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Sachem Capital Corp.

Sachem Capital Corp.SACH财报

NYSE · 金融 · 房地产投资信托

Sachem Head Capital Management is an American value-oriented investment management firm based in New York City, managed by Scott Ferguson.

What changed in Sachem Capital Corp.'s 10-K — 2024 vs 2025

Top changes in Sachem Capital Corp.'s 2025 10-K

329 paragraphs added · 267 removed · 196 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

42 edited+6 added−3 removed53 unchanged
Our loans are referred to in the real estate finance industry as “hard money loans” primarily because they are secured by “hard” ( i.e., real estate) assets. Our mortgage loans are structured to fit the needs and business plans of the borrowers.
Our loans are referred to in the real estate finance industry as “hard money loans” primarily because they are secured by “hard” assets (i.e., real estate). Our mortgage loans are structured to fit the needs and business plans of the borrowers.
He is responsible for overseeing all aspects of our business operations, including investor relations, brand development and business development. Prior to starting Sachem, Mr. Villano was engaged in the private practice of accounting and auditing for almost 30 years. In December 2024, Jeffery C. Walraven was appointed to serve as our Interim Chief Financial Officer. Mr.
He is responsible for overseeing all aspects of our business operations, including investor relations, brand development and business development. Prior to starting Sachem, Mr. Villano was engaged in the private practice of accounting and auditing for almost 30 years. In December 2024, Jeffery C. Walraven was appointed to serve as our Interim Chief Financial Officer.
The amount of leverage we deploy depends on our assessment of a variety of factors, which may include the liquidity of the real estate market in which most of our collateral is located, employment rates, general economic conditions, the cost of funds relative to the yield curve, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, our opinion regarding the creditworthiness of our borrowers, the value of the collateral underlying our portfolio, and our outlook for interest rates and property values.
The amount of leverage we deploy depends on our assessment of a variety of factors, which may include the liquidity of the real estate market in which most of our collateral is located, employment rates, the cost of funds relative to the yield curve, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, our opinion regarding the creditworthiness of our borrowers, the value of the collateral underlying our portfolio, our outlook for interest rates and property values, and general economic conditions.
On February 9, 2017, we completed our initial public offering (the “IPO”) in which we issued and sold 2.6 million common shares, $.001 par value per share, (“Common Shares”).
On February 9, 2017, we completed our initial public offering (the “IPO”) in which we issued and sold 2.6 million common shares, $0.001 par value per share, (“Common Shares”).
Additionally, we have solidified strategic partnerships with banks and brokers, further expanding our network and providing a consistent pipeline of potential borrowers. These combined efforts ensure a balanced approach to loan origination, leveraging both digital innovation and established industry relationships to support sustainable growth. Intellectual Property Our business does not depend on exploiting or leveraging any intellectual property rights.
Additionally, we have solidified strategic partnerships with banks and brokers, further expanding our network and providing a consistent pipeline of potential borrowers. These combined efforts ensure a balanced approach to loan origination, leveraging both digital innovation and established industry relationships to support sustainable growth. Intellectual Property Our business does not depend on leveraging any intellectual property rights.
He has extensive experience with private and public real estate companies working on matters including capital markets, accounting and finance. 4 Table of Contents Our Origination Process and Underwriting Criteria Our executive management team possesses extensive experience in both residential and commercial mortgage lending, navigating various economic and market conditions with expertise.
Walraven has extensive experience with private and public real estate companies working on matters including capital markets, accounting and finance. 4 Table of Contents Our Origination Process and Underwriting Criteria Our executive management team possesses extensive experience in both residential and commercial mortgage lending, navigating various economic and market conditions with expertise.
Additionally, we assess the experience and qualifications of the borrower and their principals in real estate ownership, construction, development, and project management. As part of our due diligence, we engage third-party professionals and experts, including appraisers, engineers, title insurers, and attorneys, to ensure a thorough and informed decision- making process.
Additionally, we assess the experience and qualifications of the borrower and its principals in real estate ownership, construction, development, and project management. As part of our due diligence, we engage third-party professionals and experts, including appraisers, engineers, title insurers, and attorneys, to ensure a thorough and informed decision- making process.
Through our website, we make available, free of charge, our annual proxy statement, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish them to, the SEC. ​ ​ 12 Table of Contents
Through our website, we make available, free of charge, our annual proxy statement, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish them to, the SEC.
Escrow. Generally, none required. Reserves. Depending on the particular cash flow of a property, we may require the borrower to establish reserves for interest, taxes and/or insurance, particularly with respect to larger loans. Security. Each loan is evidenced by a promissory note, which is secured by a first mortgage lien on real property owned by the borrower.
Escrow. Generally, none required. Reserves. Depending on various factors, particularly the cash flow of a property, we may require the borrower to establish reserves for interest, taxes and/or insurance, particularly with respect to larger loans. Security. Each loan is evidenced by a promissory note, which is secured by a first mortgage lien on real property owned by the borrower.
Our qualification as a REIT depends on our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Code, relating to, among other things, the sources of our gross income, the composition and values of our assets, our compliance with the distribution requirements applicable to REITs and the diversity of ownership of our outstanding Common Shares.
Our qualification as a REIT depends on our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Code, relating to, among other things, the sources of our gross 11 Table of Contents income, the composition and values of our assets, our compliance with the distribution requirements applicable to REITs and the diversity of ownership of our outstanding Common Shares.
As a REIT, we are also subject to federal excise taxes and minimum state taxes. We intend to continue to operate in a manner that will permit us to maintain our exemption from registration under the Investment Company Act.
As a REIT, we may also be subject to federal excise taxes and minimum state taxes. We intend to continue to operate in a manner that will permit us to maintain our exemption from registration under the Investment Company Act.
See Item 1A – Risk Factors for additional REIT qualification and tax status information. 11 Table of Contents Regulation Our operations are subject, in certain instances, to supervision and regulation by state and federal governmental authorities and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions.
See Item 1A – Risk Factors for additional REIT qualification and tax status information. Regulation Our operations are subject, in certain instances, to supervision and regulation by state and federal governmental authorities and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions.
However, in all instances the properties are held only for investment by the borrowers and may or may not generate cash flow. 7 Table of Contents As of December 31, 2024, the primary markets in which we were exposed were Connecticut, Florida, Massachusetts and New York.
However, for all loans, the properties are held only for investment by the borrowers and may or may not generate cash flow. 7 Table of Contents As of December 31, 2025, the primary markets in which we were exposed were Connecticut, Florida, Massachusetts and New York.
Business Overview and Investment Strategy We are a Connecticut-based real estate finance company that specializes in originating, underwriting, funding, servicing and managing a portfolio of short-term ( i.e., typically three years or less) loans secured by first mortgage liens on real property.
Business Overview and Investment Strategy We are a Connecticut-based real estate finance company that specializes in originating, underwriting, funding, servicing and managing a portfolio of short-term (i.e. , one to three years) loans secured by first mortgage liens on real property.
Finally, any loan with an original principal amount exceeding $5 million must be approved by our board of directors (the “Board”). Loan-to-Value Ratio; Loan to Cost Ratio. Our underwriting guidelines provide that the original principal amount of a loan should not exceed 70% of the fair market value of the property securing the loan.
In addition, any loan with an original principal amount exceeding $5 million must be approved by the Board. Loan-to-Value Ratio; Loan to Cost Ratio. Our underwriting guidelines provide that the original principal amount of a loan should not exceed 70% of the fair market value of the property securing the loan.
Depending on various factors we may, in the future, decide to take on additional debt to expand our mortgage loan origination activities to increase the potential returns to our shareholders.
We may, in the future, decide to take on additional debt to expand our mortgage loan origination activities to increase the potential returns to our shareholders.
In addition, through our marketing efforts, we are beginning to develop a brand identity in some of the other markets in which we operate, particularly those along the eastern seaboard. We believe we have developed a reputation among these borrowers for offering reasonable terms and providing outstanding customer service.
In addition, through our marketing efforts, we have developed a brand identity in some of the other markets in which we operate, particularly those along the eastern seaboard of the United States. We believe we have developed a reputation among borrowers in these markets for offering reasonable terms and providing outstanding customer service.
Employees As of December 31, 2024, we had 29 employees, of which 28 were full-time. Taxation - REIT Qualification We believe that we have qualified as a REIT since the consummation of the IPO and that it is in the best interests of our shareholders that we continue to operate as a REIT.
Employees As of December 31, 2025, we had 27 employees, of which 26 were full-time. Taxation - REIT Qualification We believe that we have qualified as a REIT since the consummation of the IPO and that it is in the best interests of our shareholders that we continue to operate as a REIT.
We rely on readily available market data, including independent appraisals, Automated Valuation Models, trailing twelve month financial statements, rent rolls (if applicable), recent sales transactions, and broker insights, to assess the value of the collateral. Additionally, the asset management team reviews the construction aspects of the project.
We rely on readily available market data, including independent appraisals, Automated Valuation Models, trailing twelve month financial statements, rent rolls (if applicable), recent sales transactions and broker insights, to assess the value of the collateral. Additionally, if the property securing our loan is in development or being renovated, our asset management team reviews the construction aspects of the project.
At December 31, 2024, our loan portfolio included 63 loans with future funding obligations, having a funded outstanding principal amount of $316.5 million and $49.9 million unfunded pending borrower performance. Advances under these loans are funded against requests supported by all required documentation (including lien waivers) as and when needed to pay contractors and other costs of construction.
At December 31, 2025, our loan portfolio included 43 loans with future funding obligations, having a funded outstanding principal amount of $198.8 million and unfunded obligations of $37.2 million pending borrower performance. Advances under these loans are funded against requests supported by all required documentation (including lien waivers) as and when needed to pay contractors and other costs of construction.
This team meets with the borrower, its principals, and the General Contractor to understand the project scope, timelines, and any potential constraints. The asset management team continues to monitor and oversee the project until its completion. We conduct thorough due diligence by ordering title, lien, and judgement searches.
The members of the asset management team meet with the borrower, its principals, and the general contractor to understand the project scope, timelines, and any potential risks associated with the project. The asset management team continues to monitor and oversee the project until its completion. We conduct thorough due diligence by ordering title, lien, and judgment searches.
If we were required to register as an investment company under the Investment Company Act, we would be subject to substantial regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration, and other matters.
If we were required to register as an investment company under the Investment Company Act, we would be subject to substantial regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration, and other matters. 12 Table of Contents Qualification for exclusion from the definition of an investment company under the Investment Company Act will limit our ability to make certain investments.
The table below gives a breakdown of our loans held for investment by loan size as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate Gross ​ ​ ​ Number of ​ ​ ​ Principal ​ ​ ​ Amount Loans Percentage Amount Percentage ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ $1,000,000 or less 75 ​ 47.8 % $ 30,629 ​ 8.1 % $1,000,001 to $5,000,000 65 ​ 41.4 % 146,939 ​ 39.0 % $5,00,001 to $10,000,000 8 ​ 5.1 % 51,831 ​ 13.7 % $10,000,001 or more 9 ​ 5.7 % 147,592 ​ 39.2 % Total 157 ​ 100.0 % $ 376,991 ​ 100.0 % ​ Most of our loans are funded in full at closing.
The table below gives a breakdown of our loans held for investment by loan size as of December 31, 2025 and 2024: December 31, 2025 December 31, 2024 Amount Number of Loans Percentage Aggregate Gross Principal Amount Percentage Number of Loans Percentage Aggregate Gross Principal Amount Percentage (in thousands) (in thousands) $1,000,000 or less 49 42.6 % $ 21,109 5.6 % 75 47.8 % $ 30,629 8.1 % $1,000,001 to $5,000,000 46 40.0 % 108,128 28.6 % 65 41.4 % 146,939 39.0 % $5,000,001 to $10,000,000 10 8.7 % 64,833 17.2 % 8 5.1 % 51,831 13.7 % $10,000,001 or more 10 8.7 % 183,348 48.6 % 9 5.7 % 147,592 39.2 % Total 115 100.0 % $ 377,418 100.0 % 157 100.0 % $ 376,991 100.0 % Most of our loans are funded in full at closing.
