What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-20 compared with 2025-11-05 · 206 added, 161 removed, 153 unchanged (71% of the section changed)

5 unchanged sentences

Sachem Capital Corp., a New York corporation, established in 2010 and completing an initial public offering in 2017, is a self-managed REIT that specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans.

We operate our business as one segment.

We offer 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 our 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.

Our primary underwriting criteria is a conservative loan to value ratio.

In addition, we may make opportunistic real estate purchases and investments apart from our lending activities.

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 typically secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower.

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

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

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

Recent Developments

Contribution Agreement with Industrial Realty Group Global, LLC

On May 17, 2026, we entered into a Contribution Agreement (the “Contribution Agreement”) with Industrial Realty Group Global, LLC, a Delaware limited liability company (“IRG Global”).

The Contribution Agreement and the transactions contemplated thereby (the “Transaction”) were unanimously approved by our Board of Directors.

Pursuant to the Contribution Agreement, IRG Global will contribute to IRG Realty Operating Partnership, L.P., a Delaware limited partnership to be formed as our subsidiary prior to the Closing (as defined below) (the “Operating Partnership”), 100% of the outstanding membership interests of IRG Master Holdings, LLC, a Delaware limited liability company (“IRG Master Holdings”), in exchange for (i) a number of common units of limited partnership interest in the Operating Partnership (“OP Units”) equal to the Transferee Consideration Units (as defined below) and (ii) a number of shares of our Class B common stock (the “Class B Common Stock”) equal to the Transferee Consideration Units.

IRG Master Holdings, together with its subsidiaries, owns and operates a portfolio of industrial real estate assets.

Prior to the closing of the Transaction (the “Closing”), which is expected to be by the end of 2026, we will complete a series of pre-closing reorganization steps (the “Pre-Closing Reorganization”), including (i) forming the Operating Partnership and contributing all or substantially all of our assets thereto, (ii) redomesticating from the State of New York to the State of Delaware, (iii) effecting a 20-to-1 reverse stock split of our issued and outstanding common shares, following which such shares will be redesignated as our Class A common stock (the “Class A Shares”), (iv) authorizing a new class of Class B Common Stock (the “Class B Shares”), (v) adjusting the conversion and anti-dilution rights applicable to our issued and outstanding preferred stock in accordance with the applicable certificate of designations to reflect the reverse stock split, and (vi) changing our corporate name to “IRG Realty Trust, Inc.”

The number of OP Units and Class B Shares to be issued to IRG Global at the Closing (the “Transferee Consideration Units”) will be calculated based on a formula set forth in the Contribution Agreement, subject to downward adjustment based on the aggregate shortfall in replacement value for any dispositions of IRG Master Holdings’ properties occurring during the Interim Period (as defined in the Contribution Agreement), other than dispositions with an aggregate shortfall of less than $3.0 million.

The calculation of the Transferee Consideration Units was based on an assumed implied gross asset value of the IRG Global portfolio to be contributed of approximately $2.9 billion, with a net asset value of approximately $1.5 billion after approximately $1.4 billion of debt, and a deemed exchange value of our common shares at a price of $2.00 per share.

Immediately following the Closing, IRG Global is expected to hold approximately 94.1% of the outstanding OP Units, with us retaining the remaining approximately 5.9% of the outstanding OP Units.

Subject to certain

restrictions, a holder of OP Units may require the Operating Partnership to exchange all or a portion of such holder’s OP Units for cash or, at our option, Class A Shares on a one-for-one basis, subject to the ownership, transfer, REIT qualification and other limitations set forth in an Amended and Restated Limited Partnership Agreement, which is expected to be executed in connection with the Closing of the Transaction.

The Closing of the Transaction is expected to occur by the end of 2026, subject to customary closing conditions, including the approval of our shareholders.

