Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 11, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-37997 | |
Entity Registrant Name | Sachem Capital Corp. | |
Entity Incorporation, State or Country Code | NY | |
Entity Tax Identification Number | 81-3467779 | |
Entity Address, Address Line One | 568 East Main Street, | |
Entity Address, City or Town | Branford | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06405 | |
City Area Code | 203 | |
Local Phone Number | 433-4736 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 45,346,429 | |
Entity Central Index Key | 0001682220 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Common Stock | ||
Document and Entity Information | ||
Title of 12(b) Security | Common Shares, par value $.001 per share | |
Trading Symbol | SACH | |
Security Exchange Name | NYSE | |
7.125% Notes due 2024 | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.125% Notes due 2024 | |
Trading Symbol | SCCB | |
Security Exchange Name | NYSE | |
6.875% Notes due 2024 | ||
Document and Entity Information | ||
Title of 12(b) Security | 6.875% Notes due 2024 | |
Trading Symbol | SACC | |
Security Exchange Name | NYSE | |
7.75% Notes due 2025 | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.75% Notes due 2025 | |
Trading Symbol | SCCC | |
Security Exchange Name | NYSE | |
6.00% Notes due 2026 | ||
Document and Entity Information | ||
Title of 12(b) Security | 6.00% Notes due 2026 | |
Trading Symbol | SCCD | |
Security Exchange Name | NYSE | |
6.00% Notes due 2027 | ||
Document and Entity Information | ||
Title of 12(b) Security | 6.00% Notes due 2027 | |
Trading Symbol | SCCE | |
Security Exchange Name | NYSE | |
7.125% Notes due 2027 | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.125% Notes due 2027 | |
Trading Symbol | SCCF | |
Security Exchange Name | NYSE | |
8.00% Notes due 2027 | ||
Document and Entity Information | ||
Title of 12(b) Security | 8.00% Notes due 2027 | |
Trading Symbol | SCCG | |
Security Exchange Name | NYSE | |
Series A Preferred Stock | ||
Document and Entity Information | ||
Title of 12(b) Security | 7.75% Series A Cumulative Redeemable Preferred Stock, Liquidation Preference $25.00 per share | |
Trading Symbol | SACHPRA | |
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and cash equivalents | $ 15,128,984 | $ 23,713,097 |
Investment securities | 37,201,120 | 24,576,462 |
Mortgages receivable, net | 506,653,156 | 460,633,268 |
Interest and fees receivable | 7,736,475 | 6,309,845 |
Due from borrowers | 6,765,910 | 5,276,967 |
Real estate owned | 4,998,934 | 5,216,149 |
Investments in partnerships | 35,399,190 | 30,831,180 |
Property and equipment, net | 4,534,711 | 4,121,721 |
Other assets | 5,612,286 | 4,983,173 |
Total assets | 624,030,766 | 565,661,862 |
Liabilities: | ||
Unsecured notes payable (net of deferred financing costs of $7,223,456 and $8,352,597) | 281,178,294 | 280,049,153 |
Secured note payable | 6,224,000 | |
Repurchase facility | 50,509,605 | 42,533,466 |
Mortgage payable | 1,649,167 | 750,000 |
Lines of credit | 35,900,737 | 3,587,894 |
Accrued dividends payable | 5,342,160 | |
Accounts payable and accrued liabilities | 2,124,028 | 1,439,219 |
Advances from borrowers | 12,586,438 | 9,892,164 |
Deferred revenue | 4,815,702 | 4,360,452 |
Total liabilities | 394,987,971 | 347,954,508 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Preferred shares - $.001 par value; 5,000,000 shares authorized; 2,903,000 shares designated as Series A Preferred Stock; 1,928,000 and 1,903,000 shares of Series A Preferred Stock issued and outstanding at June 30, 2023 and December 31, 2022, respectively | 1,928 | 1,903 |
Common stock - $.001 par value; 200,000,000 shares authorized; 43,822,050 and 41,093,536 issued and outstanding at June 30, 2023 and December 31, 2022, respectively | 43,822 | 41,094 |
Paid-in capital | 236,595,201 | 226,220,990 |
Accumulated other comprehensive loss | (376,078) | (561,490) |
Accumulated deficit | (7,222,078) | (7,995,143) |
Total shareholders' equity | 229,042,795 | 217,707,354 |
Total liabilities and shareholders' equity | $ 624,030,766 | $ 565,661,862 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Deferred financing costs | $ 7,223,456 | $ 8,352,597 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common shares, shares authorized | 200,000,000 | 200,000,000 |
Common shares, shares issued | 43,822,050 | 41,093,536 |
Common shares, shares outstanding | 43,822,050 | 41,093,536 |
Series A Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | |
Preferred stock, shares authorized | 2,903,000 | 2,903,000 |
Preferred stock, shares issued | 1,928,000 | 1,903,000 |
Preferred stock, shares outstanding | 1,928,000 | 1,903,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Revenue: | ||||
Interest income from loans | $ 11,898,484 | $ 10,433,572 | $ 22,881,810 | $ 18,944,947 |
Investment gain, net | 333,873 | 230,602 | 608,669 | 347,940 |
Income from partnership investments | 1,006,477 | 317,004 | 1,556,200 | 589,493 |
Origination and modification fees, net | 1,764,262 | 2,246,775 | 3,240,183 | 4,090,616 |
Fee and other income | 1,570,976 | 798,609 | 2,278,581 | 1,407,172 |
Unrealized gain (loss) on investment securities | (115,789) | (1,478,432) | 600,600 | (2,530,662) |
Total revenue | 16,458,283 | 12,548,130 | 31,166,043 | 22,849,506 |
Operating costs and expenses: | ||||
Interest and amortization of deferred financing costs | 7,138,940 | 5,209,865 | 14,011,907 | 9,108,253 |
Compensation, fees and taxes | 1,562,465 | 1,187,940 | 3,341,783 | 2,181,903 |
General and administrative expenses | 1,317,348 | 645,871 | 2,215,463 | 1,277,819 |
Other expenses | 212,822 | 130,060 | 296,545 | 229,331 |
(Gain) Loss on sale of real estate | 21,239 | (188,182) | (126,861) | (122,343) |
Provision for Credit Losses | 94,932 | 105,000 | 196,447 | 105,000 |
Impairment loss | 412,500 | 230,000 | 412,500 | 490,500 |
Total operating costs and expenses | 10,760,246 | 7,320,554 | 20,347,784 | 13,270,463 |
Net income | 5,698,037 | 5,227,576 | 10,818,259 | 9,579,043 |
Preferred stock dividend | (924,762) | (921,766) | (1,849,525) | (1,843,531) |
Net income attributable to common shareholders | 4,773,275 | 4,305,810 | 8,968,734 | 7,735,512 |
Other comprehensive loss | ||||
Unrealized gain (loss) on investment securities | 93,775 | (192,764) | 185,412 | 50,044 |
Comprehensive income | $ 4,867,050 | $ 4,113,046 | $ 9,154,146 | $ 7,785,556 |
Basic and diluted net income per common share outstanding: | ||||
Basic | $ 0.11 | $ 0.12 | $ 0.21 | $ 0.22 |
Diluted | $ 0.11 | $ 0.12 | $ 0.21 | $ 0.22 |
Weighted average number of common shares outstanding: | ||||
Basic | 43,844,285 | 36,373,570 | 43,321,303 | 35,630,455 |
Diluted | 43,844,285 | 36,373,877 | 43,321,303 | 35,636,374 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2021 | $ 1,903 | $ 32,730 | $ 185,516,394 | $ (476,016) | $ (4,992,450) | $ 180,082,561 |
Beginning balance (in shares) at Dec. 31, 2021 | 1,903,000 | 32,730,004 | ||||
Issuance of Common Stock, net of expenses | $ 3,867 | 21,227,108 | 21,230,975 | |||
Issuance of Common Stock, net of expenses (in shares) | 3,867,157 | |||||
Exercise of warrants | $ 20 | (20) | ||||
Exercise of warrants (in shares) | 19,658 | |||||
Stock based compensation | $ 139 | 230,028 | 230,167 | |||
Stock based compensation (in shares) | 138,967 | |||||
Unrealized gain on marketable securities | 50,044 | 50,044 | ||||
Dividends paid on Series A Preferred Stock | (1,843,531) | (1,843,531) | ||||
Dividends paid on Common Stock | (4,326,264) | (4,326,264) | ||||
Net income for the period | 9,579,043 | 9,579,043 | ||||
Ending Balance at Jun. 30, 2022 | $ 1,903 | $ 36,756 | 206,973,510 | (425,972) | (1,583,202) | 205,002,995 |
Ending Balance (in shares) at Jun. 30, 2022 | 1,903,000 | 36,755,786 | ||||
Beginning balance at Mar. 31, 2022 | $ 1,903 | $ 35,514 | 201,168,304 | (233,208) | (1,562,750) | 199,409,763 |
Beginning balance (in shares) at Mar. 31, 2022 | 1,903,000 | 35,513,887 | ||||
Issuance of Common Stock, net of expenses | $ 1,136 | 5,681,884 | 5,683,020 | |||
Issuance of Common Stock, net of expenses (in shares) | 1,136,432 | |||||
Stock based compensation | $ 106 | 123,322 | 123,428 | |||
Stock based compensation (in shares) | 105,467 | |||||
Unrealized gain on marketable securities | (192,764) | (192,764) | ||||
Dividends paid on Series A Preferred Stock | (921,766) | (921,766) | ||||
Dividends paid on Common Stock | (4,326,262) | (4,326,262) | ||||
Net income for the period | 5,227,576 | 5,227,576 | ||||
Ending Balance at Jun. 30, 2022 | $ 1,903 | $ 36,756 | 206,973,510 | (425,972) | (1,583,202) | 205,002,995 |
Ending Balance (in shares) at Jun. 30, 2022 | 1,903,000 | 36,755,786 | ||||
Beginning balance at Dec. 31, 2022 | $ 1,903 | $ 41,094 | 226,220,990 | (561,490) | (7,995,143) | 217,707,354 |
Beginning balance (in shares) at Dec. 31, 2022 | 1,903,000 | 41,093,536 | ||||
Adoption of ASU 2016-13 | (2,489,574) | (2,489,574) | ||||
Issuance of Preferred Stock, net of expenses | $ 25 | 516,977 | 517,002 | |||
Issuance of Preferred Stock, net of expenses (in shares) | 24,603 | |||||
Issuance of Common Stock, net of expenses | $ 2,616 | 9,687,964 | 9,690,580 | |||
Issuance of Common Stock, net of expenses (in shares) | 2,616,124 | |||||
Stock Buyback | $ (71) | (226,256) | $ (226,327) | |||
Stock Buyback (in shares) | 71,000 | (71,000) | ||||
Stock based compensation | $ 183 | 395,526 | $ 395,709 | |||
Stock based compensation (in shares) | 183,390 | |||||
Unrealized gain on investments | 185,412 | 185,412 | ||||
Dividends paid on Series A Preferred Stock | (1,849,525) | (1,849,525) | ||||
Dividends paid on Common Stock | (5,706,095) | (5,706,095) | ||||
Net income for the period | 10,818,259 | 10,818,259 | ||||
Ending Balance at Jun. 30, 2023 | $ 1,928 | $ 43,822 | 236,595,201 | (376,078) | (7,222,078) | 229,042,795 |
Ending Balance (in shares) at Jun. 30, 2023 | 1,927,603 | 43,822,050 | ||||
Beginning balance at Mar. 31, 2023 | $ 1,909 | $ 43,757 | 235,709,499 | (469,853) | (6,289,257) | 228,996,055 |
Beginning balance (in shares) at Mar. 31, 2023 | 1,909,187 | 43,756,724 | ||||
Issuance of Preferred Stock, net of expenses | $ 18 | 380,278 | 380,296 | |||
Issuance of Preferred Stock, net of expenses (in shares) | 18,416 | |||||
Issuance of Common Stock, net of expenses | $ 136 | 509,469 | 509,605 | |||
Issuance of Common Stock, net of expenses (in shares) | 136,326 | |||||
Stock Buyback | $ (71) | (226,256) | (226,327) | |||
Stock Buyback (in shares) | (71,000) | |||||
Stock based compensation | 222,211 | 222,211 | ||||
Unrealized gain on investments | 93,775 | 93,775 | ||||
Dividends paid on Series A Preferred Stock | (924,762) | (924,762) | ||||
Dividends paid on Common Stock | (5,706,096) | (5,706,096) | ||||
Net income for the period | 5,698,037 | 5,698,037 | ||||
Ending Balance at Jun. 30, 2023 | $ 1,928 | $ 43,822 | $ 236,595,201 | $ (376,078) | $ (7,222,078) | $ 229,042,795 |
Ending Balance (in shares) at Jun. 30, 2023 | 1,927,603 | 43,822,050 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income | $ 10,818,259 | $ 9,579,043 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Amortization of deferred financing costs and bond discount | 1,224,324 | 1,108,675 | |||
Depreciation expense | 109,497 | 44,478 | |||
Stock based compensation | 395,709 | 230,167 | |||
Provision for credit losses | $ 94,932 | $ 105,000 | 196,447 | 105,000 | |
Impairment loss | 412,500 | 490,500 | |||
(Gain) Loss on sale of real estate | (126,861) | (122,343) | |||
Unrealized (gain) loss on investment securities | 115,789 | 1,478,432 | (600,600) | 2,530,662 | |
Gain on sale of investment securities | 24,285 | 148,565 | |||
(Increase) decrease in: | |||||
Interest and fees receivable | (1,455,807) | (1,620,733) | |||
Other assets - miscellaneous | (863,887) | (393,624) | |||
Due from borrowers | (1,521,226) | (1,102,371) | |||
Other assets - prepaid expenses | 163,617 | 101,149 | |||
(Decrease) increase in: | |||||
Accrued Interest | 168,919 | 301,495 | |||
Accounts payable and accrued liabilities | (9,596) | (323,887) | |||
Deferred revenue | 455,250 | (15,493) | |||
Advances from borrowers | 2,694,274 | (3,729,817) | |||
Total adjustments | 1,266,845 | (2,247,577) | |||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 12,085,104 | 7,331,466 | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Purchase of investment securities | (18,346,504) | (36,088,438) | |||
Proceeds from the sale of investment securities | 6,560,095 | 59,710,599 | |||
Purchase of interests in investment partnerships, net | (4,568,010) | (13,561,132) | |||
Proceeds from sale of real estate owned | 191,274 | 1,397,502 | |||
Acquisitions of and improvements to real estate owned, net | (180,146) | (19,917) | |||
Purchase of property and equipment | (722,487) | (815,339) | |||
Principal disbursements for mortgages receivable | (114,468,454) | (191,971,926) | |||
Principal collections on mortgages receivable | 66,355,505 | 60,895,362 | |||
Other assets | 19,927 | (114,244) | |||
NET CASH USED FOR INVESTING ACTIVITIES | (65,158,800) | (120,567,533) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Net proceeds from (repayment of) line of credit | 32,312,843 | (9,771,376) | |||
Net proceeds from repurchase facility | 7,976,139 | 20,285,241 | |||
Proceeds from mortgage | 899,167 | ||||
Accounts payable and accrued liabilities - principal payments on other notes | (6,014) | (13,281) | |||
Dividends paid on Common Stock | (11,048,257) | (8,253,864) | |||
Dividends paid on Preferred Stock | (1,849,525) | (1,843,531) | |||
Proceeds from issuance of common shares, net of expenses | 9,690,580 | 21,230,975 | |||
Common Stock buyback | (226,327) | ||||
Proceeds from issuance of Series A Preferred Stock, net of expenses | 516,977 | ||||
Gross proceeds from issuance of fixed rate notes | 81,875,000 | ||||
Gross proceeds from issuance of secured note | 6,224,000 | ||||
Financings costs incurred in connection with fixed rate notes | (3,081,500) | ||||
NET CASH PROVIDED BY FINANCING ACTIVITIES | 44,489,583 | 100,427,664 | |||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (8,584,113) | (12,808,403) | |||
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 23,713,097 | 41,938,897 | $ 41,938,897 | ||
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ 15,128,984 | $ 29,130,494 | 15,128,984 | 29,130,494 | $ 23,713,097 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION | |||||
Interest paid | $ 12,662,617 | $ 7,710,686 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOW (Parenthetical) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CONSOLIDATED STATEMENTS OF CASH FLOW | ||
Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable | $ 1,186,663 | $ 1,091,348 |
Increase in mortgage receivable from sale of real estate owned | $ 1,307,112 |
The Company
The Company | 6 Months Ended |
Jun. 30, 2023 | |
The Company | |
The Company | 1. The Company Sachem Capital Corp. (the “Company”), a New York corporation, specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company offers short term ( i.e. one |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Unaudited Financial Statements The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022 and the notes thereto included in the Company’s Annual Report on Form 10-K. Results of operations for the three months and six month periods ended June 30, 2023, are not necessarily indicative of the operating results to be attained in the entire fiscal year, or for any subsequent period. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on (a) various assumptions that are based on experience, (b) projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could materially differ from those estimates. Cash and Cash Equivalents The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The combined account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. The Company does not believe that the risk is significant. Investment Securities The Company considers all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. Investment transactions are accounted for on a trade-date basis. Dividends are recorded on the ex-dividend date and interest is recognized on the accrual basis. Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. Fair value is calculated based on publicly available market information or other estimates determined by management. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. If qualitative factors indicate an available-for-sale debt security may be credit impaired the loss is measured as the excess of carrying value over the present value of expected cash flows, limited to the excess of carrying value over fair value. To determine credit losses, the Company may employ a systematic methodology that considers available quantitative and qualitative evidence. In addition, the Company considers specific adverse conditions related to the financial health of, and business outlook for, the person or entity for which it is providing credit. If the Company has plans to sell the security or it is more likely than not that the Company will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in net income and a new cost basis in the investment is established. If market, industry, and/or there is a deterioration in the financial health, business outlook or other conditions of the person or entity to which it provided credit, the Company may incur future impairments. Equity investments with readily determinable fair values are measured at fair value. Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative). The Company performs a qualitative assessment on a periodic basis and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are recorded in net income. Current Expected Credit Losses Allowance The Company adopted the current expected credit loss (“CECL”) standard effective January 1, 2023 in accordance with ASU No. 2016-13. The initial CECL allowance adjustment of $2,489,574 was recorded effective January 1, 2023 as a cumulative-effect of change in accounting principle through a direct charge to accumulated deficit on the consolidated statements of shareholders’ equity; however, subsequent changes to the CECL allowance will be recognized in the consolidated statements of comprehensive income. The Company records an allowance for credit losses in accordance with the CECL standard on the Company’s loan portfolio, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics. This methodology replaces the probable incurred loss impairment methodology. In addition, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are also analyzed for credit losses in accordance with the CECL standard, as they represent a financial asset that is subject to credit risk. As allowed under the CECL standard used by the Company , as a practical expedient, the fair value of the collateral at the reporting date is compared to the net carrying amount of the loan when determining the allowance for credit losses for loans in pending/pre-foreclosure status, as defined. Fair value of collateral is reduced by estimated cost to sell if the collateral is expected to be sold. The amount of loans in pending/pre-foreclosure as of June 30, 2023 and December 31, 2022 was approximately $50.0 million and $24.0 million, respectively. As of June 30, 2023 and December 31, 2022, none of those loans required an allowance for credit loss. The CECL standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the economic environment. The Company utilizes a loss-rate method for estimating current expected credit losses. The loss rate method involves applying a loss rate to a pool of loans with similar risk characteristics to estimate the expected credit losses on that pool of loans. In determining the CECL allowance, the Company considers various factors including (1) historical loss experience in its portfolio, (2) loan specific losses for loans deemed collateral dependent based on excess amortized cost over the fair value of the underlying collateral, and (3) its current and future view of the macroeconomic environment. The Company utilizes a reasonable and supportable forecast period equal to the contractual term of the loan plus any applicable short-term extensions that are reasonably expected for construction loans. Management estimates the allowance for credit losses using relevant information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. The allowance for credit losses is maintained at a level sufficient to provide for expected credit losses over the life of the loans based on evaluating historical credit loss experience and to make adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio. The CECL allowance related to the principal outstanding is presented within “Mortgages receivable, net” and for unfunded commitments is within accounts payable and accrued liabilities in the Company’s consolidated balance sheets. The CECL allowance related to the late payment fees are presented in “Interest and fees receivable” and “Due from borrowers” in the Company’s consolidated balance sheets. As of June 30, 2023 and January 1, 2023, the CECL allowance for mortgages receivable was approximately $2.2 million and approximately $1.9 million, respectively, an increase of approximately $0.3 million. As of June 30, 2023 and January 1, 2023, the CECL allowance for interest and fees receivable was approximately $29,100 and approximately $26,100, respectively, an increase of approximately $3,000. As of June 30, 2023 and January 1, 2023, the CECL allowance for amounts due from borrowers was approximately $32,300 and $19,900, respectively, an increase of approximately $12,400. As of June 30, 2023 and January 1, 2023, the CECL allowance for unfunded commitments was approximately $531,500 and $522,000, respectively, an increase of approximately $9,500. Fair Value Measurements The framework for measuring fair value provides a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 are described as follows: Level 1 Level 2 ● quoted prices for similar assets or liabilities in active markets; ● quoted prices for identical or similar assets or liabilities in inactive markets; ● inputs other than quoted prices that are observable for the asset or liability; and ● inputs that are derived principally from or corroborated by observable market data by correlation to other means. If the asset or liability has a specified (i.e., Level 3 Property and Equipment Land and building acquired in December 2016 to serve as the Company’s office facilities is stated at cost. The building is being depreciated using the straight-line method over its estimated useful life of 40 years. Expenditures for repairs and maintenance are charged to expense as incurred. The Company relocated its entire operations to this property in March 2019. As of June 30, 2023 this property was under contract to be sold and, as such, the company classifies it as available-for-sale. The carrying value of the land and building is $1,048,380, which is net of an impairment loss of $200,000 that the Company recognized during the quarter ended June 30, 2023. Land and building acquired in 2021 to serve as the Company’s new corporate headquarters is stated at cost. Renovation of the building was completed in the first quarter of 2023 and the Company relocated its operations to the new building in March 2023. The building is being depreciated using the straight-line method over its estimated useful life of 40 years. The new building was placed in service during the six months ended June 30, 2023. Real Estate Owned Real estate owned by the Company is stated at cost and is tested for impairment quarterly. Consolidations The consolidated financial statements of the Company include the accounts of all subsidiaries in which the Company has control over significant operating, financial and investing decisions of the entity. All intercompany accounts and transactions have been eliminated. Impairment of Long-Lived Assets The Company monitors events or changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the undiscounted cash flows are less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets. Goodwill Goodwill is not amortized, but rather tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment. Goodwill at June 30, 2023 represents the excess of the consideration paid over the fair value of net assets acquired from Urbane New Haven, LLC in October 2022. In testing goodwill for impairment, the Company follows FASB ASC 350, “Intangibles—Goodwill and Other”, which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or the Company chooses not to perform the qualitative assessment, then the Company compares the fair value of that reporting unit with its carrying value, including goodwill. Deferred Financing Costs Costs incurred in connection with the Company’s revolving credit facilities, described in Note 7 – Lines of Credit, Mortgage Payable, and Churchill Facility and Note 9 – Secured Note Payable, are amortized over the term of the applicable facility using the straight-line method. Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 8 – Unsecured Notes Payable, are being amortized over the term of the respective Notes. Revenue Recognition Interest income from the Company’s loan portfolio is earned over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company’s loans provide for interest to be paid monthly in arrears. The Company, generally, does not accrue interest income on mortgages receivable that are more than ninety (90) days past due or interest charged at default rates. However, interest income not accrued at June 30, 2023 but collected prior to the issuance of this report is included in income for the period ended June 30, 2023. Origination and modification fee revenue, generally 1% – 3% of either the original loan principal or the modified loan balance, is collected at loan funding and is recognized ratably over the contractual life of the loan in accordance with ASC 310. Income Taxes The Company believes it qualifies as a real estate investment trust (“REIT”) for federal income tax purposes and operates accordingly. It made the election to be taxed as a REIT on its 2017 Federal income tax return. The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding capital stock. So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S. federal income tax on its taxable income distributed to its shareholders. However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification. The Company has elected, and may elect in the future, to treat certain of its existing or newly created corporate subsidiaries as taxable REIT subsidiaries (“TRSs”). In general, a TRS may hold assets that the Company cannot hold directly and generally may engage in any real estate or non-real estate related business. The TRSs generate income, resulting in federal and state income tax liability for these entities. The Company does not expect to incur any corporate federal income tax liability outside of the TRSs, as it believes it has maintained its qualification as a REIT. During the three and six months ended June 30, 2023 and 2022, the Company’s TRSs, nor has the Company, recognized any provisions for federal income tax or state, local and franchise taxes on the Company’s consolidated statements of operations. The income tax provision for the Company differs from the amount computed from applying the statutory federal income tax rate to income before income taxes due to non-taxable REIT income and other permanent differences including the non-deductibility of acquisition costs of business combinations for federal income tax reporting. FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes ” “ ” Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260 “ ” Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments”, (ASU 2016-13), which changes accounting requirements for the measurement and recognition of expected credit losses from an incurred or probable methodology to a current expected credit loss methodology. Mortgages receivable, unfunded loan commitments, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are the only items currently held by the Company that are within the scope of ASU 2016-13. The Company adopted this ASU effective January 1, 2023 and applied a modified retrospective approach through a cumulative-effect adjustment to retained earnings upon adoption. At transition on January 1, 2023, the cumulative effect of adopting this ASU resulted in a decrease in retained earnings of $2,489,574 and an increase in the allowance for credit losses. The increase in the allowance is driven by the fact that the allowance under CECL covers expected credit losses over the full expected life of the loan portfolios and takes into account forecasts of expected future economic conditions. In March 2022, the FASB issued ASU 2022-02, “Financial Instruments-Credit Losses” (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for troubled debt restructurings (“TDR”) for creditors that have adopted the CECL standard and requires enhanced disclosures for loan modifications made to borrowers experiencing financial difficulty in the form of interest rate reductions, principal forgiveness, other-than-insignificant payment delays, or term extensions. In addition, the new guidance requires presentation in the vintage disclosures of current-period gross write-offs by year of origination. The amendments in this update became effective for fiscal years beginning after December 15, 2022. This update did not have a material effect on the Company’s financial statements. In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” ASU 2022-03 was issued to (1) to clarify the guidance in FASB ASC Topic 820, “Fair Value Measurement”, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with FASB ASC Topic 820. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company does not anticipate that this update will have a material impact on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s consolidated financial statements. Reclassifications Certain amounts included in the June 30, 2022 and December 31, 2022 consolidated financial statements have been reclassified to conform to the June 30, 2023 presentation. |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Measurement | |
Fair Value Measurement | 3. Fair Value Measurement The fair value measurement level within the fair value hierarchy of an asset or liability is based on the lowest level of any input that is significant to the fair market value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of June 30, 2023: Level 1 Level 2 Level 3 Total Stocks and ETFs $ — $ 1,204,857 $ — $ 1,204,857 Mutual funds 15,429,261 — — 15,429,261 Debt securities 18,564,164 1,002,838 — 19,567,002 Convertible preferred equity security — — 1,000,000 1,000,000 Total liquid investments $ 33,993,425 $ 2,207,695 $ 1,000,000 $ 37,201,120 Real estate owned $ — $ — $ 4,998,934 $ 4,998,934 The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of December 31, 2022: Level 1 Level 2 Level 3 Total Stocks and ETF’s $ 3,282,659 $ 1,446,065 — $ 4,728,724 Mutual funds 14,850,839 — — 14,850,839 Debt securities 3,880,045 1,116,854 — 4,996,899 Total liquid investments $ 22,013,543 $ 2,562,919 — $ 24,576,462 Real estate owned — — $ 5,216,149 $ 5,216,149 Following is a description of the methodologies used for assets measured at fair value: Stocks and ETFs (level 1 and 2): Mutual funds (level 1 and 2): Debt securities (level 2) Convertible preferred equity security (level 3): Real estate owned (level 3) See Note 5 for the roll forward of real estate owned – Level 3 assets. Impact of Fair Value of AFS Securities on OCI The carrying value of the Company’s financial instruments approximates fair value generally due to the relative short-term nature of such instruments. Other financial assets and financial liabilities have fair value that approximate their carrying value. Pursuant to ASC 326-30-50-4 and 50-5 the Company is required to disclose investment securities that have been in a continuous unrealized loss position for 12 months or more as of the balance sheet date. As of June 30, 2023 and December 31, 2022, the Company had a continuous unrealized losses over 12 months in Available-For-Sale debt securities of approximately The following table presents the impact of the Company’s Available-For-Sale (AFS) securities - debt securities on its Other Comprehensive Income (OCI) for the three and six months ended June 30, 2023: Three Months Ended Six months Ended June 30, June 30, 2023 2022 2023 2022 OCI from AFS securities: Unrealized (losses) on AFS securities at beginning of period $ (469,853) $ (233,208) $ (561,490) $ (476,016) Unrealized gain (losses) on securities available-for-sale – debt securities 93,775 (192,764) 185,412 50,044 Change in OCI from AFS securities 93,775 (192,764) 185,412 50,044 Balance at end of period $ (376,078) $ (425,972) $ (376,078) $ (425,972) The following table presents the Company’s Level 3 Investments of Real Estate Owned as of June 30, 2023 and December 31, 2022: Six Months Ended Twelve Months Ended June 30, 2023 December, 31, 2022 Real Estate Owned at the beginning of period $ 5,216,149 $ 6,559,010 Principal basis transferred to Real Estate Owned 1,186,663 1,376,733 Charges and/or improvements 180,147 126,443 Proceeds from sale of Real Estate Owned (1,498,386) (2,090,880) Impairment (212,500) (799,909) Gain on sale of Real Estate Owned 126,861 44,752 Balance at end of period $ 4,998,934 $ 5,216,149 The following table presents the Company’s Level 3 Investments of Convertible preferred equity securities as of June 30, 2023 and December 31, 2022: Six Months Ended Twelve Months Ended June 30, 2023 December, 31, 2022 Convertible preferred equity securities at the beginning of period $ — $ — Investment in 1,000,000 — Balance at end of period $ 1,000,000 $ — |
Mortgages Receivable
Mortgages Receivable | 6 Months Ended |
Jun. 30, 2023 | |
Mortgages Receivable | |
