Sachem Capital Corp.
For the period ended Mar 31, 2026. Filed May 20, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 20, 2026
SACH$0.82+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-05.
0001682220-25-000070
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-20.
0001682220-26-000038
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 71 previous paragraphs and 109 current paragraphs.
27 unchanged; 19 reworded; 63 added; 23 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 13 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (63)
Current report
Recent Developments
Current report
Contribution Agreement with Industrial Realty Group Global, LLC
Current report
On May 17, 2026, we entered into a Contribution Agreement (the “Contribution Agreement”) with Industrial Realty Group Global, LLC, a Delaware limited liability company (“IRG Global”). The Contribution Agreement and the transactions contemplated thereby (the “Transaction”) were unanimously approved by our Board of Directors.
Current report
Pursuant to the Contribution Agreement, IRG Global will contribute to IRG Realty Operating Partnership, L.P., a Delaware limited partnership to be formed as our subsidiary prior to the Closing (as defined below) (the “Operating Partnership”), 100% of the outstanding membership interests of IRG Master Holdings, LLC, a Delaware limited liability company (“IRG Master Holdings”), in exchange for (i) a number of common units of limited partnership interest in the Operating Partnership (“OP Units”) equal to the Transferee Consideration Units (as defined below) and (ii) a number of shares of our Class B common stock (the “Class B Common Stock”) equal to the Transferee Consideration Units. IRG Master Holdings, together with its subsidiaries, owns and operates a portfolio of industrial real estate assets.
Current report
Prior to the closing of the Transaction (the “Closing”), which is expected to be by the end of 2026, we will complete a series of pre-closing reorganization steps (the “Pre-Closing Reorganization”), including (i) forming the Operating Partnership and contributing all or substantially all of our assets thereto, (ii) redomesticating from the State of New York to the State of Delaware, (iii) effecting a 20-to-1 reverse stock split of our issued and outstanding common shares, following which such shares will be redesignated as our Class A common stock (the “Class A Shares”), (iv) authorizing a new class of Class B Common Stock (the “Class B Shares”), (v) adjusting the conversion and anti-dilution rights applicable to our issued and outstanding preferred stock in accordance with the applicable certificate of designations to reflect the reverse stock split, and (vi) changing our corporate name to “IRG Realty Trust, Inc.”
Current report
The number of OP Units and Class B Shares to be issued to IRG Global at the Closing (the “Transferee Consideration Units”) will be calculated based on a formula set forth in the Contribution Agreement, subject to downward adjustment based on the aggregate shortfall in replacement value for any dispositions of IRG Master Holdings’ properties occurring during the Interim Period (as defined in the Contribution Agreement), other than dispositions with an aggregate shortfall of less than $3.0 million. The calculation of the Transferee Consideration Units was based on an assumed implied gross asset value of the IRG Global portfolio to be contributed of approximately $2.9 billion, with a net asset value of approximately $1.5 billion after approximately $1.4 billion of debt, and a deemed exchange value of our common shares at a price of $2.00 per share. Immediately following the Closing, IRG Global is expected to hold approximately 94.1% of the outstanding OP Units, with us retaining the remaining approximately 5.9% of the outstanding OP Units. Subject to certain restrictions, a holder of OP Units may require the Operating Partnership to exchange all or a portion of such holder’s OP Units for cash or, at our option, Class A Shares on a one-for-one basis, subject to the ownership, transfer, REIT qualification and other limitations set forth in an Amended and Restated Limited Partnership Agreement, which is expected to be executed in connection with the Closing of the Transaction.
Current report
The Closing of the Transaction is expected to occur by the end of 2026, subject to customary closing conditions, including the approval of our shareholders.
Current report
For additional information on the Contribution Agreement, see our Current Report on Form 8-K filed with the SEC on May 18, 2026 and Note 21 – Subsequent Events – to our accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Current report
(1)Includes new originations, modifications, and draws
Current report
(2)Includes default interest.
Current report
Investment in Developmental Real Estate
Current report
As of March 31, 2026, we owned eight properties that were classified as investments in developmental real estate. The projects are in various phases of completion. The following table details the carry value of our investments in developmental real estate owned property reflected on our unaudited Condensed Consolidated Balance Sheet as of March 31, 2026:
Current report
For further information, see Note 5 – Investment in Developmental Real Estate, Net — to our unaudited condensed consolidated financial statements.