Our principal competitive advantages include our experience, our reputation, our size and our ability to address the needs of borrowers in terms of timing and structuring loan transactions. 10 Table of Contents Notwithstanding intense competition and some of our competitive disadvantages, we believe we have carved a niche for ourselves among small and mid-size real estate developers, owners and contractors in the markets in which we operate because we are well-capitalized, we have demonstrated flexibility to structure loans to suit the needs of the individual borrower and we can act quickly.
Notwithstanding intense competition and some of our competitive disadvantages, we believe we have carved a niche for ourselves among small and mid-size real estate developers, owners and contractors in the markets in which we operate because we are well-capitalized, we have demonstrated flexibility to structure loans to suit the needs of the individual borrower and we can act quickly.
At December 31, 2024, debt represented 62.0% of our total capital compared to 60.4% at December 31, 2023.
At December 31, 2025, debt represented 61.4% of our total capital compared to 62.4% at December 31, 2024.
We will continue to selectively originate loans and carefully manage our loan portfolio in a manner designed to generate attractive risk-adjusted returns across a variety of market conditions, economic cycles and high-growth geographies. Management John L. Villano, CPA, is our founder, Chairman, President and Chief Executive Officer.
We will continue to selectively originate loans and carefully manage our loan portfolio in a manner designed to generate attractive risk-adjusted returns across a variety of market conditions, economic cycles and high-growth geographies.
Investments in limited liability companies As of December 31, 2024, we had investments in limited liability companies of $53.9 million, consisting of limited liability membership equity investments in real estate note-on-note mortgage investment vehicles, direct investments in real estate, and a direct investment in an real estate asset manager. For further information, see Note 17 – Limited Liability Company Investments.
Investments in limited liability companies As of December 31, 2025, we had investments in limited liability companies of $39.1 million, consisting of limited liability membership equity investments in real estate note-on-note mortgage investment vehicles, direct investments in real estate, and a direct investment in an real estate asset manager.
We do not have any formal policy limiting the amount of indebtedness we may incur, but under the terms of the loan documents related to our various credit facilities, including the indenture covering our unsecured unsubordinated five-year notes (the “Notes”), we are required to maintain total assets exceeding 150% of our total liabilities.
However, under the terms of the loan documents related to our various credit facilities, including the indenture covering our unsecured unsubordinated five-year notes (the “Notes”), we are required to maintain total assets exceeding 150% of our total liabilities.
Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income. Furthermore, we have a taxable REIT subsidiary (“TRS”), which pays U.S. federal, state, and local taxes on its net taxable income.
Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income. Sachem Opportunities Corp., a wholly-owned subsidiary of Sachem Capital Corp., is our taxable REIT subsidiary (“TRS”). As such, it pays U.S. federal, state, and local taxes on its net taxable income.
Our operating income in the future will depend on how much capital we raise and the spread between our cost of capital and the effective yield on our loan portfolio.
Our operating income in the future will depend on how much capital we raise and the spread between our cost of capital and the effective yield on our loan portfolio. We do not have any formal policy limiting the amount of indebtedness we may incur.
We are providing the address to our website solely for information purposes. The information on our website is not a part of, and is it incorporated by reference into, this Report.
The information on our website is not a part of, and is not incorporated by reference into, this Report.
Competition The real estate finance markets in which we operate are highly competitive. Competition is becoming more of a factor as we implement our strategy to focus on larger loans and more sophisticated borrowers.
Competition is becoming more of a factor as we implement our strategy to focus on larger loans and more sophisticated borrowers.
This evaluation encompasses factors such as the local market conditions, the current and potential alternative uses of the property, the existing and projected net incomes, sales data for comparable properties, applicable zoning regulations, and the creditworthiness of the borrower and principals.
This evaluation considers multiple factors that impact value, including, without limitation, local market conditions, the current and potential alternative uses of the property, the existing and projected net income generated by the property, sales data for comparable properties, applicable zoning regulations and the creditworthiness of the borrower and its principals.
The table below gives a breakdown of our loans held for investment by state as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Gross Amount ​ State ​ Loans ​ Percentage ​ Outstanding ​ Percentage ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ California 1 ​ 0.6 % $ 4,101 1.1 % Connecticut 84 ​ 53.6 % 129,787 34.4 % Florida ​ 23 ​ 14.7 % ​ 115,232 ​ 30.6 % Georgia ​ 1 ​ 0.6 % ​ 3,840 ​ 1.0 % Maine ​ 1 ​ 0.6 % ​ 1,625 ​ 0.4 % Maryland ​ 1 ​ 0.6 % ​ 864 ​ 0.2 % Massachusetts 9 ​ 5.8 % 46,121 12.2 % New Jersey 1 ​ 0.6 % 2,240 0.6 % New York 21 ​ 13.5 % 33,166 8.8 % North Carolina 4 ​ 2.5 % 7,764 2.1 % Pennsylvania 2 ​ 1.3 % 4,850 1.4 % Rhode Island 3 ​ 1.9 % 1,888 0.5 % South Carolina 4 ​ 2.5 % 12,461 3.3 % Tennessee ​ 1 ​ 0.6 % ​ 11,868 ​ 3.1 % Washington D.C. ​ 1 ​ 0.6 % ​ 1,184 ​ 0.3 % Total 157 ​ 100.0 % $ 376,991 100.0 % ​ The following table details our loans held for investment as of December 31, 2024 by year of origination: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate Gross ​ ​ ​ Number of ​ ​ Principal ​ ​ ​ Year of Origination Loans Percentage Amount Percentage ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ 2024 36 22.9 % $ 46,786 ​ 12.4 % 2023 31 ​ 19.7 % ​ 83,704 ​ 22.2 % 2022 34 ​ 21.7 % 80,349 ​ 21.3 % 2021 33 ​ 21.0 % 148,773 ​ 39.5 % 2020 8 ​ 5.1 % 9,879 ​ 2.6 % 2019 ​ 6 ​ 3.9 % ​ 3,752 ​ 1.0 % 2018 and prior 9 ​ 5.7 % 3,748 ​ 1.0 % Total 157 ​ 100.0 % $ 376,991 ​ 100.0 % ​ The following tables set forth information regarding the types of properties securing loans held for investment at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2024 ​ 2023 ​ ​ ​ (in thousands) ​ ​ ​ Aggregate Gross Principal ​ ​ ​ Aggregate Gross Principal ​ ​ ​ ​ Amount Percentage Amount Percentage ​ Residential ​ $ 211,939 ​ 56.2 % $ 246,520 ​ 49.4 % Commercial ​ ​ 95,509 ​ 25.3 % 186,524 ​ 37.4 % Pre-Development Land ​ 23,466 ​ 6.2 % 35,920 ​ 7.2 % Mixed Use ​ 46,077 ​ 12.3 % 30,271 ​ 6.0 % Total ​ $ 376,991 ​ 100.0 % $ 499,235 ​ 100.0 % ​ 8 Table of Contents Allowance for Credit Losses Our allowance for credit losses is influenced by historical loss experience, current exposure by geographical region, current expected credit losses on loans in foreclosure based on fair value less cost to sell, non-performing status, and other supportable forecasts of economic conditions.
The table below gives a breakdown of our loans held for investment by state as of December 31, 2025: State Number of Loans Percentage Gross Principal Outstanding Percentage (in thousands) Connecticut 48 41.8 % $ 101,019 26.9 % Florida 16 13.9 % 114,198 30.3 % Georgia 2 1.7 % 5,040 1.3 % Maine 2 1.7 % 914 0.2 % Maryland 2 1.7 % 3,073 0.8 % Massachusetts 10 8.7 % 59,569 15.8 % New Jersey 3 2.6 % 3,581 0.9 % New York 17 14.8 % 30,944 8.2 % North Carolina 4 3.5 % 25,374 6.7 % Pennsylvania 3 2.6 % 4,969 1.3 % Rhode Island 2 1.7 % 1,547 0.4 % South Carolina 4 3.5 % 12,603 3.3 % Tennessee 1 0.9 % 13,227 3.5 % Washington D.C. 1 0.9 % 1,360 0.4 % Total 115 100.0 % $ 377,418 100.0 % The following table details our loans held for investment as of December 31, 2025 by year of origination: Year of Origination Number of Loans Percentage Aggregate Gross Principal Amount Percentage (in thousands) 2025 24 20.9 % $ 87,991 23.3 % 2024 17 14.8 % 31,430 8.3 % 2023 21 18.3 % 83,379 22.1 % 2022 19 16.5 % 43,547 11.5 % 2021 24 20.9 % 122,525 32.5 % 2020 4 3.5 % 6,255 1.7 % 2019 and prior 6 5.1 % 2,291 0.6 % Total 115 100.0 % $ 377,418 100.0 % 8 Table of Contents The following tables set forth information regarding the types of properties securing loans held for investment at December 31, 2025 and 2024: At December 31, 2025 2024 (in thousands) Aggregate Gross Principal Amount Percentage Aggregate Gross Principal Amount Percentage Residential $ 202,234 53.6 % $ 211,939 56.2 % Commercial 110,178 29.2 % 95,509 25.3 % Pre-Development Land 17,977 4.8 % 23,466 6.3 % Mixed Use 47,029 12.4 % 46,077 12.2 % Total $ 377,418 100.0 % $ 376,991 100.0 % Allowance for Credit Losses Our allowance for credit losses is influenced by historical loss experience, current exposure by geographical region, current expected credit losses on loans in foreclosure based on fair value less cost to sell, non-performing status, and other supportable forecasts of economic conditions.
Qualification for exclusion from the definition of an investment company under the Investment Company Act will limit our ability to make certain investments. In addition, complying with the tests for such exclusion could restrict the time at which we can acquire and sell assets. Available Information We maintain a website at www.sachemcapitalcorp.com .
In addition, complying with the tests for such exclusion could restrict the time at which we can acquire and sell assets. Available Information We maintain a website at www.sachemcapitalcorp.com . We are providing the address to our website solely for information purposes.
We expect to maintain our current level of debt and are always looking to attempt to reduce our cost of capital. 6 Table of Contents Our Loan Portfolio The following table highlights certain information regarding our real estate lending activities for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and For the Years Ended ​ ​ ​ December 31, ​ ​ ​ (in thousands, except number of loans and weighted averages) ​ ​ 2024 2023 Loans disbursed ​ $ 134,298 ​ $ 204,885 ​ Loans repaid ​ $ 190,971 ​ $ 167,036 ​ Principal of loans sold ​ $ 55,838 ​ $ — ​ Number of loans sold ​ ​ 32 ​ ​ — ​ Principal of loans transferred to real estate owned ​ $ 28,639 ​ $ 1,749 ​ Number of loans transferred to real estate owned ​ ​ 22 ​ ​ 4 ​ Number of loans held for investment outstanding ​ 157 ​ 311 ​ Gross principal amount of loans held for investment ​ $ 376,991 ​ $ 499,235 ​ Weighted average contractual interest rate (1) ​ 12.53 % 12.56 % Weighted average term to maturity (in months) (2) ​ 4 ​ 6 ​ (1) Includes default interest.
We have no current plans to increase our leverage; however, we are always open to reducing our cost of capital. 6 Table of Contents Our Loan Portfolio The following table highlights certain information regarding our real estate lending activities for the periods indicated: As of and For the Years Ended December 31, (in thousands, except number of loans and weighted averages) 2025 2024 Loans disbursed (1) $152,616 $134,298 Loans originated 30 41 Loan repayments $162,689 $184,853 Loans repaid 69 130 Principal amount of loans sold $5,085 $55,838 Number of loans sold 3 32 Principal amount of loans transferred to real estate owned $22,141 $28,639 Number of loans transferred to real estate owned 13 22 Number of loans held for investment outstanding 115 157 Gross principal amount of loans held for investment $377,418 $376,991 Weighted average contractual interest rate (2) 13.10% 12.53% Weighted average term to maturity (in months) (3) 8 4 __________________________ (1) Includes new originations, modifications, and draws.
