Greetings, and welcome to the Sachem Capital Fourth Quarter 2018 Business Update Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. David Waldman with Crescendo Communications. Thank you. You may begin.

Good morning, and thank you for joining Sachem Capital Corp's 2018 year end business update conference call. On the call with us today is John Villano CPA, Co-Chief Executive Officer and Chief Financial Officer of Sachem Capital. The company issued a press release yesterday containing 2018 year end financial results, which is also posted on the company's website. In addition, the company filed its 2018 annual report on Form 10-K with the U.S. Securities and Exchange Commission on March 29th, which can also be accessed on the company's website as well as the SEC's website at www.sec.gov. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1021. Before Mr. Villano reviews the company's operating results for year end 2018 and the company's financial condition at December 31, 2018, we would like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in this conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words anticipate, estimate, expect, project, plan, seek, intend, believe, may, might, will, should, could, likely, continue, design, and the negative of such terms and other words and terms of similar expressions are intended to identify forward-looking statements. These forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to several risks, uncertainties and assumptions as described in the company's Annual Report on Form 10-K for 2018 filed with the U.S. Securities and Exchange Commission on March 29, 2019. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this conference call may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although, the company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance or achievements. In addition, neither the company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements. All forward-looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements, as well as others made in this conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties. With that out of the way, I’ll now turn the call over to John Villano. Please go ahead, John.

Thank you, David, and thanks to everyone for joining us today. I am pleased to report that Sachem finished the year strong and we continue to deliver positive top and bottom line results. Total revenues and net income for the year ended December 31, 2018 were approximately $11.7 million and $7.8 million, reflecting 67% and 60% increases respectively versus the year ended December 31 2017. Net income per share for 2018 was $0.50 compared to $0.38 for ’17, a 32% increase. This increase reflects our continued ability to put capital to work in a profitable and creative manner. We had a strong first half of 2018 which was somewhat tempered in the second half of the year due to constraints on capital. Nevertheless, we believe 2019 will be another solid year based on our current backlog and ongoing requests for funding. We will continue to be selective among the numerous opportunities available to us. In the meantime, we believe there are five key factors to our continued success. First, disciplined underwriting, second, extensive due diligence including borrower background analysis, third, flexibility in structuring loans to suit the needs of our borrowers, fourth, borrower activity is monitored throughout the loan term and finally, we portfolio all our loans thereby maintaining a strong relationship with our borrower. As a result of our continuing operational success in January we paid a dividend of $0.17 a share bringing the total dividends paid with respect 2018 to approximately $7.3 million. This represents approximately 95% of our 2018 net income. This high dividend payout reflects not only our strong fiscal year 2018 performance, but also our commitment to providing investors attractive risk-adjusted returns. As of December 31, 2018, our balance sheet contains relatively low levels of leverage compared to our peers. Mortgages receivable at December 31,…

Thank you. At this time we'll be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Mark Deloitte [ph] with Deloitte & Associates International [ph]. Please proceed with your question.

Good morning, John. How are you?

Good morning, Mark. How are you?

I just have a couple quick questions. If Connecticut starts slowing down where you're not getting enough interest in the loans, can you expand outside of Connecticut and to say New York, Massachusetts? I know you have a few loans there, but what's your intentions outside of Connecticut, especially if things slowed down like you - you know, where you'd have to look outside that arena?

That's great question. I'll try to take this in two parts. So first, we are looking to expand operations away from our Connecticut borders and you are correct in saying, we do have loans in Rhode, Island. We do have loans in Weston, Mass. We do have loans in Westchester County. We do not lend in New York City. We do not lend in Boston. Those markets are a little too hot for us. To expand away from our Connecticut borders, it becomes a capital question for us. So currently right now Mark, we're within an hour's drive of the office. So if you just - you know, from Branford on the shore line where if you drove - made a semicircle around every one of our properties is within an hour drive. So we have - we have the ability to review all our all our assets. We have the ability, we have inquiries where small companies want us to expand beyond our borders and you know, the need the need for us to do that is I've got to lock up some - some good efficient capital to be serious when we move into an area. And what we're trying to do here is we don't want to do this the Wall Street way. Wall Street is going out, they are buying paper from brokers and consolidators. That's not our game. We want to buy the boots on the ground. We want to have interaction with the borrowers. We want to have a feel for the area that we're lending in and most importantly when we acquire this - the smaller lender just like us, I want him to have a financial interest in not only his business, but ultimately in the assets of Sachem’s as a future Sachem shareholder. And that's the only way we're going to be able to build this thing safely. You know, we - there's a lot of opportunity to move, but it's got to be done safely. We have to have the right individual. And he has to have enough assets in the game to make this safe and conservative for our investors.

Perfect. I'm glad to hear that. And with regards to the ATM, it appears that it's close to a wash with - wouldn't you sell the stock and you have to pay dividends on it for what you get in income off of it. Do you have any comment on the ATM being neutral or slightly positive creditive [ph] to the company?

I am going to - let me delve in a little bit, so this will come from our K. You know, currently today we have $31.5 million on our Webster credit facility. Our maximum line is $35 million. We look at that as being fully funded. We have a significant backlog of loans in the office. We have a significant commitment for future construction draws. So even though I have availability on our line in the office here we consider ourselves fully funded and we're using - we're using the ATM. to just provide some liquidity. It's really not meant to finance the dividend. It's really to give us the ability to invest in an opportunity that may show up on a moment's notice. And in fact, we've used it to make loans in the first quarter of 2019.

