Sachem Capital Corp. (NYSE MKT:SACH) Q1 2020 Earnings Conference Call - Final Transcript

May 12, 2020 • 08:00 am ET


Sachem Capital Corp. (NYSE MKT:SACH) Q1 2020 Earnings Conference Call - Final Transcript


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John L. Villano

As of March 31, 2020, real estate owned decreased to $7.3 million compared to $8.3 million at year-end. Net cash provided by operating activities for the 3 months ended March 31, 2020, was approximately $1.7 million compared to approximately $1.2 million for the same period last year. We've received several questions regarding our plans as it relates to the dividend. As I've noted in the past, from February 2017 through March 31, 2020, Sachem has paid aggregate dividend equal to 100% of our net income over the period. In light of the uncertain outlook for 2020 due to COVID-19, the company has deferred any decision regarding further 2020 dividends until after the end of the second quarter. Our plans have not changed in this regard, and we plan to provide further updates when we report our second quarter results. As most of you are aware, as a REIT, Sachem is required to distribute a minimum of 90% of its taxable income each year to shareholders. We intend to satisfy this requirement for 2020. Let me take a moment now to discuss liquidity and capital resources. We ended the quarter with approximately $18 million in cash, cash equivalents and short-term investment securities. These funds are the balance remaining from our $31.4 million in equity capital and $58.2 million of debt capital we raised last year. The net proceeds from these financing transactions were used to pay off our outstanding balance on our $35 million credit facility and ex proceeds were intended to grow our loan portfolio and for working capital. Our decision to refinance and bolster our balance sheet and its timing has worked to our advantage. We believe we are well positioned to weather the current storm. In connection with the termination of our line of credit in 2019, we eliminated significant banking charges and fees associated with the facility. We also reduced our credit exposure from a single asset class, the residential fix and flip market, giving us greater flexibility to react to changes in the marketplace. We can now deploy capital where we believe we can generate the best returns while minimizing risk in the process. From a macro perspective, last year was highly competitive for Sachem with increased competition from well-capitalized market participants, aggressive pricing and generally less stringent lending criteria. Obviously, the market has changed dramatically. And as a non bank lender with a strong balance sheet and less than 1% of our assets secured by creditors, we believe we are well positioned when stability returns to the marketplace. In contrast, competitive lenders are funded by banks and large mortgage REITS. And with these entities going through their own set of challenges, significantly less funding is being deployed to compete with us. The fact that we are able to lend off our own balance sheet is a major differentiator between and competitive advantage for Sachem. That said, we continue to be highly selective as we review lending opportunities. We are limiting new loan activity to the