For additional information on the Contribution Agreement, see our Current Report on Form 8-K filed with the SEC on May 18, 2026 and Note 21 – Subsequent Events – to our accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Use of Estimates

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

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

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

Management will base 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, loans held for sale at fair value, and real estate owned.

See Note 2 – Significant Accounting Policies — to our condensed consolidated financial statements for further details.

Significant estimates include the provisions for current expected credit losses and real estate owned, See Note 2 – Significant Accounting Policies – to our unaudited condensed consolidated financial statements for further details.

Revenue Recognition

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CECL Allowance

We record an allowance for credit losses (“CECL”) on our loan portfolio in accordance with FASB Topic 326, Financial Instruments - Credit Losses, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics.

We record an allowance for credit losses (“CECL”) in accordance with the CECL standard on our loan portfolio, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics.

This methodology replaces the probable incurred loss impairment methodology.

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Further, CECL requires credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell.

As allowed under the CECL standard that we have adopted, as a practical expedient, the fair value of the collateral at the reporting date is compared to the net carrying amount of the loan when determining the allowance for credit losses for loans in pending foreclosure status, as defined.

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

2 unchanged sentences

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

In determining the CECL allowance, we consider various factors including (1) historical loss experience in our loan portfolio, (2) loan specific losses for loans deemed collateral dependent based on

excess amortized cost over the fair value of the underlying collateral, and (3) management's current and future view of the macroeconomic environment.

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

We also utilize a reasonable and supportable forecast period equal to the contractual term of the loan plus any applicable short-term extensions that are reasonably expected for construction loans.

Loans, interest receivable, due from borrowers, unfunded commitments, and investment securities are all presented net on our Condensed Consolidated Balance Sheets with expanded disclosures in the notes to our condensed consolidated financial statements.

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.

Loans, interest receivable, due from borrowers, unfunded commitments, and (available-for-sale debt) investment securities are all presented on a net basis on the unaudited Condensed Consolidated Balance Sheets with expanded disclosures in the notes to the unaudited condensed consolidated financial statements.

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

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.

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.

Any impairment losses or recoveries are included in the unaudited Condensed Consolidated Statements of Operations.

Our Loan Portfolio

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

The following table presents certain information regarding our real estate lending activities for the three months ended March 31, 2026:

Three Months Ended March 31, 2026

(in thousands, except number

Loans disbursed (1)

Loans repaid $ 40,651 $ 112,045

Loans originated 4

Loan repayments $18,050

Number of loans repaid 9

Principal of loans transferred to real estate owned $—

Number of loans transferred to real estate owned —

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

As of March 31, 2026 As of December 31, 2025

(in thousands, except number

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______________________________________________________________

(1) Includes new originations, modifications, and draws

(2) Includes default interest.

(3) Does not give effect to extensions.

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:

The table below presents our loans held for investment by loan size as of March 31, 2026:

Amount Number of

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Total 108 100.0 % $ 355,835 100.0 %

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:

As of March 31, 2026, the primary geographic 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 March 31, 2026:

State Number of

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Maine 1 0.9 % 550 0.2 %

Maryland 2 1.9 % 3,073 0.9 %

Massachusetts 10 9.3 % 57,768 16.2 %

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Tennessee 1 0.9 % 13,362 3.8 %

Virginia 1 0.9 % 4,850 1.4 %

Washington D.C.

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Total 108 100.0 % $ 355,835 100.0 %

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

The following table presents our loans held for investment as of March 31, 2026 by year of origination:

Year of Origination Number of

8 unchanged sentences

2021 20 18.5 % 81,341 22.9 %

2020 4 3.7 % 6,227 1.7 %

2019 and prior 6 5.6 % 2,291 0.6 %

Total 108 100.0 % $ 355,835 100.0 %

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

The following table presents additional information regarding the types of properties securing loans held for investment as of March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

(in thousands)

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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 September 30, 2025 and December 31, 2024:

September 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 March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

(in thousands)

2 unchanged sentences

Performing – General reserve $ 280,436 $ (5,413) 1.9 % $ 259,833 $ (5,262) 2.0 %

Non-performing – General reserve 20,970 (403) 1.9 % 5,396 (96) 1.8 %

Non-performing – Direct reserves 35,818 (289) 0.8 % 80,079 (2,054) 2.6 %

2 unchanged sentences

Total $ 355,835 $ (12,401) 3.5 % $ 377,418 $ (11,510) 3.0 %

For further information, see Note 4 – Loans and Allowance for Credit Losses — to our condensed consolidated financial statements.