Current report
Our results of operations depend primarily on net interest income, the credit performance of our loan portfolio, and the effectiveness of our operating platform. These results are affected by a variety of factors, including demand for commercial real estate loans, competitive conditions in loan origination, the cost, structure, and availability of financing, operating expense levels, and the performance of the collateral securing our loans.
Current report
Net (loss) income and net loss attributable to common shareholders are the primary metrics by which we assess our business performance. Accordingly, we closely monitor the following primary drivers of these metrics:
Current report
Net interest income
Current report
Net interest income represents the largest component of net income and is evaluated on both an absolute basis and relative to our provision for credit losses and operating expenses. Net interest income is generated when the yield earned on our loan portfolio exceeds the cost of financing those assets, which we primarily achieve through short- and long-term financing arrangements. Accordingly, we actively monitor financing market conditions and maintain ongoing dialogue with investors and financial institutions as we evaluate funding sources and cost of capital.
Current report
In evaluating net interest income, management monitors: (1) portfolio loan yields, (2) funding costs, (3) net interest spread, and (4) net interest margin. Net interest spread reflects the difference between the yield earned on our loans and the interest rates paid on our funding sources. Net interest margin represents net interest income, calculated as annualized interest income less annualized interest expense, expressed as a percentage of average loans outstanding for the applicable period.
Current report
Average loans outstanding are calculated using the arithmetic average of the unpaid principal balance of loans held for investment as of the end of each of the five most recent fiscal quarters.
Current report
Changes in net interest income are primarily driven by origination activity, changes in average outstanding loan balances (total, performing and nonperforming), and fluctuations in interest rates affecting asset yields and funding costs. Historically, portfolio growth driven by loan originations has been the primary contributor to increases in net interest income. Net interest income is evaluated both before and after interest expense associated with corporate debt and before and after provisions for credit losses.
Current report
Interest income from loans - increased from the corresponding period in the prior year, as further analyzed below.
Current report
•Average loans held for investment were $365.5 million and $370.3 million for the three months ended March 31, 2026 and 2025, respectively. The effective yield on total loans held for investment was 10.0% and 8.5%, respectively.
Current report
Results are impacted by nonperforming loans and real estate owned, which do not contribute interest income.
Current report
•Average total performing loans held for investment were $270.9 million and $275.1 million for the three months ended March 31, 2026 and 2025, respectively. The effective yield on performing loans was 13.5% and 11.5%, respectively.
Current report
The difference between total portfolio yield and performing loan yield reflects the impact of nonaccrual loans, which do not generate current interest income.
Current report
•Average nonperforming loans held for investment were $95.7 million and $97.3 million for the three months ended March 31, 2026 and 2025, respectively.
Current report
Interest income from limited liability company investments - Interest income generated from our investments in the Shem Creek funds and direct loan co-investment vehicles decreased from the corresponding period in the prior year. The decrease was primarily attributable to lower average capital deployed within certain direct loan co-investment vehicles during 2026. As underlying mortgage loans repaid, capital was returned to us and not redeployed at prior levels within those structures. In certain vehicles, our ownership percentage also declined during the period, further reducing its effective exposure.
Current report
The decrease in interest income was driven by lower average invested balances rather than changes in underlying loan yields or credit performance. The Shem Creek portfolios continue to consist primarily of short-duration, first mortgage loans, and there were no material changes in the contractual economics of those investments during the period.
Current report
We evaluate these minority investments as part of its broader capital allocation framework. Given the short-term nature of the underlying assets and the return of capital upon loan repayment, investment balances may fluctuate period to period depending on repayment activity and redeployment decisions. Capital returned from these vehicles may be redeployed into other investment opportunities or retained to support liquidity and balance sheet objectives.
Current report
See Note 19 — Limited Liability Company ("LLC") Investments — to our unaudited condensed consolidated financial statements for the three months ended March 31, 2026.
Current report
Interest expense and amortization of deferred financing costs - consistent with the corresponding period in the prior year, primarily attributable to lower average borrowings but at higher average interest rates.
Current report
During 2025, as a result of maturing unsecured notes payable, we began repositioning its capital structure through the issuance of $100.0 million ($100.0 million and $90.0 million drawn as of March 31, 2026 and December 31, 2025, respectively) of Senior Secured Notes due 2030. The secured notes replaced a portion of lower rate unsecured notes and reduced reliance on repurchase agreements and lines of credit.
