Sachem Capital (SACH) risk factors, FY2025 10-K

Risks Related to Our Current Financial Condition

1. 01We incurred a net loss attributable to common shareholders for 2024 but returned to profitability in 2025. We cannot assure you that we will be profitable for 202653% rewritten
2. 02Concurrently with the decline in our operational performance, we have reduced the dividend payable to shareholders
3. 03The price of our publicly traded securities has declined significantly41% rewritten
4. 04A default under the Needham Credit Facility could have significant adverse consequences on our business, operations, and financial conditionNew
5. 05Notes having an aggregate outstanding principal amount of $173.3 million are due and payable in full between December 2026 and September 202774% rewritten
6. 06We are subject to the “baby shelf” rules, which limits the amount of securities we can sell pursuant to an S-3 Registration Statement28% rewritten
7. 07The illiquidity of our loan portfolio could significantly impede our ability to respond to adverse changes in economic, financial, investment and other conditions39% rewritten

Risks Related to Our Business and Our Company

1. 08Declining real estate valuations have resulted in impairment charges or provisions for credit losses, the determination of which involves a significant amount of judgment on our part. Any future impairment or provision could have a material adverse effect on us
2. 09We have experienced a significant increase in the balance of non-performing loans77% rewritten
3. 10A high level of defaults, particularly among larger mortgage loans, could have a material adverse impact on our business, operations and financial condition
4. 11Difficult conditions in the mortgage and real estate markets, the financial markets and the economy generally have caused and may cause us to experience losses in the future
5. 12Increases in interest rates could adversely affect our ability to generate income and pay dividends53% rewritten
6. 13Adverse geopolitical developments could have a material adverse impact on our business
7. 14Prepayment rates can change, adversely affecting the performance of our assets
8. 15Many of our loans are not funded with interest reserves and our borrowers may be unable to pay the interest accruing on the loans when due, which could have a material adverse impact on our financial condition
9. 16Most of the properties securing our mortgage loans are not income producing, thus increasing the risks of delinquency and foreclosure
10. 17Our due diligence may not reveal all the risks associated with a mortgage loan or the property that will be mortgaged to secure the loan, which could lead to losses56% rewritten
11. 18able to sell the property and recovering our investment and of being exposed to the risks attendant to the ownership of real propertyNew
12. 19Residential mortgage loans are subject to increased risks
13. 20Our real estate assets are subject to risks particular to real property
14. 21We may be adversely affected by the economies and other conditions of the markets in which we operate, particularly in Connecticut, Florida and New York, where we have a high concentration of our loans24% rewritten
15. 22Competition could have a material adverse effect on our business, financial condition and results of operations
16. 23We may be adversely affected by deficiencies in foreclosure practices as well as related delays in the foreclosure process
17. 24We may be unable to identify and complete acquisitions on favorable terms or at all, which may inhibit our growth and have a material adverse effect on us

Risks Related to Our Operations, Structure and Change in Control Provisions

1. 25We have significant unfunded commitments to existing borrowers. If we are unable to fund these commitments, we may be subject to borrower legal claims
2. 26Interruptions in our ability to provide our products and our service to our customers could damage our reputation, which could have a material adverse effect on us58% rewritten
3. 27of our confidential information or damage to our business relationships or reputation, all of which could negatively impact our business and results of operationsNew
4. 28The loss of key personnel, such as one of our executive officers, could have a material adverse effect on us47% rewritten
5. 29Our inability to recruit or retain qualified personnel or maintain access to key third-party service providers and software developers, could have a material adverse effect on us
6. 30The stock ownership limit imposed by our charter may inhibit market activity in our Common Shares and may restrict our business combination opportunities
7. 31If we sell or transfer mortgage loans to a third party, including a securitization entity, we may be required to repurchase such loans or indemnify such third party if we breach representations and warranties39% rewritten

Risks Related to Debt Financing

1. 32If we cannot access external sources of capital on favorable terms or at all, our ability to execute our business and growth strategies will be impaired
2. 33We are leveraged. If we default on our obligations, we may suffer adverse consequences55% rewritten
3. 34to sell a portion of our investments to repay some debt when it is disadvantageous to do so, and we may not be able to make distributions to our shareholdersNew
4. 35Despite our current debt levels, we may incur substantially more debt or take other actions which could have the effect of diminishing our ability to make payments on our indebtedness when due and distributions to our shareholders

