Breaking Down Sachem Capital Corp. (SACH) Financial Health: Key Insights for Investors

You're looking at Sachem Capital Corp. (SACH) because a forward dividend yield near 19% is impossible to ignore, but you need to understand the true health of the underlying loan book before chasing that payout. The firm's Q3 2025 results show a company in transition, with total revenue for the nine months ended September 30, 2025, coming in at $34.22 million, a clear drop from the prior year, primarily due to lower loan originations and an elevated level of nonperforming loans (NPLs). Still, management has been decisive, successfully reducing the gross unpaid principal balance of NPLs from $119.6 million to $104.1 million, and net income for the nine-month period improved to $3.79 million, turning around a prior-year loss. The key is whether their strategic moves-like the $100 million senior secured notes private placement that shored up liquidity-can overcome the drag of problem assets, like the single Naples property accounting for nearly half the NPLs, and get new, high-yield loans flowing again. That's the defintely critical question.

Revenue Analysis

You're looking at Sachem Capital Corp. (SACH)'s revenue, and the direct takeaway is a clear contraction in the core lending business for 2025. The company's total revenue for the first nine months of the year, ending September 30, 2025, dropped significantly to $34.22 million from $46.74 million in the same period in 2024. That's a 26.8% year-over-year decline. It's a tough environment for real estate lenders, and SACH is defintely feeling the pinch.

Sachem Capital Corp. is a mortgage real estate investment trust (REIT), so its revenue streams are relatively straightforward. The vast majority of its income comes from a single source: interest income from loans secured by first mortgages on real property. They are essentially a hard-money lender for real estate investors. The other, smaller segment is income from their preferred membership in limited liability company (LLC) investments.

Here's the quick math on the recent performance, showing the deceleration throughout the year:

The $12.0 million in total revenue for the third quarter of 2025 shows the core issue: the company is generating less interest income. Why? It's a two-part problem. First, they had materially lower net new loan originations over the prior year, so the total unpaid principal balance of loans held for investment shrank. Second, they have an elevated amount of nonperforming loans (NPLs) and real estate owned (REO), which don't generate the expected interest revenue. Less lending plus more bad loans equals a revenue drop.

The contribution from the LLC investments also saw a shift. While income from this segment initially increased by 71.7% in Q1 2025 compared to the prior year, the company later reduced its total LLC investments by $12.8 million since December 31, 2024, which led to a $0.4 million decrease in LLC income in Q3 2025 compared to Q3 2024. This segment is not a reliable counterweight to the main lending decline. You need to watch the loan portfolio health more than anything else.

So, the near-term action is clear: SACH must resolve those NPLs to free up capital for new, accretive originations. For a deeper dive into the company's balance sheet and strategic moves, you can read more in Breaking Down Sachem Capital Corp. (SACH) Financial Health: Key Insights for Investors.

Profitability Metrics

You're looking at Sachem Capital Corp. (SACH) to see if the recent operational improvements are actually translating into better profitability, and the quick answer is yes, but with a major caveat. The company is successfully cutting costs and managing credit risk, swinging its nine-month net income into positive territory, but top-line revenue continues to shrink. This is a classic case of managing for margin in a tough market, which is smart, but it can't last forever.

For the nine months ended September 30, 2025, Sachem Capital Corp. reported total revenue of $34.2 million, which led to a net income of $3.8 million. That translates to a year-to-date Net Profit Margin of about 11.11%. That's defintely an improvement from the significant losses seen in 2024, but it's crucial to break down how they got there.

Margin Breakdown: Gross, Operating, and Net

As a mortgage Real Estate Investment Trust (REIT), Sachem Capital Corp. operates differently than a typical manufacturing business. Their primary revenue source is interest income from loans, which means they don't have a traditional 'Cost of Goods Sold.' So, their Gross Profit Margin consistently sits at 100.0%. That number is misleadingly high; the real story is in the operating and net margins, where the costs of running the business and financing the loans hit.

Here's the quick math on the quarterly performance in 2025, which shows the volatility:

• Q2 2025 Operating Profit Margin: 10.19% (Revenue of $10.8 million minus Operating Expenses of $9.7 million).
• Q3 2025 Operating Profit Margin: -3.33% (Revenue of $12.0 million minus Operating Expenses of $12.4 million).
• Q2 2025 Net Profit Margin: 7.41% (Net Income of $0.8 million on $10.8 million revenue).

The swing from a positive Q2 to a near-breakeven Q3 net loss of $0.1 million shows how sensitive this model is to a slight revenue miss or an expense increase. Every basis point matters here.