Current report
We continue to evaluate refinancing strategies for upcoming maturities late 2026 and into 2027, with a focus on extending duration and optimizing cost of capital. Access to diversified funding sources remains a strategic priority as we balance liquidity, leverage, and shareholder returns.
Current report
Net Interest Margin
Current report
Net interest margin in the first quarter of 2026 was 3.9% compared to 4.0% in the first quarter of 2025. The decrease in net interest margin reflects both structural and cyclical factors. Structurally, refinancing activity during 2025 increased the weighted average cost of capital. Cyclically, lower average earning assets reduced interest-earning balances.
Current report
While asset yields remained strong on performing loans, 13.5% in first quarter 2026 as compared to 11.5% in the first quarter 2025, overall margin stabilization depends on continued resolution of nonperforming loans, normalization of earning asset levels, and disciplined origination activity at spreads consistent with current funding costs.
Current report
Net interest (loss) income after provision for credit losses, loss on sale of loans, and changes in valuation allowance
Current report
Credit risk management is central to our operating model. We seek to minimize credit losses through disciplined underwriting, active life-of-loan portfolio management, and targeted special servicing. We closely monitor portfolio credit performance, including delinquency trends and expected and realized credit losses, as a key indicator of overall operating results.
Current report
Provision for credit losses related to loans held for investment - increased from the corresponding period in the prior year primarily due to declines in collateral valuations for loans previously reserved and a credit loss of $3.9 million related to a loan restructuring. This non-cash loss relates to the Naples, Florida loan restructuring where we took control of the three completed condominium units and entitled land for development of four additional condominium units which is treated as a deed in lieu of foreclosure for accounting purposes. The loan restructuring was negotiated by management to recover the full carrying value of the mortgage note receivable on an undiscounted cash flow basis. Due to the length of time between taking over the project and receipt of the final cash flows from sales of the units under construction, we are required to record the assets received on a discounted cash flow basis. As a result, we recorded a $3.9 million charge in first quarter 2026. We believe the sales of the condominium units provides an opportunity to recover the fair value adjustment over time; however, actual recovery will depend on sales prices, timing, completion costs and market conditions.
Current report
We continue to apply a conservative collateral-dependent methodology for loans in foreclosure and pending foreclosure status. We evaluate the allowance quarterly based on updated appraisals, liquidation cost assumptions and macroeconomic forecasts under the CECL framework.
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Removed paragraphs (23)
Previous report
Loans held for sale
Previous report
Loans are classified as held for sale if there is an intent to sell in the near-term. These loans are recorded at the lower of amortized cost or fair value. If the fair value of a loan is determined to be less than its amortized cost, a non-recurring fair value adjustment will be recorded through a valuation allowance. When a loan is transferred to the held for sale category, any previously recorded allowance for credit losses is reversed in the provision for credit losses related to loans and the loan is recorded at its amortized cost basis. If the amortized cost basis exceeds the loan’s fair value at the date of transfer, a valuation allowance equal to the difference between amortized cost basis and fair value is recorded.
Previous report
(1)Includes default interest.
Previous report
As of September 30, 2025, we owned 19 properties, each of which previously served as collateral for first mortgage loans. Six and ten properties were acquired during the three and nine months ended September 30, 2025, respectively, in connection with foreclosure actions. Four and ten properties were sold during the three and nine months ended September 30, 2025, respectively. Two properties were transferred from real estate owned to investment in developmental real estate during the three and nine months ended September 30, 2025.
Previous report
Total revenues
Previous report
The change in revenue was primarily due to the cumulative effect of materially lower net new origination over the last twelve months, resulting in a reduction in the unpaid principal balance of loans held for investment, in addition to a currently elevated amount of nonperforming loans and real estate owned. Utilizing the average performing loans held for investment balance for the three months ended September 30, 2025 of $268.1 million, the effective interest rate on loans held for investment was 12.4% for the three months ended September 30, 2025. Comparatively, utilizing the average performing loans held for investment balance for the three months ended September 30, 2024 of $361.7 million, the effective interest rate on loans held for investment was 12.6% for the three months ended September 30, 2024.
Previous report
Income from limited liability company investments has decreased as we have reduced our investments in limited liability companies by $12.8 million since December 31, 2024. The Company used returns of capital from its investments in limited liability companies to fund additional loans held for investment during the period.
Previous report
Operating expenses
Previous report
Interest and amortization of deferred financing costs remained relatively consistent with the corresponding 2024 period in total dollars, but increased as a percentage of total revenues due to lower revenues in 2025 as the overall size of our loan portfolio decreased and nonperforming loans as a percentage of the loan portfolio increased.
