicles, direct investments in real estate, and a direct investment in an real estate asset manager.

For further information, see Note 17 – Limited Liability Company Investments.

For further information, see Note 17 – Limited Liability Company Investments — to our consolidated financial statements for the year ended December 31, 2025.

The real estate finance markets in which we operate are highly competitive.

Competition is becoming more of a factor as we implement our strategy to focus on larger loans and more sophisticated borrowers.

Over the last few years, as banks have pulled back from the lending market, non-traditional lenders, such as non - bank real estate companies, hedge funds, private equity funds and insurance companies, have stepped into the void.

Our competitors include traditional lending institutions such as regional and local banks, savings and loan institutions, credit unions and other financial institutions as well as other market participants such as specialty finance companies, REITs, investment banks, insurance companies, hedge funds, private equity funds, family offices and high net worth individuals.

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Notwithstanding intense competition and some of our competitive disadvantages, we believe we have carved a niche for ourselves among small and mid-size real estate developers, owners and contractors in the markets in which we operate because we are well-capitalized, we have demonstrated flexibility to structure loans to suit the needs of the individual borrower and we can act quickly.

In addition, through our marketing efforts, we are beginning to develop a brand identity in some of the other markets in which we operate, particularly those along the eastern seaboard.

We believe we have developed a reputation among these borrowers for offering reasonable terms and providing outstanding customer service.

In addition, through our marketing efforts, we have developed a brand identity in some of the other markets in which we operate, particularly those along the eastern seaboard of the United States.

We believe we have developed a reputation among borrowers in these markets for offering reasonable terms and providing outstanding customer service.

We further believe our future success will depend on our ability to maintain and capitalize on our existing relationships with borrowers and brokers and to expand our borrower base by continuing to offer attractive loan products, remain competitive in pricing and terms, and provide superior service.

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Intellectual Property

Our business does not depend on exploiting or leveraging any intellectual property rights.

Our business does not depend on leveraging any intellectual property rights.

To the extent we own any rights to intellectual property, we rely on a combination of federal, state and common law trademarks, service marks and trade names, copyrights and trade secret protection.

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As a REIT, we are required to distribute at least 90% of our taxable income to our shareholders on an annual basis.

Our qualification as a REIT depends on our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Code, relating to, among other things, the sources of our gross income, the composition and values of our assets, our compliance with the distribution requirements applicable to REITs and the diversity of ownership of our outstanding Common Shares.

income, the composition and values of our assets, our compliance with the distribution requirements applicable to REITs and the diversity of ownership of our outstanding Common Shares.

So long as we qualify as a REIT, we, generally, will not be subject to U.S.

4 unchanged sentences

federal, state and local taxes on our income.

Furthermore, we have a taxable REIT subsidiary (“TRS”), which pays U.S.

Sachem Opportunities Corp., a wholly-owned subsidiary of Sachem Capital Corp., is our taxable REIT subsidiary (“TRS”).

As such, it pays U.S.

federal, state, and local taxes on its net taxable income.

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We are providing the address to our website solely for information purposes.

The information on our website is not a part of, and is it incorporated by reference into, this Report.

The information on our website is not a part of, and is not incorporated by reference into, this Report.

Through our website, we make available, free of charge, our annual proxy statement, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish them to, the SEC.

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-K

Item 1. Business