Operational Efficiency and Cost Management

The primary driver for the improved net income, despite lower revenue, has been operational efficiency, specifically in managing credit risk. For instance, in Q2 2025, the company's total operating costs and expenses were significantly reduced to $9.7 million from $18.3 million in Q2 2024. This improvement stems largely from a substantial decrease in the provision for credit losses. They're not taking on as much new risk, and they're aggressively working through their non-performing loans (NPLs).

However, this strategy has a trade-off. Total revenue has declined year-over-year in both Q2 and Q3 2025 due to fewer new loan originations and a smaller performing loan portfolio. The focus is on capital preservation and portfolio management, not growth, which is a necessary defensive posture in this interest rate environment. You can see how this shifts their focus in Exploring Sachem Capital Corp. (SACH) Investor Profile: Who's Buying and Why?

Here is a snapshot of the quarterly trends:

Industry Context: SACH vs. Mortgage REIT Peers

Sachem Capital Corp.'s profitability challenges are not unique. The broader U.S. Mortgage REIT industry has seen earnings decline 16% per year over the last three years, with revenues also declining 3.0% annually. This tells you the entire sector is under pressure from higher interest rates and a constrained real estate market. SACH's Net Profit Margin of 11.11% year-to-date is a sign of resilience, considering the sector-wide headwind.

However, the company has also underperformed the US Mortgage REITs industry, which returned -5.5% over the past year. The company's unique 100.0% Gross Profit Margin is higher than peers like Ladder Capital Corp Class A at 74.8% and PennyMac Mortgage Investment Trust at 78.4%, but this is simply a function of accounting for a hard money lender; it doesn't reflect better core profitability. The true test is the net result, and while SACH is improving its net result, the shrinking revenue base is the next problem to solve.

Next Step: Management: Present a 2026 revenue growth plan that doesn't rely on increased NPL risk by end of Q4 2025.

Debt vs. Equity Structure

When you look at Sachem Capital Corp. (SACH), the first thing to understand is how they fund their short-term real estate loans-it's primarily with debt. As a mortgage Real Estate Investment Trust (REIT), this is expected, but the structure of that debt is what matters most right now.

As of the end of the third quarter of 2025 (September 30), Sachem Capital Corp. (SACH) reported total indebtedness of $298.8 million against total shareholders' equity of $175.6 million. This translates to a Debt-to-Equity (D/E) ratio of approximately 1.70.

Here's the quick math: A D/E of 1.70 means the company is using $1.70 of debt for every dollar of shareholder equity. For a mortgage REIT, this is actually a relatively conservative figure; the broader Mortgage REIT industry average is closer to 2.74 as of November 2025. Sachem Capital Corp. (SACH) is using less leverage than its peers, which offers a cushion against market volatility, but it also means their Return on Equity (ROE) may be lower than highly leveraged competitors.

• Total Indebtedness (Q3 2025): $298.8 million
• Total Shareholders' Equity (Q3 2025): $175.6 million
• Debt-to-Equity Ratio: 1.70
• Mortgage REIT Industry Average D/E: 2.74

The Shift to Secured and Long-Term Debt

The real story in 2025 is the strategic shift in the debt mix. Sachem Capital Corp. (SACH) has been actively extending its debt maturity profile and moving from unsecured to secured financing. This is defintely a smart move in a high-interest-rate environment.

In June 2025, the company closed a private placement of $100 million in five-year Senior Secured Notes, due in June 2030, with a fixed interest rate of 9.875%. They immediately drew $50 million of that. Crucially, these new notes received an investment-grade rating of A from Egan-Jones Ratings Company. This new, longer-term, and secured debt has been used to retire older, shorter-term obligations.

For instance, they used part of the proceeds to repay $56.3 million of unsecured subordinated notes and fully paid off the 7.75% unsecured notes that matured in September 2025. This action reduces near-term refinancing risk and lowers the overall cost of capital over the long run.

The balance of debt now looks like this, showing a mix of long-term notes and shorter-term facilities:

The takeaway is that Sachem Capital Corp. (SACH) is balancing its funding by favoring debt, which is typical for a mortgage REIT, but it's doing so with a disciplined approach. They are actively swapping short-term, unsecured debt for long-term, secured debt to stabilize their balance sheet and manage interest rate risk. This strategic debt management is a key factor for investors to consider. For a deeper dive into the shareholder base, check out Exploring Sachem Capital Corp. (SACH) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking at Sachem Capital Corp. (SACH)'s ability to cover its near-term obligations, and honestly, the headline ratios look fantastic, but we need to dig into the cash flow statement to see the full picture. The company's liquidity position as of the end of Q3 2025 is a story of strategic debt management overriding soft operating performance.