Previous report
The increase in compensation and employee benefits relates to one time cash bonuses of $0.4 million and additional headcount to build out the executive team due to the resignation of the prior chief financial officer and the hiring of his replacement and a new chief accounting officer.
Previous report
The material decline in the provision for credit losses related to loans held for investment for the three months ended September 30, 2025 as compared to the corresponding 2024 period is a result of the prior year build up and recognition of credit loss allowance as the aggregate non-performing loan balances were rising materially. The aggregate non-performing loan balance as of September 30, 2024 was $147.0 million, up $62.4 million from the December 31, 2023 balance of $84.6 million. As the Company has been addressing the non-performing loan portfolio for the last year through certain loan sales primarily during the fourth quarter of 2024, ongoing foreclosure sales and conversions to real estate owned with subsequent sale, material additional new material credit loss allowance has not been required.
Previous report
Nine months ended September 30, 2025 compared to nine months ended September 30, 2024
Previous report
Total revenues
Previous report
The change in revenue was primarily due to the cumulative effect of materially lower net new origination over the last twelve months, resulting in a reduction in the unpaid principal balance of loans held for investment, in addition to a currently elevated amount of nonperforming loans and real estate owned. Utilizing the average performing loans held for investment balance for the nine months ended September 30, 2025 of $271.6 million, the effective interest rate on loans held for investment rate was 11.6% for the nine months ended September 30, 2025. Comparatively, utilizing the average performing loans held for investment balance for the nine months ended September 30, 2024 of $385.8 million, the effective interest rate on loans held for investment was 12.4% for the nine months ended September 30, 2024.
Previous report
Operating expenses
Previous report
Interest and amortization of deferred financing costs decreased as we paid off $34.5 million of notes payable in December 2024 with proceeds from loans sold, but increased as a percentage of total revenues due to lower revenues in 2025 as the overall size of our loan portfolio decreased and nonperforming loans as a percentage of the loan portfolio increased.
Previous report
The increase in compensation and employee benefits relates to additional headcount to build out the executive team due to resignation of our former chief financial officer and the hiring of his replacement and a new chief accounting officer.
Previous report
The material decline in the provision for credit losses related to loans held for investment for the nine months ended September 30, 2025 as compared to the corresponding 2024 period is a result of the prior year build up and recognition of credit loss allowance due to a material increase in the aggregate non-performing loan balances. The aggregate non-performing loan balance as of September 30, 2024 was $147.0 million, up $62.4 million from the December 31, 2023 balance of $84.6 million. As the Company has been addressing the non-performing loan portfolio for the last year through loan sales, primarily during the fourth quarter of 2024, ongoing foreclosure sales and conversions to real estate owned with subsequent sale, material additional new material credit loss allowance has not been required.
Previous report
Book value per common share
Previous report
Total liabilities at September 30, 2025 were $308.8 million compared to $310.3 million at December 31, 2024, a decrease of $1.5 million, or 0.5%. This decrease is primarily due to decreases in notes payable of $55.5 million, repurchase agreements of $25.9 million, and lines of credit of $7.3 million offset by a $86.4 million increase in senior secured notes payable net of deferred financing costs of $3.6 million. The Company used the proceeds from sale of its senior secured notes to reduce other indebtedness.
Previous report
On March 20, 2025, we entered into a new Credit Agreement with Needham Bank (the "New Credit Agreement"), replacing the prior Needham Credit Facility, which was fully repaid and terminated on the same date. The new facility matures on March 2, 2026, and includes an option to extend the term by one year upon satisfaction of certain conditions. Under the new agreement, SN Holdings LLC (“SN Holdings”), our wholly owned subsidiary, serves as the borrower, and we serve as guarantor of all SN Holdings' obligations under the New Credit Agreement. The new facility is secured by a first priority lien on all the assets of SN Holdings, and includes a requirement that SN Holdings maintain assets equal to at least two times the outstanding principal balance under the facility. In addition, SN Holdings is required to collaterally assign to Needham a portfolio of mortgage loans with an outstanding principal balance of no less than the greater of $30 million or the full drawn balance on the facility. We, as guarantor, have also granted Needham a lien on substantially all of our assets, with the ability to request lien releases to facilitate other financings. The new facility, at the subsidiary borrower level, 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 SN Holdings to maintain: (A) a ratio of Adjusted EBITDA (as defined in the New Credit Agreement) to Debt Service (as defined in the New Credit Agreement) of not less than 1.40 to 1.0, tested on a trailing-twelve-month basis at the end of each fiscal quarter; (B) a sum of cash, cash equivalents (at the consolidated guarantor level) and availability under the facility equal to or greater than $10 million; and (C) an Asset Coverage Ratio (as defined) of at least 150%. As of September 30, 2025, SN Holdings had borrowed $32.7 million under the new facility and was in compliance with all covenants under the New Credit Agreement.