For further information, see Note 4 – Loans and Allowance for Credit Losses — to our unaudited condensed consolidated financial statements.

Investment in Developmental Real Estate

As of March 31, 2026, we owned eight 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 investments in developmental real estate owned property reflected on our unaudited Condensed Consolidated Balance Sheet as of March 31, 2026:

Property Type Location Month of

Acquisition Carrying

(in thousands)

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 2,197

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

Residential - Multifamily (3 completed units and one parcel) Naples, FL January 2026 36,151

Accumulated depreciation (36)

Total $ 46,013

For further information, see Note 5 – Investment in Developmental Real Estate, Net — to our unaudited condensed consolidated financial statements.

Real Estate Owned

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:

As of March 31, 2026, we owned twelve properties, each of which previously served as collateral for first mortgage loans.

The following table presents the carrying value of each of our properties reflected on our unaudited Condensed Consolidated Balance Sheet as o f March 31, 2026 :

Property Type Location Month of

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Land Bristol, CT December 2019 936

Land Sturbridge, MA November 2022 110

Residential - Single Family Bellingham, MA December 2023 293

Land Stamford, CT May 2024 115

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

Residential - Single Family Gainsville, FL November 2024 250

Commercial - Office Windsor, CT December 2024 1,400

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Land Marathon, FL January 2025 410

Residential - Single Family Old Lyme, CT May 2025 1,310

Residential - Single Family Old Lyme, CT May 2025 285

Residential - Single Family Old Lyme, CT May 2025 315

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

Commercial - Office Baltimore, MD July 2025 741

Mixed Use Cumberland Center, ME July 2025 $ 300

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

Total $ 16,022

For further information, see Note 6 – Real Estate Owned (REO) — to our condensed consolidated financial statements.

For further information, see Note 6 – Real Estate Owned (REO) — to our unaudited condensed consolidated financial statements.

Results of Operations

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

Our results of operations depend primarily on net interest income, the credit performance of our loan portfolio, and the effectiveness of our operating platform.

These results are affected by a variety of factors, including demand for commercial real estate loans, competitive conditions in loan origination, the cost, structure, and availability of financing, operating expense levels, and the performance of the collateral securing our loans.

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Three Months Ended March 31,

2026 2025 $ Change % Change

Interest income from loans $ 8,754 $ 7,887 $ 867 11.0 %

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 %

Interest income from limited liability company investments 858 1,942 (1,084) (55.8) %

Interest expense and amortization of deferred financing costs (6,059) (6,094) (35) (0.6) %

Net interest income 3,553 3,735 (182) (4.9) %

Net interest margin 3.9 % 4.0 %

Provision for credit losses related to loans held for investment (5,372) (1,052) 4,320 410.6 %

Change in valuation allowance related to loans held for sale — 4 (4) (100.0) %

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.