The company's liquidity ratios are exceptionally high. For the most recent quarter (MRQ), the Current Ratio sits at approximately 10.96, and the Quick Ratio is nearly identical at 10.94. Here's the quick math: a ratio this high means current assets dwarf current liabilities. For a traditional business, this would be a massive strength. But for a mortgage Real Estate Investment Trust (REIT), the primary current asset is often 'Loans Held for Investment,' which isn't a true cash-equivalent like a bond, so the ratios mostly signal a very low level of short-term operational debt, not necessarily an abundance of readily available cash.

• Current Ratio: 10.96 (MRQ)
• Quick Ratio: 10.94 (MRQ)
• Cash at Quarter End: $11.2 million

Analysis of the working capital trend shows a deliberate effort to manage its debt maturity profile, which is the real driver of financial flexibility. The working capital position is strong because the company has minimal short-term liabilities, but the cash balance itself was only $11.2 million at quarter-end. This is why the financing moves are so critical.

The cash flow statements for the nine months ended September 30, 2025, tell a more nuanced story:

The main liquidity strength is the successful execution of the $100 million financing deal, which allowed Sachem Capital Corp. (SACH) to repay and delist $56.3 million in maturing debt, extending its debt maturity profile. This move defintely eases near-term refinancing risk. The primary liquidity concern, however, remains the low cash flow from operating activities and the persistent drag from non-performing loans (NPLs), which totaled a gross unpaid principal balance of $104.1 million at the end of Q3 2025. What this estimate hides is that the resolution of these NPLs is key to unlocking future cash flow and earnings. You can read more about this in Breaking Down Sachem Capital Corp. (SACH) Financial Health: Key Insights for Investors.

Valuation Analysis

You're looking at Sachem Capital Corp. (SACH) and seeing a massive dividend yield, but also a stock price that's been on a slide. The quick takeaway is this: Sachem Capital Corp. currently looks undervalued on a book value basis, but the valuation ratios tied to earnings-like Price-to-Earnings-are flashing a warning sign because of recent losses. It's a classic risk-reward scenario in a hard money lender.

The market seems to be pricing in significant risk, which is why the stock price has dropped about -49.51% over the last 52 weeks, trading near the lower end of its 52-week range of $0.801 to $1.760. As of mid-November 2025, the stock sits around $1.04. This price action suggests a clear lack of investor confidence in the near-term earnings power, defintely not a sign of an overvalued stock.

Key Valuation Multiples (2025 Fiscal Data)

To figure out if Sachem Capital Corp. is overvalued or undervalued, we need to look past the sticker price and check the core metrics. Here's the quick math on the most telling ratios, using data as close to November 2025 as possible:

• Price-to-Book (P/B): At roughly 0.29, the stock trades at less than a third of its book value. This is a strong indicator of being undervalued, suggesting the market believes the company's assets are worth far less than their stated value.
• Price-to-Earnings (P/E): The trailing P/E is listed as N/A or negative (around -1.16) because the company reported a negative TTM Earnings Per Share (EPS) of about -$0.91. This immediately signals financial stress; a company with no earnings cannot be valued by a traditional P/E.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio is also negative, around -8.92, because the TTM Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is negative (about -$37.98 million). Negative EBITDA means the core business isn't generating operating cash flow, which is a major red flag for a financial company.

What this estimate hides is the potential for a turnaround. Analysts forecast a significant improvement, with the annual EBITDA for the fiscal year ending December 31, 2025, projected to be around $59 million. If they hit that, the EV/EBITDA will normalize quickly.

Dividend and Analyst Sentiment

The dividend is a huge part of the Sachem Capital Corp. story. The Forward Dividend Yield is exceptionally high, sitting between 18.52% and 19.61%, with an annual dividend of $0.20 per share. But here's the caveat: the dividend payout ratio is unsustainable because of the negative earnings, with some models showing a Payout Ratio of -21.28% or an extremely high multiple, which just means they are paying the dividend out of capital or debt, not current profit. That's a risk you need to factor in.

Analyst consensus reflects this mixed picture. Based on a review of five Wall Street analysts, the current consensus is a Hold rating. The average 12-month price target is $1.48, which suggests a significant upside of over 40% from the current price. It's clear the Street sees the deep value in the underlying assets (the low P/B ratio) but is waiting for the earnings (P/E and EV/EBITDA) to catch up before upgrading their rating to a 'Buy.' For a deeper dive into the balance sheet and cash flow, you should check out the full post on Breaking Down Sachem Capital Corp. (SACH) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Sachem Capital Corp. (SACH) and seeing a high dividend yield, but you need to understand the engine's stress points. The primary risks for this mortgage Real Estate Investment Trust (REIT) are concentrated in credit quality and capital structure, especially in the current challenging macroeconomic backdrop.

The biggest internal risk is the elevated level of nonperforming loans (NPLs), which are loans where the borrower is not making payments. As of September 30, 2025, the gross unpaid principal balance of NPLs stood at approximately $104.1 million, although management did reduce this by $15.5 million gross during the third quarter. That's a lot of capital sitting on the sidelines, not generating income.