Previous report
On June 11, 2025, Sachem Capital Corporation Holdings, LLC ("Holdings"), our indirect, wholly-owned subsidiary, consummated a private placement of $100.0 million aggregate principal amount of Senior Secured Notes due June 11, 2030 (the "Senior Secured Notes") to various institutional investors under a Note Purchase and Guaranty
Previous report
Agreement. An initial draw of $50.0 million was made at closing, an additional draw of $40.0 million was made in September 2025, and the remaining $10.0 million may be drawn at any time on or prior to May 15, 2026. The Senior Secured Notes bear interest at a fixed rate of 9.875% per annum, with interest only payable quarterly on the 1st day of March, June, September and December, and include a commitment fee of 1.0% on the undrawn portion of the Senior Secured Notes.
Reworded paragraphs (19)
Previous wording
Sachem Capital Corp., a New York corporation, established in 2010 and completing an initial public offering in 2017, is a self-managed REIT that specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. We operate our business as one segment. We offer short-term (i.e., one to three years), secured, non-bank loans to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States. The properties securing our loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower. Our primary underwriting criteria is a conservative loan to value ratio. In addition, we may make opportunistic real estate purchases and investments apart from our lending activities.
Current wording
Sachem Capital Corp., a New York corporation, established in 2010 and completing an initial public offering in 2017, is a self-managed REIT that specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company operates its business as one segment. The Company offers short-term (i.e., one to three years), secured, non-bank loans to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in the northeastern and southeastern sections of the United States. The properties securing the Company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is typically secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals, a pledge of the ownership interests in the borrower by the principals thereof, and/or personal guarantees by the principals of the borrower. The Company does not lend to owner occupants of residential real estate. The Company’s primary underwriting criteria is a conservative loan to value ratio. In addition, the Company may make opportunistic real estate purchases and investments apart from its lending activities.
Previous wording
Preparing our unaudited condensed consolidated 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. We base the use of estimates on (a) various assumptions that consider prior reporting results, (b) our projections regarding future operations, and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. Significant estimates include the provisions for current expected credit losses, loans held for sale at fair value, and real estate owned. See Note 2 – Significant Accounting Policies — to our condensed consolidated financial statements for further details.
Current wording
The preparation of our unaudited condensed consolidated 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 will base the use of estimates on (a) various assumptions that consider prior reporting results, (b) projections regarding future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. Significant estimates include the provisions for current expected credit losses and real estate owned, See Note 2 – Significant Accounting Policies – to our unaudited condensed consolidated financial statements for further details.
Previous wording
We record an allowance for credit losses (“CECL”) on our loan portfolio in accordance with FASB Topic 326, Financial Instruments - Credit Losses, 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. Further, CECL requires credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell. As allowed under the CECL standard that we have adopted, 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 foreclosure status, as defined. Fair value of collateral is reduced by estimated cost to sell if the collateral is expected to be sold. The CECL standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the economic environment. We utilize 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, we consider various factors including (1) historical loss experience in our loan 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) management's current and future view of the macroeconomic environment. We also utilize 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. Loans, interest receivable, due from borrowers, unfunded commitments, and investment securities are all presented net on our Condensed Consolidated Balance Sheets with expanded disclosures in the notes to our condensed consolidated financial statements. The change in the balances during the reporting period are recorded in our Condensed Consolidated Statements of Operations under the provision for credit losses.
Current wording
We record an allowance for credit losses (“CECL”) in accordance with the CECL standard on our 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. Further, CECL requires credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities if management does not intend to sell and does not believe that it is more likely than not, they will be required to sell. As allowed under the CECL standard that we have adopted, 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 CECL standard requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the economic environment. We utilize 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, we consider various factors including (1) historical loss experience in our 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) our current and future view of the macroeconomic environment. We also utilize 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. Loans, interest receivable, due from borrowers, unfunded commitments, and (available-for-sale debt) investment securities are all presented on a net basis on the unaudited Condensed Consolidated Balance Sheets with expanded disclosures in the notes to the unaudited condensed consolidated financial statements. The change in the balances during the reporting period are recorded in the unaudited Condensed Consolidated Statements of Operations under the provision for credit losses.
