Sachem Capital Corp. Common Shares

Greetings and welcome to the Sachem Capital Corp. 4th Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Steve Sweat, Investor Relations. Thank you, sir. You may begin.

Good morning, and thank you for joining Sachem Capital Corp's fourth quarter and full year 2025 earnings conference call. On the call from Sachem Capital today are Chief Executive Officer John Villano, CPA, and Executive Vice President and Chief Financial Officer Jeff Walrader. Last evening, the company announced its operating and financial results for the year ended December 31st, 2025. The press release is posted on the company's website at www.sachemcapitalcorp.com. In addition, The company filed its Form 10-K last evening, which can be accessed on the company's website as well as at the SEC's website at www.sec.gov. As a reminder, remarks made on today's conference call may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. These include the risks detailed in our annual Form 10-K and other filings with the SEC, including risks related to non-performing loans, credit losses, and market conditions. We do not undertake any obligation to update our forward-looking statements in light of new information or future events. For a more detailed discussion of the factors that may affect the company's results, please refer to our earnings release and our most recent SEC filings. During this call, the company will be discussing certain non-GAAP financial measures. More information about these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are contained in our SEC filings. With that, I'll now turn the call over to John.

Thank you, and thank you to everyone for joining us today. I will begin by reviewing our operating and portfolio activities for the full year 2025 and provide an update on our strategic progress. I will then turn the call over to Jeff to discuss our financial results and balance sheet, after which we will open the call to questions. 2025 represented an important stabilization year for Sager. following the portfolio repositioning actions taken in 2024. During 2025, we continued executing our plan to stabilize and strengthen the balance sheet while positioning Sachem for disciplined growth. Our focus throughout 2025 centered on preserving capital, enhancing liquidity, and improving the overall credit quality of our portfolio. These efforts enabled us to return to profitability and reestablish a foundation for sustainable growth. As we enter 2026, we are increasingly focused on monetizing non-performing assets, redeploying capital to new originations. Over the course of the year, we refinanced and amended key credit facilities, secured new senior secured financing, and proactively managed our debt maturities. At year end, debt represented approximately 61.4% of total capital, consistent with prior year and aligned with our long-term capital structure targets. We remain focused on reducing our overall cost of capital and maintaining adequate liquidity as we approach note maturities beginning in late 2026. Turning to the portfolio, as of December 31st, 2025, we had 115 loans held for investment with an aggregate gross principal balance of approximately $377.4 million. During the year, we originated 30 loans totaling approximately $152.6 million and received approximately $162.7 million loan repayments. Our weighted average contractual interest rate, inclusive of default interest, was 13.1% at year end. Portfolio performance remained broadly consistent with our expectations as we continued working through legacy non-performing assets. As of December 31, 2025, we had approximately 117.6 million gross unpaid principal balance of non-performing loans included in loans held for investment, up 30.5 million gross from the 87.1 million gross as of December 31, 2024. While non-performing balances remain elevated relative to historical levels, we believe the actions taken over the past year positioned the portfolio for accelerating resolution activity for the coming quarters. I will highlight some such activity here very shortly. As these legacy assets move through resolution, our objective is to convert those positions back to liquidity and redeploy that capital into new originations. This capital recycling is a core component of our business model and an important driver of future net interest income growth. REO decreased nominally by 2.2 million, or 11.7% over the year. Full-year activity reflected our continued focus on actively managing and repositioning assets through Urbane Capital, our asset management platform, and working through legacy NPL and REO exposure. During the fourth quarter, we completed the sale of our Westport, Connecticut office assets, generating approximately $19.9 million in net proceeds and a $4 million book gain, further strengthening our liquidity and balance sheet. Certain foreclosure processes also concluded during the year, resulting in additions to REO that we are now positioning for monetization. Solving NPLs and REO can be a lengthy process, but we made steady progress throughout the year. As of December 31, 2025, our book value was $2.46 per share, representing a 6.8% decrease from year-end 2024. Urbane remains a key component of our strategy, providing the capability to actively manage and maximize value on assets that transition from lending into ownership through foreclosure or restructuring. Turning to Naples, subsequent to year-end, we took a significant step in addressing this legacy 2021 exposure by acquiring 100% of the membership interests the entity holding the condominium assets associated with our prior loan at an approximate net book value of $39.9 million with no material book gain or loss at closing. We now directly control three completed condominium units and the southern parcel of the property which had previously been in dispute and approved for four additional units. Through Urbane, we have assumed responsibility for actively managing and monetizing these assets over the next 18 to 24 months, subject to market conditions. We also retained our $12.3 million first mortgage on the separate waterfront parcel as a senior secured lender. Solidating control of the condominium assets while maintaining our secured lender position simplifies the capital structure and enhances execution clarity. At year end, we had invested $36.6 million across seven Shem Creek capital funds, including our 20% interest in the manager providing attractive exposure to commercial multifamily and industrial finance alongside experienced sponsors. From a capital markets perspective, during 2025, we issued $100 million of senior secured notes due 2030, reduced certain short-term borrowings, and repaid maturing unsecured notes. Subsequent to year-end, we extended our $50 million Needham credit facility to March 2028 with an option to extend to 2029. further enhancing liquidity and balance sheet flexibility. Turning to the macro environment, our industry continues to navigate a cautious lending environment. While short-term rates have declined from peak levels, medium and longer-term borrowing costs remain elevated, keeping affordability stretched and existing home sales below historical averages. While these conditions continue to weigh on origination activity, and contribute to elevated NPLs and REO across the industry. It also creates opportunities for experienced lenders like Sage to provide flexible capital solutions where traditional financing remains constrained. A disciplined approach to credit will guide new originations. They focus on single-family and multifamily residential assets supported by strong fundamentals, experience, and sponsorship. With that, I will now turn the call over to Jeff.