• Credit Risk: Gross NPL balance was $104.1 million as of Q3 2025.
• Concentration Risk: A single-borrower exposure in Southwest Florida totals $50.4 million.
• Financial Risk: Total Q3 2025 revenue was $12.0 million, down from $14.8 million a year prior.

A key operational risk is the significant single-borrower exposure in Southwest Florida, often referred to as the Naples project. These two cross-collateralized loans total roughly $50.4 million as of September 30, 2025, which represents 13.4% of the entire outstanding mortgage loan portfolio. This concentration means any further trouble with that single borrower could disproportionately impact the whole business. The fact that these loans are on nonaccrual status is defintely weighing on monthly earnings by about $450,000.

On the financial and strategic side, lower net new loan origination over the past year has shrunk the performing loan portfolio, contributing to the year-over-year revenue decline. The average performing loan balance for Q3 2025 was approximately $268.1 million, down significantly from the prior year, leading to Q3 2025 total revenue of $12.0 million. Also, as a REIT, Sachem Capital Corp. must distribute at least 90% of its taxable income to shareholders, which limits the capital it can retain for growth or to cover future credit losses.

The external environment remains a challenge. The company is a hard money lender, specializing in short-term, secured loans for real estate investors, so it is highly sensitive to real estate market conditions and interest rate fluctuations. A prolonged period of high interest rates could continue to pressure borrowers and increase default risk, plus it makes their own cost of capital (debt) more expensive.

Here's the quick math on mitigation: Management is actively addressing the capital structure, which is a smart move. They successfully completed a $100 million senior secured notes private placement and used a portion to repay $56.3 million of unsecured subordinated notes. This extends their debt maturity profile, buying them time and strengthening liquidity to navigate the current environment. They are also actively working to resolve NPLs through sales and foreclosure, which is how they reduced the gross NPL balance by $15.5 million in the last quarter.

For a deeper dive into the numbers that drive these risks and opportunities, check out the full analysis: Breaking Down Sachem Capital Corp. (SACH) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking at Sachem Capital Corp. (SACH) and wondering where the growth engine is, especially after a challenging period for the real estate market. The near-term opportunity isn't about massive new market expansion; it's about balance sheet cleanup and smart capital deployment. The biggest lever Sachem Capital Corp. has right now is resolving its non-performing loans (NPLs) and Real Estate Owned (REO) assets.

As of the first quarter of 2025, the company had about $124 million in net NPLs on its books, and working through that inventory unlocks significant capital for new, high-yield originations. This focus on asset resolution, plus a strategic move to strengthen their capital structure, is the clear path to better earnings. They've been working hard on this.

• Resolve NPLs to free up capital.
• Strengthen balance sheet for new lending.
• Diversify income streams with partnerships.

Future Revenue and Earnings Estimates

The analyst consensus for Sachem Capital Corp.'s financial year 2025 revenue is around $44,982,000. That's a conservative forecast, but it reflects the current headwinds and the deliberate slowdown in new originations as they focus on portfolio quality. Here's the quick math: the consensus earnings forecast for 2025 is a modest $1,654,882, translating to a consensus Earnings Per Share (EPS) of just $0.04 for the year.

To be fair, this estimate hides the potential upside from successful NPL resolution. If they can sell off a significant portion of those $124 million in problem assets at favorable prices, that capital can immediately be recycled into new loans, which are performing defintely well in the post-COVID era portfolio. That's the real earnings kicker for 2026.

Strategic Initiatives and Competitive Edge

Sachem Capital Corp. has made a few smart moves to position itself for growth when the market stabilizes. A key strategic initiative was the successful completion of a $100 million senior secured notes private placement, with a portion of the proceeds used to repay $56.3 million of unsecured subordinated notes. This extends their debt maturity profile and enhances liquidity, giving them a stronger runway to pursue high-quality lending opportunities.

Also, their partnership with Shem Creek Capital is a solid move for diversification. This platform allows them to participate in multifamily finance, a market previously inaccessible due to their higher cost of capital. This investment generated approximately $4.1 million in revenue in the first nine months of 2025, providing a low-risk, double-digit yield. Their core competitive advantage remains their specialized focus on short-term (three years or less), secured, non-banking real estate loans, backed by a conservative loan-to-value ratio and personal guarantees from borrowers. They know the Eastern Seaboard market well, and their in-house asset management capabilities give them an edge over less specialized lenders.

For a deeper dive into the company's financial stability, you can check out Breaking Down Sachem Capital Corp. (SACH) Financial Health: Key Insights for Investors. Finance: Monitor the next NPL reduction announcement for a clear signal on capital deployment.