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**Key Takeaways:**
- **NPL Reduction Momentum**: Gross NPLs down 13.8% to $104.1 million, with $4.3 million converted to REO for development.
- **Naples Mediation Critical**: $50.4 million Naples project resolution hinges on November 7 mediation, with potential to unlock $3.72 million commercial sale.
- **Financial Resilience**: Sequential revenue growth of 11.4% to $12 million, despite 12.4% yield on performing loans.
- **Liquidity Management**: $11.2 million cash and 1.57x asset/liability coverage support disciplined growth.
- **Dividend Sustainability**: $0.05 common dividend maintained despite $0.12 million net loss, with book value per share stable at $2.47.
- **Risk Focus**: Mediation outcome, REO management costs, and Naples project resolution key to 2026 dividend framework.

**【CEO Summary Section】**
- **Balance Sheet Strength**: Repaid $56.3 million in 7.75% FCCC notes using senior secured private placement and revolving credit facility, reducing unsecured debt by $56.5 million.
- **NPL Reduction Progress**: Gross NPLs decreased by $15.5 million (13.8%) to $104.1 million, with $4.3 million converted to REO for development.
- **Naples Project Update**: $50.4 million cross-collateralized loans remain nonaccrual, weighing on earnings by $450k/month. Mediation on November 7 could resolve ownership disputes and unlock development of 4-unit condo and commercial site.
- **Pipeline Activity**: $44.7 million disbursed in Q3, $40.7 million collected, and $10.9 million migrated to REO. 12.4% yield on performing loans reflects disciplined underwriting.

**【CFO Financial Commentary】**
- **Revenue Growth**: Sequential increase of 11.4% to $12 million, driven by $8.3 million interest income and $2 million loan fees.
- **Credit Improvement**: Provision for credit losses fell to $0.8 million (vs. $8.1 million YoY), with allowance for loan losses reduced to 3% of unpaid principal.
- **Liquidity Management**: $11.2 million cash on hand, with $40 million drawn on senior secured notes and $32.7 million on Needham revolver, maintaining 1.57x asset/liability coverage.
- **Dividend Sustainability**: GAAP net income of $1 million supported $0.05 common and $0.484375 preferred dividends, with book value per share at $2.47.

**【Q&A Key Highlights】**
- **Naples Mediation Impact**: Favorable outcome could enable control of $50.4 million asset, potentially reducing NPLs and freeing capital for development.
- **Loan Origination Yields**: Maintaining 12.4%+ yields despite higher funding costs, reflecting strong collateral and sponsor underwriting.
- **REO Management Costs**: G&A expenses increased due to property taxes and maintenance, but viewed as necessary to preserve value and accelerate resolutions.
- **Pipeline Visibility**: $47 million unfunded commitments spread over 12-18 months, with focus on single-family and multifamily residential assets in strong markets.

Sachem Capital Corp. (SACH) Q3 2025 Earnings Call Transcript

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SACH

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