The following table details the carrying value of each of our real estate owned properties reflected on our consolidated balance sheets as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Month of Carrying Property Type Location Acquisition Value ​ ​ ​ ​ ​ ​ ​ (in thousands) Commercial – Restaurant Bristol, CT March 2019 $ 750 Land Bristol, CT December 2019 ​ 1,406 Land Derby, CT March 2022 ​ 30 Land Sturbridge, MA November 2022 ​ 110 Residential – Single Family Bellingham, MA December 2023 ​ 293 Land Stamford, CT May 2024 ​ 115 Land Stamford, CT May 2024 ​ 115 Residential – Multi Family Westbrook, ME September 2024 ​ 298 Residential – Multi Family South Portland, ME September 2024 ​ 550 Mixed Use Casco, ME September 2024 ​ 300 Land Cape Coral, FL October 2024 ​ 600 Land Cape Coral, FL October 2024 ​ 900 Land Cape Coral, FL October 2024 ​ 350 Land Cape Coral, FL October 2024 ​ 350 Residential – Multi Family Flagler Beach, FL October 2024 ​ 3,382 Residential – Single Family Gainesville, FL November 2024 ​ 925 Mixed Use New London, CT November 2024 ​ 1,750 Land New London, CT November 2024 ​ 2,500 Commercial – Office Windsor, CT December 2024 ​ 1,600 Commercial – Office Windsor, CT December 2024 ​ 2,250 Total ​ ​ ​ ​ $ 18,574 ​ For further information, see Note 6 – Real Estate Owned (REO).
The following table details the carrying value of each of our real estate owned properties reflected on our Consolidated Balance Sheets as of December 31, 2025: Property Type Location Month of Acquisition Carrying Value (in thousands) Commercial - Restaurant Bristol, CT March 2019 $ 750 Land Bristol, CT December 2019 1,050 Residential - Single Family Bellingham, MA December 2023 293 Residential - Multi Family Flagler Beach, FL October 2024 3,382 Commercial - Office Windsor, CT December 2024 1,400 Commercial - Office Windsor, CT December 2024 2,000 Land Marathon, FL January 2025 410 Commercial - Office Baltimore, MD July 2025 644 Mixed Use Cumberland Center, ME July 2025 270 Commercial - Office Wilton, CT September 2025 1,338 Commercial - Office Wilton, CT September 2025 334 Residential - Multi Family Jacksonville, FL October 2025 2,400 Residential - Multi Family Daytona Beach, FL October 2025 2,038 Residential - Single Family Ansonia, CT December 2025 93 Total $ 16,402 For further information, see Note 6 – Real Estate Owned (REO) — to our consolidated financial statements for the year ended December 31, 2025.
The following table presents the allowance for credit losses against unpaid principal balance of loans held for investment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2024 2023 ​ ​ (in thousands ) ​ ​ ​ ​ ​ ​ ​ ​ Percentage of ​ ​ ​ ​ ​ ​ ​ Percentage of ​ ​ Aggregate Gross ​ ​ ​ ​ Respective ​ Aggregate Gross ​ ​ ​ ​ Respective ​ ​ Principal Amount ​ Allowance Principal Principal Amount ​ Allowance Principal ​ Performing & Non-performing – General reserve ​ $ 282,910 ​ $ (5,147) ​ 1.8 % $ 350,922 ​ $ (2,360) ​ 0.7 % Non-performing – Direct reserves ​ ​ 57,808 ​ ​ (7,265) ​ 12.6 % 84,592 ​ ​ — ​ — % Non-performing in Foreclosure – Direct reserves ​ 36,273 ​ (6,058) 16.7 % 63,721 ​ (5,163) 8.1 % Total ​ $ 376,991 ​ $ (18,470) ​ ​ ​ $ 499,235 ​ $ (7,523) ​ ​ For further information, see Note 4 – Loans and Allowance for Credit Losses.
The following table presents the allowance for credit losses against unpaid principal balance of loans held for investment: At December 31, 2025 2024 (in thousands ) Aggregate Gross Principal Amount Allowance Percentage of Respective Principal Aggregate Gross Principal Amount Allowance Percentage of Respective Principal Performing – General reserve $ 259,833 $ (4,785) 1.8 % $ 289,909 $ (5,051) 1.7 % Non-performing – General reserve 25,945 (477) 1.8 % 5,396 (96) 1.8 % Non-performing – Direct reserves 54,134 (2,054) 3.8 % 57,808 (7,265) 12.6 % Non-performing in Foreclosure – Direct reserves 37,506 (4,194) 11.2 % 23,878 (6,058) 25.4 % Non-performing subtotal $ 117,585 $ (6,725) 5.7 % $ 87,082 $ (13,419) 15.4 % Total $ 377,418 $ (11,510) 3.0 % $ 376,991 $ (18,470) 4.9 % For further information, see Note 4 – Loans and Allowance for Credit Losses.
Walraven joined us in August 2024 as a member of the Board. Prior to his appointment as Interim Chief Financial Officer, he was also a member of the Audit, Compensation and Nominating and Corporate Governance Committees of the Board. In connection with this appointment, he resigned as a member of all the committees.
He was named Executive Vice President and Chief Financial Officer effective September 1, 2025. Mr. Walraven joined us in August 2024 as a member of our board of directors (the "Board")and a member of the Board's Audit, Compensation and Nominating and Corporate Governance committees.
(2) Does not give effect to extensions. At December 31, 2024, our outstanding mortgage loan portfolio included loans ranging in size from $35,000 to $42.9 million.
(2) Includes default interest. (3) Does not give effect to extensions. At December 31, 2025 and 2024, our outstanding mortgage loan portfolio included loans with outstanding principal balances up to $38.3 million.
Fifteen of such properties were acquired during the year ended December 31, 2024 in connection with foreclosure actions.
Real Estate Owned As of December 31, 2025, we owned fourteen properties, each of which previously served as collateral for first mortgage loans. Thirteen properties were acquired during the year ended December 31, 2025 in connection with foreclosure actions. Thirteen properties were sold during the year ended December 31, 2025.
The following table details the carry value of our investment in rental real estate owned property reflected on our consolidated balance sheets as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Month of Carrying Property Type ​ Location ​ Acquisition Value ​ ​ ​ ​ ​ ​ (in thousands) Commercial – Office space and Condominiums Westport, CT June 2023 $ 14,032 Total ​ ​ ​ ​ $ 14,032 ​ For further information, see Note 5 – Investment in Rental Real Estate, Net. 9 Table of Contents Real Estate Owned As of December 31, 2024, we owned twenty properties, each of which previously served as collateral for first mortgage loans.
The projects are in various phases of completion. 9 Table of Contents The following table details the carry value of our investment in rental real estate owned property reflected on our Consolidated Balance Sheets as of December 31, 2025: Property Type Location Month of Acquisition Carrying Value (in thousands) Commercial Branford, CT July 2025 $ 1,541 Residential - Single family (3 parcels) Old Lyme, CT May 2025 1,910 Residential - Multifamily (1 parcel) East Windsor, CT March 2025 2,037 Residential - Multifamily (2 parcels) New London, CT November 2024 4,250 Accumulated depreciation (19) Total $ 9,719 For further information, see Note 5 – Investment in Developmental Real Estate, Net — to our consolidated financial statements for the year ended December 31, 2025.
Removed
Investment in Rental Real Estate As of December 31, 2024, we owned one property that was purchased for the sole purpose of an investment in rental real estate, and is currently in final phases of construction renovation. On February 15, 2025, we commenced a lease agreement for approximately 51% of the gross leasable space of 49,041 square feet.
Added
In addition to originating and servicing loans, we may from time to time reposition and develop real estate acquired through foreclosure or intentional acquisition where management believes value creation opportunities exist. Management John L. Villano, CPA, is our founder, Chairman, President and Chief Executive Officer.
Removed
This property also has an approved residential development component, which as of the date of this report, is currently in the planning stage.
Added
In connection with his interim appointment, he resigned as a member of all the committees and in connection with his permanent appointment, he resigned his board membership. Mr.
Removed
Over the last few years, as banks have pulled back from the lending market, non-traditional lenders, such as non - bank real estate companies, hedge funds, private equity funds and insurance companies, have stepped into the void.
Added
Investment in Developmental Real Estate As of December 31, 2025, we owned seven properties that were classified as investments in developmental real estate.
Added
Five properties were transferred from real estate owned to investment in developmental real estate during the year ended December 31, 2025.
Added
For further information, see Note 17 – Limited Liability Company Investments — to our consolidated financial statements for the year ended December 31, 2025. 10 Table of Contents Competition The real estate finance markets in which we operate are highly competitive.
Added
Our principal competitive advantages include our experience, our reputation, our size and our ability to address the needs of borrowers in terms of timing and structuring loan transactions.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

133 edited+50 added−35 removed211 unchanged
If we are forced to liquidate our assets to pay our creditors, we may not have sufficient assets to pay amounts due with respect to the outstanding shares of the Series A Preferred Stock.
If we are forced to liquidate our assets to pay our creditors, we may not have sufficient assets to pay amounts due with respect to the outstanding shares of Series A Preferred Stock.
Other than the limited circumstances described in our certificate of incorporation, as amended, holders of shares of Series A Preferred Stock will not have any voting rights. Future sales of substantial amounts of Series A Preferred Stock, or the possibility that such sales could occur, could adversely affect the market price of the Series A Preferred Stock.
Other than the limited circumstances described in our certificate of incorporation, as amended, holders of shares of Series A Preferred Stock will not have any voting rights. Future 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 Stock.
Our substantial outstanding indebtedness, and the limitations imposed on us by our debt agreements, could have other significant adverse consequences, including the following: ● our cash flow may be insufficient to meet our required principal and interest payments; ● we may use a substantial portion of our cash flows to make principal and interest payments and we may be unable to obtain additional financing as needed or on favorable terms, which could, among other things, have a material adverse effect on our ability to capitalize upon acquisition opportunities, fund working capital, make capital expenditures, make cash distributions to our shareholders, or meet our other business needs; ● we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; 25 Table of Contents ● we may be forced to dispose of assets, possibly on unfavorable terms or in violation of certain covenants to which we may be subject in order to pay debt obligations when due; ● our financial flexibility may be diminished as a result of various covenants including debt and coverage and other financial ratios; ● our vulnerability to general adverse economic and industry conditions may be increased; ● we may be at a competitive disadvantage relative to our competitors that have less indebtedness; and ● our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate may be limited and we may default on our indebtedness by failure to make required payments or violation of covenants, which would entitle holders of such indebtedness, and possibly other indebtedness, to accelerate the maturity of their indebtedness and to foreclose on our mortgages receivable that secure their loans.
Our substantial outstanding indebtedness, and the limitations imposed on us by our debt agreements, could have other significant adverse consequences, including the following: • our cash flow may be insufficient to meet our required principal and interest payments; • we may use a substantial portion of our cash flows to make principal and interest payments and we may be unable to obtain additional financing as needed or on favorable terms, which could, among other things, have a material adverse effect on our ability to capitalize upon acquisition opportunities, fund 24 Table of Contents working capital, make capital expenditures, make cash distributions to our shareholders, or meet our other business needs; • we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; • we may be forced to dispose of assets, possibly on unfavorable terms or in violation of certain covenants to which we may be subject in order to pay debt obligations when due; • our financial flexibility may be diminished as a result of various covenants including debt and coverage and other financial ratios; • our vulnerability to general adverse economic and industry conditions may be increased; • we may be at a competitive disadvantage relative to our competitors that have less indebtedness; and • our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate may be limited and we may default on our indebtedness by failure to make required payments or violation of covenants, which would entitle holders of such indebtedness, and possibly other indebtedness, to accelerate the maturity of their indebtedness and to foreclose on our mortgages receivable that secure their loans.
Because the Churchill Credit Facility and the NHB Mortgage have, and any future credit facilities may have, customary cross-default provisions, if repayment of any outstanding indebtedness, such as the Notes, the Churchill Facility, the NHB Mortgage, the Needham Credit Facility or any future credit facility, is accelerated, we may be unable to repay or finance the amounts due.
Because the NHB Mortgage have, and any future credit facilities may have, customary cross-default provisions, if repayment of any outstanding indebtedness, such as the Notes, the NHB Mortgage, the Needham Credit Facility or any future credit facility, is accelerated, we may be unable to repay or finance the amounts due.
Acquisitions, in general, involve a high degree of risk including the following: ● we could incur significant expenses for due diligence, document preparation and other pre-closing activities and then fail to consummate the acquisition; ● we could overpay for the business or assets acquired; ● there may be hidden liabilities that we failed to uncover prior to the consummation of the acquisition; ● the demands on management’s time related to the acquisition will detract from their ability to focus on the operation of our business; and 22 Table of Contents ● challenges or difficulties in integrating the acquired business or assets into our existing platform.