Mortgages Receivable | 4. Mortgages Receivable The Company offers secured, non-bank loans to real estate owners and investors (also known as “hard money” loans) to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut, New York and Florida. The Company’s lending standards typically require that the original principal amount of all mortgage receivable notes be secured by first mortgage liens on one or more properties owned by the borrower or related parties and that the maximum LTV be no greater than 70% of the appraised value of the underlying collateral, as determined by an independent appraiser at the time of the loan origination. The Company considers the maximum LTV as an indicator for the credit quality of a mortgage note receivable. In the case of properties undergoing renovation, the loan-to-value ratio is calculated based on the estimated fair market value of the property after the renovations have been completed. However, the Company makes exceptions to this guideline if the facts and circumstances support the incremental risk. These factors include the additional collateral provided by the borrower, the credit profile of the borrower, the Company’s previous relationship, if any, with the borrower, the nature of the property, the geographic market in which the property is located and any other information the Company deems appropriate. The loans are generally for a term of one Allowance for credit losses is charged to income in amounts sufficient to maintain an allowance for credit losses inherent in the loans which are established systematically by management as of the reporting date. Management’s estimate of expected credit losses is based on an evaluation of relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the future collectability of the reported amounts. The Company uses static pool modeling techniques to determine the allowance for loan losses expected over the remaining life of the loans, which is supplemented by management judgment. Expected losses are estimated for groups of accounts aggregated by geographical location. The Company’s estimate of expected credit losses includes a reasonable and supportable forecast period equal to the contractual term of the loan plus any applicable short-term extensions that are reasonably expected for construction loans. The Company reviews charge-off experience factors, contractual delinquency, historical collection rates, the value of underlying collateral and other information to make the necessary judgments as to credit losses expected in the portfolio as of the reporting date. While management utilizes the best information available to make its evaluations, changes in macroeconomic conditions, interest rate environments, or both, may significantly impact the assumptions and inputs used in determining the allowance for credit losses. The Company’s charge-off policy is determined by a review of each delinquent loans. The Company has an accounting policy to not place loans on nonaccrual status unless they are more than 90 days delinquent. Accrual of interest income is generally resumed when the delinquent contractual principal and interest is paid in full or when a portion of the delinquent contractually payments are made and the ongoing required contractual payments have been made for an appropriate period. As of June 30, 2023 and December 31, 2022, loans on nonaccrual status had an outstanding principal balance of $96,371,599 and $55,691,857 , respectively. The nonaccrual loans are inclusive of loans pending foreclosure. For the three and six months ended June 30, 2023, For the six months ended June 30, 2023 and 2022, the aggregate amounts of loans funded by the Company were $114,468,454 and $191,971,926 , respectively, offset by principal repayments of $66,355,505 and $60,895,362 , respectively. As of June 30, 2023, the Company’s mortgage loan portfolio includes loans ranging in size up to $34.0 million with stated interest rates ranging from 5.0% to 14.2% . The default interest rate is generally 18 % but could be more or less depending on state usury laws and other considerations deemed relevant by the Company. At June 30, 2023, and December 31, 2022, no single borrower or group of related borrowers had loans outstanding representing more than 10% of the total balance of the loans outstanding. The Company may agree to extend the term of a loan if, at the time of the extension, the loan and the borrower meet all the Company’s then underwriting requirements. The Company treats a loan extension as a new loan. If an interest reserve is established at the time a loan is funded, accrued interest is paid out of the interest reserve and recognized as interest income at the end of each month. If no reserve is established, the borrower is required to pay the interest monthly from its own funds. The deferred origination, loan servicing and amendment fee income represents amounts that will be recognized over the contractual life of the underlying mortgage notes receivable. Allowance for Credit Loss In assessing the Allowance for Credit Losses (“CECL Allowance”), the Company considers historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. The Company derived an annual historical loss rate based on its historical loss experience in its portfolio, adjusted to incorporate the risks of construction lending and to reflect the Company’s expectations of the macroeconomic environment. The following table summarizes the activity in the CECL Allowance from adoption on January 1, 2023: CECL Allowance Provision for CECL as of December Adoption of ASU CECL Allowance as of (dollars in thousands) 31, 2022 (1) 2016-13 (2) Charge-offs Allowance June 30, 2023 Geographical Location New England $ 105 $ 1,302 $ — $ 104 $ 1,511 West — 7 — — 7 South — 402 — 79 481 Mid-Atlantic — 210 — (11) 199 Total $ 105 $ 1,921 $ — $ 172 $ 2,198 (1) As of December 31, 2022, amounts represent probable loan loss provisions recorded before the adoption of the ASU 2016-13. (2) As a component of the adoption of ASU 2016-13, $531,500 of the CECL allowance is excluded from this table because it relates to unfunded commitments and has been recorded as a liability under accounts payable and accrued liabilities in the Company’s consolidated balance sheet. Presented below is the Company’s loan portfolio by geographical location: June 30, 2023 December 31, 2022 (dollars in thousands) Carrying Value % of Portfolio Carrying Value % of Portfolio Geographical Location New England $ 245,236 48.19 % $ 225,603 48.97 % West 3,150 0.62 % 3,150 0.68 % South 162,621 31.96 % 135,857 29.49 % Mid-Atlantic 97,844 19.23 % 96,128 20.86 % Total 508,851 100.00 % 460,738 100.00 % Less, CECL and Direct Allowances 2,198 105 Carrying value, net $ 506,653 $ 460,633 Presented below are the carrying values by Property Type: June 30, 2023 December 31, 2022 Outstanding Outstanding (dollars in thousands) Principal % of Portfolio Principal % of Portfolio Property Type Residential $ 228,228 44.85 % $ 229,944 49.91 % Commercial 168,949 33.20 % 154,929 33.63 % Land 82,281 16.17 % 46,499 10.09 % Mixed use 29,393 5.78 % 29,366 6.37 % Total 508,851 100.00 % 460,738 100.00 % Less, CECL and Direct Allowances 2,198 105 Carrying value, net $ 506,653 $ 460,633 The following tables allocate the carrying value of the Company’s loan portfolio based on internal credit quality indicators in assessing estimated credit losses and vintage of origination at the dates indicated: June 30, 2023 Year Originated (1) Carrying % of FICO Score (2) (dollars in thousands) Value Portfolio 2023 2022 2021 2020 Prior Under 500 $ 400 0.08 % $ — $ — $ — $ — $ 443 501-550 4,492 0.88 % — — 1,779 49 2,809 551-600 9,386 1.84 % — 2,678 5,073 700 2,355 601-650 38,278 7.52 % 2,693 19,205 7,238 6,333 5,045 651-700 96,298 18.92 % 6,784 32,306 34,570 7,113 10,095 701-750 190,724 37.48 % 15,961 54,823 91,255 8,477 6,779 751-800 151,344 29.74 % 3,231 75,055 48,163 9,997 1,883 801-850 17,929 3.52 % — 15,035 — 359 265 Total 508,851 100.00 % $ 28,669 $ 199,102 $ 188.078 $ 33,028 $ 29,674 Less, CECL and Direct Allowances 2,198 Carrying value, net $ 506,653 (1) Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2) The FICO Scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis. December 31, 2022 Year Originated (1) Carrying % of FICO Score (2) (dollars in thousands) Value Portfolio 2022 2021 2020 2019 Prior Under 500 $ 629 0.14 % $ — $ — $ 185 $ 235 $ 209 501-550 4,786 1.04 % — 1,779 87 803 2,117 551-600 15,977 3.47 % 3,061 8,256 1,836 1,357 1,467 601-650 40,349 8.76 % 21,382 7,474 6,273 1,547 3,673 651-700 84,085 18.25 % 33,832 31,342 7,398 5,269 6,244 701-750 174,347 37.83 % 65,190 90,524 11,892 5,527 1,214 751-800 125,347 27.21 % 68,826 45,038 9,470 1,640 373 801-850 15,218 3.30 % 14,554 — 399 — 265 Total 460,738 100.00 % $ 206,845 $ 184,413 $ 37,540 $ 16,378 $ 16,562 Less, CECL and Direct Allowances 105 Carrying value, net $ 460,633 (1) Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2) The FICO Scores are calculated at the inception of a loan and are updated if the loan is modified or on an as needed basis. The following table sets forth the maturities of mortgages receivable as of June 30, 2023 and December 31, 2022: As of June 30, 2023 As of December 31, 2022 2023 and prior $ 229,763,962 $ 372,964,665 2024 250,299,189 85,968,294 2025 20,907,195 1,699,500 2026 7,780,000 — 2027 — — Thereafter 100,871 105,809 Total 508,851,217 460,738,268 Less, CECL and Direct Allowances 2,198,061 105,000 Total $ 506,653,156 $ 460,633,268 At June 30, 2023, of the 360 mortgage loans included in the Company’s loan portfolio, 126, or approximately 19.1%, representing approximately $97.1 million of mortgage receivables, have matured but have not been repaid in full or extended. Of these 126 loans, 51 are in foreclosure status, of which have an aggregate principal balance of approximately $47.2 million. At December 31, 2022, of the 444 mortgage loans included in the Company’s loan portfolio, 105 loans, or 13.4%, representing approximately $61.6 million of mortgage receivables had matured but have not been repaid in full or extended. Of these 105 loans, 40 were in foreclosure status, of which had an aggregate principal balance of approximately $22.5 million. All loans in maturity default and not in foreclosure are subject to modification and will be extended if the borrower can satisfy the Company’s underwriting criteria, including the proper loan-to-value ratio, at the time of renewal. In the case of each of the loans in foreclosure, the Company believed the value of the collateral exceeded the outstanding balance on the loan. |
Real Estate Owned
Real Estate Owned | 6 Months Ended |
Jun. 30, 2023 | |
Real Estate Owned | |
Real Estate Owned | 5. Real Estate Owned Property purchased for rental or acquired through foreclosure are included on the balance sheet as real estate owned. As of June 30, 2023 and June 30, 2022, the fair value of real estate owned totaled $4,998,934 and $5,904,614, respectively, with no valuation allowance. For the three months ended June 30, 2023 and 2022, the Company recorded an impairment loss of $212,500 and $230,000, respectively. For the six months ended June 30, 2023 and 2022, the Company recorded an impairment loss of $212,500 and $490,500, respectively. As of June 30, 2023, real estate owned included $817,609 of real estate held for rental and $4,181,325 of real estate held for sale. As of June 30, 2022, real estate owned included $800,949 of real estate held for rental and $5,103,685 of real estate held for sale. Properties Held for Sale During the three months ended June 30, 2023, the Company sold three (3) properties held for sale and recognized an aggregate loss of $21,239. During the six months ended June 30, 2023, the Company sold five (5) properties held for sale and recognized an aggregate gain of $126,861. During the three months ended June 30, 2022, the Company sold two (2) properties held for sale and recognized an aggregate gain of $188,182. During the six months ended June 30, 2022, the Company sold three (3) properties held for sale and recognized an aggregate gain of $122,343. Properties Held for Rental As of June 30, 2023, one property, a commercial building, was held for rental. The tenant signed a five-year lease that commenced on August 1, 2021. Rental payments due from real estate held for rental are as follows: Year ending December 31, 2023 $ 26,600 Year ending December 31, 2024 53,200 Year ending December 31, 2025 53,200 Year ending December 31, 2026 31,033 Total $ 164,033 |
Other Assets
Other Assets | 6 Months Ended |
Jun. 30, 2023 | |
Other Assets | |
Other Assets | 6. Other Assets As of June 30, 2023 and December 31, 2022, other assets consists of the following: June 30, 2023 December 31, 2022 Prepaid expenses $ 246,756 $ 410,373 Other receivables 4,008,696 3,519,804 Other assets 567,499 477,048 Goodwill 391,000 391,000 Intangible asset – trade name 130,400 130,400 Deferred financing costs, net 267,935 54,548 Total $ 5,612,286 $ 4,983,173 |
Lines of Credit, Mortgage Payab
Lines of Credit, Mortgage Payable, and Churchill Facility | 6 Months Ended |
Jun. 30, 2023 | |
Lines of Credit, Mortgage Payable, and Churchill Facility | |
Lines of Credit, Mortgage Payable, and Churchill Facility | 7. Lines of Credit, Mortgage Payable, and Churchill Facility Line of Credit – Wells Fargo During the year ended December 31, 2020, the Company established a margin loan account at Wells Fargo Advisors that is secured by the Company’s portfolio of short-term securities. The credit line bears interest at a rate equal to 1.75% below the prime rate (6.5% at June 30, 2023, 6.75% as of July 27, 2023). As of June 30, 2023 the total outstanding balance on the Wells Fargo credit line was $25.9 million. Mortgage Payable In 2021, the Company obtained a $1.4 million adjustable-rate mortgage loan from New Haven Bank (the “NHB Mortgage”) of which $750,000 was funded at closing and remained outstanding as of December 31, 2022. The NHB Mortgage accrued interest at an initial rate of 3.75% per annum for the first 72 months and was due and payable in full on December 1, 2037. During the first 12 months, from December 1, 2021 to November 30, 2022, only interest was due and payable. Beginning on December 1, 2022 principal and interest on the NHB Mortgage were to be due and payable on a monthly basis. All payments under the NHB Mortgage was to be amortized based on a 20-year amortization schedule. The interest rate was to be adjusted on each of December 1, 2027 and 2032 to the then published 5-year Federal Home Loan Bank of Boston Classic Advance Rate, plus 2.60%. The NHB Mortgage was a non-recourse loan, secured by a first mortgage lien on each of the properties, located at 698 Main Street, Branford, Connecticut, and 568 East Main Street, Branford, Connecticut. The $750,000 of proceeds funded at closing were used to reimburse the Company for out-of-pocket costs relating to the acquisition of the East Main Street property. On February 28, 2023, the Company refinanced the NHB Mortgage with a new $1.66 million adjustable-rate mortgage loan from New Haven Bank (the “New NHB Mortgage”). The new loan accrues interest at an initial rate of 5.75% per annum for the first 60 months. The interest rate will be adjusted on each of March 1, 2028 and March 1, 2033 to the then published 5-year Federal Home Loan Bank of Boston Classic Advance Rate, plus 1.75%. Beginning on April 1, 2023 and through March 1, 2038, principal and interest will be due and payable on a monthly basis. All payments under the new loan are amortized based on a 20-year amortization schedule. The unpaid principal amount of the loan and all accrued and unpaid interest are due and payable in full on March 1, 2038. The new loan is a non-recourse obligation, secured primarily by a first mortgage lien on the properties located 698 Main Street, Branford, Connecticut and 568 East Main Street, Branford, Connecticut, which are owned by the Company. Churchill MRA Funding I LLC Repurchase Financing Facility On July 21, 2021, the Company consummated a $200 million master repurchase financing facility (“Facility”) with Churchill MRA Funding I LLC (“Churchill”), a subsidiary of Churchill Real Estate, a vertically integrated real estate finance company based in New York, New York. Under the terms of the Facility, the Company has the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans. In addition, the Company has the right and, in some instances the obligation, to repurchase those loans from Churchill. The amount that Churchill will pay for each mortgage loan it purchases will vary based on the attributes of the loan and various other circumstances. The repurchase price is calculated by applying an interest factor, as defined, to the purchase price of the mortgage loan. The Company has also pledged the mortgage loans sold to Churchill to secure its repurchase obligation. The cost of capital under the Facility is equal to the sum of (a) the greater of (i) 0.25% and (ii) the 90-day LIBOR plus (b) 3%-4%, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time. On November 18, 2022, the Facility was amended to replace the 90-day LIBOR with the 90-day SOFR as the new benchmark rate. As of June 30, 2023 the effective rate charged under the Facility was 9.31%. The Facility is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements. Under one such covenant, the Company (A) is prohibited from (i) paying any dividends or making distributions in excess of 90% of its taxable income, (ii) incurring any indebtedness or (iii) purchasing any of its capital stock, unless, it has an asset coverage ratio of at least 150%; and (B) must maintain unencumbered cash and cash equivalents in an amount equal to or greater than 2.50% of the amount of its repurchase obligations. Churchill has the right to terminate the Facility at any time upon 180 days prior notice to the Company. The Company then has an additional 180 days after termination to repurchase all the mortgage loans held by Churchill. The Company uses the proceeds from the Facility to finance the continued expansion of its lending business and for general corporate purposes. At June 30, 2023, the total amount outstanding under the Facility was $50.5 million. The collateral pledged to Churchill at June 30, 2023 was 26 mortgage loans that in the aggregate had unpaid principal balance of approximately $82.9 million. Each of the New NHB Mortgage and the Churchill Facility contain cross-default provisions. Line of Credit – Needham Bank On March 2, 2023, the Company entered into a Credit and Security Agreement (the “Credit Agreement”), with Needham Bank, a Massachusetts co-operative bank, as the administrative agent (the “Administrative Agent”) for the lenders party thereto (the “Lenders”) with respect to a $45 million revolving credit facility (the “Credit Facility”). Under the Credit Agreement, the Company also has the right to request an increase in the size of the Credit Facility up to $75 million, subject to certain conditions, including the approval of the Lenders. Loans under the Credit Facility accrue interest at the greater of (i) the annual rate of interest equal to the “prime rate,” as published in the “Money Rates” column of The Wall Street Journal minus one-quarter of one percent (0.25%), and (ii) four and one-half percent (4.50%). All amounts borrowed under the Credit Facility are secured by a first priority lien on virtually all Company’s assets. Assets excluded from the lien include real estate owned by the Company (other than real estate acquired pursuant to foreclosure) and mortgages sold to Churchill under the Facility. The Credit Facility expires March 2, 2026 but the Company has a right to extend the term for one year upon the consent of the Administrative Agent and the Lenders, which consent cannot be unreasonably withheld, and so long as it is not in default and satisfies certain other conditions. All outstanding revolving loans and accrued but unpaid interest are due and payable on the expiration date. The Company may terminate the Credit Facility at any time without premium or penalty by delivering written notice to the Administrative Agent at least ten ( 10 The Credit Facility is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements, including a covenant that requires the Company to maintain: (A) a ratio of Adjusted EBITDA (as defined in the Credit Agreement) to Debt Service (as defined in the Credit Agreement) of less than 1.40 to 1.0, tested on a trailing-twelve-month basis at the end of each fiscal quarter, commencing with the quarter ended June 30, 2023; (B) a sum of cash, cash equivalents and availability under the facility equal to or greater than $10 million; and (C) an asset coverage ratio of at least 150%. As of June 30, 2023, the interest rate on the Credit Facility was 8.0% and as of July 27, 2023, interest is accruing at the rate of 8.25% per annum. The Company uses the proceeds from the Credit Facility to finance the continued expansion of its lending business and for general corporate purposes. At June 30, 2023, the total amount outstanding under the Credit Facility was $10.0 million. |
