Greetings and welcome to the Sachem Capital Corp. First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to hand it over to Investor Relations. Thank you. You may begin.

Good morning, and thank you for joining Sachem Capital Corp.'s first quarter 2025 earnings conference call. On the call from Sachem Capital today is Chief Executive Officer, John Villano, CPA; and Interim Chief Financial Officer, Jeff Walraven. This morning, the company announced its operating and financial results for the quarter ended March 31st, 2025. The press release is posted on the company's website, www.sachemcapitalcorp.com. In addition, the company filed its Form 10-Q today, which can be accessed on the company's website as well as 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. 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 for this quarter and to 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 the reconciliations to the most directly comparable GAAP financial measures are contained in our SEC filings. With that, I'll turn the call over to John.

Thank you, and thanks to everyone for joining us today. We will begin by reviewing our operating and financial results for the first quarter and discuss the future as we continue working towards growing our lending platform and restoring bottom line profits to the company. The difficulties of last fall, coupled with our desire to protect our balance sheet from non-accretive finance, set the stage for stability this quarter and further illuminated the path of our recovery into the second quarter of 2025. We continue to search for accretive capital to build our business. And as of today, we have two signed term sheets with well-respected lenders. We will keep you informed of our progress on these financing transactions. In 2025, our portfolio is now performing as expected. As stated during our last earnings call, our post-COVID loan fundings are performing famously. While we still have $153 million of non-performing loans or $124 million of NPLs net compared to $103 million of non-performing loans net as of December 31st, 2024, we did not incur any material incremental markdowns during the quarter. The net increase in NPLs was due to our Naples, Florida mortgage, moving from performing to non-performing during the quarter as well as other loans totaling $25 million. Further, significant progress has been made as we continue to work through all problem assets. We realized a significant part of our dividend growth plan is directly tied to unlocking our non-performing loans. As of March 31st, our book value stood at $2.57 per share, down less than 3% from year-end 2024. Further, we have successfully diversified our business model and cash flow sources through two successful partnerships. These partnerships not only add stability to our income, but create opportunities for further growth. Urbane New Haven brings expertise in real estate…

Thank you, John. I'll walk you through Sachem Capital's financial highlights for the first quarter ended March 31st, 2025. Starting with revenues. Total revenue for the first quarter was $11.4 million compared to $16.8 million for the same period in 2024. The 31.9% decrease primarily reflects the cumulative effect of fewer loan originations over the past 15 months, resulting in a compression in our earning unpaid principal loan balance portfolio alongside elevated levels of non-performing loans and conversion of loans through foreclosure to real estate owned. On a positive note, income from our preferred membership in Shem Creek LLC investment earnings increased approximately 71.7% as compared to the first quarter of 2024. Turning to expenses. Total operating expenses were $10.4 million, down from $12.5 million in the prior year's quarter, a 16.9% reduction. The primary drivers were lower interest and amortization expenses due to the repayment of $58.2 million in unsecured retail notes in 2024, as well as reductions in compensation and employee benefits and credit loss provisions. On net results, this resulted in GAAP net income of $0.9 million and after payment of the Series A Preferred Stock dividends of $1.1 million, net loss attributable to common shareholders was $0.2 million or $0.00 per share compared to $3.6 million of income, or $0.08 per share for the first quarter of 2024. On balance sheet position, total assets were $491.4 million, nearly flat compared to $492 million at December 31, 2024. Total liabilities increased just slightly to $312.1 million, mainly due to higher repurchase agreements, partially offset by reductions in lines of credit and accounts payable. Our outstanding debt at March 31st was $306 million. This resulting in total asset to total liability coverage of 1.57 times. Our shareholders' equity stands at $179.3 million, resulting in debt-to-equity ratio of 1.7…

Thanks Jeff. We are excited with our recent performance, and believe Sachem is positioned to be a market leader in small balance real estate finance. We look forward to resolving our remaining NPLs to unlock capital for growth and accessing new sources of accretive capital to refill our loan pipeline. While our recovery is well underway, more time is needed to be fully back on track. We will continue to manage our business, grow book value and our dividend, with the ultimate goal to produce value for our shareholders. Thank you. And we will now open the call to questions from our analysts.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] The first question is from Gaurav Mehta from Alliance Global Partners. Please go ahead.