Acquisitions, in general, involve a high degree of risk including the following: • we could incur significant expenses for due diligence, document preparation and other pre-closing activities and then fail to consummate the acquisition; 21 Table of Contents • we could overpay for the business or assets acquired; • there may be hidden liabilities that we failed to uncover prior to the consummation of the acquisition; • the demands on management’s time related to the acquisition will detract from their ability to focus on the operation of our business; and • challenges or difficulties in integrating the acquired business or assets into our existing platform.
Except in limited circumstances, the terms of the indenture and the Notes do not restrict our ability to: ● issue securities or otherwise incur additional indebtedness or other obligations, including (i) any indebtedness or other obligations that would be equal in right of payment to the Notes, (ii) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (iii) indebtedness that we incur that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (iv) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in those entities and therefore rank structurally senior to the Notes with respect to the assets of these entities; ● pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the Notes, including subordinated indebtedness; ● sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets); ● enter into transactions with affiliates; 28 Table of Contents ● create liens or enter into sale and leaseback transactions; ● make investments; or ● create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
Except in limited circumstances, the terms of the indenture and the Notes do not restrict our ability to: • issue securities or otherwise incur additional indebtedness or other obligations, including (i) any indebtedness or other obligations that would be equal in right of payment to the Notes, (ii) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (iii) indebtedness that we incur that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (iv) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in those entities and therefore rank structurally senior to the Notes with respect to the assets of these entities; • pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the Notes, including subordinated indebtedness; • sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets); • enter into transactions with affiliates; • create liens or enter into sale and leaseback transactions; • make investments; or • create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
In addition, whether the real estate is held for sale or for rental, if it is income producing property, the net operating income can be adversely affected by, among other things: ● tenant mix; ● success of tenant businesses; ● the performance, actions and decisions of operating partners and the property managers they engage in the day-to-day management and maintenance of the property; ● property location, condition and design; ● new construction of competitive properties; ● a surge in homeownership rates; ● changes in laws that increase operating expenses or limit rents that may be charged; ● changes in specific industry segments, including the labor, credit and securitization markets; ● declines in regional or local real estate values; ● declines in regional or local rental or occupancy rates; ● increases in interest rates, real estate taxes, energy costs and other operating expenses; ● costs of remediation and liabilities associated with environmental conditions; ● the potential for uninsured or underinsured property losses; and ● the risks particular to real property.
In addition, whether the real estate is held for sale or for rental, if it is income producing property, the net operating income can be adversely affected by, among other things: • tenant mix; • success of tenant businesses; • the performance, actions and decisions of operating partners and the property managers they engage in the day-to-day management and maintenance of the property; 18 Table of Contents • property location, condition and design; • new construction of competitive properties; • a surge in homeownership rates; • changes in laws that increase operating expenses or limit rents that may be charged; • changes in specific industry segments, including the labor, credit and securitization markets; • declines in regional or local real estate values; • declines in regional or local rental or occupancy rates; • increases in interest rates, real estate taxes, energy costs and other operating expenses; • costs of remediation and liabilities associated with environmental conditions; • the potential for uninsured or underinsured property losses; and • the risks particular to real property.
Upon the occurrence of a Change of Control, each holder of shares of Series A Preferred Stock will have the right (unless, prior to the Change of Control Conversion Date (as defined in our certificate of incorporation, as amended), we have provided notice of our election to redeem some or all of the shares of Series A Preferred Stock held by such holder, in which case such holder will have the right only with respect to shares of Series A Preferred Stock that are not called for redemption) to convert some or all of such holder’s shares of Series A Preferred Stock into our Common Shares (or under specified circumstances certain alternative consideration).
Upon the occurrence of a “Change of Control” (as defined in our certificate of incorporation, as amended), each holder of shares of Series A Preferred Stock will have the right (unless, prior to the Change of Control Conversion Date (as defined in our certificate of incorporation, as amended), we have provided notice of our election to redeem some or all of the shares of Series A Preferred Stock held by such holder in which case such holder will have the right only with respect to shares of Series A Preferred Stock that are not called for redemption) to convert some or all of such holder’s shares of Series A Preferred Stock into our Common Shares (or under specified circumstances certain alternative consideration).
If we do not elect to redeem the Series A Preferred Stock prior to the Change of Control Conversion Date, then upon an exercise of their conversion rights, the holders of Series A Preferred Stock will be limited to a maximum number of our Common Shares (or, if applicable, the Alternative Conversion Consideration (as defined in our certificate of incorporation, as amended)) equal to the lesser of (a) the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of Series A Preferred Stock plus the amount of any accumulated and unpaid dividends thereon to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a dividend record date and prior to the corresponding dividend payment date for the Series A Preferred Stock, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price (as defined in our certificate of incorporation, as amended); and (b) 25.00, multiplied by the number of shares of Series A Preferred Stock converted.
If we do not elect to redeem the Series A Preferred Stock prior to the Change of Control Conversion Date, then upon an exercise of their conversion rights, the holders of Series A Preferred Stock will be limited to a maximum number of our Common Shares (or, if applicable, the Alternative Conversion Consideration (as defined in our certificate of 30 Table of Contents incorporation, as amended)) equal to the lesser of (a) the quotient obtained by dividing (i) the sum of (A) the $25.00 liquidation preference per share of Series A Preferred Stock plus (B) the amount of any accumulated and unpaid dividends thereon to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a dividend record date and prior to the corresponding dividend payment date for the Series A Preferred Stock, in which case no additional amount for such accrued and unpaid dividend will be included in this sum) by (ii) the Common Stock Price (as defined in our certificate of incorporation, as amended); and (b) 25.00, multiplied by the number of shares of Series A Preferred Stock converted.
There is no assurance that we will remain in compliance with these standards. Delisting from the NYSE American would adversely affect our ability to raise additional financing through the public or private sale of equity securities, significantly affect the ability of investors to trade our securities and negatively affect the value and liquidity of our common stock.
There is no assurance that we will remain in compliance with these standards. Delisting from the NYSE American would adversely affect our ability to raise additional financing through the public or private sale of equity securities, significantly affect the ability of investors to trade our securities and negatively affect the value and liquidity of our Common Shares.
If there is a material breach in any of theses representations and warranties, we may be liable for any damages incurred by the buyer as a result of such breach or we may be obligated to repurchase one or more of the sold loans that is directly impacted by the breach or replace the impacted loan with another loan.
If there is a material breach in any of these representations and warranties, we may be liable for any damages incurred by the buyer as a result of such breach or we may be obligated to repurchase one or more of the sold loans that is directly impacted by the breach or replace the impacted loan with another loan.
Moreover, we committed in connection with the sale of securities to use commercially reasonable efforts to maintain the listing of our common stock during such time that certain warrants are outstanding. Risks Related to Regulatory Matters Maintenance of our Investment Company Act exemption imposes limits on our operations.
Moreover, we committed in connection with the sale of securities to use commercially reasonable efforts to maintain the listing of our Common Shares during such time that certain warrants are outstanding. Risks Related to Regulatory Matters Maintenance of our Investment Company Act exemption imposes limits on our operations.
Our organizational documents contain no limitations regarding the maximum level of indebtedness, whether as a percentage of our market capitalization or otherwise, that we may incur. The amount of leverage that we employ depends on managements assessment of market and other factors at the time of any proposed borrowing.
Our organizational documents contain no limitations regarding the maximum level of indebtedness, whether as a percentage of our market capitalization or otherwise, that we may incur. The amount of leverage that we employ depends on management's assessment of market and other factors at the time of any proposed borrowing.
As a practical matter, since we started to operate as a REIT in 2017 through the end of 2023, we distributed 100% of our GAAP income to shareholders, in cash. However, in 2024, primarily because we did not have access to growth capital, we reduced the dividend payable to shareholders.
As a practical matter, since we started to operate as a REIT in 2017 through the end of 2023, we distributed 100% of our GAAP income to shareholders, in cash. However, in 2024 and 2025, primarily because we did not have access to growth capital, we reduced the dividend payable to shareholders.
To the extent an active trading market does not develop, the liquidity and trading price for the Notes may be harmed. Accordingly, the Noteholders may be required to bear the financial risk of an investment in the Notes indefinitely. We may choose to redeem the Notes when prevailing interest rates are relatively low.
To the extent an active trading market does not develop, the liquidity and trading price for the Notes may be harmed. Accordingly, the holders of Notes may be required to bear the financial risk of an investment in the Notes indefinitely. We may choose to redeem the Notes when prevailing interest rates are relatively low.
In addition, these restrictions could have takeover defense effects and could reduce the possibility that a third party will attempt to acquire control of us, which could adversely affect the market price of the Series A Preferred Stock. The Series A Preferred Stock shareholders has extremely limited voting rights.
In addition, these restrictions could have takeover defense effects and could reduce the possibility that a third party will attempt to acquire control of us, which could adversely affect the market price of the Series A Preferred Stock. The Series A Preferred Stock shareholders have limited voting rights.
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT and provides that, unless exempted by the Board, no person may own more than 4.99% in value of the aggregate of the outstanding shares of our capital stock or more than 4.99% in value or in number of shares, whichever is more restrictive, of the aggregate of our outstanding shares of our Common Shares.
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our 23 Table of Contents qualification as a REIT and provides that, unless exempted by the Board, no person may own more than 4.99% in value of the aggregate of the outstanding shares of our capital stock or more than 4.99% in value or in number of shares, whichever is more restrictive, of the aggregate of our outstanding shares of our Common Shares.
If the net operating income of the subject property is reduced, the borrower’s ability to repay the loan, or our ability to receive adequate returns on our investment, may be impaired. 17 Table of Contents In the case of non-income producing properties, the expectation is that our loans will be repaid out of sale or refinancing proceeds.
If the net operating income of the subject property is reduced, the borrower’s ability to repay the loan, or our ability to receive adequate returns on our investment, may be impaired. In the case of non-income producing properties, the expectation is that our loans will be repaid out of sale or refinancing proceeds.
The occurrence of cyber incidents, or a deficiency in our cybersecurity or in those of any of our third-party service providers, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information or damage to our business relationships or reputation, all of which could negatively impact our business and results of operations.
The occurrence of cyber incidents, or a deficiency in our cybersecurity or in those of any of our third-party service providers, could negatively impact our business by causing a disruption to our operations, a compromise or corruption 22 Table of Contents of our confidential information or damage to our business relationships or reputation, all of which could negatively impact our business and results of operations.
We cannot assure you that our business and results of operations will not be negatively impacted by a cyber incident. 23 Table of Contents We face risks from cybersecurity threats that could have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation.
We cannot assure you that our business and results of operations will not be negatively impacted by a cyber incident. We face risks from cybersecurity threats that could have a material adverse effect on our business, financial condition, results of operations, cash flows or reputation.
To the extent any of the foregoing risks arise in Connecticut, New York and Florida, our business, financial condition and results of operations and ability to make distributions to shareholders could be materially adversely affected. 20 Table of Contents Competition could have a material adverse effect on our business, financial condition and results of operations.
To the extent any of the foregoing risks arise in Connecticut, New York and Florida, our business, financial condition and results of operations and ability to make distributions to shareholders could be materially adversely affected. Competition could have a material adverse effect on our business, financial condition and results of operations.
Other debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional covenants and events of default. For example, the indenture under which the Notes are issued does not contain cross-default provisions.
Other debt we issue or incur in the future could contain more protections for its holders than the indenture and the Notes, including additional covenants and events of default. For example, the indenture under which the Notes are issued 27 Table of Contents does not contain cross-default provisions.
If this ratio declines below 150%, we may not be able to incur additional debt and may need to 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 shareholders.
If this ratio declines below 150%, we may not be able to incur additional debt and may need 25 Table of Contents to 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 shareholders.
The NHB Mortgage is secured by a first mortgage lien on the property located at 568 East Main Street, Branford, Connecticut. The Notes are subordinated to the indebtedness and other liabilities of our subsidiaries. The Notes are our exclusive obligations, and not of any of our subsidiaries.