Unsecured Notes Payable
Unsecured Notes Payable | 6 Months Ended |
Jun. 30, 2023 | |
Unsecured Notes Payable | |
Unsecured Notes Payable | 8. Unsecured Notes Payable At June 30, 2023, the Company had an aggregate of $281,178,294 of unsecured, unsubordinated notes payable outstanding, net of $7,223,456 of deferred financing costs (collectively, the “Notes”). Currently, the Company has seven series of Notes outstanding: (i) Notes having an aggregate principal amount of $23,663,000 bearing interest at 7.125% per annum and maturing June 30, 2024 (“the June 2024 Notes”); (ii) Notes having an aggregate principal amount of $34,500,000 bearing interest at 6.875% per annum and maturing December 30, 2024 (the “December 2024 Notes”); (iii) Notes having an aggregate principal amount of $56,363,750 bearing interest at 7.75% per annum and maturing September 30, 2025 (the “September 2025 Notes”); (iv) Notes having an aggregate principal amount of $51,750,000 bearing interest at 6.0% per annum and maturing December 30, 2026 (the “December 2026 Notes”); (v) Notes having an aggregate principal amount of $51,875,000 bearing interest at 6.0% per annum and maturing March 30, 2027 (the “March 2027 Notes”); (vi) Notes having an aggregate principal amount of $ 30,000,000 bearing interest at 7.125 % per annum and maturing June 30, 2027 (the “June 2027 Notes”); and (vii) Notes having an aggregate principal amount of $40,250,000 bearing interest at 8.00% per annum and maturing September 30, 2027 (the “September 2027 Notes”). The Notes were sold in underwritten public offerings, were issued in denomination of $25.00 each and are listed on the NYSE American and trade under the symbols “SCCB,” “SACC,” “SCCC,” “SCCD,” “SCCE,” “SCCF” and “SCCG,” respectively. All the Notes were issued at par except for the last tranche of the September 2025 notes, in the original principal amount of $28 million, which were issued at $24.75 each. Interest on the Notes is payable quarterly on each March 30, June 30, September 30 and December 30 that they are outstanding. So long as the Notes are outstanding, the Company is prohibited from making distributions in excess of 90% of its taxable income, incurring any additional indebtedness or purchasing any shares of its capital stock unless it has an “Asset Coverage Ratio” of at least 150% after giving effect to the payment of such dividend, the incurrence of such indebtedness or the application of the net proceeds, as the case may be. The Company may redeem the Notes, in whole or in part, without premium or penalty, at any time after their second anniversary of issuance upon at least 30 days prior written notice to the holders of the Notes. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including the date of redemption. Currently, the June 2024 Notes, December 2024 Notes and the September 2025 Notes are callable at any time. The December 2026 Notes will be callable at any time after December 30, 2023, the March 2027 Notes will be callable at any time after March 9, 2024, the June 2027 Notes will be callable at any time after May 11, 2024, and the September 2027 Notes will be callable at any time after August 23, 2024. The following are the future principal payments on the notes payable as of June 30, 2023: Year ending December 31, Amount Remainder of 2023 $ — 2024 58,163,000 2025 56,363,750 2026 51,750,000 2027 122,125,000 Total principal payments 288,401,750 Deferred financing costs (7,223,456) Total notes payable, net of deferred financing costs $ 281,178,294 The estimated amortization of the deferred financing costs as of June 30, 2023 is as follows: Year ending December 31, Amount Remainder of 2023 $ 1,174,966 2024 2,336,228 2025 1,807,606 2026 1,410,319 2027 494,337 Total deferred costs $ 7,223,456 |
Secured Note Payable
Secured Note Payable | 6 Months Ended |
Jun. 30, 2023 | |
Secured Note Payable | |
Secured Note Payable | 9. Secured Note Payable On May 30, 2023, and in connection with the Company’s investment in Shem Creek Sachem 100 LLC (one of the Company’s wholly-owned subsidiaries), the Company obtained a commercial loan from PeoplesBank of $7,000,000. At closing the Company had an outstanding principal balance of $6,224,000 with the ability to draw an additional $776,000 so long as there are no existing events of default under the loan agreement. The loan accrues interest at a fixed annual rate of 6.50%. The loan has an original maturity date of June 20, 2026 and a one year extension option that defers the maturity date until June 20, 2027. During the first 36 payment periods, only interest is due and payable, after which principal must be repaid for the remainder of the loan term under a thirty (30) year amortization schedule. The PeoplesBank loan is non-recourse, secured by a first lien on the Shem Creek Middlesex mortgage receivable, as described in Note 18. As of June 30, 2023, the outstanding balance remained at $6,224,000. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Accounts Payable and Accrued Liabilities | |
Accounts Payable and Accrued Liabilities | 10. Accounts Payable and Accrued Liabilities As of June 30, 2023 and December 31, 2022, accounts payable and accrued liabilities include the following: June 30, 2023 December 31, 2022 Accounts payable and accrued expenses $ 1,100,193 $ 1,109,789 CECL - allowance for unfunded contractual obligation credit losses 531,500 — Other notes — 6,014 Accrued interest 492,335 323,416 Total $ 2,124,028 $ 1,439,219 |
Fee and Other Income
Fee and Other Income | 6 Months Ended |
Jun. 30, 2023 | |
Fee and Other Income | |
Fee and Other Income | 11. Fee and Other Income For the three and six month periods ended June 30, 2023 and 2022, fee and other income consists of the following: Three Months Six Months ended June 30, ended June 30, 2023 2022 2023 2022 Late and other fees $ 37,187 $ 117,676 $ 150,317 $ 246,540 Processing fees 29,630 62,615 61,700 128,470 Rental income, net 13,300 18,158 26,600 28,200 Extension fees 233,135 100,686 413,544 202,519 Construction management fee 500,634 39,031 667,808 48,809 Other fees 37,324 45,657 73,180 86,441 Legal fees 119,500 99,840 216,000 161,940 Other income 600,266 314,946 669,432 504,253 Total $ 1,570,976 $ 798,609 $ 2,278,581 $ 1,407,172 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies Origination, Modification, and Construction Servicing Fees Loan origination, modification, and construction servicing fees generally range from 1% - 3% each of the original loan principal or the modified loan balance and, generally, are payable at the time the loan is funded or modified. The unamortized portion is recorded as deferred revenue on the consolidated balance sheet. At June 30, 2023, deferred revenue was $4.8 million, which will be recorded as income as follows: Year ending December 31, 2023 $ 2,930,200 Year ending December 31, 2024 1,443,537 Year ending December 31, 2025 343,515 Year ending December 31, 2026 98,450 Total $ 4,815,702 In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in full at the time of repayment. Employment Agreements In February 2017, the Company entered into an employment agreement with John Villano, the material terms of which are as follows: (i) the employment term is five years with extensions for successive one-year periods unless either party provides written notice at least 180 days prior to the next anniversary date of its intention to not renew the agreement; (ii) a base salary of $260,000, which was increased in April 2018, April 2021 and April 2022 to $360,000, $500,000 and $750,000, respectively; (iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s Board of Directors; (iv) participation in the Company’s employee benefit plans; (v) full indemnification to the extent permitted by law; (vi) a two-year non-competition period following the termination of employment without cause; and (vii) payments upon termination of employment or a change in control. In April 2021, the Company granted 89,928 restricted common shares (having a market value of approximately $500,000) to Mr. Villano. One one One-third one-third 2025 One 2025 2026 In July 2022, the Company entered into an employment agreement with John E. Warch, the Company’s former chief financial officer, the material terms of which were as follows: (i) the employment term commenced on August 1, 2022 and continued until terminated by either party; (ii) a base salary of $325,000; (iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s Board of Directors; (iv) participation in the Company’s employee benefit plans; (v) full indemnification to the extent permitted by law; and (vi) payments upon termination of employment or a change in control. In February 2023, the Company granted 8,000 restricted common shares (having a market value of approximately $30,000) to Mr. Warch. One one unvested restricted common shares were forfeited to the Company. Unfunded Commitments At June 30, 2023, the Company had future funding obligations totaling approximately $110.3 million, which can be drawn by the borrowers when the conditions relating thereto have been satisfied. The unfunded commitments will be funded from loan payoffs and additional drawdowns under existing and future credit facilities and proceeds from sale of debt and equity securities. Other In the normal course of its business, the Company is named as a party-defendant in connection with tax foreclosure proceedings against properties on which it holds a first mortgage lien. The Company actively monitors these actions and, in all cases, believes there remains sufficient value in the subject property to assure that no loan impairment exists. At June 30, 2023, there were five such proceedings. The unpaid principal balances on the properties that are the subject of these proceedings was approximately $5.4 million. In accordance with the asset purchase agreement with Urbane New Haven, LLC in October 2022 under certain circumstances the Company will be required to pay the seller 20% of the net proceeds, as defined, of certain real estate development projects completed by the Company until such time that the principal former owner is no longer employed by the Company. Any future payments will be expensed and included in net income. On June 23, 2023, the Company entered into a purchase and sale contract for $10,600,000 to acquire a commercial building in Wesport, CT. Upon execution of the agreement, the Company put down a deposit of $1,060,000 that is non-refundable, unless seller fails to meet certain diligence requirements. The transaction is expected to close in the third quarter of 2023, but as of the date of this filing no closing date has been set. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions | |
Related Party Transactions | 13. Related Party Transactions In the ordinary course of business, the Company may originate, fund, manage and service loans to shareholders. The underwriting process on these loans adheres to prevailing Company policy. The terms of such loans, including the interest rate, income, origination fees and other closing costs are the same as those applicable to loans made to unrelated third parties in the portfolio. As of June 30, 2023 and 2022, loans to known shareholders totaled approximately $28.0 million and $18.4 million, respectively. Interest income earned on these loans for the three months ended June 30, 2023 and 2022 totaled $546,266 and $666,584, respectively, and for the six months ended June 30, 2023 and 2022 totaled $1,092,533 and $312,546, respectively. The wife of the Company’s chief executive officer was employed by the Company as its director of finance until her retirement from the Company on June 30, 2022. For the six-month periods ended June 30, 2023 and 2022, she was paid $0 and $60,394, respectively, as compensation from the Company. For the three months ended June 30, 2023 and 2022, the corresponding amounts were $0 and $34,247, respectively. In December 2021, the Company hired the daughter of the Company’s chief executive officer to perform certain internal audit and compliance services. For the three-month periods ended June 30, 2023 and 2022, she received compensation of $33,000 and $36,704, respectively. For the six-month periods ended June 30, 2023 and 2022, she received compensation of $76,000 and $62,850, respectively. |
Concentration of Credit Risk
Concentration of Credit Risk | 6 Months Ended |
Jun. 30, 2023 | |
Concentration of Credit Risk | |
Concentration of Credit Risk | 14. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments in securities, investments in partnerships, and mortgage loans. The Company maintains its cash and cash equivalents with various financial institutions. Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company is potentially subject to concentration of credit risk in its investment securities. Currently, all its investment securities, which include common stocks, preferred stock, corporate bonds and mutual funds, are held at Wells Fargo Advisors. Wells Fargo Advisors is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects clients against the custodial risk of a member investment firm becoming insolvent by replacing missing securities and cash up to $500,000, including up to $250,000 in cash, per client in accordance with SIPC rules. The Company makes loans that are secured by first mortgage liens on real property located primarily in Connecticut (42.17%), Florida (26.47%) and New York (11.36%). This concentration of credit risk may be affected by changes in economic or other conditions of the particular geographic area. Credit risks associated with the Company’s mortgage loan portfolio and related interest receivable are described in Note 4 - Mortgages Receivable. |
Outstanding Warrants
Outstanding Warrants | 6 Months Ended |
Jun. 30, 2023 | |
Outstanding Warrants | |
Outstanding Warrants | 15. Outstanding Warrants In connection with a public offering that was consummated in October 2017, the Company issued to the underwriters warrants to purchase an aggregate of 187,500 common shares at an exercise price of $5.00 per share. In January 2022, warrants to purchase 93,750 of the Company’s common shares were exercised. The holders of those warrants elected to use the cashless exercise option available to them under the terms of the warrants. As such, they received 19,658 common shares. All the remaining unexercised warrants expired on October 24, 2022. |
Stock-Based Compensation and Em
Stock-Based Compensation and Employee Benefits | 6 Months Ended |
Jun. 30, 2023 | |
Stock-Based Compensation and Employee Benefits | |
Stock-Based Compensation and Employee Benefits | 16. Stock-Based Compensation and Employee Benefits Stock-Based Compensation On October 27, 2016, the Company adopted the 2016 Equity Compensation Plan (the “Plan”), the purpose of which is to align the interests of the Company’s officers, other employees, advisors and consultants or any subsidiary, if any, with those of the Company’s shareholders and to afford an incentive to such officers, employees, consultants and advisors to continue as such, to increase their efforts on the Company’s behalf and to promote the success of the Company’s business. The Plan is administered by the Compensation Committee. The maximum number of common shares reserved for the grant of awards under the Plan is 1,500,000, subject to adjustment as provided in Section 5 of the Plan. The number of securities remaining available for future issuance under the Plan as of June 30, 2023 was 1,005,078. During the six months ended June 30, 2023 and 2022, the Company granted an aggregate of 183,390 and 138,967 restricted common shares under the Plan, respectively, with a fair value of $707,719 and $718,913, respectively. With respect to the restricted common shares granted during the six months ended June 30, 2023, (i) an aggregate of 17,500 shares vested immediately on the date of grant, an additional aggregate of 17,500 shares will vest on each of the first and second Stock based compensation for the three months ended June 30, 2023 and 2022 was $222,211 and $123,428, respectively. Stock based compensation for the six months ended June 30, 2023 and 2022 was $395,709 and $230,167, respectively. As of June 30, 2023, unrecorded stock based compensation expense was $1,125,694. Employee Benefits On April 16, 2018, the Company’s Board of Directors approved the adoption of the Sachem Capital Corp. 401(k) Profit Sharing Plan (the “401(k) Plan”). All employees, who meet the participation criteria, are eligible to participate in the 401(k) Plan. Under the terms of the 401(k) Plan, the Company is obligated to contribute 3% of a participant’s compensation to the 401(k) Plan on behalf of an employee-participant. For the three months ended June 30, 2023 and 2022, the 401(k) Plan expense was $30,693 and $30,008, respectively. For the six months ended June 30, 2023 and 2022, the 401(k) Plan expense was $75,389 and $50,001, respectively. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2023 | |
