Sachem Capital Corp. 6.00% Note

What they do

Sachem Capital originates, underwrites, funds, services, and manages a portfolio of short-term (one to three years) loans secured by first mortgage liens on residential and commercial real estate. Borrowers are typically real estate investors or developers, and loans are often further secured by additional collateral such as pledges of ownership interests or personal guarantees. The company operates as one segment and generates revenue primarily from interest on loans and related fees. It may also reposition and develop real estate acquired through foreclosure or intentional acquisition.

Revenue drivers

• Interest income on mortgage loans — Primary revenue source, generated from interest paid by borrowers on short-term hard money loans.
• Loan origination and other fees — Fees related to origination, maintenance, servicing, modification, and extension of loans.
• Real estate operations — Revenue from properties acquired through foreclosure or intentional development, though less significant than lending activities.

Recent performance

For the full year 2025, Sachem reported net income of $6.3 million (diluted EPS $0.04), recovering from a net loss of $39.6 million in 2024 (diluted EPS -$0.93). Revenue declined from $64.7 million in 2023 to $57.5 million in 2024, and recent quarterly revenue has ranged between $10.8 million and $12.0 million. As of June 30, 2026, total assets were $472.9 million, total liabilities $314.1 million, and shareholder equity $158.8 million. The company's most recent earnings release reported second quarter 2026 results and progress on the IRG transaction.

Strategy

Management's stated strategy is to accelerate profitable growth and drive operational excellence, reducing general and administrative expenses as a percentage of revenue. A key strategic initiative is the pending contribution agreement with Industrial Realty Group Global, under which IRG will contribute 98 industrial assets to Sachem, with the combined company to be renamed IRG Realty Trust, Inc. The transaction involves a 20-to-1 reverse stock split, a redomestication to Delaware, and issuance of OP units and Class B shares to IRG. The company also continues to selectively originate loans and manage its portfolio, and may make opportunistic real estate purchases.

Risks

• Transaction completion risk — The IRG contribution transaction is subject to closing conditions, including preparation of pro forma financials and proxy statement filing; failure to complete could leave Sachem without the anticipated strategic reset.
• Credit and asset quality risk — The company experienced significant credit losses in 2024, including a $26.9 million provision for credit loss and $22.0 million realized loss on loan sales, indicating elevated risk in its loan portfolio.
• Capital market dependence — Historically reliant on capital markets for growth, the company faced funding constraints in 2023-2024 due to interest rate environment and limited access to credit facilities.
• REIT distribution requirement — As a REIT, Sachem must distribute at least 90% of taxable income annually, which can limit retained capital for growth and may require external financing.

Outlook

Management continues to progress toward closing the IRG transaction, which is expected to create a top 10 publicly listed industrial REIT with an enterprise value of approximately $3.4 billion. IRG has signed significant leases representing 9.3 million square feet and $44.9 million in annual base rent during Q2 2026 through July 31, 2026. The company expects to file a proxy statement and complete pro forma financials to provide additional details. Post-closing, the combined entity will focus on mission critical industrial infrastructure.