Previous wording
REO acquired through foreclosure is initially measured at fair value and is thereafter subject to an ongoing impairment analysis. After an REO acquisition, events or circumstances may occur that result in a material and sustained decrease in the cash flows generated from the property or other market indicators, including listing data, may signal a decline in the liquidation value. REO is evaluated for recoverability when impairment indicators are identified. Any impairment losses or recoveries are included in the Condensed Consolidated Statements of Operations.
Current wording
REO acquired through foreclosure is initially measured at fair value and is thereafter subject to an ongoing impairment analysis. After an REO acquisition, events or circumstances may occur that result in a material and sustained decrease in the cash flows generated from the property or other market indicators, including listing data, may signal a decline in the liquidation value. REO is evaluated for recoverability when impairment indicators are identified. Any impairment losses or recoveries are included in the unaudited Condensed Consolidated Statements of Operations.
Previous wording
The following table presents certain information regarding our real estate lending activities for the three and nine months ended September 30, 2025:
Current wording
The following table presents certain information regarding our real estate lending activities for the three months ended March 31, 2026:
Previous wording
(2)Does not give effect to extensions.
Current wording
(3)Does not give effect to extensions.
Previous wording
At September 30, 2025, our outstanding mortgage loan portfolio included loans with outstanding principal balance amount up to $38.3 million. The table below presents our loans held for investment by loan size as of September 30, 2025:
Current wording
The table below presents our loans held for investment by loan size as of March 31, 2026:
Previous wording
As of September 30, 2025, the primary markets in which we were exposed were Connecticut, Florida, Massachusetts and New York. The following table presents our loans held for investment by state as of September 30, 2025:
Current wording
As of March 31, 2026, the primary geographic markets in which we were exposed were Connecticut, Florida, Massachusetts and New York. The following table presents our loans held for investment by state as of March 31, 2026:
Previous wording
For further information, see Note 4 – Loans and Allowance for Credit Losses — to our condensed consolidated financial statements.
Current wording
For further information, see Note 4 – Loans and Allowance for Credit Losses — to our unaudited condensed consolidated financial statements.
Previous wording
The following table presents the carrying value of each of our real estate owned properties reflected on our Condensed Consolidated Balance Sheets as of September 30, 2025:
Current wording
As of March 31, 2026, we owned twelve properties, each of which previously served as collateral for first mortgage loans. The following table presents the carrying value of each of our properties reflected on our unaudited Condensed Consolidated Balance Sheet as of March 31, 2026:
Previous wording
For further information, see Note 6 – Real Estate Owned (REO) — to our condensed consolidated financial statements.
Current wording
For further information, see Note 6 – Real Estate Owned (REO) — to our unaudited condensed consolidated financial statements.
Previous wording
The decrease in book value per common share is primarily due to cash dividends declared and paid for the three months ended September 30, 2025 on issued and outstanding common shares and shares of Series A Preferred Stock totaling $3.5 million, or $0.07 per common share, partially offset by net income for the three months ended September 30, 2025 of $1.0 million, or $0.02 per common share.
Current wording
The decrease in book value per common share is primarily due to cash dividends declared and paid for the three months ended March 31, 2026 on issued and outstanding common shares and shares of Series A Preferred Stock totaling $3.5 million, or $0.07 per common share, and net loss attributable to common shareholders for the three months ended March 31, 2026 of $6.1 million, or $0.13 per common share.
Previous wording
Total assets at September 30, 2025 were $484.4 million compared to $492.0 million at December 31, 2024, a decrease of $7.6 million, or 1.5%. The net decrease was due primarily to decreases in cash and cash equivalents of $6.9 million and investments in limited liability companies of $12.8 million offset by increases in loans held for investment, net of $5.2 million and real estate owned of $4.6 million. The Company used returns of capital from its investments in limited liability companies to fund additional loans held for investment during the period.
Current wording
Total assets at March 31, 2026 were $473.3 million compared to $460.0 million at December 31, 2025, an increase of $13.3 million, or 2.9%. The increase was due primarily to increases in investments in developmental real estate of $36.3 million and other assets of $4.0 million offset by decreases in loans held for investment, net of $22.5 million and investments in limited liability companies of $3.9 million. The increase in investments in developmental real estate and decrease in loans held for investment, net is primarily driven by the Nautilus loan restructuring as described elsewhere in this report.