Equity | |
Equity | 17. Equity On August 24, 2022, the Company filed a prospectus supplement to its Form S-3 Registration Statement covering the sale of up to $75,000,000 of its common shares and its Series A Preferred Stock (as defined in Note 20 below) having an aggregate liquidation preference of up to $25,000,000 in an “at-the market” offering, which is ongoing. During the six months ended June 30, 2023, under this offering, the Company sold an aggregate of 2,616,124 common shares, realizing gross proceeds of approximately $9.9 million, and sold shares of its Series A Preferred Stock having an aggregate liquidation preference of $615,075, realizing gross proceeds of approximately $527,600 representing a discount of approximately 16.6% from the liquidation preference. In October 2022, the Board adopted a stock repurchase plan (the “Repurchase Program”), pursuant to which the Company may repurchase up to an aggregate of $7,500,000 of its Common Shares. Under the Repurchase Program, share repurchases will be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market in accordance with applicable federal securities laws, including Rule 10b-18 and 10b5-1 of the Exchange Act. During the six month period ended June 30, 2023, the Company repurchased 71,000 Common Shares under the Repurchase Program at a total cost of approximately $226,000. Following the repurchase, such shares were retired. As of June 30, 2023, there were approximately $7,277,000 available under the Repurchase Program. The Repurchase Program is expected to continue through September 30, 2023, unless extended or shortened by the Board. |
Partnership Investments
Partnership Investments | 6 Months Ended |
Jun. 30, 2023 | |
Partnership Investments | |
Partnership Investments | 18. Partnership Investments As of June 30, 2023, the Company had invested an aggregate of approximately $35.4 million in four limited liability companies in which it held non-controlling interests. The Company’s ownership interest in the four limited liability companies ranges up to 49%. The Company accounts for these investments at cost because the Company does not control or have significant influence over the investments. In May 2023, the Company made an additional investment in a limited liability company, Shem Creek Sachem 100 LLC, of which it owns 100% and, as such, the Company consolidates this investment within its books and records. In connection with this investment the third party manager originated a mortgage loan in the amount of $8,750,000 at a fixed rate of 8.4% and borrowed $7,000,000 via a secured commercial loan, as more accurately described in Note 9. The third party manager of both the non-controlling and consolidated investments is a commercial real estate finance company that provides debt capital solutions to local and regional commercial real estate owners in the Northeastern United States. The Company’s withdrawal from each limited liability company may only be granted by the manager of such entity. Each limited liability company has elected to be treated as a partnership for income tax purposes. The Company’s partnership investments can be categorized into two fund structures, fund investments and direct loan investments. The fund investments primarily include investments in two funds that invest in mortgage loans to borrowers. The direct loan investments are through two partnerships whereby the Company directly invests in the participation of individual loans to borrowers. Both the fund and direct loan structure primarily invest in mortgage loans to borrowers with a majority of the deals being leveraged by a bank. These loans are primarily two- to three- year collateralized mortgage loans, often with contractual extension options for the borrowers of an additional year. The Company receives quarterly dividends from the partnerships that are composed of a preferred return, return of capital and promote depending on each loan’s waterfall calculation, as defined by the loan agreements. The Company cannot redeem its fund investment at any time, its investment will be repaid as the underlying loans are repaid. The Company expects to be repaid on its current investments by December 31, 2026. For the three months ended June 30, 2023 and 2022, the non-controlling partnership interests generated $1.0 million and $0.3 million, respectively, of income for the Company. For the six months ended June 30, 2023 and 2022, the partnerships generated $1.6 million and $0.6 million, respectively, of income for the Company. At June 30, 2023, the Company had unfunded partnership commitments totaling approximately $2.1 million. |
Special Purpose Acquisition Cor
Special Purpose Acquisition Corporation | 6 Months Ended |
Jun. 30, 2023 | |
Special Purpose Acquisition Corporation | |
Special Purpose Acquisition Corporation | 19. Special Purpose Acquisition Corporation On March 24, 2021, the Company loaned $25,000 to its wholly-owned subsidiary, Sachem Sponsor LLC. Sachem Sponsor LLC used those funds to purchase 1,437,500 shares of Class B common stock of Sachem Acquisition Corp., a newly organized blank check company formed under the laws of Maryland in February 2021, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. As of June 30, 2023, the Company had incurred approximately $457,000 of costs related to the preparation and filing of the registration statement, including legal fees, accounting fees and filing fees as well as organizational costs and an expense advance to the underwriter. On July 14, 2021, Sachem Acquisition Corp. filed a registration statement on Form S-1 registering the sale of 5,750,000 units at $10.00 per unit, or $57,500,000 in the aggregate. Each unit consists of one share of Class A common stock and one |
Series A Preferred Stock
Series A Preferred Stock | 6 Months Ended |
Jun. 30, 2023 | |
Series A Preferred Stock. | |
Series A Preferred Stock | 20. Series A Preferred Stock The Company has designated 2,903,000 shares of its authorized preferred shares, par value $0.001 per share, as shares of Series A Preferred Stock (the “Series A Preferred Stock”) with the powers, designations, preferences and other rights as set forth in an Amended and Restated Certificate of Designation (the “Series A Designation Certificate”). The Series A Designation Certificate provides that the Company will pay quarterly cumulative dividends on the Series A Preferred Stock, in arrears, on the 30th day of each of March, June, September and December, and including, the date of original issuance of the Series A Preferred Stock until redeemed at 7.75% of the $25.00 per share liquidation preference per annum (equivalent to $1.9375 per annum per share). The Series A Preferred Stock is not redeemable before June 29, 2026, except upon the occurrence of a Change of Control (as defined in the Series A Designation Certificate). On or after June 29, 2026, the Company may, at its option, redeem any or all of the shares of the Series A Preferred Stock at $25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date. Upon the occurrence of a Change of Control, the Company may, at its option, redeem any or all of the shares of Series A Preferred Stock within 120 days after the first date on which such Change of Control occurred at $25.00 per share plus any accumulated and unpaid dividends to, but not including, the redemption date. The Series A Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by the Company or converted into common shares in connection with a Change of Control by the holders of the Series A Preferred Stock. Upon the occurrence of a Change of Control, each holder of Series A Preferred Stock will have the right (subject to the Company’s election to redeem the Series A Preferred Stock in whole or in part, as described above, prior to the Change of Control Conversion Date as defined in the Series A Designation Certificate) to convert some or all of the Series A Preferred Stock held by such holder on the Change of Control Conversion Date into a number of the common shares determined by formula, in each case, on the terms and subject to the conditions described in the Series A Designation Certificate, including provisions for the receipt, under specified circumstances, of alternative consideration as described in the Series A Designation Certificate. Except under limited circumstances, holders of the Series A Preferred Stock generally do not have any voting rights. The Company has reserved 72,575,000 common shares for issuance upon conversion of the Series A Preferred Stock. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events | |
Subsequent Events | 21. Subsequent Events On July 26, 2023, the board of directors declared a dividend of $0.13 per common share payable on August 11, 2023 to shareholders of record as of August 7, 2023. From July 1, 2023 through August 11, 2023, the Company sold an aggregate of 1,524,379 common shares under its at-the-market offering facility, realizing gross proceeds of approximately $5,756,477. From July 1, 2023 through August 11, 2023, the Company sold an aggregate of 28,531 Series A Preferred shares under its at-the-market offering facility, realizing gross proceeds of approximately $585,804. Management has evaluated subsequent events through August 11, 2023 the date on which the financial statements were available to be issued. Based on the evaluation, no adjustments were required in the accompanying financial statements. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Significant Accounting Policies | |
Unaudited Financial Statements | Unaudited Financial Statements The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022 and the notes thereto included in the Company’s Annual Report on Form 10-K. Results of operations for the three months and six month periods ended June 30, 2023, are not necessarily indicative of the operating results to be attained in the entire fiscal year, or for any subsequent period. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on (a) various assumptions that are based on experience, (b) projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could materially differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The combined account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. The Company does not believe that the risk is significant. |
Investment Securities | Investment Securities The Company considers all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. Investment transactions are accounted for on a trade-date basis. Dividends are recorded on the ex-dividend date and interest is recognized on the accrual basis. Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. Fair value is calculated based on publicly available market information or other estimates determined by management. If the cost of an investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. If qualitative factors indicate an available-for-sale debt security may be credit impaired the loss is measured as the excess of carrying value over the present value of expected cash flows, limited to the excess of carrying value over fair value. To determine credit losses, the Company may employ a systematic methodology that considers available quantitative and qualitative evidence. In addition, the Company considers specific adverse conditions related to the financial health of, and business outlook for, the person or entity for which it is providing credit. If the Company has plans to sell the security or it is more likely than not that the Company will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in net income and a new cost basis in the investment is established. If market, industry, and/or there is a deterioration in the financial health, business outlook or other conditions of the person or entity to which it provided credit, the Company may incur future impairments. |
Current Expected Credit Losses Allowance | Current Expected Credit Losses Allowance The Company adopted the current expected credit loss (“CECL”) standard effective January 1, 2023 in accordance with ASU No. 2016-13. The initial CECL allowance adjustment of $2,489,574 was recorded effective January 1, 2023 as a cumulative-effect of change in accounting principle through a direct charge to accumulated deficit on the consolidated statements of shareholders’ equity; however, subsequent changes to the CECL allowance will be recognized in the consolidated statements of comprehensive income. The Company records an allowance for credit losses in accordance with the CECL standard on the Company’s loan portfolio, including unfunded construction commitments, on a collective basis by assets with similar risk characteristics. This methodology replaces the probable incurred loss impairment methodology. In addition, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are also analyzed for credit losses in accordance with the CECL standard, as they represent a financial asset that is subject to credit risk. As allowed under the CECL standard used by the Company , as a practical expedient, the fair value of the collateral at the reporting date is compared to the net carrying amount of the loan when determining the allowance for credit losses for loans in pending/pre-foreclosure status, as defined. Fair value of collateral is reduced by estimated cost to sell if the collateral is expected to be sold. The amount of loans in pending/pre-foreclosure as of June 30, 2023 and December 31, 2022 was approximately $50.0 million and $24.0 million, respectively. As of June 30, 2023 and December 31, 2022, none of those loans required an allowance for credit loss. The CECL standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the economic environment. The Company utilizes a loss-rate method for estimating current expected credit losses. The loss rate method involves applying a loss rate to a pool of loans with similar risk characteristics to estimate the expected credit losses on that pool of loans. In determining the CECL allowance, the Company considers various factors including (1) historical loss experience in its portfolio, (2) loan specific losses for loans deemed collateral dependent based on excess amortized cost over the fair value of the underlying collateral, and (3) its current and future view of the macroeconomic environment. The Company utilizes a reasonable and supportable forecast period equal to the contractual term of the loan plus any applicable short-term extensions that are reasonably expected for construction loans. Management estimates the allowance for credit losses using relevant information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. The allowance for credit losses is maintained at a level sufficient to provide for expected credit losses over the life of the loans based on evaluating historical credit loss experience and to make adjustments to historical loss information for differences in the specific risk characteristics in the current loan portfolio. The CECL allowance related to the principal outstanding is presented within “Mortgages receivable, net” and for unfunded commitments is within accounts payable and accrued liabilities in the Company’s consolidated balance sheets. The CECL allowance related to the late payment fees are presented in “Interest and fees receivable” and “Due from borrowers” in the Company’s consolidated balance sheets. As of June 30, 2023 and January 1, 2023, the CECL allowance for mortgages receivable was approximately $2.2 million and approximately $1.9 million, respectively, an increase of approximately $0.3 million. As of June 30, 2023 and January 1, 2023, the CECL allowance for interest and fees receivable was approximately $29,100 and approximately $26,100, respectively, an increase of approximately $3,000. As of June 30, 2023 and January 1, 2023, the CECL allowance for amounts due from borrowers was approximately $32,300 and $19,900, respectively, an increase of approximately $12,400. As of June 30, 2023 and January 1, 2023, the CECL allowance for unfunded commitments was approximately $531,500 and $522,000, respectively, an increase of approximately $9,500. |
Fair Value Measurements | Fair Value Measurements The framework for measuring fair value provides a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 are described as follows: Level 1 Level 2 ● quoted prices for similar assets or liabilities in active markets; ● quoted prices for identical or similar assets or liabilities in inactive markets; ● inputs other than quoted prices that are observable for the asset or liability; and ● inputs that are derived principally from or corroborated by observable market data by correlation to other means. If the asset or liability has a specified (i.e., Level 3 |
Property and Equipment | Property and Equipment Land and building acquired in December 2016 to serve as the Company’s office facilities is stated at cost. The building is being depreciated using the straight-line method over its estimated useful life of 40 years. Expenditures for repairs and maintenance are charged to expense as incurred. The Company relocated its entire operations to this property in March 2019. As of June 30, 2023 this property was under contract to be sold and, as such, the company classifies it as available-for-sale. The carrying value of the land and building is $1,048,380, which is net of an impairment loss of $200,000 that the Company recognized during the quarter ended June 30, 2023. Land and building acquired in 2021 to serve as the Company’s new corporate headquarters is stated at cost. Renovation of the building was completed in the first quarter of 2023 and the Company relocated its operations to the new building in March 2023. The building is being depreciated using the straight-line method over its estimated useful life of 40 years. The new building was placed in service during the six months ended June 30, 2023. |