Thank you. Good morning. I wanted to follow-up on your comments around two term sheets with different lenders and just wanted to get some details. So if you were to execute on those two term sheets, so that would provide funds to address the upcoming debt maturity? Or would that provide more funds than that to maybe allocate towards loan originations?

Hi Gaurav, good morning. The facility that you're talking about comes in two components. There is an initial funding and a delayed draw. The initial funding will provide some working capital for us to build our business. The second -- the delayed draw will provide funds directly related to the payment of the unsecured notes in September.

Okay. So, it's not like -- it won't be like a note. It's going to be like a credit line, right?

No, it is a term note, a term note.

Understood.

Gaurav, I'll add real quick. Gaurav, one of the two is the term, as John just described, and we're reserving a portion of that to avoid balance sheet compression via the delayed draw. The other facility is a new facility similar to like a Churchill and others that would provide other growth on kind of really a direct match of use of those funds for growth assets. So, there is a significant component of the two facilities that is related to give us expansionary growth, while a portion of the one is protection, basically liquidity protection against the -- from a compression perspective on the redemption of the bond in September.

Okay, understood. Maybe on the macro environment, you touched upon some headwinds in the market. I was wondering if you would maybe comment on what you guys saw in April in the loan market as far as credit spreads and loan origination opportunities?

Yes. And you've heard me say this countless times, we are never at a loss for opportunity. We have a significant pipeline. As we discussed, we have more opportunities than we have capital available. Seems to be the nature of our business. The significant pricing differences that we are noticing is single-family and multifamily are commanding better pricing. There is a push in the world today where they are the most sought-after asset class in our industry. So, lenders are aggressive. With respect to mixed-use development, residential with a retail component on the first floor, we're able to really maintain our standard pricing, which is 12% and 2%, 12% interest, 2% origination. And if there's a construction component, we still continue to get our construction service fee. And we expect to see further rate compression in the single-family, multifamily space. Again, it's just a preferred asset class and a good portion of the industry's capital is flowing into that area.

Okay, thank you. That’s all I had.

Thank you.

The next question is from Christopher Nolan from Ladenburg Thalmann. Please go ahead.

Hey guys. On the new facilities that you guys mentioned, are they fixed rate? Or would you benefit if interest rates were cut?

We would benefit if rates are cut on one of the facilities. Our delayed draw facility will be a fixed rate.

Great. And then what sort of advance rates are you getting on these various facilities, including Churchill?

Up until recently, Churchill was kind of all over the board, and they seem to have stabilized a bit. We are getting between 60% and 70% advance rates. They are becoming a little more specific with asset type and quality. One of our potential facilities could have advance rates up to 75% or 80%, which is very attractive to us, but it's a very specific asset class. It will be resi and multifamily specifically. The delayed draw facility has a lot more flexibility with advance. In our world, we're at 70% LTV. So, we're getting much less than the amount needed to close these things. So, we have to maintain our liquidity to do this. So, we're basically getting, in most cases, 70% on 70. So, it sucks up our cash pretty quick, but it does give us a nice amount of leverage and it does work with our loan covenants at 1.5 times.

And then what do all these change -- I mean, I know the baby bonds impose leverage limits on you guys. As those mature and pay off, should we expect the leverage levels of the balance sheet to start to go up or stay around current levels?

That's an interesting question. Our new facilities, specifically one of our facilities will have a 1.5 times asset coverage ratio. Jeff, if you'd like to expand on that? It does look like we're going to be tied to a 1.5x asset coverage ratio going forward.

Yes. Still for -- at the collateral level, as John has mentioned, it's at 1.5 times. I mean, even when you do look at the baby bonds, the last -- the maturity of the baby bonds, we have the 9/30 maturity. Our next maturity is out at 12/31 of 2026. And then we have a first quarter, second quarter, and third quarter maturity in 2027. So, unless we were to do some kind of financing even just relative to the baby bonds, we have the 1.5 times coverage on those bond debentures all the way out to June 30th of 2027. So, sans an early payoff of or redemption of those bonds.

Okay, that’s it for me. Thank you.

This concludes the question-and-answer session and today's teleconference. You may disconnect your lines at this time. Thank you for your participation.