Company: SACH
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001410578-25-000587
Chunk: 19

Company: Sachem Capital Corp.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1A
Chunk 19
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Item 1A. Risk Factors.

The following factors may affect our growth and profitability of and should be considered by any prospective purchaser or current holder of our securities:

Risks Related to Our Current Financial Condition

We incurred a net loss attributable to common shareholders for 2024 and we cannot assure you that we will be profitable for 2025.

For the year ended December 31, 2024, we reported a net loss of $43.9 million compared to net income of $12.1 million for the year ended December 31, 2023. This is the first annual net loss that we reported since we became a publicly traded company in 2017. There were a number of factors that contributed to this result. For the year ended December 31, 2024, we recorded a $22.0 million realized loss on sale of loans, a $4.9 million valuation allowance for loans held for sale, a $26.9 million provision for credit loss related to loans held for investment and loans transferred to real estate owned, and an impairment charge of $0.5 million relating to real estate owned, all of which are presented on our consolidated statement of operations. Second, top-line revenue for 2024 declined 11.2% compared to 2023, after we had delivered solid growth every year from 2017 through 2023. This decrease was due to the unavailability of capital required to grow our business. Historically, we relied on the capital markets to provide us with the bulk of our growth capital. Given the interest rate environment in 2023 and 2024 and the state of the real estate market in general, we were unable to access the capital markets and our existing credit facilities were not robust enough to fill the gap. The effects of this lack of growth was compounded by the fact that two tranches of outstanding Notes, having an aggregate principal amount of $58.2 million came due in 2024 and were repaid from cash flow from operations or drawdowns on our credit facilities. We cannot assure you that any of these structural issues adversely impacting our operational performance will ease or resolve in 2025. If they do not, and we are not able to find suitable solutions to address these issues, we may continue to incur losses in 2025.

Concurrently with the decline in our operational performance, we have reduced the dividend payable to shareholders.

As a real estate investment trust (REIT), to maintain our REIT status for income tax purposes, we