Real Estate Owned | Real Estate Owned Real estate owned by the Company is stated at cost and is tested for impairment quarterly. |
Consolidations | Consolidations The consolidated financial statements of the Company include the accounts of all subsidiaries in which the Company has control over significant operating, financial and investing decisions of the entity. All intercompany accounts and transactions have been eliminated. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company monitors events or changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the undiscounted cash flows are less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets. |
Goodwill | Goodwill Goodwill is not amortized, but rather tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment. Goodwill at June 30, 2023 represents the excess of the consideration paid over the fair value of net assets acquired from Urbane New Haven, LLC in October 2022. In testing goodwill for impairment, the Company follows FASB ASC 350, “Intangibles—Goodwill and Other”, which permits a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill, or the Company chooses not to perform the qualitative assessment, then the Company compares the fair value of that reporting unit with its carrying value, including goodwill. |
Deferred Financing Costs | Deferred Financing Costs Costs incurred in connection with the Company’s revolving credit facilities, described in Note 7 – Lines of Credit, Mortgage Payable, and Churchill Facility and Note 9 – Secured Note Payable, are amortized over the term of the applicable facility using the straight-line method. Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 8 – Unsecured Notes Payable, are being amortized over the term of the respective Notes. |
Revenue Recognition | Revenue Recognition Interest income from the Company’s loan portfolio is earned over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company’s loans provide for interest to be paid monthly in arrears. The Company, generally, does not accrue interest income on mortgages receivable that are more than ninety (90) days past due or interest charged at default rates. However, interest income not accrued at June 30, 2023 but collected prior to the issuance of this report is included in income for the period ended June 30, 2023. Origination and modification fee revenue, generally 1% – 3% of either the original loan principal or the modified loan balance, is collected at loan funding and is recognized ratably over the contractual life of the loan in accordance with ASC 310. |
Income Taxes | Income Taxes The Company believes it qualifies as a real estate investment trust (“REIT”) for federal income tax purposes and operates accordingly. It made the election to be taxed as a REIT on its 2017 Federal income tax return. The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended (the “Code”), relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding capital stock. So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S. federal income tax on its taxable income distributed to its shareholders. However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification. The Company has elected, and may elect in the future, to treat certain of its existing or newly created corporate subsidiaries as taxable REIT subsidiaries (“TRSs”). In general, a TRS may hold assets that the Company cannot hold directly and generally may engage in any real estate or non-real estate related business. The TRSs generate income, resulting in federal and state income tax liability for these entities. The Company does not expect to incur any corporate federal income tax liability outside of the TRSs, as it believes it has maintained its qualification as a REIT. During the three and six months ended June 30, 2023 and 2022, the Company’s TRSs, nor has the Company, recognized any provisions for federal income tax or state, local and franchise taxes on the Company’s consolidated statements of operations. The income tax provision for the Company differs from the amount computed from applying the statutory federal income tax rate to income before income taxes due to non-taxable REIT income and other permanent differences including the non-deductibility of acquisition costs of business combinations for federal income tax reporting. FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes ” “ ” |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated in accordance with ASC 260 “ ” |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments”, (ASU 2016-13), which changes accounting requirements for the measurement and recognition of expected credit losses from an incurred or probable methodology to a current expected credit loss methodology. Mortgages receivable, unfunded loan commitments, interest and fees receivable and amounts included in due from borrowers, other than reimbursements, which include origination, modification and other fees receivable are the only items currently held by the Company that are within the scope of ASU 2016-13. The Company adopted this ASU effective January 1, 2023 and applied a modified retrospective approach through a cumulative-effect adjustment to retained earnings upon adoption. At transition on January 1, 2023, the cumulative effect of adopting this ASU resulted in a decrease in retained earnings of $2,489,574 and an increase in the allowance for credit losses. The increase in the allowance is driven by the fact that the allowance under CECL covers expected credit losses over the full expected life of the loan portfolios and takes into account forecasts of expected future economic conditions. In March 2022, the FASB issued ASU 2022-02, “Financial Instruments-Credit Losses” (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the accounting guidance for troubled debt restructurings (“TDR”) for creditors that have adopted the CECL standard and requires enhanced disclosures for loan modifications made to borrowers experiencing financial difficulty in the form of interest rate reductions, principal forgiveness, other-than-insignificant payment delays, or term extensions. In addition, the new guidance requires presentation in the vintage disclosures of current-period gross write-offs by year of origination. The amendments in this update became effective for fiscal years beginning after December 15, 2022. This update did not have a material effect on the Company’s financial statements. In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” ASU 2022-03 was issued to (1) to clarify the guidance in FASB ASC Topic 820, “Fair Value Measurement”, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with FASB ASC Topic 820. The amendments in this update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company does not anticipate that this update will have a material impact on its consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s consolidated financial statements. |
Reclassifications | Reclassifications Certain amounts included in the June 30, 2022 and December 31, 2022 consolidated financial statements have been reclassified to conform to the June 30, 2023 presentation. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Measurement | |
Schedule of company's assets at fair value | The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of June 30, 2023: Level 1 Level 2 Level 3 Total Stocks and ETFs $ — $ 1,204,857 $ — $ 1,204,857 Mutual funds 15,429,261 — — 15,429,261 Debt securities 18,564,164 1,002,838 — 19,567,002 Convertible preferred equity security — — 1,000,000 1,000,000 Total liquid investments $ 33,993,425 $ 2,207,695 $ 1,000,000 $ 37,201,120 Real estate owned $ — $ — $ 4,998,934 $ 4,998,934 The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of December 31, 2022: Level 1 Level 2 Level 3 Total Stocks and ETF’s $ 3,282,659 $ 1,446,065 — $ 4,728,724 Mutual funds 14,850,839 — — 14,850,839 Debt securities 3,880,045 1,116,854 — 4,996,899 Total liquid investments $ 22,013,543 $ 2,562,919 — $ 24,576,462 Real estate owned — — $ 5,216,149 $ 5,216,149 |
Schedule of company's available-for-sale (AFS) securities and other comprehensive income (OCI) | Three Months Ended Six months Ended June 30, June 30, 2023 2022 2023 2022 OCI from AFS securities: Unrealized (losses) on AFS securities at beginning of period $ (469,853) $ (233,208) $ (561,490) $ (476,016) Unrealized gain (losses) on securities available-for-sale – debt securities 93,775 (192,764) 185,412 50,044 Change in OCI from AFS securities 93,775 (192,764) 185,412 50,044 Balance at end of period $ (376,078) $ (425,972) $ (376,078) $ (425,972) |
Schedule of Company's Level 3 Investments of Real Estate Owned | Six Months Ended Twelve Months Ended June 30, 2023 December, 31, 2022 Real Estate Owned at the beginning of period $ 5,216,149 $ 6,559,010 Principal basis transferred to Real Estate Owned 1,186,663 1,376,733 Charges and/or improvements 180,147 126,443 Proceeds from sale of Real Estate Owned (1,498,386) (2,090,880) Impairment (212,500) (799,909) Gain on sale of Real Estate Owned 126,861 44,752 Balance at end of period $ 4,998,934 $ 5,216,149 |
Schedule of Company's Level 3 Investments of Convertible preferred equity securities | Six Months Ended Twelve Months Ended June 30, 2023 December, 31, 2022 Convertible preferred equity securities at the beginning of period $ — $ — Investment in 1,000,000 — Balance at end of period $ 1,000,000 $ — |
Mortgages Receivable (Tables)
Mortgages Receivable (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Mortgages Receivable | |
Summary of the activity in the CECL Allowance from adoption on January 1, 2023 | The following table summarizes the activity in the CECL Allowance from adoption on January 1, 2023: CECL Allowance Provision for CECL as of December Adoption of ASU CECL Allowance as of (dollars in thousands) 31, 2022 (1) 2016-13 (2) Charge-offs Allowance June 30, 2023 Geographical Location New England $ 105 $ 1,302 $ — $ 104 $ 1,511 West — 7 — — 7 South — 402 — 79 481 Mid-Atlantic — 210 — (11) 199 Total $ 105 $ 1,921 $ — $ 172 $ 2,198 (1) As of December 31, 2022, amounts represent probable loan loss provisions recorded before the adoption of the ASU 2016-13. (2) As a component of the adoption of ASU 2016-13, $531,500 of the CECL allowance is excluded from this table because it relates to unfunded commitments and has been recorded as a liability under accounts payable and accrued liabilities in the Company’s consolidated balance sheet. June 30, 2023 December 31, 2022 (dollars in thousands) Carrying Value % of Portfolio Carrying Value % of Portfolio Geographical Location New England $ 245,236 48.19 % $ 225,603 48.97 % West 3,150 0.62 % 3,150 0.68 % South 162,621 31.96 % 135,857 29.49 % Mid-Atlantic 97,844 19.23 % 96,128 20.86 % Total 508,851 100.00 % 460,738 100.00 % Less, CECL and Direct Allowances 2,198 105 Carrying value, net $ 506,653 $ 460,633 June 30, 2023 December 31, 2022 Outstanding Outstanding (dollars in thousands) Principal % of Portfolio Principal % of Portfolio Property Type Residential $ 228,228 44.85 % $ 229,944 49.91 % Commercial 168,949 33.20 % 154,929 33.63 % Land 82,281 16.17 % 46,499 10.09 % Mixed use 29,393 5.78 % 29,366 6.37 % Total 508,851 100.00 % 460,738 100.00 % Less, CECL and Direct Allowances 2,198 105 Carrying value, net $ 506,653 $ 460,633 |
Schedule of allocation of the carrying value of Company's loan portfolio based on our internal credit quality indicators in assessing estimated credit losses and vintage of origination at the dates indicated | June 30, 2023 Year Originated (1) Carrying % of FICO Score (2) (dollars in thousands) Value Portfolio 2023 2022 2021 2020 Prior Under 500 $ 400 0.08 % $ — $ — $ — $ — $ 443 501-550 4,492 0.88 % — — 1,779 49 2,809 551-600 9,386 1.84 % — 2,678 5,073 700 2,355 601-650 38,278 7.52 % 2,693 19,205 7,238 6,333 5,045 651-700 96,298 18.92 % 6,784 32,306 34,570 7,113 10,095 701-750 190,724 37.48 % 15,961 54,823 91,255 8,477 6,779 751-800 151,344 29.74 % 3,231 75,055 48,163 9,997 1,883 801-850 17,929 3.52 % — 15,035 — 359 265 Total 508,851 100.00 % $ 28,669 $ 199,102 $ 188.078 $ 33,028 $ 29,674 Less, CECL and Direct Allowances 2,198 Carrying value, net $ 506,653 (1) Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2) The FICO Scores are calculated at the inception of the loan and are updated if the loan is modified or on an as needed basis. December 31, 2022 Year Originated (1) Carrying % of FICO Score (2) (dollars in thousands) Value Portfolio 2022 2021 2020 2019 Prior Under 500 $ 629 0.14 % $ — $ — $ 185 $ 235 $ 209 501-550 4,786 1.04 % — 1,779 87 803 2,117 551-600 15,977 3.47 % 3,061 8,256 1,836 1,357 1,467 601-650 40,349 8.76 % 21,382 7,474 6,273 1,547 3,673 651-700 84,085 18.25 % 33,832 31,342 7,398 5,269 6,244 701-750 174,347 37.83 % 65,190 90,524 11,892 5,527 1,214 751-800 125,347 27.21 % 68,826 45,038 9,470 1,640 373 801-850 15,218 3.30 % 14,554 — 399 — 265 Total 460,738 100.00 % $ 206,845 $ 184,413 $ 37,540 $ 16,378 $ 16,562 Less, CECL and Direct Allowances 105 Carrying value, net $ 460,633 (1) Represents the year of origination or amendment where the loan was subject to a full re-underwriting. (2) The FICO Scores are calculated at the inception of a loan and are updated if the loan is modified or on an as needed basis. |
Schedule of maturities of Mortgages receivable | As of June 30, 2023 As of December 31, 2022 2023 and prior $ 229,763,962 $ 372,964,665 2024 250,299,189 85,968,294 2025 20,907,195 1,699,500 2026 7,780,000 — 2027 — — Thereafter 100,871 105,809 Total 508,851,217 460,738,268 Less, CECL and Direct Allowances 2,198,061 105,000 Total $ 506,653,156 $ 460,633,268 |
Real Estate Owned (Tables)
Real Estate Owned (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Real Estate Owned | |
Schedule of rental payments due from real estate held for rental | Year ending December 31, 2023 $ 26,600 Year ending December 31, 2024 53,200 Year ending December 31, 2025 53,200 Year ending December 31, 2026 31,033 Total $ 164,033 |
Other Assets (Tables)
Other Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Other Assets | |
Schedule of other assets | June 30, 2023 December 31, 2022 Prepaid expenses $ 246,756 $ 410,373 Other receivables 4,008,696 3,519,804 Other assets 567,499 477,048 Goodwill 391,000 391,000 Intangible asset – trade name 130,400 130,400 Deferred financing costs, net 267,935 54,548 Total $ 5,612,286 $ 4,983,173 |
Unsecured Notes Payable (Tables
Unsecured Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Unsecured Notes Payable | |
Summary of future principal payments on the notes payable | The following are the future principal payments on the notes payable as of June 30, 2023: Year ending December 31, Amount Remainder of 2023 $ — 2024 58,163,000 2025 56,363,750 2026 51,750,000 2027 122,125,000 Total principal payments 288,401,750 Deferred financing costs (7,223,456) Total notes payable, net of deferred financing costs $ 281,178,294 |
Summary of estimated amortization of the deferred financing costs | The estimated amortization of the deferred financing costs as of June 30, 2023 is as follows: Year ending December 31, Amount Remainder of 2023 $ 1,174,966 2024 2,336,228 2025 1,807,606 2026 1,410,319 2027 494,337 Total deferred costs $ 7,223,456 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounts Payable and Accrued Liabilities | |
Schedule of accounts payable and accrued liabilities | June 30, 2023 December 31, 2022 Accounts payable and accrued expenses $ 1,100,193 $ 1,109,789 CECL - allowance for unfunded contractual obligation credit losses 531,500 — Other notes — 6,014 Accrued interest 492,335 323,416 Total $ 2,124,028 $ 1,439,219 |
Fee and Other Income (Tables)
Fee and Other Income (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fee and Other Income | |
Schedule of fees and other income | Three Months Six Months ended June 30, ended June 30, 2023 2022 2023 2022 Late and other fees $ 37,187 $ 117,676 $ 150,317 $ 246,540 Processing fees 29,630 62,615 61,700 128,470 Rental income, net 13,300 18,158 26,600 28,200 Extension fees 233,135 100,686 413,544 202,519 Construction management fee 500,634 39,031 667,808 48,809 Other fees 37,324 45,657 73,180 86,441 Legal fees 119,500 99,840 216,000 161,940 Other income 600,266 314,946 669,432 504,253 Total $ 1,570,976 $ 798,609 $ 2,278,581 $ 1,407,172 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies | |
Schedule of original maturities of deferred revenue | Year ending December 31, 2023 $ 2,930,200 Year ending December 31, 2024 1,443,537 Year ending December 31, 2025 343,515 Year ending December 31, 2026 98,450 Total $ 4,815,702 |
The Company (Details)
The Company (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Minimum | |
The Company | |
Term of debt | 1 year |
Maximum | |
The Company | |
Term of debt | 3 years |
Significant Accounting Polici_3
Significant Accounting Policies (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2023 | Jan. 01, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | |
Significant Accounting Policies | ||||
CECL Allowance | $ 2,198,061 | $ 105,000 | ||
Loan pending/pre-foreclosure amount | 50,000,000 | 24,000,000 | ||
Loan of allowance for credit loss | 0 | 0 | ||
CECL allowance for mortgages receivable | 2,200,000 | $ 1,900,000 | ||
Increase in CECL allowance for mortgages receivable | 300,000 | |||
CECL allowance for interest and fees receivable | 29,100 | 26,100 | ||
Increase in CECL allowance for interest and fees receivable | 3,000 | |||
CECL allowance for borrowers | 32,300 | 19,900 | ||
Increase in CECL allowance for borrowers | 12,400 | |||
CECL allowance for unfunded commitments | 531,500 | 522,000 | ||
Increase In CECL allowance for unfunded commitments | 9,500 | |||
Uncertain tax positions | 0 | $ 0 | ||
Retained earnings | (7,222,078) | $ (7,995,143) | ||