Risks Related to the Notes

1. 36Our outstanding fixed rate term notes are unsecured and therefore are effectively subordinated to any secured indebtedness we have incurred or may incur in the future41% rewritten
2. 37The Notes are subordinated to the indebtedness and other liabilities of our subsidiaries
3. 38The indenture under which the Notes are issued contains limited protection for holders of the Notes
4. 39In addition, the indenture does not require us to offer to purchase the Notes in connection with a change of control or any other event
5. 40An increase in market interest rates could result in a decrease in the value of the Notes
6. 41Although the Notes are listed on the NYSE American, an active trading market for the Notes may not develop, which could limit a noteholder's ability to sell the Notes and/or the market price of the Notes
7. 42We may choose to redeem the Notes when prevailing interest rates are relatively low
8. 43We are not obligated to contribute to a sinking fund to retire the Notes and the Notes are not guaranteed by a third party
9. 44A downgrade, suspension or withdrawal of the credit rating assigned by a rating agency to us or the Notes, if any, could cause the liquidity or market value of the Notes to decline significantly

Risks Related to our Series A Preferred Stock

1. 45The Series A Preferred Stock effectively ranks junior to all our indebtedness and other liabilities and of our subsidiaries50% rewritten
2. 46We may issue additional shares of Series A Preferred Stock in the future and may create new classes or series of preferred shares that would rank equal or senior to the Series A Preferred Stock with respect to dividend payments and rights upon liquidation, dissolution or winding up of our affairsNew
3. 47Market interest rates may materially and adversely affect the value of the Series A Preferred Stock32% rewritten
4. 48Our ability to pay dividends is limited by the requirements of New York law
5. 49Our cash available for distribution may not be sufficient to pay dividends on the Series A Preferred Stock at the stated dividend rateNew
6. 50The change of control conversion rights may not adequately compensate the holders of Series A Preferred Stock in the event we undergo a change of control. The change of control conversion rights may also make it more difficult for a party to acquire us or discourage a party from acquiring us
7. 51If we redeem your shares of the Series A Preferred Stock, you will no longer receive dividendsNew
8. 52You should not expect us to redeem shares of the Series A Preferred Stock on or after the date they become redeemableNew
9. 53The trading price of the Series A Preferred Stock could be substantially affected by various factors73% rewritten
10. 54The market price and trading volume of the Series A Preferred Stock may be volatile and you could experience a loss if you sell your sharesNew
11. 55In sum, we cannot assure you that the market price of the Series A Preferred Stock will not fluctuate significantly in the futureNew
12. 56The Series A Preferred Stock shareholders have limited voting rights44% rewritten
13. 57Future sales of substantial amounts of the Series A Preferred Stock, or the possibility that such sales could occur, could adversely affect the market price of the Series A Preferred Stock38% rewritten
14. 58Although the Series A Preferred Stock currently has a private credit rating of BBB from Egan-Jones Ratings Company, the Series A Preferred Stock may be downgraded, suspended or withdrawn as a result of the offering of additional shares of Series A Preferred Stock
15. 59If we are unable to comply with the continued listing requirements of the NYSE American, our Common Shares could be delisted, which could adversely affect the listing of the Series A Preferred StockNew
16. 60Listing on NYSE American does not guarantee an active trading market for the Series A Preferred StockNew
17. 61If the Series A Preferred Stock or our Common Shares are delisted, your ability to transfer or sell your shares of the Series A Preferred Stock may be limited and the market value of the Series A Preferred Stock will likely be materially adversely affectedNew

Risks Relating to our Common Shares

1. 62The market price and trading volume of our securities may be volatile39% rewritten
2. 63We have not established a minimum dividend payment level for our Common Shares and there are no assurances of our ability to pay dividends to our common shareholders in the future
3. 64Future offerings of preferred shares or debt securities would rank senior to our Common Shares upon liquidation and for dividend purposes, would dilute the interests of our common shareholders and may adversely affect the market price of our Common Shares
4. 65An increase in interest rates may have an adverse effect on the market price of our Common Shares and our ability to make distributions to our shareholders
5. 66Your investment in and resulting interest in us may be diluted or lose value if we issue additional shares
6. 67If we fail to comply with the continued listing standards of the NYSE American, all or some of our securities that currently are listed on the NYSE American could be delisted. This would have a material adverse impact on the holders of that security and us

Risks Related to Regulatory Matters

1. 68Maintenance of our Investment Company Act exemption imposes limits on our operations
2. 69Failure to qualify as a REIT would adversely affect our operations and ability to make distributions
3. 70Qualifying as a REIT involves highly technical and complex provisions of the Code and therefore, in certain circumstances, may be subject to uncertainty
4. 71Even if we qualify as a REIT, we will be subject to some taxes that will reduce our cash flow
5. 72The REIT distribution requirements could adversely affect our ability to grow our business and may force us to seek third-party capital during unfavorable market conditions
6. 73Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends, which could depress the market price of our Common Shares if it is perceived as a less attractive investment73% rewritten
7. 74We may in the future choose to pay dividends in the form of Common Shares, in which case shareholders may be required to pay income taxes in the absence of cash dividends
8. 75Complying with REIT requirements may cause us to liquidate or forgo otherwise attractive investment opportunities
9. 76We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our Common Shares100% rewritten
10. 772025, and (iv) increases the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of “adjusted taxable income” (i.e. based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024New