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 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

Series A Preferred Stock ($25 liquidation preference per share) (57,669) (57,669)

Total shareholders’ equity, net of preferred stock $ 117,949 $ 120,238

Number of common shares outstanding at period end 47,691,121 47,310,139

Book value per common share $ 2.47 $ 2.54

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 %

Net interest (loss) income after provision for credit losses related to loans held for investment and changes in valuation allowance related to loans held for sale (1,819) 2,687 (4,506) (167.7) %

Fee income from loans 1,292 1,425 (133) (9.3) %

1 unchanged sentence

Other investment income 3 6 (3) (50.0) %

Loss on equity securities (140) (125) 15 12.0 %

Other income 143 72 71 98.6 %

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

Total other income 1,403 1,488 (85) (5.7) %

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 (2,138) (1,771) 367 20.7 %

General and administrative expenses (1,963) (1,355) 608 44.9 %

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) %

Transaction expenses (1,608) — 1,608 100.0 %

Recovery of impairment loss on real estate 97 — 97 100.0 %

Gain on sale of investments in developmental real estate, real estate owned, and property and equipment, net 196 — 196 100.0 %

Other expenses (245) (145) 100 69.0 %

Total operating expenses (5,661) (3,271) 2,390 73.1 %

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) %

Net (loss) income (6,077) 904 (6,981) (772.2) %

Preferred stock dividends (1,120) (1,117) 3 0.3 %

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

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.

Net loss attributable to common shareholders $ (7,197) $ (213) $ (6,984) NM

Basic and diluted loss per common share $ (0.15) $ —

NM - not meaningful

Net (loss) income and net loss attributable to common shareholders are the primary metrics by which we assess our business performance.

Accordingly, we closely monitor the following primary drivers of these metrics:

Net interest income

Net interest income represents the largest component of net income and is evaluated on both an absolute basis and relative to our provision for credit losses and operating expenses.

Net interest income is generated when the yield earned on our loan portfolio exceeds the cost of financing those assets, which we primarily achieve through short- and long-term financing arrangements.

Accordingly, we actively monitor financing market conditions and maintain ongoing dialogue with investors and financial institutions as we evaluate funding sources and cost of capital.

In evaluating net interest income, management monitors:

(1) portfolio loan yields, (2) funding costs, (3) net interest spread, and (4) net interest margin.

Net interest spread reflects the difference between the yield earned on our loans and the interest rates paid on our funding sources.

Net interest margin represents net interest income, calculated as annualized interest income less annualized interest expense, expressed as a percentage of average loans outstanding for the applicable period.

Average loans outstanding are calculated using the arithmetic average of the unpaid principal balance of loans held for investment as of the end of each of the five most recent fiscal quarters.

Changes in net interest income are primarily driven by origination activity, changes in average outstanding loan balances (total, performing and nonperforming), and fluctuations in interest rates affecting asset yields and funding costs.

Historically, portfolio growth driven by loan originations has been the primary contributor to increases in net interest income.

Net interest income is evaluated both before and after interest expense associated with corporate debt and before and after provisions for credit losses.

Interest income from loans - increased from the corresponding period in the prior year, as further analyzed below.

• Average loans held for investment were $365.5 million and $370.3 million for the three months ended March 31, 2026 and 2025, respectively.

The effective yield on total loans held for investment was 10.0% and 8.5%, respectively.

Results are impacted by nonperforming loans and real estate owned, which do not contribute interest income.

• Average total performing loans held for investment were $270.9 million and $275.1 million for the three months ended March 31, 2026 and 2025, respectively.

The effective yield on performing loans was 13.5% and 11.5%, respectively.

The difference between total portfolio yield and performing loan yield reflects the impact of nonaccrual loans, which do not generate current interest income.

• Average nonperforming loans held for investment were $95.7 million and $97.3 million for the three months ended March 31, 2026 and 2025, respectively.

Interest income from limited liability company investments - Interest income generated from our investments in the Shem Creek funds and direct loan co-investment vehicles decreased from the corresponding period in the prior year.

The decrease was primarily attributable to lower average capital deployed within certain direct loan co-investment vehicles during 2026.

As underlying mortgage loans repaid, capital was returned to us and not redeployed at prior levels within those structures.

In certain vehicles, our ownership percentage also declined during the period, further reducing its effective exposure.

The decrease in interest income was driven by lower average invested balances rather than changes in underlying loan yields or credit performance.