Great. That's - so that's sort of what I thought and I really appreciate all the work you guys are doing and as I think a significant shareholder I plan to - plan to be one for a long time. Thanks again for your input.

Thanks, Mark. Great questions.

Thank you. Our next question comes from the line Jim Altschul with Aviation Advisory Service. Please proceed with your question.

Good morning. Two questions if I may please. First of all, can you explain the transaction in which you were signed a loan to a shareholder? And there's no liability due to shareholder and who that shareholder was?

Okay. I can't tell you who the shareholder was, but I can be specific on the transaction.

Okay.

Okay. So what we do - and the shareholder is not executive management, I can tell you that.

Oh!, okay…

Its not a related party. So independent – and Sachem was formed from a pool of 175 individuals and partners at the time. And there are times in our operations where our credit facility is not as robust and expandable as we would like. And you know, I may have talked to some of you, you've heard that we don't like to sell our notes. We love our paper. We want it. It earns 14.5% all in the year annual. When we get tight and we need money to fund opportunities, I get on the phone and I have one or two individuals that will step up and buy existing Sachem paper and the $1.2 million that's reflected on our balance sheet is a note that was purchased and we have not provided the assignment of that note to the purchaser. And so therefore the loan was on our books and we've recorded the corresponding liability to him. And let me be clear, in our history I don't think we've sold five or six notes. These are strictly working capital transactions. The investor in the note currently gets a 9% yield, Sachem manages to receive the difference. So you've heard me say 14.5% the net difference still accrues to Sachem and in this case we monitor the borrower and we service the loan for this individual.

Okay.

Does that help?

That is a very thorough answer and I thank you for it. The next question and this is one more fact - quite frankly more of a statement than a question, but I’d make a statement. If you have not already done so and I don't see a reference to it, I would encourage the company to arrange keyman life insurance policies for you and your brother because you're not a huge company and it appears that the company is heavily dependent on you two, which is not a bad thing. But that adds an element of risk. I can speak from personal experience. I run a small real estate venture and considerably smaller than your operation and our investors asked me to get a keyman life insurance policy. So it's something I'd like you to consider.

I will take that under advisement. Our auditors have also raised the same question. And right now that - the exact question is in front of our Board. So as part of an auditor request we are considering it.

Okay. Thank you very much. That's all I have.

Okay, Jim. Thank you.

Thank you. [Operator Instructions] Our next question comes from line of Ethan Brown with Cox Capital Management. Please proceed with your question.

Hi, John. Good morning.

Hi, Ethan. How are you?

Pretty good. Thanks. So it looks like you know over the past several quarters the real estate owned has kind of gradually risen on the balance sheet and that trend reversed this past quarter. So I was wondering your thoughts on where you think that's going to go over the coming year. If you think that trend will continue or if we should continue to kind of see some lumpiness there?

We would - obviously REO [ph] is something we spend an awful lot of time on. And the biggest issue in Connecticut it is first getting the asset back. Connecticut is very friendly to borrowers and you know recently we sold four units in December and these properties were on our - on our IPO filing in 2017. So it takes time. They hang around, sometimes they come back in - you know, not as good shape as when we lent the money. But in most cases Ethan we don't know what's coming next. You know, we monitor our borrowers daily. Our office is in contact with them all the time. Our software provides triggers and we act on the triggers to get in contact with the borrowers. The idea here is, Ethan if we're lending properly, if we're doing our job and we're diligent on our loan to value calculations they can come back. They're going to sit here for a little bit or they're going to be sold and Sachem will get their capital back. And you know, really since inception, I think if we've lost any money it's like a fraction of 1%, a tiny fraction of 1% based on about $165 million in loans.

Okay…

Okay. So they come back if we're good managers and if we do our job, it's only a - it's just still small bump in the road like you said and we should get our capital right back.

Right. I see. Okay, that's helpful. And then my second question, you know, I just was hoping you could provide a little bit more color when you say you're exploring some alternative options for financing, can you give any more detail there at what you're looking at. And is it going to be - continue to be equity or debt or how do you think about that?

Okay. So in a perfect world our company, we love debt. It does wonderful things. It gives us a little bit of a bottom line boost and in a perfect world I'm going to select debt over equity every day and sadly the offers for liquidity have been from the Wall Street guys you know, they would come in here and they want to buy our portfolio. They want to buy our paper and you know as a large shareholder I have no interest in selling them our paper. We would destroy our business model. So that's one level of liquidity that we don't like. We've had offers for bank debt. It has to be what we call efficient. We've had an offer for a significant line, but we had to leave $10 million of the portfolio, the port – 10% of the portfolio balance in cash at their bank. It's just crazy. So we're looking - we want to pick the needle out of the haystack and you know I'll sit here and make a great dividend. But our goal is to build our business. We just don't want to grab money and believe me people are offering and we're being very diligent. We're not going to make a mistake and it just has to be a right fit for us. So to answer your question, debt is number one. We're not selling loans. We're not going to do that. The equity that we're doing now its really liquidity and working capital and it's - you know, we're putting some collars on the ATM where there's not just orders to sell, we're not doing that, we're trying to manage it and we're doing that because we're shareholders as well. And we realize that you know, every share we sell is another dividend we have to pay. So we have to have good use for it. So you know, for right now equity is kind of way on the back burner except for our ATM. You know, do I know when the next equity offering will be up, I'm not so sure. If the ATM works well we'll continue. A lot depends on the market as well.

Got it. Okay. Well, thank you.

Okay.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Villano for any final comment.

Everybody thank you very much for joining. We appreciate your interest and your investment in Sachem Capital Corp. Once again, thank you, and stay with us. The best is yet to come.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.