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

May 12, 2020 • 08:00 am ET

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

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Q & A
Executive
John L. Villano

of 2 things, at least from my desk. People have not been damaged as bad as we may think, which is a great thing for us. Or second, they're trying to buy an extra month or two. So they have our paperwork. We're trying to schedule a closing, and they're trying to buy not only the 90 days but maybe an extra month or two. So that's the current -- that's the gun in the pale for us. We need to see how those work out. And if they go away, then you know what this -- our damage has not been bad, right? Well, our damage will be well understated. And I expect probably sometime in the third quarter, things are going to pick up here again. A lot has to do with how we finance our business. Credit markets are tight. Currently, our bonds are trading less than par. And all that, that equates to a larger interest rate than our approximate 7% yield to the investor, okay? Our bonds have rallied tremendously in the past one and half months, and I suspect that they will be at par. And prior to COVID-19, they were trading above par. So I think as a measuring stick when our bonds make that move back to par, I believe the capital markets will be open to us, and we'll go back on our growth plans.

Analyst
Ben Zucker

Okay. That was a lot of good detail there. Just real quickly on the portfolio. Is it safe to assume that probably repayments are going to slow for a little bit, which could obviously lead to maybe some duration extension for the in place portfolio?

Executive
John L. Villano

Right now, monthly payments are on track. Where we're seeing the slowdown, Ben, is in the refinance activity, -- okay. So that capital comes back to us. We spin around. We put it back to work. So as a result of a slow repayment trend, our origination fees are down substantially. Our interest expense.

Analyst
Ben Zucker

That makes sense.

Executive
John L. Villano

Our origination fees are down.

Analyst
Ben Zucker

And then you started talking about forbearances. They're $9.2 million, a little more than 8%. I think this was something that a lot of people were expecting to come. Could you just help me understand exactly what those conversations sound like? I saw on the 10-Q that you grant them a 90 day interest-free period after they can prove some kind of hardship. With respect to that 90 day or three month interest holiday, is that then tacked on or like amortized over the subsequent payments? Or the is that 90 day balance added to like the principal balance at maturity? Just kind of how is that recouped? And if you could go over that, that would be helpful.

Executive
John L. Villano

Okay. Yeah. -- This is another great question. So when a borrower calls looking for assistance, our people in the office, they've been trained, and they had -- not that they have a script, but they understand the process. And