ASU 2016-13 | ||||
Significant Accounting Policies | ||||
CECL Allowance | 531,500 | |||
Adjustment | ASU 2016-13 | ||||
Significant Accounting Policies | ||||
CECL Allowance | $ 1,921,000 | 2,489,574 | ||
Retained earnings | $ (2,489,574) | |||
Land and building | ||||
Significant Accounting Policies | ||||
Property plant and equipment, useful life | 40 years | |||
Carrying value | $ 1,048,380 | |||
Impairment loss | $ 200,000 | |||
Building | ||||
Significant Accounting Policies | ||||
Property plant and equipment, useful life | 40 years | |||
Minimum | ||||
Significant Accounting Policies | ||||
Percentage of origination and modification fee revenue | 1% | |||
Maximum | ||||
Significant Accounting Policies | ||||
Percentage of origination and modification fee revenue | 3% |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Fair Value Measurement | ||
Stocks and ETF's | $ 1,204,857 | $ 4,728,724 |
Mutual funds | 15,429,261 | 14,850,839 |
Debt securities | 19,567,002 | 4,996,899 |
Convertible preferred equity security | 1,000,000 | |
Total liquid investments | 37,201,120 | 24,576,462 |
Real estate owned | 4,998,934 | 5,216,149 |
Available-For-Sale debt securities | 645,000 | 531,000 |
Level 1 | ||
Fair Value Measurement | ||
Stocks and ETF's | 3,282,659 | |
Mutual funds | 15,429,261 | 14,850,839 |
Debt securities | 18,564,164 | 3,880,045 |
Total liquid investments | 33,993,425 | 22,013,543 |
Level 2 | ||
Fair Value Measurement | ||
Stocks and ETF's | 1,204,857 | 1,446,065 |
Debt securities | 1,002,838 | 1,116,854 |
Total liquid investments | 2,207,695 | 2,562,919 |
Level 3 | ||
Fair Value Measurement | ||
Convertible preferred equity security | 1,000,000 | |
Total liquid investments | 1,000,000 | |
Real estate owned | $ 4,998,934 | $ 5,216,149 |
Fair Value Measurement - Compan
Fair Value Measurement - Company's available-for-sale (AFS) securities and other comprehensive income (OCI) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
OCI from AFS securities - debt securities: | ||||
Unrealized (losses) on AFS securities at beginning of period | $ (469,853) | $ (233,208) | $ (561,490) | $ (476,016) |
Unrealized gain (losses) on securities available-for-sale - debt securities | 93,775 | (192,764) | 185,412 | 50,044 |
Change in OCI from AFS securities | 93,775 | (192,764) | 185,412 | 50,044 |
Balance at end of period | $ (376,078) | $ (425,972) | $ (376,078) | $ (425,972) |
Fair Value Measurement - Comp_2
Fair Value Measurement - Company's Level 3 Investments of Real Estate Owned (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Fair Value Measurement | |||||
Impairment | $ (212,500) | $ (230,000) | $ (212,500) | $ (490,500) | |
Gain on sale of Real Estate Owned | 126,861 | 122,343 | |||
Balance at end of period | 4,998,934 | $ 5,904,614 | 4,998,934 | 5,904,614 | |
Level 3 | |||||
Fair Value Measurement | |||||
Real Estate Owned at the beginning of period | 5,216,149 | $ 6,559,010 | $ 6,559,010 | ||
Principal basis transferred to Real Estate Owned | 1,186,663 | 1,376,733 | |||
Charges and/or improvements | 180,147 | 126,443 | |||
Proceeds from sale of Real Estate Owned | (1,498,386) | (2,090,880) | |||
Impairment | (212,500) | (799,909) | |||
Gain on sale of Real Estate Owned | 126,861 | 44,752 | |||
Balance at end of period | $ 4,998,934 | $ 4,998,934 | $ 5,216,149 |
Fair Value Measurement - Comp_3
Fair Value Measurement - Company's Level 3 Investments of Convertible preferred equity securities (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 | Jun. 30, 2023 | |
Fair Value Measurement | ||
Beginning balance | $ 228,996,055 | $ 217,707,354 |
Investment in | 380,296 | 517,002 |
Ending Balance | 229,042,795 | 229,042,795 |
Level 3 | Convertible preferred equity securities | ||
Fair Value Measurement | ||
Investment in | 1,000,000 | |
Ending Balance | $ 1,000,000 | $ 1,000,000 |
Mortgages Receivable - CECL All
Mortgages Receivable - CECL Allowance by Geographical Location (Details) | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Mortgages Receivable | |
CECL Allowance beginning balance | $ 105,000 |
CECL Allowance ending balance | 2,198,061 |
Provision for CECL allowance | 172,000 |
ASU 2016-13 | |
Mortgages Receivable | |
CECL Allowance ending balance | 531,500 |
Adjustment | ASU 2016-13 | |
Mortgages Receivable | |
CECL Allowance ending balance | 1,921,000 |
New England | |
Mortgages Receivable | |
CECL Allowance beginning balance | 105,000 |
CECL Allowance ending balance | 1,511,000 |
Provision for CECL allowance | 104,000 |
New England | Adjustment | ASU 2016-13 | |
Mortgages Receivable | |
CECL Allowance ending balance | 1,302,000 |
West | |
Mortgages Receivable | |
CECL Allowance ending balance | 7,000 |
West | Adjustment | ASU 2016-13 | |
Mortgages Receivable | |
CECL Allowance ending balance | 7,000 |
South | |
Mortgages Receivable | |
CECL Allowance ending balance | 481,000 |
Provision for CECL allowance | 79,000 |
South | Adjustment | ASU 2016-13 | |
Mortgages Receivable | |
CECL Allowance ending balance | 402,000 |
Mid-East | |
Mortgages Receivable | |
CECL Allowance ending balance | 199,000 |
Provision for CECL allowance | (11,000) |
Mid-East | Adjustment | ASU 2016-13 | |
Mortgages Receivable | |
CECL Allowance ending balance | $ 210,000 |
Mortgages Receivable - CECL A_2
Mortgages Receivable - CECL Allowance by CECL Allowances by loan portfolio geographical location (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Mortgages Receivable | ||
Total | $ 508,851,217 | $ 460,738,268 |
Less, CECL and Direct Allowances | 2,198,061 | 105,000 |
Carrying value, net | $ 506,653,156 | $ 460,633,268 |
% of Portfolio | 100% | 100% |
New England | ||
Mortgages Receivable | ||
Less, CECL and Direct Allowances | $ 1,511,000 | $ 105,000 |
Carrying value, net | $ 245,236,000 | $ 225,603,000 |
% of Portfolio | 48.19% | 48.97% |
West | ||
Mortgages Receivable | ||
Less, CECL and Direct Allowances | $ 7,000 | |
Carrying value, net | $ 3,150,000 | $ 3,150,000 |
% of Portfolio | 0.62% | 0.68% |
South | ||
Mortgages Receivable | ||
Less, CECL and Direct Allowances | $ 481,000 | |
Carrying value, net | $ 162,621,000 | $ 135,857,000 |
% of Portfolio | 31.96% | 29.49% |
Mid-East | ||
Mortgages Receivable | ||
Less, CECL and Direct Allowances | $ 199,000 | |
Carrying value, net | $ 97,844,000 | $ 96,128,000 |
% of Portfolio | 19.23% | 20.86% |
Mortgages Receivable - CECL A_3
Mortgages Receivable - CECL Allowance by Property Type (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Mortgages Receivable | ||
Total | $ 508,851,217 | $ 460,738,268 |
Less, CECL and Direct Allowances | 2,198,061 | 105,000 |
Carrying value, net | $ 506,653,156 | $ 460,633,268 |
% of Portfolio | 100% | 100% |
Residential | ||
Mortgages Receivable | ||
Total | $ 228,228,000 | $ 229,944,000 |
% of Portfolio | 44.85% | 49.91% |
Commercial | ||
Mortgages Receivable | ||
Total | $ 168,949,000 | $ 154,929,000 |
% of Portfolio | 33.20% | 33.63% |
Land | ||
Mortgages Receivable | ||
Total | $ 82,281,000 | $ 46,499,000 |
% of Portfolio | 16.17% | 10.09% |
Mixed Use | ||
Mortgages Receivable | ||
Total | $ 29,393,000 | $ 29,366,000 |
% of Portfolio | 5.78% | 6.37% |
Mortgages Receivable - Internal
Mortgages Receivable - Internal credit quality indicators (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Mortgages Receivable | ||
Total | $ 508,851,217 | $ 460,738,268 |
Less, CECL and Direct Allowances | 2,198,061 | 105,000 |
Carrying value, net | $ 506,653,156 | $ 460,633,268 |
% of Portfolio | 100% | 100% |
Year Originated, 2023 | $ 28,669,000 | $ 206,845,000 |
Year Originated, 2022 | 199,102,000 | 184,413,000 |
Year Originated, 2021 | 188,078,000 | 37,540,000 |
Year Originated, 2020 | 33,028,000 | 16,378,000 |
Year Originated, Prior | 29,674,000 | 16,562,000 |
Under 500 | ||
Mortgages Receivable | ||
Total | $ 400,000 | $ 629,000 |
% of Portfolio | 0.08% | 0.14% |
Year Originated, 2021 | $ 185,000 | |
Year Originated, 2020 | 235,000 | |
Year Originated, Prior | $ 443,000 | 209,000 |
501-550 | ||
Mortgages Receivable | ||
Total | $ 4,492,000 | $ 4,786,000 |
% of Portfolio | 0.88% | 1.04% |
Year Originated, 2022 | $ 1,779,000 | |
Year Originated, 2021 | $ 1,779,000 | 87,000 |
Year Originated, 2020 | 49,000 | 803,000 |
Year Originated, Prior | 2,809,000 | 2,117,000 |
551-600 | ||
Mortgages Receivable | ||
Total | $ 9,386,000 | $ 15,977,000 |
% of Portfolio | 1.84% | 3.47% |
Year Originated, 2023 | $ 3,061,000 | |
Year Originated, 2022 | $ 2,678,000 | 8,256,000 |
Year Originated, 2021 | 5,073,000 | 1,836,000 |
Year Originated, 2020 | 700,000 | 1,357,000 |
Year Originated, Prior | 2,355,000 | 1,467,000 |
601-650 | ||
Mortgages Receivable | ||
Total | $ 38,278,000 | $ 40,349,000 |
% of Portfolio | 7.52% | 8.76% |
Year Originated, 2023 | $ 2,693,000 | $ 21,382,000 |
Year Originated, 2022 | 19,205,000 | 7,474,000 |
Year Originated, 2021 | 7,238,000 | 6,273,000 |
Year Originated, 2020 | 6,333,000 | 1,547,000 |
Year Originated, Prior | 5,045,000 | 3,673,000 |
651-700 | ||
Mortgages Receivable | ||
Total | $ 96,298,000 | $ 84,085,000 |
% of Portfolio | 18.92% | 18.25% |
Year Originated, 2023 | $ 6,784,000 | $ 33,832,000 |
Year Originated, 2022 | 32,306,000 | 31,342,000 |
Year Originated, 2021 | 34,570,000 | 7,398,000 |
Year Originated, 2020 | 7,113,000 | 5,269,000 |
Year Originated, Prior | 10,095,000 | 6,244,000 |
701-750 | ||
Mortgages Receivable | ||
Total | $ 190,724,000 | $ 174,347,000 |
% of Portfolio | 37.48% | 37.83% |
Year Originated, 2023 | $ 15,961,000 | $ 65,190,000 |
Year Originated, 2022 | 54,823,000 | 90,524,000 |
Year Originated, 2021 | 91,255,000 | 11,892,000 |
Year Originated, 2020 | 8,477,000 | 5,527,000 |
Year Originated, Prior | 6,779,000 | 1,214,000 |
751-800 | ||
Mortgages Receivable | ||
Total | $ 151,344,000 | $ 125,347,000 |
% of Portfolio | 29.74% | 27.21% |
Year Originated, 2023 | $ 3,231,000 | $ 68,826,000 |
Year Originated, 2022 | 75,055,000 | 45,038,000 |
Year Originated, 2021 | 48,163,000 | 9,470,000 |
Year Originated, 2020 | 9,997,000 | 1,640,000 |
Year Originated, Prior | 1,883,000 | 373,000 |
801-850 | ||
Mortgages Receivable | ||
Total | $ 17,929,000 | $ 15,218,000 |
% of Portfolio | 3.52% | 3.30% |
Year Originated, 2023 | $ 14,554,000 | |
Year Originated, 2022 | $ 15,035,000 | |
Year Originated, 2021 | 399,000 | |
Year Originated, 2020 | 359,000 | |
Year Originated, Prior | $ 265,000 | $ 265,000 |
Mortgages Receivable - Maturiti
Mortgages Receivable - Maturities of mortgages receivable (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 USD ($) loan | Dec. 31, 2022 USD ($) loan | |
Mortgages Receivable | ||
2023 and prior | $ 229,763,962 | $ 372,964,665 |
2024 | 250,299,189 | 85,968,294 |
2025 | 20,907,195 | 1,699,500 |
2026 | 7,780,000 | |
Thereafter | 100,871 | 105,809 |
Total | 508,851,217 | 460,738,268 |
Less, CECL and Direct Allowances | 2,198,061 | 105,000 |
Carrying value, net | $ 506,653,156 | $ 460,633,268 |
Mortgage loan portfolio number of loans | loan | 360 | 444 |
Number of loans matured but not have been repaid in full or extended | loan | 126 | 105 |
Number of loans under foreclosure proceedings | loan | 51 | 40 |
Amount of loans matured but not have been repaid in full or extended | $ 97,100,000 | $ 61,600,000 |
Percentage of loans matured but not have been repaid in full or extended | 19.10% | 13.40% |
Aggregate outstanding principal balance and the accrued but unpaid interest and borrower charges of loans under foreclosure proceedings | $ 47,200,000 | $ 22,500,000 |
Mortgages Receivable - Addition
Mortgages Receivable - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Mortgages Receivable | |||||
Outstanding principal balance | $ 288,401,750 | $ 288,401,750 | |||
Interest income on debt | 11,898,484 | $ 10,433,572 | 22,881,810 | $ 18,944,947 | |
Aggregate amounts of loans funded | 114,468,454 | 191,971,926 | |||
Principal collections on mortgages receivable | 66,355,505 | $ 60,895,362 | |||
Face amount of mortgages | 34 | $ 34 | |||
Default interest rate on mortgage loans | 18% | ||||
Nonaccrual loans | |||||
Mortgages Receivable | |||||
Outstanding principal balance | 96,371,599 | $ 96,371,599 | $ 55,691,857 | ||
Interest income on debt | $ 174,397 | $ 222,506 | |||
Mortgage Concentration Risk | Revenue Benchmark | No borrower | |||||
Mortgages Receivable | |||||
Loans outstanding (in percent) | 10% | 10% | |||
Minimum | |||||
Mortgages Receivable | |||||
Term of debt | 1 year | ||||
Interest rate (as a percent) | 5% | ||||
Maximum | |||||
Mortgages Receivable | |||||
Term of debt | 3 years | ||||
Interest rate (as a percent) | 14.20% |
Real Estate Owned (Details)
Real Estate Owned (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 USD ($) property | Jun. 30, 2022 USD ($) property | Jun. 30, 2023 USD ($) property | Jun. 30, 2022 USD ($) property | |
Real Estate Owned | ||||
Real estate owned | $ 4,998,934 | $ 5,904,614 | $ 4,998,934 | $ 5,904,614 |
Impairment loss on real estate owned | 212,500 | 230,000 | 212,500 | 490,500 |
Real estate on owned | 817,609 | 800,949 | 817,609 | 800,949 |
Real estate held-for-sale | $ 4,181,325 | $ 5,103,685 | $ 4,181,325 | $ 5,103,685 |
Number of properties held for sale | property | 3 | 2 | 5 | 3 |
(Gain) Loss on sale of real estate | $ 21,239 | $ (188,182) | $ (126,861) | $ (122,343) |
Number of properties held for rental | property | 1 | 1 | ||
Lease term of rental property held for rental | 5 years | |||
Valuation allowance | $ 0 | $ 0 | $ 0 | $ 0 |
Real Estate Owned - Rental paym
Real Estate Owned - Rental payments due from real estate (Details) | Jun. 30, 2023 USD ($) |
Real Estate Owned | |
Year ending December 31, 2023 | $ 26,600 |
Year ending December 31, 2024 | 53,200 |
Year ending December 31, 2025 | 53,200 |
Year ending December 31, 2026 | 31,033 |
Total | $ 164,033 |
Other Assets (Details)
Other Assets (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Other Assets | ||
Prepaid expenses | $ 246,756 | $ 410,373 |
Other receivables | 4,008,696 | 3,519,804 |
Other assets | 567,499 | 477,048 |
Goodwill | 391,000 | 391,000 |
Intangible asset - trade name | 130,400 | 130,400 |
Deferred financing costs, net | 267,935 | 54,548 |
Total | $ 5,612,286 | $ 4,983,173 |
Lines of Credit, Mortgage Pay_2
Lines of Credit, Mortgage Payable, and Churchill Facility (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Jul. 27, 2023 | Mar. 02, 2023 USD ($) | Feb. 28, 2023 USD ($) | Jul. 21, 2021 USD ($) | Mar. 31, 2023 | Feb. 28, 2023 USD ($) | Jun. 30, 2023 USD ($) loan | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | May 31, 2023 USD ($) | |
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Spread on variable rate | 6.75% | 6.50% | ||||||||
Outstanding balance | $ 35,900,737 | $ 3,587,894 | ||||||||
Amount outstanding | 288,401,750 | |||||||||
Fixed annual rate | 8.25% | |||||||||
Amortization schedule | 20 years | |||||||||
Term of Federal Home Loan Bank of Boston Classic Advance Rate | 5 years | |||||||||
Unpaid principal balance | $ 82,900,000 | |||||||||
Threshold asset coverage ratio | 150% | |||||||||
Number of first line mortgage loans | loan | 26 | |||||||||
Maximum borrowing capacity | $ 10,000,000 | |||||||||
Percentage of asset coverage ratio | 150% | |||||||||
Revolving Credit Facility | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Outstanding balance | $ 10,000,000 | |||||||||
Wells Fargo Credit line | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Spread on variable rate | 1.75% | |||||||||
Outstanding balance | 25,900,000 | |||||||||
New Haven Bank Mortgage | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Principal Amount | $ 1,660,000 | $ 1,660,000 | $ 1,400,000 | $ 8,750,000 | ||||||
Amount outstanding | $ 750,000 | |||||||||
Fixed annual rate | 5.75% | 5.75% | 3.75% | 8.40% | ||||||
Interest accrued period | 60 months | 72 months | ||||||||
Period for which only interest is payable | 12 months | |||||||||
Amortization schedule | 20 years | |||||||||
Term of Federal Home Loan Bank of Boston Classic Advance Rate | 5 years | |||||||||
Unpaid principal balance | $ 750,000 | |||||||||
New Haven Bank Mortgage | Federal Home Loan Bank of Boston Classic Advance Rate | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Spread on variable rate | 1.75% | 2.60% | ||||||||
Master Repurchase Agreement | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Outstanding balance | $ 50,500,000 | |||||||||
Fixed annual rate | 0.25% | |||||||||
Repurchase face amount | $ 200,000,000 | |||||||||
Notes callable period | 90 days | |||||||||
Threshold asset coverage ratio | 150% | |||||||||
Percentage amount of repurchase obligation of unencumbered cash and cash equivalents | 2.50% | |||||||||
Term of debt | 180 days | |||||||||
Credit and Security Agreement with Needham Bank | Revolving Credit Facility | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Right to extend the term (in years) | 1 year | |||||||||
Interest rate | 4.50% | |||||||||
Maximum borrowing capacity | $ 75,000,000 | |||||||||
Amount of credit facility | $ 45,000,000 | |||||||||
Credit and Security Agreement with Needham Bank | Prime Rate | Revolving Credit Facility | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Percentage reduced from prime rate for calculating annual interest rate | 0.25% | |||||||||
Minimum | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Term of debt | 1 year | |||||||||
Adjusted EBITDA coverage ratio | 1 | |||||||||
Minimum | Master Repurchase Agreement | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Fixed annual rate | 3% | 8% | ||||||||
Minimum | Credit and Security Agreement with Needham Bank | Revolving Credit Facility | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Notice period for terminating the Credit Facility, prior to the proposed date of termination | 10 days | |||||||||
Maximum | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Term of debt | 3 years | |||||||||
Adjusted EBITDA coverage ratio | 1.40 | |||||||||
Maximum | Master Repurchase Agreement | ||||||||||