The NHB Mortgage is secured by a first mortgage lien on the property located at 568 East Main Street, Branford, Connecticut. 26 Table of Contents The Notes are subordinated to the indebtedness and other liabilities of our subsidiaries. The Notes are our exclusive obligations, and not of any of our subsidiaries.
The issuance or incurrence of any indebtedness with incremental protections could affect the market for, trading volume and prices of the Notes. An increase in market interest rates could result in a decrease in the value of the Notes. In general, as market interest rates rise, notes bearing interest at a fixed rate decline in value.
The issuance of any indebtedness with incremental protections could adversely affect the market for, trading volume and prices of the Notes. An increase in market interest rates could result in a decrease in the value of the Notes. In general, as market interest rates rise, notes bearing interest at a fixed rate decline in value.
In the event of our bankruptcy, liquidation, dissolution or winding up of our affairs, our assets will be available to pay obligations on the Series A Preferred Stock only after all of our indebtedness and other liabilities have been paid.
In the event of a bankruptcy, liquidation, dissolution or winding up of our affairs, our assets will be available to pay obligations on the Series A Preferred Stock only after all our indebtedness and other liabilities and that of our subsidiaries have been paid in full.
If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities. Our current shareholders do not have preemptive rights to any Common Shares issued by us in the future.
If this occurs and continues, it could impair our ability to raise additional capital through the sale of securities. 35 Table of Contents Our current shareholders do not have preemptive rights to any Common Shares issued by us in the future.
Our redemption right may adversely impact the ability of holders to sell the Notes as the optional redemption date or period approaches. 29 Table of Contents We are not obligated to contribute to a sinking fund to retire the Notes and the Notes are not guaranteed by a third party.
Our redemption right may adversely impact the ability of holders to sell the Notes as the optional redemption date or period approaches. We are not obligated to contribute to a sinking fund to retire the Notes and the Notes are not guaranteed by a third party.
Our certificate of incorporation, as amended, including the certificate of amendment creating the Series A Preferred Stock, contains restrictions on ownership and transfer of the Series A Preferred Stock intended, among other things, to assist us in maintaining our qualification as a REIT for federal income tax purposes.
Our certificate of incorporation, as amended, including the certificate of amendment creating the Series A Preferred Stock, contains restrictions on ownership and transfer of the Series A Preferred Stock intended to assist us in maintaining our qualification as a REIT for federal income tax purposes.
Borrowings, also known as leverage, magnify the potential for income gain or loss on amounts invested in loans and, therefore, increase the risks associated with investing in us. We borrow from and issue senior debt securities to banks and other lenders that are secured by liens on our assets.
Indebtedness for borrowed money, also known as "leverage", magnify the potential for income gain or loss on amounts invested in loans and, therefore, increase the risks associated with investing in us. We borrow from and issue senior debt securities to banks and other lenders that are secured by liens on our assets.
If properties securing our mortgage loans become real estate owned because of foreclosure, we bear the risk of not being able to sell the property and recovering our investment and of being exposed to the risks attendant to the ownership of real property.
If properties securing our mortgage loans become real estate owned because of foreclosure, we bear the risk of not being 17 Table of Contents able to sell the property and recovering our investment and of being exposed to the risks attendant to the ownership of real property.
As a result, we are subject to the general economic and market conditions in those markets as well as in other markets where we lend. For example, other geographic markets in neighboring states could become more attractive for developers, investors and owners based on favorable costs and other conditions to construct or improve or renovate real estate properties.
As a result, we are particularly subject to the general economic and market conditions in those markets. For example, other geographic markets in neighboring states could become more attractive for developers, investors and owners based on favorable costs and other conditions to construct or improve or renovate real estate properties.
In addition, although holders of shares of Series A Preferred Stock are entitled to limited voting rights, the Series A Preferred Stock will vote separately as a class together with all other classes or series of our preferred shares that we may issue upon which like voting rights have been conferred and are exercisable.
Although holders of shares of Series A Preferred Stock are entitled to limited voting rights, the Series A Preferred Stock will vote separately as a class together with all other classes or series of our preferred shares that we may issue upon which like voting rights have been conferred.
Our ability to pay dividends is limited by the requirements of New York law. Our ability to pay dividends on the Series A Preferred Stock is limited by the laws of New York.
Our ability to pay dividends on the Series A Preferred Stock is limited by the laws of New York.
Although the Notes are listed on the NYSE American, an active trading market for the Notes may not develop, which could limit the ability of Noteholders to sell the Notes and/or the market price of the Notes.
Although 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.
Any impairment or credit losses could have a material adverse effect on our financial condition. 15 Table of Contents We have experienced a significant increase in the number of non-performing loans. We define loans that are more than 90 days in arrears as non-performing status and stop accruing interest on such loans.
Any impairment or credit losses could have a material adverse effect on our financial condition. We have experienced a significant increase in the balance of non-performing loans. We define loans that are more than 90 days in arrears as non-performing status and stop accruing interest on such loans.
It also may reduce dividend payments on the Series A Preferred Stock issued in this offering if we do not have sufficient funds to pay dividends on all Series A Preferred Stock outstanding and other classes of stock with equal priority with respect to dividends.
It also may reduce dividend payments on the Series A Preferred Stock if we do not have sufficient funds to pay dividends on all Series A Preferred Stock outstanding and other classes of stock with equal priority with respect to dividends.
The Company’s inability to continue to raise capital when needed will harm its business, financial condition and results of operations, and will likely cause the Company’s stock value to decline further, which could have a material adverse impact on the Company’s business, operations and financial condition.
Our inability to continue to raise capital when needed will harm our business, financial condition and results of operations, and will likely cause our stock value to decline further, which could have a material adverse impact on our business, operations and financial condition.
Main Street, Branford Connecticut, which we own and which is our principal place of business. In addition, the Churchill Credit Facility and the NHB Mortgage have cross default provisions, which means that a default under the terms of any other indebtedness, would also be an event of default under the Churchill Credit Facility and the NHB Mortgage as well.
Main Street, Branford Connecticut, which we own and which is our principal place of business. In addition, the NHB Mortgage has cross default provisions, which means that a default under the terms of any other indebtedness, would also be an event of default under the NHB Mortgage as well.
Voting rights for holders of shares of Series A Preferred Stock exist primarily with respect to the ability to elect, voting together as a single class with the holders of any other class or series of our preferred shares having similar voting rights, two additional directors to the Board, in the event that six quarterly dividends (whether or not consecutive) payable on the Series A Preferred Stock are in arrears, and with respect to voting on amendments to our charter, including the certificate of amendment creating the Series A Preferred Stock, that materially and adversely affect the rights of the holders of shares of Series A Preferred Stock or authorize, increase or create additional classes or series of our stock that are senior to the Series A Preferred Stock.
Holders of shares of Series A Preferred Stock have the right to elect, voting together as a single class with the holders of any other class or series of our preferred shares having similar voting rights, two additional directors to the Board, in the event that six quarterly dividends (whether or not consecutive) payable on the Series A Preferred Stock are in arrears, and the right to vote on amendments to our charter, including amendments to the certificate of amendment creating the Series A Preferred Stock, that materially and adversely affect the rights of the holders of shares of Series A Preferred Stock or that authorize, increase or create additional classes or series of our stock that are senior to the Series A Preferred Stock.
An increase in market interest rates may lead prospective purchasers of the Series A Preferred Stock to expect a higher dividend yield (and higher interest rates would likely increase our borrowing costs and potentially decrease funds available for dividend payments). Thus, higher market interest rates could cause the market price of the Series A Preferred Stock to materially decrease.
An increase in market interest rates may lead prospective purchasers of the Series A Preferred Stock to expect a higher dividend yield (and higher interest rates would likely increase our borrowing costs and potentially decrease funds available for dividend payments).
Accordingly, we may not make a distribution on the Series A Preferred Stock if, after giving effect to the distribution, we would not be able to pay our debts as they become due in the usual course of business or, except in limited circumstances, our total assets would be less than the sum of our total liabilities plus, unless the charter provides otherwise, the amount that would be needed to satisfy the preferential rights upon dissolution of the holders of shares of any class or series of preferred shares then outstanding, if any, with preferences senior to those of the Series A Preferred Stock. 31 Table of Contents The 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.
Accordingly, we may not make a distribution on the Series A Preferred Stock if, after giving effect to the distribution, we would not be able to pay our debts as they become due in the usual course of business or, except in limited circumstances, our total assets would be less than the sum of our total liabilities plus, unless the charter provides otherwise, the amount that would be needed to satisfy the preferential rights upon dissolution of the holders of shares of any class or series of preferred shares then outstanding, if any, with preferences senior to those of the Series A Preferred Stock.
Risks Related to Our Operations, Structure and Change in Control Provisions We have significant unfunded commitments to existing borrowers. If we are unable to fund these commitments, we may be subject to borrower legal claims. At December 31, 2024, we had unfunded commitments under existing loans of $49.9 million.
Risks Related to Our Operations, Structure and Change in Control Provisions We have significant unfunded commitments to existing borrowers. If we are unable to fund these commitments, we may be subject to borrower legal claims. At December 31, 2025, we had unfunded commitments under existing loans of $37.2 million.
Future issuances and sales of parity preferred shares, or the perception that such issuances and sales could occur, may cause prevailing market prices for the Series A Preferred Stock and our Common Shares to decline and may adversely affect our ability to raise additional capital in the financial markets at times and prices favorable to us.
Future issuances and sales of parity preferred shares, or the perception that such issuances and sales could occur, may cause prevailing market prices for the Series A Preferred Stock and our Common Shares to decline and may adversely affect our ability to raise additional capital in the financial markets at times and prices favorable to us. 29 Table of Contents Market interest rates may materially and adversely affect the value of the Series A Preferred Stock.
Some of the factors that could negatively affect our stock price or result in fluctuations in the price or trading volume of our Common Shares are the following: ● our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects; ● equity issuances by us, or share resales by our shareholders, or the perception that such issuances or resales may occur; ● publication of research reports about us or the real estate industry; ● changes in market valuations of similar companies; ● adverse market reaction to the level of leverage we employ; ● additions to or departures of our key personnel; ● accounting issues; ● speculation in the press or investment community; ● our failure to meet, or the lowering of, our earnings’ estimates or those of any securities analysts; ● increases in market interest rates, which may lead investors to demand a higher distribution yield for our Common Shares and would result in increased interest expenses on our debt; ● failure to qualify or to remain qualified as a REIT; ● price and volume fluctuations in the stock market generally; and ● general market and economic conditions, including the current state of the credit and capital markets and current level of inflation. 34 Table of Contents We 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.
These factors include, but are not limited to, the following: • our actual or projected operating results, financial condition, cash flows and liquidity, or changes in business strategy or prospects; • equity issuances by us, or share resales by our shareholders, or the perception that such issuances or resales may occur; • publication of research reports about us or the real estate industry; • changes in market valuations of similar companies; • adverse market reaction to the level of leverage we employ; • additions to or departures of our key personnel; • accounting issues; • speculation in the press or investment community; 34 Table of Contents • our failure to meet, or the lowering of, our earnings’ estimates or those of any securities analysts; • increases in market interest rates, which may lead investors to demand a higher distribution yield for our Common Shares and would result in increased interest expenses on our debt; • failure to qualify or to remain qualified as a REIT; • price and volume fluctuations in the stock market generally; and • general market and economic conditions, including the current state of the credit and capital markets and current level of inflation.
Thus, issuing more securities increases our costs, which, in turn, means we have to raise more money to cover the costs, which means we have to sell more securities. Therefore, during the second half of 2024, we did not sell Common Shares, shares of our Series A Preferred Stock, or debt securities to raise capital.
Thus, issuing more securities increases our costs, which, in turn, means we have to raise more money to cover the costs, which means we have to sell more securities. Therefore, during the second half of 2024 and in 2025, we did not sell Common Shares or debt securities to raise capital.
Many of the properties securing our mortgage loans are not income producing, thus increasing the risks of delinquency and foreclosure. Most of our loans are secured by properties, whether residential or commercial, that are under construction or renovation and are not income producing.
Most of the properties securing our mortgage loans are not income producing, thus increasing the risks of delinquency and foreclosure. Most of our loans, by both number of loans and aggregate principal amount, are secured by properties, whether residential or commercial, that are under construction or renovation and are not income producing.