Previous wording
Total shareholders’ equity at September 30, 2025 was $175.6 million compared to $181.7 million at December 31,2024, a decrease of $6.0 million, or 3.3%. This decrease was due primarily to an aggregate increase of $10.5 million of dividends paid to holders of Series A Preferred Stock and common shares, which was partially offset by an aggregate increase of $3.8 million of cumulative net earnings for the nine month period and $0.6 million increase in additional paid-in capital related to stock-based compensation.
Current wording
Total shareholders’ equity at March 31, 2026 was $165.6 million compared to $174.9 million at December 31, 2025, a decrease of $9.3 million, or 5.3%. This decrease was due primarily to an aggregate of $3.5 million of dividends paid to holders of Series A Preferred Stock and common shares during the quarter and a net loss of $6.1 million for the period, offset by a $0.3 million increase in additional paid-in capital related to stock-based compensation.
Previous wording
These sources and uses of cash are reflected in our Condensed Consolidated Statements of Cash Flows as summarized below:
Current wording
These sources and uses of cash are reflected in our unaudited Condensed Consolidated Statements of Cash Flows as summarized below:
Previous wording
For a detailed breakdown of our cash flows during the nine months ended September 30, 2025 and 2024, see our Condensed Consolidated Statement of Cash Flows.
Current wording
For a detailed breakdown of our cash flows during the three months ended March 31, 2026 and 2025, see our Condensed Consolidated Statement of Cash Flows.
Previous wording
We project anticipated cash requirements for our operating needs as well as cash flows generated from operating activities available to meet these needs. Our short-term cash requirements primarily include funding of loans, dividend payments, interest and principal payments on our indebtedness, and payments for usual and customary operating and administrative expenses, such as employee compensation and sales and marketing expenses. Based on this analysis, we believe that our current cash balances, availability on our debt facilities, and our anticipated cash flows from operations will be sufficient to fund the operations for the next 12 months.
Current wording
We project anticipated cash requirements for our operating needs as well as cash flows generated from operating activities available to meet these needs. Our short-term cash requirements primarily include funding of loans, transaction expenses, dividend payments, interest and principal payments on our indebtedness, including repayment/refinancing of the Notes maturing in December 2026 and March 2027, and payments for usual and customary operating and administrative expenses. Based on this analysis, we believe that our current cash balances, availability on our debt facilities, and our anticipated cash flows from operations will be sufficient to fund the operations for the next 12 months.
Previous wording
Our long-term cash needs will include principal and interest payments on outstanding indebtedness maturing in late 2026 and early 2027, preferred stock dividends and funding of new mortgage loans. Funding for long-term cash needs will come from unused net proceeds from financing activities, operating cash flows, refinancing existing debt, and proceeds from sales of real estate owned.
Current wording
Our long-term cash needs will include principal and interest payments on outstanding indebtedness including notes payable in the principal amount of $173.2 million maturing late in 2026 and in 2027, preferred stock dividends and funding of new mortgage loans. Specific to the maturities in 2026 and 2027, we believe that we will address these maturities through a combination of operating cash flow, credit facility capacity, secured financing alternatives and potential capital markets transactions, subject to market conditions. There can be no assurance that refinancing will occur on terms similar to existing obligations. We continue to proactively evaluate capital market access and balance sheet positioning in advance of these maturities. In general, funding for long-term cash needs will come from unused net proceeds from financing activities, operating cash flows, refinancing existing debt, and proceeds from sales of investment in developmental real estate and real estate owned.
Previous wording
See Note 2 — Significant Accounting Policies — to our condensed consolidated financial statements for explanation of recent accounting pronouncements impacting us.
Current wording
See Note 2 — Significant Accounting Policies — to our unaudited condensed consolidated financial statements for explanation of recent accounting pronouncements impacting us.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The following table presents the calculation of our book value per common share (in thousands, except share and per share data):
Previous report — wording carried elsewhere
The decrease in book value per common share is primarily due to cash dividends declared and paid for thenine months ended September 30, 2025 on issued and outstanding common shares and Series A Preferred Stock totaling $10.4 million, or $0.22 per common share, partially offset by net income for thenine months ended September 30, 2025 of $3.8 million, or $0.08 per common share.