The Shem Creek portfolios continue to consist primarily of short-duration, first mortgage loans, and there were no material changes in the contractual economics of those investments during the period.

We evaluate these minority investments as part of its broader capital allocation framework.

Given the short-term nature of the underlying assets and the return of capital upon loan repayment, investment balances may fluctuate period to

period depending on repayment activity and redeployment decisions.

Capital returned from these vehicles may be redeployed into other investment opportunities or retained to support liquidity and balance sheet objectives.

See Note 19 — Limited Liability Company ("LLC") Investments — to our unaudited condensed consolidated financial statements for the three months ended March 31, 2026.

Interest expense and amortization of deferred financing costs - consistent with the corresponding period in the prior year, primarily attributable to lower average borrowings but at higher average interest rates.

During 2025, as a result of maturing unsecured notes payable, we began repositioning its capital structure through the issuance of $100.0 million ($100.0 million and $90.0 million drawn as of March 31, 2026 and December 31, 2025, respectively) of Senior Secured Notes due 2030.

The secured notes replaced a portion of lower rate unsecured notes and reduced reliance on repurchase agreements and lines of credit.

We continue to evaluate refinancing strategies for upcoming maturities late 2026 and into 2027, with a focus on extending duration and optimizing cost of capital.

Access to diversified funding sources remains a strategic priority as we balance liquidity, leverage, and shareholder returns.

Net Interest Margin

Net interest margin in the first quarter of 2026 was 3.9% compared to 4.0% in the first quarter of 2025.

The decrease in net interest margin reflects both structural and cyclical factors.

Structurally, refinancing activity during 2025 increased the weighted average cost of capital.

Cyclically, lower average earning assets reduced interest-earning balances.

While asset yields remained strong on performing loans, 13.5% in first quarter 2026 as compared to 11.5% in the first quarter 2025, overall margin stabilization depends on continued resolution of nonperforming loans, normalization of earning asset levels, and disciplined origination activity at spreads consistent with current funding costs.

Net interest (loss) income after provision for credit losses, loss on sale of loans, and changes in valuation allowance

Credit risk management is central to our operating model.

We seek to minimize credit losses through disciplined underwriting, active life-of-loan portfolio management, and targeted special servicing.

We closely monitor portfolio credit performance, including delinquency trends and expected and realized credit losses, as a key indicator of overall operating results.

Provision for credit losses related to loans held for investment - increased from the corresponding period in the prior year primarily due to declines in collateral valuations for loans previously reserved and a credit loss of $3.9 million related to a loan restructuring.

This non-cash loss relates to the Naples, Florida loan restructuring where we took control of the three completed condominium units and entitled land for development of four additional condominium units which is treated as a deed in lieu of foreclosure for accounting purposes.

The loan restructuring was negotiated by management to recover the full carrying value of the mortgage note receivable on an undiscounted cash flow basis.

Due to the length of time between taking over the project and receipt of the final cash flows from sales of the units under construction, we are required to record the assets received on a discounted cash flow basis.

As a result, we recorded a $3.9 million charge in first quarter 2026.

We believe the sales of the condominium units provides an opportunity to recover the fair value adjustment over time;

however, actual recovery will depend on sales prices, timing, completion costs and market conditions.

We continue to apply a conservative collateral-dependent methodology for loans in foreclosure and pending foreclosure status.

We evaluate the allowance quarterly based on updated appraisals, liquidation cost assumptions and macroeconomic forecasts under the CECL framework.

Total other income

Total other income remained relatively consistent from the corresponding period in the prior year, with underlying components shifting in composition rather than magnitude.

Fee income on loans - declined from the corresponding period in the prior year primarily due to lower new loan origination volume.

Origination and modification fees are recognized over the contractual life of the loan, and the decrease reflects the smaller average portfolio growth and reduced refinancing activity relative to the prior year.