In addition to the usual operating expenses, we have significant other cash requirements, notably interest and dividend payments (to maintain our REIT status, we are required to distribute at least 90% of our taxable income on a annual basis) and loan repayments ($56.4 million principal amount of Notes will become due in September of 2025 and another $51.8 million principal amount of Notes will become due in December of 2026.) Consequently, we rely on third-party sources of capital to fund a substantial amount of our working capital needs.
In addition to the usual operating expenses, we have significant other cash requirements, notably interest and dividend payments (to maintain our REIT status, we are required to distribute at least 90% of our taxable income on a annual basis) and loan repayments ($51.8 million principal amount of Notes will become due in December 2026 and an aggregate of an additional $121.5 million principal amount of Notes will become at various due dates in 2027.) Consequently, we rely on third-party sources of capital to fund a substantial amount of our working capital needs.
Item 1A. Risk Factors. The following factors may affect our growth and profitability of and should be considered by any prospective purchaser or current holder of our securities: Risks Related to Our Current Financial Condition We incurred a net loss attributable to common shareholders for 2024 and we cannot assure you that we will be profitable for 2025.
Item 1A. Risk Factors. The following factors may affect our growth and profitability of and should be considered by any prospective purchaser or current holder of our securities: Risks Related to Our Current Financial Condition We incurred a net loss attributable to common shareholders for 2024 but returned to profitability in 2025.
For example, our charter provides that no person may own, or be deemed to own by virtue of applicable attribution provisions of the Code, more than 4.99% (by value or by number of shares, whichever is more restrictive) of our outstanding Common Shares or 4.99% by value of our outstanding shares of capital stock, subject to certain exceptions.
Specifically, our charter provides that no person may own, or be deemed to own by virtue of applicable constructive ownership rules of the Code, more than 4.99% (by value or by number of shares, whichever is more restrictive) of our outstanding Common Shares or 4.99% by value of our outstanding shares of capital stock, subject to certain exceptions.
Any deterioration in the mortgage markets, the residential or commercial real estate markets, the financial markets and the economy generally may lower net income, increase losses and impair the market value of our assets, all of which may adversely affect our results of operations, the availability and cost of credit and our ability to make distributions to our shareholders. 16 Table of Contents Increases in interest rates could adversely affect our ability to generate income and pay dividends.
Any deterioration in the mortgage markets, the residential or commercial real estate markets, the financial markets and the economy generally may lower net income, increase losses and impair the market value of our assets, all of which may adversely affect our results of operations, the availability and cost of credit and our ability to make distributions to our shareholders.
The trading price of the Series A Preferred Stock will depend on many factors, which may change from time to time, including the following: ● increases in prevailing interest rates, which may have an adverse effect on the market price of the Series A Preferred Stock; ● market prices of common and preferred equity securities issued by REITs and other real estate companies; ● the annual yield from distributions on the Series A Preferred Stock as compared to yields on other financial instruments; ● general economic and financial market conditions; ● government action or regulation; ● the financial condition, performance and prospects of us and our competitors; ● changes in financial estimates or recommendations by securities analysts with respect to us, our competitors or our industry; 32 Table of Contents ● our issuance of additional common equity or debt securities; ● our issuance of additional series or classes of preferred securities; and ● actual or anticipated variations in quarterly operating results of us and our competitors.
These factors include, but are not limited to, the following: • increases in prevailing interest rates, which may have an adverse effect on the market price of the Series A Preferred Stock; • market prices of common and preferred equity securities issued by REITs and other real estate companies; • our history of timely dividend payments; • the annual yield from distributions on the Series A Preferred Stock as compared to yields on other financial instruments; 31 Table of Contents • general economic and financial market conditions; • government action or regulation; • the financial condition, performance and prospects of us and our competitors; • changes in financial estimates or recommendations by securities analysts with respect to us, our competitors or our industry; • our issuance of additional common equity or debt securities; • our issuance of additional series or classes of preferred securities; and • actual or anticipated variations in quarterly operating results of us and our competitors.
Given the interest rate environment in 2023 and 2024 and the state of the real estate market in general, we were unable to access the capital markets and our existing credit facilities were not robust enough to fill the gap.
Historically, we relied on the capital markets to provide us with the bulk of our growth capital. Given the interest rate environment in 2023 and 2024 and the state of the real estate market in general, we were unable to access the capital markets and our existing credit facilities were not robust enough to fill the gap.
If we fail to qualify as a REIT in any taxable year and we do not qualify for certain statutory relief provisions, all our taxable income would be subject to U.S. federal and state income taxes at the prevailing corporate income tax rates, we would no longer be allowed to deduct the distributions to our shareholders and we generally would be disqualified from treatment as a REIT for the four taxable years following the year in which we lost our REIT status. 36 Table of Contents Qualifying as a REIT involves highly technical and complex provisions of the Code and therefore, in certain circumstances, may be subject to uncertainty.
If we fail to qualify as a REIT in any taxable year and we do not qualify for certain statutory relief provisions, all our taxable income would be subject to U.S. federal and state income taxes at the prevailing corporate income tax rates, we would no longer be allowed to deduct the distributions to our shareholders and we generally would be disqualified from treatment as a REIT for the four taxable years following the year in which we lost our REIT status.
All amounts borrowed under the Needham Credit Facility are secured by a first priority lien on virtually all our assets excluding real estate owned by us (other than real estate acquired pursuant to foreclosure) and mortgages sold under the Churchill Credit Facility.
The Needham Credit Facility is secured by a first priority lien on virtually all our assets excluding real estate owned by us (other than real estate acquired pursuant to foreclosure) and mortgages sold under the Senior Secured Notes Payable.
As a result, they are effectively subordinated to all our existing and future secured indebtedness, such as the Churchill Credit Facility ($33.7 million outstanding balance at December 31, 2024), the Needham Credit Facility, ($40.0 million outstanding balance at December 31, 2024), and the NHB Mortgage, ($1.0 million outstanding balance at December 31, 2024) as well as any secured indebtedness that we may incur in the future, or any indebtedness that is initially unsecured to which we subsequently grant a security interest, to the extent of the value of the assets securing such indebtedness.
As a result, they are effectively subordinated to all our existing and future secured indebtedness, such as the Senior Secured Notes Payable ($90.0 million outstanding principal balance at December 31, 2025), the Needham Credit Facility ($19.0 million outstanding balance at December 31, 2025), and the NHB Mortgage, ($0.9 million outstanding balance at December 31, 2025) as well as any secured indebtedness that we may incur in the future, or any indebtedness that is initially unsecured to which we subsequently grant a security interest, to the extent of the value of the assets securing such indebtedness.
Prospective shareholders are urged to consult with their tax advisors with respect to the status of the TCJA and any other regulatory or administrative developments and proposals and their potential effect on investment in our Common Shares. ​ Item 1B. Unresolved Staff Comments None. ​
We urge our shareholders and prospective shareholders to consult with their tax advisors with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our Common Shares. Item 1B. Unresolved Staff Comments None.
The closing price on December 31, 2024, as reported by the New York Stock Exchange, was $15.49 per share. Similar declines were recorded for the price of our Notes. The declining prices in our securities does not only adversely impact the holders of those securities, it also adversely impacts our ability to raise capital at accretive or market prices.
The closing price on December 31, 2025, as reported by the NYSE American, was $17.75 per share. Similar declines were recorded for the price of our Notes. The declining prices in our securities does not only adversely impact the holders of those securities, it also adversely impacts our ability to raise capital at accretive or market prices.
In addition, the Series A Preferred Stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others in) our existing subsidiaries and any future subsidiaries in that the Series A Preferred Stock is structurally subordinated to these types of indebtedness and other liabilities.
Similarly, the Series A Preferred Stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others in) our existing subsidiaries and any future subsidiaries.
At December 31, 2024, we had 88 loans, 52.4% of the loans in our portfolio, with an outstanding principal balance exceeding $1 million. At December 31, 2023, we had 113 loans, 36.3% of the loans in our portfolio, with an outstanding principal balance exceeding $1 million.
At December 31, 2025, we had 66 loans, 57.4% of the loans in our portfolio, with an outstanding principal balance exceeding $1 million. At December 31, 2024, we had 88 loans, 52.4% of the loans in our portfolio, with an outstanding principal balance exceeding $1 million.
Primarily because of our operating performance and the dividend cuts, in 2024 we experienced a steep decline in the trading price of all our securities. For example, the opening price of our Common Shares on January 2, 2024, as reported on the New York Stock Exchange, was $3.73 per share.
Primarily because of our operating performance and the reduced dividend payments, in 2024 and 2025, we experienced a steep decline in the trading price of all our equity and debt securities. For example, the opening price of our Common Shares on January 2, 2024, as reported on the NYSE American, was $3.73 per share.
Our business is materially affected by conditions in the residential and commercial mortgage and real estate markets, the financial markets and the economy generally. We believe the risks associated with our mortgage loan portfolio will be more acute during periods of economic slowdown, recession or market dislocation, especially if these periods are accompanied by declining real estate values and defaults.
We believe the risks associated with our mortgage loan portfolio will be more acute during periods of economic slowdown, recession or market dislocation, especially if these periods are accompanied by declining real estate values and defaults.
If we cannot repay these Notes and the holders of these Notes call a default, it may trigger defaults under our other obligations and impair our ability to raise capital from other sources.
If we cannot repay any of these Notes and the holders of such Notes call a default, it may trigger defaults under our other obligations and impair our ability to raise capital from other sources. As previously noted, a default under the Notes would also trigger a default under the terms of the NHB Mortgage.
The closing price on December 31, 2024, as reported by the New York Stock Exchange, was $1.35 per share. Similarly, the opening price of our Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”) on January 2, 2024, as reported on the New York Stock Exchange, was $20.00 per share.
Similarly, the opening price of our 7.75% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”) on January 2, 2024, as reported on the NYSE American, was $20.00 per share. The closing price on December 31, 2024, as reported by the NYSE American, was $15.49 per share.
The trading price of the Series A Preferred Stock could be substantially affected by various factors. During the year ended December 31, 2024, the price for our Series A Preferred Stock on the NYSE American has ranged from a high of $24.70 to a low of $15.39.
The trading price of the Series A Preferred Stock could be substantially affected by various factors. During the year ended December 31, 2025, the closing price for our Series A Preferred Stock on the NYSE American ranged from a high of $18.99 to a low of $12.54.
Therefore, our current common shareholders may experience dilution of their equity investment if we sell additional Common Shares in the future, sell securities that are convertible into Common Shares or issue Common Shares or options exercisable for Common Shares.
Therefore, our current common shareholders may experience dilution of their equity investment if we sell additional Common Shares in the future, sell securities that are convertible into Common Shares or issue Common Shares or options exercisable for Common Shares. In addition, we could sell securities at a price less than our then-current book value per share.
At that time, we were not subject to any limitations on the volume of securities that we could sell under that Registration Statement. That Registration Statement expired on February 25, 2025.
These securities were covered by an S-3 Registration Statement that the SEC declared effective on February 25, 2022. At that time, we were not subject to any limitations on the volume of securities that we could sell under that Registration Statement. That Registration Statement expired on February 25, 2025.
We cannot assure you that the credit rating assigned to us or the Series A Preferred Stock will not be downgraded, suspended or withdrawn in the future. If it is, the liquidity or market value of the Series A Preferred Stock could be adversely affected.
We cannot assure you that the credit rating assigned to us or the Series A Preferred Stock will not be downgraded, suspended or withdrawn in the future.
For those U.S. stockholders in the top marginal tax bracket of 37%, the deduction for REIT dividends yields an effective income tax rate of 29.6% on REIT dividends, which is higher than the 20% tax rate on qualified dividend income paid by non- REIT “C” corporations.
Thus, despite the permanence of this deduction under the OBBBA, those U.S. stockholders in the top marginal tax bracket of 37%, the deduction for REIT dividends yields an effective income tax rate of 29.6% on REIT dividends, which is still higher than the 20% tax rate on "qualified dividends".
The issuance of additional shares of Series A Preferred Stock and additional series of parity preferred stock could have the effect of reducing the amounts available to the holders of the Series A Preferred Stock issued in this offering upon our liquidation or dissolution or the winding up of our affairs.
The issuance of additional shares of Series A Preferred Stock and additional series of parity preferred stock may reduce amounts available to the holders of the Series A Preferred Stock upon our liquidation or dissolution or the winding up of our affairs.