Lines of Credit, Mortgage Payable, and Churchill Facility | ||||||||||
Fixed annual rate | 4% | 9.31% |
Unsecured Notes Payable (Detail
Unsecured Notes Payable (Details) | 6 Months Ended | ||
Jun. 30, 2023 USD ($) series $ / shares | Jul. 27, 2023 | Dec. 31, 2022 USD ($) | |
Unsecured Notes Payable | |||
Deferred financing costs | $ 7,223,456 | $ 8,352,597 | |
Number of unsecured unsubordinated notes | series | 7 | ||
Fixed annual rate | 8.25% | ||
Notes issued denomination | $ / shares | $ 25 | ||
Threshold percentage of taxable income to prohibit distribution | 90% | ||
Threshold asset coverage ratio | 150% | ||
Period of written notice to redeem notes without premium or penalty | 30 days | ||
Notes | |||
Unsecured Notes Payable | |||
Aggregate amount outstanding | $ 281,178,294 | ||
Deferred financing costs | 7,223,456 | ||
June 2024 Notes | |||
Unsecured Notes Payable | |||
Aggregate amount outstanding | $ 23,663,000 | ||
Fixed annual rate | 7.125% | ||
December 2024 Notes | |||
Unsecured Notes Payable | |||
Aggregate amount outstanding | $ 34,500,000 | ||
Fixed annual rate | 6.875% | ||
September 2025 Notes | |||
Unsecured Notes Payable | |||
Aggregate amount outstanding | $ 56,363,750 | ||
Fixed annual rate | 7.75% | ||
Principal Amount | $ 28,000,000 | ||
Notes issued denomination | $ / shares | $ 24.75 | ||
December 2026 Notes | |||
Unsecured Notes Payable | |||
Aggregate amount outstanding | $ 51,750,000 | ||
Fixed annual rate | 6% | ||
March 2027 Notes | |||
Unsecured Notes Payable | |||
Aggregate amount outstanding | $ 51,875,000 | ||
Fixed annual rate | 6% | ||
June 2027 Notes | |||
Unsecured Notes Payable | |||
Aggregate amount outstanding | $ 30,000,000 | ||
Fixed annual rate | 7.125% | ||
September 2027 Notes | |||
Unsecured Notes Payable | |||
Aggregate amount outstanding | $ 40,250,000 | ||
Fixed annual rate | 8% |
Unsecured Notes Payable - Futur
Unsecured Notes Payable - Future principal payments (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Unsecured Notes Payable | ||
2024 | $ 58,163,000 | |
2025 | 56,363,750 | |
2026 | 51,750,000 | |
2027 | 122,125,000 | |
Total principal payments | 288,401,750 | |
Deferred financing costs | (7,223,456) | $ (8,352,597) |
Total notes payable, net of deferred financing costs | $ 281,178,294 |
Unsecured Notes Payable - Estim
Unsecured Notes Payable - Estimated amortization of the deferred financing costs (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Unsecured Notes Payable | ||
Remainder of 2023 | $ 1,174,966 | |
2024 | 2,336,228 | |
2025 | 1,807,606 | |
2026 | 1,410,319 | |
2027 | 494,337 | |
Total deferred costs | $ 7,223,456 | $ 8,352,597 |
Secured Note Payable (Details)
Secured Note Payable (Details) | May 30, 2023 USD ($) D | Feb. 28, 2023 | Jul. 27, 2023 | Jun. 30, 2023 USD ($) | May 31, 2023 USD ($) |
Secured Note Payable | |||||
Secured note payable | $ 6,224,000 | ||||
Fixed annual rate | 8.25% | ||||
Amortization schedule | 20 years | ||||
Commercial loan from Peoples Bank | |||||
Secured Note Payable | |||||
Principal Amount | $ 7,000,000 | $ 7,000,000 | |||
Secured note payable | 6,224,000 | ||||
Additional borrowing ability | $ 776,000 | ||||
Fixed annual rate | 6.50% | ||||
Extension period from original maturity date | 1 year | ||||
Payments periods where only interest is due and payable | D | 36 | ||||
Amortization schedule | 30 years |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable and accrued expenses | $ 1,100,193 | $ 1,109,789 |
CECL - allowance for unfunded contractual obligation credit losses | 531,500 | |
Other notes | 6,014 | |
Accrued interest | 492,335 | 323,416 |
Total | $ 2,124,028 | $ 1,439,219 |
Fee and Other Income (Details)
Fee and Other Income (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Fee and Other Income | ||||
Late and other fees | $ 37,187 | $ 117,676 | $ 150,317 | $ 246,540 |
Processing fees | 29,630 | 62,615 | 61,700 | 128,470 |
Rental income, net | 13,300 | 18,158 | 26,600 | 28,200 |
Extension fees | 233,135 | 100,686 | 413,544 | 202,519 |
Construction management fee | 500,634 | 39,031 | 667,808 | 48,809 |
Other fees | 37,324 | 45,657 | 73,180 | 86,441 |
Legal fees | 119,500 | 99,840 | 216,000 | 161,940 |
Other income | 600,266 | 314,946 | 669,432 | 504,253 |
Total | $ 1,570,976 | $ 798,609 | $ 2,278,581 | $ 1,407,172 |
Commitments and Contingencies -
Commitments and Contingencies - Original maturities of deferred revenue (Details) - Deferred revenue | Jun. 30, 2023 USD ($) |
Commitments and Contingencies | |
Year ending December 31, 2023 | $ 2,930,200 |
Year ending December 31, 2024 | 1,443,537 |
Year ending December 31, 2025 | 343,515 |
Year ending December 31, 2026 | 98,450 |
Total | $ 4,815,702 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Details) | 1 Months Ended | 6 Months Ended | ||||||||||
Jun. 23, 2023 USD ($) | Mar. 31, 2023 shares | Feb. 28, 2023 USD ($) shares | Oct. 31, 2022 | Jul. 31, 2022 USD ($) | Apr. 30, 2022 USD ($) shares | Apr. 30, 2021 USD ($) shares | Apr. 30, 2018 USD ($) | Feb. 28, 2017 USD ($) | Jun. 30, 2023 USD ($) property shares | Jun. 30, 2022 shares | Dec. 31, 2022 USD ($) | |
Commitments and Contingencies | ||||||||||||
Deferred revenue | $ 4,815,702 | $ 4,360,452 | ||||||||||
Employment agreements description | (i) the employment term is five years with extensions for successive one-year periods unless either party provides written notice at least 180 days prior to the next anniversary date of its intention to not renew the agreement; (ii) a base salary of $260,000, which was increased in April 2018, April 2021 and April 2022 to $360,000, $500,000 and $750,000, respectively; (iii) incentive compensation in such amount as determined by the Compensation Committee of the Company’s Board of Directors; (iv) participation in the Company’s employee benefit plans; (v) full indemnification to the extent permitted by law; (vi) a two-year non-competition period following the termination of employment without cause; and (vii) payments upon termination of employment or a change in control. | |||||||||||
Base salary | $ 325,000 | $ 750,000 | $ 500,000 | $ 360,000 | $ 260,000 | |||||||
Number of mortgage properties | property | 5 | |||||||||||
Mortgages receivable | $ 5,400,000 | |||||||||||
Urbane New Haven, LLC | ||||||||||||
Commitments and Contingencies | ||||||||||||
Payment to seller as percent of net proceeds from real estate development projects | 20% | |||||||||||
Amount of purchase and sale contract to acquire a commercial building | $ 10,600,000 | |||||||||||
Non-refundable deposit | $ 1,060,000 | |||||||||||
Restricted Stock | ||||||||||||
Commitments and Contingencies | ||||||||||||
Number of unvested shares | shares | 226,483 | |||||||||||
Restricted Stock | 2016 Equity Compensation plan | ||||||||||||
Commitments and Contingencies | ||||||||||||
Number of shares granted | shares | 183,390 | 138,967 | ||||||||||
Unfunded Commitments | ||||||||||||
Commitments and Contingencies | ||||||||||||
Deferred revenue | $ 4,800,000 | |||||||||||
Other commitments | $ 110,300,000 | |||||||||||
Minimum | ||||||||||||
Commitments and Contingencies | ||||||||||||
Percentage of origination and modification fee revenue | 1% | |||||||||||
Maximum | ||||||||||||
Commitments and Contingencies | ||||||||||||
Percentage of origination and modification fee revenue | 3% | |||||||||||
John Villano | ||||||||||||
Commitments and Contingencies | ||||||||||||
Market value of shares granted | $ 500,000 | |||||||||||
Restricted common shares issued | shares | 98,425 | |||||||||||
John Villano | Restricted Stock | ||||||||||||
Commitments and Contingencies | ||||||||||||
Market value of shares granted | $ 500,000 | $ 500,000 | ||||||||||
Number of unvested shares | shares | 130,890 | |||||||||||
Restricted common shares issued | shares | 89,928 | |||||||||||
John Villano | Vested immediately on the grant date | ||||||||||||
Commitments and Contingencies | ||||||||||||
Vesting percentage | 0.33% | |||||||||||
John Villano | Vested immediately on the grant date | Restricted Stock | ||||||||||||
Commitments and Contingencies | ||||||||||||
Vesting percentage | 0.33% | |||||||||||
John Villano | Vested on first anniversary | ||||||||||||
Commitments and Contingencies | ||||||||||||
Vesting percentage | 0.33% | |||||||||||
John Villano | Vested on first anniversary | Restricted Stock | ||||||||||||
Commitments and Contingencies | ||||||||||||
Vesting percentage | 0.33% | |||||||||||
John Villano | Vested on second anniversary | ||||||||||||
Commitments and Contingencies | ||||||||||||
Vesting percentage | 0.33% | |||||||||||
John Villano | Vested on second anniversary | Restricted Stock | ||||||||||||
Commitments and Contingencies | ||||||||||||
Vesting percentage | 0.33% | 0.33% | ||||||||||
John Villano | Vested on January 1, 2022 | Restricted Stock | ||||||||||||
Commitments and Contingencies | ||||||||||||
Vesting percentage | 0.33% | |||||||||||
Mr. Warch | Restricted Stock | ||||||||||||
Commitments and Contingencies | ||||||||||||
Number of shares granted | shares | 5,333 | 8,000 | ||||||||||
Market value of shares granted | $ 30,000 | |||||||||||
Mr. Warch | Vested immediately on the grant date | Restricted Stock | ||||||||||||
Commitments and Contingencies | ||||||||||||
Vesting percentage | 0.33% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Shareholders | ||||
Related Party Transactions | ||||
Shareholders totaled | $ 28,000,000 | $ 18,400,000 | $ 28,000,000 | $ 18,400,000 |
Interest income | 546,266 | 666,584 | 1,092,533 | 312,546 |
Wife of chief executive officer | Accounting and financial services | ||||
Related Party Transactions | ||||
Compensation provided | 0 | 34,247 | 0 | 60,394 |
Daughter of chief executive officer | ||||
Related Party Transactions | ||||
Compensation provided | $ 33,000 | $ 36,704 | $ 76,000 | $ 62,850 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) - Credit concentration risk | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Concentration of Credit Risk | |
Cash and cash equivalents insured by the Federal Deposit Insurance Corporation | $ 250,000 |
Concentration risk, description | SIPC protects clients against the custodial risk of a member investment firm becoming insolvent by replacing missing securities and cash up to $500,000, including up to $250,000 in cash, per client in accordance with SIPC rules. |
First mortgage liens on real property | |
Concentration of Credit Risk | |
Concentration of risk threshold percentage | 42.17% |
Florida | First mortgage liens on real property | |
Concentration of Credit Risk | |
Concentration of risk threshold percentage | 26.47% |
New York | First mortgage liens on real property | |
Concentration of Credit Risk | |
Concentration of risk threshold percentage | 11.36% |
Outstanding Warrants (Details)
Outstanding Warrants (Details) - Follow-on public offering - $ / shares | 1 Months Ended | |
Jan. 31, 2022 | Oct. 31, 2017 | |
Outstanding Warrants | ||
Warrants to purchase common shares | 93,750 | 187,500 |
Exercise price of warrants | $ 5 | |
Common stock shares issued upon exercise of warrants | 19,658 |
Stock-Based Compensation and _2
Stock-Based Compensation and Employee Benefits (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Apr. 16, 2018 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Oct. 27, 2016 | |
Stock-Based Compensation and Employee Benefits: | ||||||
Percentage of employer contribution | 3% | |||||
401(k) Plan expenses | $ 30,693 | $ 30,008 | $ 75,389 | $ 50,001 | ||
2016 Equity Compensation plan | ||||||
Stock-Based Compensation and Employee Benefits: | ||||||
Maximum number of common shares reserved for the grant of awards | 1,500,000 | |||||
Aggregate shares available for grants in period | 1,005,078 | 1,005,078 | ||||
Stock based compensation | $ 222,211 | $ 123,428 | $ 395,709 | $ 230,167 | ||
Unrecorded stock based compensation expense | $ 1,125,694 | $ 1,125,694 | ||||
Restricted Stock | ||||||
Stock-Based Compensation and Employee Benefits: | ||||||
Number of unvested shares | 226,483 | 226,483 | ||||
Restricted Stock | 2016 Equity Compensation plan | ||||||
Stock-Based Compensation and Employee Benefits: | ||||||
Shares granted | 183,390 | 138,967 | ||||
Fair value of shares granted | $ 707,719 | $ 718,913 | ||||
Vested immediately on the grant date | Restricted Stock | 2016 Equity Compensation plan | ||||||
Stock-Based Compensation and Employee Benefits: | ||||||
Shares vested | 17,500 | |||||
Vested on first anniversary | Restricted Stock | 2016 Equity Compensation plan | ||||||
Stock-Based Compensation and Employee Benefits: | ||||||
Stock grants in period, gross | 17,500 | |||||
Vested on second anniversary | Restricted Stock | 2016 Equity Compensation plan | ||||||
Stock-Based Compensation and Employee Benefits: | ||||||
Stock grants in period, gross | 17,500 | |||||
Vested on January 1, 2024 | Restricted Stock | 2016 Equity Compensation plan | ||||||
Stock-Based Compensation and Employee Benefits: | ||||||
Shares vested | 43,630 | |||||
Vested on January 1, 2025 | Restricted Stock | 2016 Equity Compensation plan | ||||||
Stock-Based Compensation and Employee Benefits: | ||||||
Shares vested | 43,630 |
Equity (Details)
Equity (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Aug. 24, 2022 | Oct. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2023 | |
Equity: | ||||
Aggregate purchase price for sale of shares | $ 380,296 | $ 517,002 | ||
Gross proceeds from the offering | 516,977 | |||
Stock repurchased | $ 7,500,000 | 226,327 | $ 226,327 | |
Repurchases of common stock | 71,000 | |||
Total cost of repurchase of common stock | $ 226,327 | |||
Amount available under repurchase program | 7,277,000 | $ 7,277,000 | ||
At the market offering | Series A Preferred Stock | ||||
Equity: | ||||
Gross proceeds from common shares | 2,616,124 | |||
Common shares under prospectus supplement Dated August 24, 2022 | ||||
Equity: | ||||
Authorized Amount To Be Issued | $ 75,000,000 | |||
Common shares available for future sale | 9,900,000 | $ 9,900,000 | ||
Common shares under prospectus supplement Dated August 24, 2022 | At the market offering | Series A Preferred Stock | ||||
Equity: | ||||
Preferred stock liquidation preference value | $ 25,000,000 | |||
Preferred stock available for future sale | $ 615,075 | 615,075 | ||
Gross proceeds from the offering | $ 527,600 | |||
Percent of discount from liquidation preference | 16.60% | |||
Common shares under prospectus supplement Dated October 2022 | At the market offering | Series A Preferred Stock | ||||
Equity: | ||||
Total cost of repurchase of common stock | $ 226,000 |
Partnership Investments (Detail
Partnership Investments (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
May 31, 2023 USD ($) | Jun. 30, 2023 USD ($) company | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) company | Jun. 30, 2022 USD ($) | Jul. 27, 2023 | May 30, 2023 USD ($) | Feb. 28, 2023 USD ($) | Dec. 31, 2022 | Dec. 31, 2021 USD ($) | |
Partnership Investments | ||||||||||
Partnership investment, total | $ 35,400,000 | $ 35,400,000 | ||||||||
Number of limited liability companies managed by a commercial real estate finance company | company | 4 | 4 | ||||||||
Fixed annual rate | 8.25% | |||||||||
Income from partnership investment | $ 1,000,000 | $ 300,000 | $ 1,600,000 | $ 600,000 | ||||||
Unfunded partnership commitments | $ 2,100,000 | $ 2,100,000 | ||||||||
Shem Creek Sachem 100 LLC | ||||||||||
Partnership Investments | ||||||||||
Ownership interest | 100% | |||||||||
Commercial loan from Peoples Bank | ||||||||||
Partnership Investments | ||||||||||
Principal Amount | $ 7,000,000 | $ 7,000,000 | ||||||||
Fixed annual rate | 6.50% | |||||||||
Mortgages | ||||||||||
Partnership Investments | ||||||||||
Principal Amount | $ 8,750,000 | $ 1,660,000 | $ 1,400,000 | |||||||
Fixed annual rate | 8.40% | 5.75% | 3.75% | |||||||
Maximum | ||||||||||
Partnership Investments | ||||||||||
Participation interest in mortgage loans | 49 | 49 |
Special Purpose Acquisition C_2
Special Purpose Acquisition Corporation (Details) - USD ($) | 6 Months Ended | ||
Jul. 14, 2021 | Mar. 24, 2021 | Jun. 30, 2023 | |
Special Purpose Acquisition Corporation | |||
Registration and legal fees | $ 457,000 | ||
Sachem Acquisition Corp | |||
Special Purpose Acquisition Corporation | |||
Sale of units | 5,750,000 | ||
Price per unit | $ 10 | ||
Aggregate sale price | $ 57,500,000 | ||
Sachem Sponsor LLC | |||
Special Purpose Acquisition Corporation | |||
Amount of loan | $ 25,000 | ||
Common Class A | |||
Special Purpose Acquisition Corporation | |||
Number of shares in a unit | 1 | ||
Number of warrants in a unit | 0.5 | ||
Number of shares issuable for warrant | 1 | ||
Common Class B | Sachem Sponsor LLC | |||
Special Purpose Acquisition Corporation | |||
Number of shares issued during the period | 1,437,500 |
Series A Preferred Stock (Detai
Series A Preferred Stock (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Series A Preferred Stock | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock conversion, shares issued | 72,575,000 | |
Series A Preferred Stock | ||
Series A Preferred Stock | ||
Preferred stock, shares authorized | 2,903,000 | 2,903,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | |
Percentage of preferred stock redeemed | 7.75% | |
Share price | $ 25 | |
Liquidation preference per annum | 1.9375 | |
Preferred stock, redemption price per share | $ 25 | |
Redemption period for preference stock | 120 days |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events - USD ($) | 1 Months Ended | |
Aug. 11, 2023 | Jul. 26, 2023 | |
Subsequent Events | ||
Dividend payable per share | $ 0.13 | |
At the market offering | ||
Subsequent Events | ||
Shares granted | 1,524,379 | |
Gross proceeds from sale of shares | $ 5,756,477 | |
Series A Preferred Stock [Member] | At the market offering | ||
Subsequent Events | ||
Shares granted | 28,531 | |
Gross proceeds from sale of shares | $ 585,804 |