Income from limited liability company investments - no material change from the corresponding period in the prior year.

See Note 19 — Limited Liability Company ("LLC") Investments — to our unaudited condensed consolidated financial statements.

Other investment income - Other investment income varies based on the timing of realizations and performance of non-core investment holdings.

Loss on equity securities - The balance includes net mark-to-market losses on equity securities held within the investment portfolio.

These losses reflect changes in fair value and are inherently subject to market volatility.

Other income - Other income consists primarily of ancillary revenue streams, including property-related income and miscellaneous recoveries.

The increase from the corresponding period in the prior year reflects rents recognized on certain investments in developmental real estate and real estate owned and certain non-recurring recoveries.

Total operating expenses

Our operating expenses primarily include compensation and benefits for our employees, general and administrative expense including occupancy costs, professional fees for legal, consulting, and advisory services, costs related to investments in developmental real estate, foreclosure pursuits and the resolution and disposition of real estate owned.

We monitor operating expenses in relation to profitability and the scale of our loan portfolio.

Because origination volume and portfolio size influence the level and impact of operating expenses, we also closely monitor loan origination activity and key loan characteristics, including interest rates, loan-to-value ratios, estimated credit losses, and expected loan duration.

We continue to align operating expense levels with portfolio scale while preserving asset management intensity.

As origination activity and earning asset levels increase, we expect to benefit from operating leverage as fixed overhead costs are absorbed over a larger asset base.

Total operating expenses increased from the corresponding period in the prior year as further discussed below.

Compensation and employee benefits - increased modestly from the corresponding period in the prior year, reflecting strategic additions to personnel during 2025 and performance-based compensation adjustments including stock-based compensation.

General and administrative expenses - increased from the corresponding period in the prior year due to additional costs associated with our investments in developmental real estate, real estate owned, increased external audit fees and increased director fees.

Transaction expenses - expenses in the current year are associated with a contribution transaction as described earlier in the Recent Developments section.

Additional material costs are expected to be incurred until that transaction closes.

Recovery of impairment loss on real estate owned - increased from the corresponding period in the prior year and relates to specific property-level valuation adjustments following updated market data and liquidation timelines.

Gain on sale of investments in developmental real estate, real estate owned and property and equipment, net - The current period reflects gains realized on the disposition of select real estate assets and developmental projects.

Other expenses - increased from the corresponding period in the prior year and primarily reflect operating costs associated with real estate owned, legal matters, and portfolio servicing.

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

Net (loss) income and net loss attributable to common shareholders - Operating results for the first quarter of 2026 were negatively impacted by increases in valuation allowances, discounted cash flow fair value adjustment on loan restructuring recorded in provision for credit losses related to loans held for investment, and transaction expenses.

Book value per common share

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

March 31, 2026 December 31, 2025

Total shareholders’ equity $ 165,609 $ 174,937

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Book value per common share $ 2.25 $ 2.46

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.

The decrease in book value per common share is primarily due to cash dividends declared and paid for the three months ended March 31, 2026 on issued and outstanding common shares and shares of Series A Preferred Stock totaling $3.5 million, or $0.07 per common share, and net loss attributable to common shareholders for the three months ended March 31, 2026 of $6.1 million, or $0.13 per common share.

This quarter's net loss impacting the book value per common share was materially driven by 1) the non-cash discounted cash flow fair value adjustment on loan restructuring recorded in provision for credit losses related to loans held for investment of $3.9 million, or $0.08 per common share, and 2) contribution transactional expenses of $1.6 million or $0.03 per common share.

The aggregate impact of both events is $5.5 million, or $0.11 per common share of book value decline from year end.

Liquidity and Capital Resources

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.

Total assets at March 31, 2026 were $473.3 million compared to $460.0 million at December 31, 2025, an increase of $13.3 million, or 2.9%.