In addition, claims may be assessed against us on account of our position as a mortgage holder or property owner, including assignee liability, responsibility for tax payments, environmental hazards and other liabilities.
In addition, claims may be assessed against us on account of our position as a mortgage holder or property owner, including assignee liability, responsibility for tax payments, environmental hazards and other liabilities. In some cases, these liabilities may be “recourse liabilities” or may otherwise lead to losses in excess of the purchase price of the related mortgage or property.
Second, top-line revenue for 2024 declined 11.2% compared to 2023, after we had delivered solid growth every year from 2017 through 2023. This decrease was due to the unavailability of capital required to grow our business. Historically, we relied on the capital markets to provide us with the bulk of our growth capital.
Second, top-line revenue for 2024 declined 11.2% compared to 2023, after we had delivered solid growth every year from 2017 through 2023. This decrease was due to the unavailability of capital required to grow our business after revenues decreased due to increases in nonperforming loans and distress in the lending markets.
At the time of issuance, the Series A Preferred Stock has a private credit rating of BBB from Egan-Jones Ratings Company. An explanation of the significance of ratings may be obtained from the rating agency. Generally, rating agencies base their ratings on such material and information, and such of their own investigations, studies and assumptions, as they deem appropriate.
An explanation of the significance of ratings may be obtained from the rating agency. Generally, rating agencies base their ratings on such material and information, and such of their own investigations, studies and assumptions, as they deem appropriate.
There can be no assurance that our credit rating will remain for any given period of time or that such credit rating will not be lowered or withdrawn entirely by the rating agency if in their judgment future circumstances relating to the basis of the credit rating so warrant.
There can be no assurance that our credit rating will remain for any given period of time or that such credit rating will not be lowered or withdrawn entirely by the rating agency if in their judgment future circumstances relating to the basis of the credit rating so warrant. 28 Table of Contents Risks Related to our Series A Preferred Stock The Series A Preferred Stock effectively ranks junior to all our indebtedness and other liabilities and of our subsidiaries.
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.
The 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.
At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be amended.
The IRS, the U.S. Treasury Department and Congress frequently review U.S. federal income tax legislation, regulations and other guidance. At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended or modified.
Given the fact that our public float is currently less than $75 million and for so long as the “public float” remains under $75 million, we are limited as to the amount of securities we can sell during any 12-month period. The limit is an amount equal to one-third of our “public float”.
We filed a new S-3 Registration Statement that was declared effective on May 30, 2025. Given the fact that our public float is currently less than $75 million and for so long as the “public float” remains under $75 million, we are limited as to the amount of securities we can sell during any 12-month period.
For the year ended December 31, 2024, we reported a net loss of $43.9 million compared to net income of $12.1 million for the year ended December 31, 2023. This is the first annual net loss that we reported since we became a publicly traded company in 2017. There were a number of factors that contributed to this result.
For the year ended December 31, 2025, we reported net income attributable to common shareholders of $1.8 million compared to a net loss attributable to common shareholders of $43.9 million for the year ended December 31, 2024. 2024 was the first annual net loss that we reported since we became a publicly traded company in 2017.
Concurrently with the decline in our operational performance, we have reduced the dividend payable to shareholders. As a real estate investment trust (REIT), to maintain our REIT status for income tax purposes, we are required to distribute at least 90% of our taxable income to our shareholders.
Nonetheless, we cannot assure you that we will continue to be profitable in 2026. Concurrently with the decline in our operational performance, we have reduced the dividend payable to shareholders. To maintain our REIT status for income tax purposes, we are required to distribute at least 90% of our taxable income to our shareholders.
The Board determines our operational policies and may adopt new policies or amend or revise existing policies regarding lending, financing, investment or other operational and management policies relating to growth, operations, indebtedness, capitalization and distributions or approve transactions that deviate from these policies without a vote of, or notice to, shareholders.
A change in our lending guidelines could result in us making riskier real estate loans than those we have been making until now. 20 Table of Contents The Board determines our operational policies and may adopt new policies or amend or revise existing policies regarding lending, financing, investment or other operational and management policies relating to growth, operations, indebtedness, capitalization and distributions or approve transactions that deviate from these policies without a vote of, or notice to, shareholders.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Once these responsibilities have been established, the cybersecurity stakeholders, including member(s) of management assigned with cybersecurity oversight responsibility and/or third-party consultants providing cyber risk advisory services will brief the Audit Committee on cyber vulnerabilities identified through the risk management process, the effectiveness of our cyber risk management program, the emerging threat landscape, and new cyber risks on at least an annual basis.
Once these responsibilities have been established, the cybersecurity stakeholders, including member(s) of management assigned with cybersecurity 39 Table of Contents oversight responsibility and/or third-party consultants providing cyber risk advisory services will brief the Audit Committee on cyber vulnerabilities identified through the risk management process, the effectiveness of our cyber risk management program, the emerging threat landscape, and new cyber risks on at least an annual basis.
We also maintain a disaster recovery plan to help us quickly recover from an incident during a disruption and help mitigate the impact of certain cybersecurity risks. 39 Table of Contents Governance Our management team, including the IT Manager, in conjunction with third-party IT and cybersecurity service providers is responsible for oversight and administration of our cyber risk management program.
We also maintain a disaster recovery plan to help us quickly recover from an incident during a disruption and help mitigate the impact of certain cybersecurity risks. Governance Our management team, including the IT Manager, in conjunction with third-party IT and cybersecurity service providers is responsible for oversight and administration of our cyber risk management program.

Item 2. Properties

Properties — owned and leased real estate

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This property serves as an investment in rental real estate property. Item 3. Legal Proceedings We are not currently a party to any material legal proceedings not in the ordinary course of business. ​ Item 4. Mine Safety Disclosures Not applicable. 40 Table of Contents PART II
Item 3. Legal Proceedings We are not currently a party to any material legal proceedings not in the ordinary course of business. Item 4. Mine Safety Disclosures Not applicable. 40 Table of Contents PART II
Item 2. Properties Our principal office is located at 568 East Main Street, Branford, Connecticut. We use this space for all our operations. We believe this facility is adequate to meet our requirements at our current level of business activity and employee headcount. We also own a commercial property located at 1 Glendinning Place, Westport, Connecticut.
Item 2. Properties Our principal office is located at 568 East Main Street, Branford, Connecticut. We use this space for all our operations. We believe this facility is adequate to meet our requirements at our current level of business activity and employee headcount. See listing of investments in developmental real estate and real estate owned listed in Item 1 above.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Issuer Purchases of Equity Securities For an overview of our stock repurchase program and shares repurchased during the years ended December 31, 2024 and 2023, see Note 16 – Equity. ​ I tem 6. [Reserved] ​
Issuer Purchases of Equity Securities For an overview of our stock repurchase program and shares repurchased during the years ended December 31, 2025 and 2024, see Note 17 – Equity — to our consolidated financial statements for the year ended December 31, 2025. Item 6. [Reserved]
On March 28, 2025, the last reported sale price of our Common Shares on the NYSE American was $1.12 per share. Holders As of March 28, 2025, we had 71 shareholders of record of our Common Shares.
On March 10, 2026, the last reported sale price of our Common Shares on the NYSE American was $1.09 per share. Holders As of March 10, 2026, we ha d 67 shareholders of record of our Common Shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are a “smaller reporting company” as defined by Regulation S-K and, as such, are not required to provide the information required by this item. ​ Item 8. Consolidated Financial Statements and Supplementary Data The consolidated financial statements required by this Item are set forth beginning on page F-1. ​
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are a “smaller reporting company” as defined by Regulation S-K and, as such, are not required to provide the information required by this item. Item 8. Consolidated Financial Statements and Supplementary Data The consolidated financial statements required by this Item are set forth beginning on page F-1. Item 9.
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.
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 offers short-term ( i.e ., one to three years), secured, non-bank loans (sometimes referred to as “hard money” 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 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.
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.
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.
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. See Note 2 – Significant Accounting Policies for further details.
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.
Book value per common share The following table sets forth the calculation of our book value per common share (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ 2024 2023 Total shareholders’ equity ​ $ 181,651 ​ $ 230,076 Series A Preferred Stock ($25 aggregate liquidation preference) ​ (57,669) ​ (50,748) Total shareholders’ equity, net of preferred stock ​ 123,982 ​ 179,328 Number of Common Shares outstanding at period end ​ 46,965,306 ​ 46,765,483 Book value per common share ​ $ 2.64 ​ $ 3.83 ​ Book value per common share as of December 31, 2024, was $2.64, a decrease of $1.19 from our book value per common share as of December 31, 2023 of $3.83.
Book value per common share The following table sets forth the calculation of our book value per common share (in thousands, except share and per share data): December 31, 2025 2024 Total shareholders’ equity 174,937 $ 181,651 Series A Preferred Stock ($25 liquidation preference per share) (57,819) (57,669) Total shareholders’ equity, net of preferred stock $ 117,118 $ 123,982 Number of common shares outstanding at period end 47,684,955 46,965,306 Book value per common share $ 2.46 $ 2.64 Book value per common share decreased $0.18 year over year.
Our short-term cash requirements primarily include funding of loans, dividend payments, interest and principal payments on our indebtedness, including repayment/refinancing of the Notes maturing in September 2025, and payments for usual and customary operating and administrative expenses, such as employee compensation and sales and marketing expenses.
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, including repayment/refinancing of the Notes maturing in December 2026, and payments for usual and customary operating and administrative expenses.
These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows as summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ One Year Change ​ ​ Amount 2024 2023 Amount Percentage ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ Cash and cash equivalents, January 1 ​ $ 12,598 ​ $ 23,713 ​ $ (11,115) (88.2) % Net cash provided by operating activities ​ ​ 12,890 ​ ​ 21,851 ​ (8,961) (69.5) % Net cash provided by (used in) investing activities ​ ​ 79,910 ​ ​ (72,488) ​ 152,398 190.7 % Net cash (used in) provided by financing activities ​ ​ (87,332) ​ ​ 39,522 ​ (126,854) (145.3) % Cash and cash equivalents, December 31 ​ $ 18,066 ​ $ 12,598 ​ $ 5,468 30.3 % ​ For a detailed breakdown of our cash flows during the years ended December 31, 2024 and 2023, see the statement of cash flows included in our audited financial statements. ​ We project anticipated cash requirements for our operating needs as well as cash flows generated from operating activities available to meet these needs.
These sources and uses of cash are reflected in our Consolidated Statements of Cash Flows as summarized below: Year Ended December 31, One Year Change Amount 2025 2024 Amount Percentage (in thousands) Cash and cash equivalents, January 1 $ 18,066 $ 12,598 $ 5,468 30.3 % Net cash provided by operating activities 2,662 12,890 (10,228) (384.2) % Net cash provided by investing activities 29,350 79,910 (50,560) (172.3) % Net cash used in financing activities (39,154) (87,332) 48,178 (123.0) % Cash and cash equivalents, December 31 $ 10,924 $ 18,066 $ (7,142) (65.4) % For a detailed breakdown of our cash flows during the years ended December 31, 2025 and 2024, see the statement of cash flows included in our audited financial statements.
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.
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. 51 Table of Contents 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.
Revenue Recognition Interest income from commercial loans is recognized, as earned, over the loan period, whereas origination and modification fee revenue on commercial loans are amortized over the term of the respective notes. ​ 42 Table of Contents CECL Allowance 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.
CECL Allowance 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.
Most of the loans sold were categorized as “non-performing”. Critical Accounting Policies and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
The extension enhances the Company’s liquidity profile and provides additional balance sheet flexibility as it continues to manage its portfolio and capital allocation strategy. 44 Table of Contents Critical Accounting Policies and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
This decrease was attributable to the $22.0 million loss on the sale of loans that occurred in December 2024, the $26.9 million provisions related to loans mandated by CECL, and the $4.9 million valuation allowance on loans held for sale, all of which contributed to the result of a $39.6 million net loss for the year ended December 31, 2024. 44 Table of Contents Sources and Uses of Funds Our primary sources of cash include principal and interest payments on mortgage loans and various fees associated with such loans, proceeds from the sales of real property, net proceeds from offerings of equity securities and borrowings from our credit facilities.
