Sachem Capital (NYSEAMERICAN:SACH) executives used the company’s fourth-quarter and full-year 2025 earnings call to describe 2025 as a “stabilization year” following portfolio repositioning actions taken in 2024, with management emphasizing balance sheet liquidity, credit quality improvements, and a return to GAAP profitability.
Chief Executive Officer John Villano said the company’s focus throughout 2025 was “preserving capital, enhancing liquidity, and improving the overall credit quality of our portfolio,” positioning the mortgage REIT for what he described as “disciplined growth” in 2026. Executive Vice President and Chief Financial Officer Jeff Walraven added that management refined its income statement presentation to better highlight net interest income and net interest margin, calling the change “presentation only” with no impact to reported net income or shareholders’ equity.
Portfolio activity and credit trends
Non-performing loans (NPLs) remained a major focus. Villano said gross unpaid principal balance of non-performing loans included in loans held for investment totaled roughly $117.6 million at year-end, up $30.5 million from $87.1 million a year earlier. While elevated relative to historical levels, he said actions taken over the past year were intended to “position the portfolio for accelerating resolution activity for the coming quarters,” with the goal of converting legacy assets back into liquidity and redeploying capital into new originations.
The company’s collateral property mix at year-end was about 54% residential, 29% commercial, 12% mixed use, and 5% land, with geographic concentrations in Connecticut (42%) and Florida (14%) by outstanding principal, Walraven said.
Real estate owned and asset monetization efforts
Real estate owned (REO) decreased by $2.2 million, or 11.7%, during 2025, though the company continued to add assets through concluded foreclosures that it is positioning for monetization. REO totaled $16.4 million across 14 properties at year-end.
Management highlighted a notable fourth-quarter disposition: the sale of a Westport, Connecticut office asset. Villano said the sale generated approximately $19.9 million in net proceeds and a $4 million book gain. In the Q&A, Walraven said the property had been purchased in 2023 and redeveloped, and that an in-place tenant ultimately offered to buy the building, resulting in the gain.
Walraven reported that during 2025, Sachem converted $22.1 million of loan principal to REO through foreclosure.
Naples exposure moves off non-accrual after year-end
Executives also provided an update on a legacy Naples, Florida exposure from 2021. Villano said that subsequent to year-end, Sachem acquired 100% of the membership interests in the entity holding condominium assets tied to the prior loan at an approximate net book value of $39.9 million, with “no material book gain or loss at closing.” The company now directly controls three completed condominium units and a southern parcel that had been approved for four additional units, and Urbane Capital, the company’s asset management platform, is responsible for actively managing and monetizing the assets over the next 18 to 24 months, subject to market conditions.
In addition, Villano said the company retained its $12.3 million first mortgage on a separate waterfront parcel as a senior secured lender, which management described as simplifying the capital structure and improving execution clarity.
During Q&A, management clarified the impact to non-accrual classifications. Walraven explained that of what was described as roughly $50 million tied to Naples, about $40 million moved into investment in developmental real estate, while a little over $10 million moved back into performing loans. He said the Naples amounts were previously categorized as non-accrual and are “no longer categorized as non-accruals,” noting that the acquisition and related modifications occurred after year-end.
Asked for an updated snapshot, Walraven said that if taking a current view starting from the $117 million of non-accruals reported at year-end, that balance would be reduced by $40 million related to the purchased Naples asset and another $12 million loan would move into performing status during the quarter. He also said there had been other resolutions, adding that non-performing loan balances would be “$50 million less at a minimum” than year-end levels, with additional resolutions expected.
Financial results, balance sheet, and funding
For full-year 2025, Walraven reported net interest income of $11.7 million, down from $20.5 million in 2024. Net interest margin was 3.1% versus 4.4% in 2024. Walraven attributed the margin decline to a higher cost of capital following refinancing activity, lower average earning assets, and a higher concentration of non-accrual loans. He said yields remained strong on performing loans—12% in 2025 compared to 11.8% in 2024—but overall margin compression reflected balance sheet contraction and capital structure repositioning.
Total operating expenses were $13.1 million, down from $15.7 million. Compensation and benefits increased to $7.6 million due to strategic hires, while general and administrative expenses declined to $6.5 million. Impairment on REO rose to $1.1 million, which management said reflected updated valuations and revised liquidation timelines. Gain on sale of real estate and developmental investments increased to $4.1 million, driven by “successful asset repositioning and increased disposition activity,” Walraven said.
Sachem reported GAAP net income of $6.3 million after $4.5 million of Series A preferred dividends. Net income attributable to common shareholders was $1.8 million, or $0.04 per share, compared with a loss of $0.93 per share in the prior year.
On the balance sheet, Walraven said total assets were $460 million and liabilities were $285.1 million, for assets-to-liabilities coverage of about 1.61 times. Cash at year-end was $10.9 million. Debt represented approximately 61.4% of total capital at year-end, Villano said.
Management described ongoing capital structure changes in 2025, including issuing $100 million of senior secured notes due 2030 and repaying maturing unsecured notes. Walraven said unsecured notes declined by $55.2 million year over year, repurchase agreements fell by $33.7 million, and senior secured notes increased by $86.6 million. The company also terminated and repaid the Churchill facility during the fourth quarter. Subsequent to year-end, management said it extended its $50 million Needham credit facility to March 2028, with an option to extend to 2029.
Regarding specific facilities, Walraven said the Needham revolver had $19.0 million outstanding at prime minus 50 basis points (6.5% at Dec. 31, 2025) and the senior secured notes due 2030 had $90 million outstanding at a fixed 9.875%. Management said it was in compliance with covenants across facilities at year-end. In response to an analyst question, Walraven said the secured note facility is $100 million in size, with $90 million drawn.
Book value per common share was $2.46 at year-end versus $2.64 a year earlier, a 6.8% decline. Walraven said the driver was that aggregate preferred and common cash dividends paid in 2025 of $14 million exceeded annual GAAP net income of $6.3 million, adding that the board evaluates dividend levels in the context of operating performance, liquidity, and long-term capital management. Management also referenced that first-quarter 2026 dividend considerations were announced on March 4, 2026, and reiterated its intended cadence for addressing dividends in March, June, September, and December.
Outlook: origination pipeline and 2026 priorities
On market conditions, Villano said short-term rates have declined from peak levels, but medium- and longer-term borrowing costs remain elevated, keeping affordability stretched and existing home sales below historical averages. He said the environment continues to weigh on origination activity and contributes to elevated NPLs and REO across the industry, while also creating opportunities for lenders providing flexible capital where traditional financing remains constrained.
In Q&A, Villano said the company was “quite positive” on the lending market, describing its pipeline as “full,” pricing as attractive, and borrower quality as improving. He also said the company is seeing larger loans amid “price creep.”
Looking ahead, management reiterated priorities that include resolving non-performing loans and monetizing REO, originating “disciplined high return loans backed by strong collateral,” and actively managing liquidity and upcoming debt maturities. Executives said expected liquidity sources for addressing maturities include loan repayments, REO monetization, available capacity on credit facilities, and potential capital markets activity as conditions permit.
About Sachem Capital (NYSEAMERICAN:SACH)
Sachem Capital Corp (NYSEAMERICAN:SACH) is an externally managed, non-diversified closed-end management investment trust that seeks to provide shareholders with current income and long-term capital appreciation. The trust is managed by Sachem Capital Management, L.P., an affiliate of Sachem Wealth Management, and its shares trade on the NYSE American exchange.
The trust’s investment strategy focuses on a diversified portfolio of senior secured debt obligations, including first and second lien loans, mezzanine loans, high-yield bonds and preferred equity.