The increase was due primarily to increases in investments in developmental real estate of $36.3 million and other assets of $4.0 million offset by decreases in loans held for investment, net of $22.5 million and investments in limited liability companies of $3.9 million.

The increase in investments in developmental real estate and decrease in loans held for investment, net is primarily driven by the Nautilus loan restructuring as described elsewhere in this report.

Total liabilities at March 31, 2026 were $307.7 million compared to $285.1 million at December 31, 2025, an increase of $22.6 million, or 7.9%.

This increase is primarily due to increases in senior secured notes payable of $10.1 million, lines of credit of $10.0 million and advances from borrowers of $1.3 million.

As of March 31, 2026, the Company’s capital structure consisted of a mix of unsecured listed notes, senior secured notes, and revolving credit facilities.

The increase in secured financing during 2025 reflects management’s strategy to diversify funding sources.

While secured borrowings increased asset encumbrance, they also provide longer-term capital stability and improved liquidity flexibility.

We monitor asset coverage ratios, covenant compliance and refinancing risk associated with upcoming maturities.

Total shareholders’ equity at March 31, 2026 was $165.6 million compared to $174.9 million at December 31, 2025, a decrease of $9.3 million, or 5.3%.

This decrease was due primarily to an aggregate of $3.5 million of dividends paid to holders of Series A Preferred Stock and common shares during the quarter and a net loss of $6.1 million for the period, offset by a $0.3 million increase in additional paid-in capital related to stock-based compensation.

Historically, we have distributed a substantial portion of our earnings to shareholders in order to maintain our REIT qualification.

Dividend levels are determined by the Board of Directors based on taxable income, capital needs, liquidity, market conditions and regulatory requirements.

Accordingly, dividend levels may fluctuate from period to period depending on operating performance, credit trends, asset repositioning activity and capital market access.

Sources and Uses of Funds

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Our primary uses of cash include debt service payments (both principal and interest), new originations of loans held for investment, new investments in real estate, dividend distributions to our shareholders, and operating expenses.

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

Nine Months Ended One Year-Change

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

Three Months Ended One Year-Change

Amount 2026 2025 Amount Percentage

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Net cash provided by operating activities 835 191 644 337.2 %

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.

Net cash (used in) provided by investing activities (16,504) 5,747 (22,251) (387.2) %

Net cash provided by financing activities 16,310 410 15,900 3878.0 %

Cash and cash equivalents, March 31 $ 11,565 $ 24,414 $ (12,849) (52.6) %

For a detailed breakdown of our cash flows during the three months ended March 31, 2026 and 2025, 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, 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, transaction expenses, dividend payments, interest and principal payments on our indebtedness, including repayment/refinancing of the Notes maturing in December 2026 and March 2027, and payments for usual and customary operating and administrative 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 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 (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 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 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 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.

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

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.

Our long-term cash needs will include principal and interest payments on outstanding indebtedness including notes payable in the principal amount of $173.2 million maturing late in 2026 and in 2027, preferred stock dividends and funding of new mortgage loans.

Specific to the maturities in 2026 and 2027, we believe that we will address these maturities through a combination of operating cash flow, credit facility capacity, secured financing alternatives and potential capital markets transactions, subject to market conditions.

There can be no assurance that refinancing will occur on terms similar to existing obligations.

We continue to proactively evaluate capital market access and balance sheet positioning in advance of these maturities.

In general, 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 investment in developmental real estate and real estate owned.

Off-Balance Sheet Arrangements

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Contractual Obligations

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.

As of March 31, 2026, our contractual obligations include unfunded amounts of any outstanding construction loans and unfunded commitments for loans and limited liability company investments.

Total Less than

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Recent Accounting Pronouncements

See Note 2 — Significant Accounting Policies — to our condensed consolidated financial statements for explanation of recent accounting pronouncements impacting us.

See Note 2 — Significant Accounting Policies — to our unaudited condensed consolidated financial statements for explanation of recent accounting pronouncements impacting us.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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