Sources and Uses of Funds Our primary sources of cash include principal and interest payments on mortgage loans and various fees associated with such loans, proceeds from the sales of real property, net proceeds from offerings of equity securities and borrowings from our credit facilities.
Total shareholders’ equity at December 31, 2024 was $181.7 million compared to $230.1 million at December 31, 2023, a decrease of $48.4 million, or 21.0%.
Total shareholders’ equity at December 31, 2025 was $174.9 million compared to $181.7 million at December 31, 2024, a decrease of $6.8 million, or (3.7)%. This decrease was attributable to common stock dividends of $9.5 million and Series A Preferred stock dividends of $4.5 million partially offset by net income of $6.3 million and stock compensation expense of $0.8 million.
Our long-term cash needs will include principal and interest payments on outstanding indebtedness maturing late in 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.
The Company continues 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.
Off-Balance Sheet Arrangements We are not a party to any off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of our requirements for capital resources. 46 Table of Contents Contractual Obligations As of December 31, 2024, our contractual obligations include unfunded amounts of any outstanding construction loans and unfunded commitments for loans and limited liability company investments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than ​ 1 – 3 ​ 3 – 5 ​ More than (in thousands) Total 1 year years years 5 years Unfunded portions of outstanding construction loans ​ $ 49,874 ​ $ 36,223 ​ $ 13,651 ​ $ — ​ $ — Unfunded commitments ​ 4,374 ​ 4,374 ​ — ​ — ​ — Total contractual obligations ​ $ 54,248 ​ $ 40,597 ​ $ 13,651 ​ $ — ​ $ — ​ Recent Accounting Pronouncements See ‘‘Note 2 — Significant Accounting Policies’’ to the financial statements for explanation of recent accounting pronouncements impacting us.
(in thousands) Total Less than 1 year 1 – 3 years 3 – 5 years More than 5 years Unfunded portions of outstanding construction loans $ 37,156 $ 24,718 $ 12,438 $ — $ — Unfunded commitments - investments in limited liability companies 1,371 1,371 — — — Total contractual obligations $ 38,527 $ 26,089 $ 12,438 $ — $ — Recent Accounting Pronouncements See ‘‘Note 2 — Significant Accounting Policies’’ to the financial statements for explanation of recent accounting pronouncements impacting us.
Removed
In addition, the Company may make opportunistic real estate purchases apart from its lending activities. 41 Table of Contents 2024 Year in Review Total revenue decreased 11.2%; net (loss) income attributable to common shareholders decreased 462.5%; and earnings per common share decreased $1.20 per share. ● Notwithstanding the decrease in net revenue and the net loss attributable to common shareholders, we reported net positive cash flow from operations of $12.4 million for the year. ● Total dividends declared and paid to common shareholders in 2024 was $11.4 million. ● We raised an aggregate of $7.8 million of additional capital from the sale of Common Shares and Series A Preferred Stock through our at-the-market offering facility. ● We funded $134.3 million of mortgage loans including loan originations, modifications, and construction draws, net of construction holdback. ● We maintained our leverage ratio, thereby mitigating the risks should economic conditions deteriorate.
Added
In addition, the Company may make opportunistic real estate purchases and investments apart from its lending activities. 41 Table of Contents Items Affecting Comparability of Results Due to a number of factors, our historical financial results may not be comparable from period to period or to future periods.
Removed
At December 31, 2024, our capital structure was 62.0% debt and 38.0% equity compared to 60.4% debt and 39.6% equity at December 31, 2023. ● We maintained our strategy to fund larger loans than we have in the past that are secured by what we believe are higher-quality properties that are being developed by borrowers that we deem to be more stable and successful.
Added
Key factors that may affect comparability include: • Changes in average earning assets and portfolio composition, including periods of lower net loan originations, portfolio runoff, and the resolution of loans through repayment, foreclosure, or sale, which may reduce average loans outstanding and interest-earning assets and, as a result, impact interest income and net interest margin. • Changes in asset yields, including the mix of performing versus nonperforming loans, the timing of loans placed on non-accrual status, the resolution of nonperforming loans, and changes in the composition of loans held for investment versus loans held for sale, all of which may affect the yield on interest-earning assets and the comparability of net interest margin between periods. • Changes in our funding mix, leverage levels, and cost of funds, including repayments, refinancings, and the issuance of new indebtedness (including senior secured notes, revolving credit facilities, and "baby bond" obligations), which may alter average borrowings outstanding and result in material period-to-period changes in interest expense.
Removed
We believe migration to larger borrowers and better capitalized sponsors will decrease future problem loans. ● We continued the enhancement of our underwriting guidelines to strengthen our documentation and collateral position on our loans. ​ ● We sold 32 loans, having an aggregate unpaid principal balance of principal balance of $55.8 million, which generated approximately $36.1 million of net proceeds.
Added
In certain periods, indebtedness has been replaced at interest rates materially higher than retired obligations, including increases of approximately 200 to 300 basis points, which may negatively impact net interest margin. • Timing differences related to debt deployment and capital availability, including periods where debt capital was outstanding prior to full deployment into interest-earning assets, which may temporarily compress net interest margin and reduce comparability between periods. • Volatility in credit-related expenses and valuation adjustments, including changes in the provision for credit losses, direct allowances, and valuation allowances on loans held for sale, which, while not components of net interest margin, may materially affect net income and period-to-period comparability of overall operating results. • Non-recurring or episodic income and expense items, including income generated from owned real estate, such as rental income from specific projects, and the timing of asset sales or similar transactions, which may not be indicative of ongoing net interest margin or core lending performance. 2025 Year in Review During 2025, the Company focused on stabilizing its credit profile and strengthening its capital structure following the portfolio repositioning actions taken in 2024 and 2025.
Removed
Results of Operations Years ended December 31, 2024 and 2023 Total revenue Total revenue for the year ended December 31, 2024, was $57.5 million compared to $64.7 million for the year ended December 31, 2023, a decrease of $7.2 million, or 11.2%.
Added
While average earning assets declined year over year and net interest margin compressed, management prioritized liquidity preservation, resolution of nonperforming assets, and extension of debt maturities over portfolio expansion.
Removed
The decrease in revenue was primarily due to a reduction in the number of loan originations and a decline in net loans held for investment over the year. For 2024, interest income was $43.2 million compared to $49.3 million for 2023, representing a decrease of $6.1 million or 12.4%.
Added
Key developments during 2025 included: • A significant reduction in credit-related charges compared to 2024, as provisioning reflected loan-specific adjustments rather than broad-based reserve recalibration. • No comparable large-scale loan sale losses, resulting in improved earnings comparability relative to the prior year. • Issuance of $100.0 million ($90.0 million drawn as of December 31, 2025) of Senior Secured Notes due 2030 bearing interest at 9.875%, which extended the Company’s weighted average debt maturity profile and diversified funding sources. • Reduction of certain short-term borrowings and repayment of maturing unsecured notes, decreasing near-term refinancing concentration. • Successfully completed the sale of its office property located in Westport, Connecticut generating net cash proceeds of approximately $19.9 million and realized a book gain of approximately $4.0 million.
Removed
Fee income from loans decreased to $8.6 million for 2024 compared to $10.7 million for 2023, a decrease of $2.1 million, or 19.7% due to lower origination volume as compared to 2023. Income from limited liability company investments increased to $5.2 million for 2024 compared to $3.5 million for 2023, an increase of $1.7 million, or 48.8%.
Added
The Westport asset was sourced, managed, and executed through Urbane Capital, the Company’s in-house development and asset management platform. 42 Table of Contents • Continued disciplined underwriting in a higher interest rate environment, resulting in moderated net loan originations and a focus on sponsor quality and collateral protection.
Removed
Other investment income was $0.4 million for 2024 compared to $1.2 million for 2023, a decrease of $0.8 million, or 67.7%. Operating costs and expenses Total operating costs and expenses for the year ended December 31, 2024, were $75.3 million compared to $49.7 million for 2023, an increase of $25.6 million, or 51.5%.
Added
Although nonaccrual balances remain elevated relative to historical norms, migration trends moderated during the year and reserve coverage reflects updated collateral valuations and expected liquidation timelines. Management continues to evaluate asset resolution strategies with the objective of improving earning asset mix and reducing nonaccrual exposure over time.
Removed
This net increase was attributable to (i) a $21.3 million increase in provision for credit losses related to loans and (ii) a $1.9 million increase in general and administrative expenses as a result of increased legal and professional fees during the second and third quarters of the year related to matters outside of our ordinary course of business; all of which was offset by a $1.4 million decrease in interest and amortization expense.
Added
While funding costs remain elevated relative to pre-2024 levels, the Company believes its current capital structure provides improved duration visibility and liquidity flexibility. Future earnings performance will depend on continued resolution of nonperforming assets, stabilization of net interest margin, disciplined capital allocation, and broader real estate market conditions.
Removed
Other (loss) income Total other loss for the year ended December 31, 2024 was $21.8 million compared to other income of $0.9 million the year ended December 31, 2023, a decrease of $22.7 million. This decrease was driven by the $22.0 million loss on the sale of loans, and a decrease in gain on equity securities of $0.7 million.
Added
The Company intends to address upcoming unsecured note maturities through a combination of operating cash flow, asset resolutions, and capital market activity, subject to prevailing market conditions.
Removed
Net (loss) income attributable to common shareholders and net (loss) income attributable to common shareholders per share Net loss attributable to common shareholders for the year ended December 31, 2024 was $43.9 million compared to net income attributable to common shareholders of $12.1 million for the year ended December 31, 2023.
Added
Recent Developments Update on Naples, Florida Assets On February 5, 2026, the Company completed a noncash transaction to acquire 100% of the membership interests of the entity holding the condominium assets associated with its legacy Naples, Florida mortgage loan held for investment having a net book value, principal and accrued interest and fees, of approximately $39.9 million.
Removed
Accordingly, net loss per weighted average Common Share outstanding for the year ended December 31, 2024 was $0.93 compared to net income per weighted average Common Share outstanding for the year ended December 31, 2023 of $0.27. 43 Table of Contents Comprehensive (loss) income For the year ended December 31, 2024, we reported a reclass of realized losses on certain equity securities of $0.3 million reflecting the recognition of unrealized losses on securities sold, as well as a reversal of losses on debt securities from unrealized to realized following the sale of such securities.
Added
The acquired assets include: • The condominium association, • Three completed condominium units, which are expected to be remarketed for sale immediately under renewed marketing efforts, and • The southern parcel, which is entitled for the development of four additional condominium units.
Removed
For the year ended December 31, 2023, we reported a reclassification of unrealized losses to provision for credit losses of $0.8 million reflecting the recognition of unrealized losses on securities held for over one year, which were not considered temporary losses, as well as an unrealized gain on investment securities of $0.1 million.
Added
The Company intends to commence construction and marketing activities for these units, with anticipated sales occurring over the next 18 to 24 months, subject to market conditions. At closing, the transaction did not result in a material gain or loss relative to the Company’s net book value of the related assets.
Removed
Such decrease is primarily due to the net effect of the sum of the following: ● Non-cash allowances and losses of (i) provision for credit losses related to loans totaling $26.9 million; (ii) valuation allowance related to loans held for sale totaling $4.9 million; (iii) loss on sale of loans totaling $22.0 million during the year ended December 31, 2024, all of which total $53.8 million, or $1.15 per share decrease in book value; ● Net loss available to common shareholders for the year ended December 31, 2024 adjusted for excluding the non-cash allowances and losses above of $9.8 million, or $0.20 per share increase in book value: and ● Cash dividends declared and paid for year ended December 31, 2024 on Common Shares totaling $11.4 million, or $0.24 per share decrease in book value. ​ Liquidity and Capital Resources Total assets at December 31, 2024 were $492.0 million compared to $620.9 million at December 31, 2023, a decrease of $128.9 million, or 20.8%.
Added
Following the transaction, Urbane Capital, a subsidiary of the Company, has assumed responsibility for the active management, development, and monetization of the condominium assets described above, consistent with its role in overseeing the Company’s owned real estate and development initiatives.
Removed
The decrease was due primarily to note sale that closed during December 2024, lower originations during the year as a result of utilizing principal repayments and cash received for the redemption of the unsubordinated unsecured note payable that was due in December 2024, and sale of $36.2 million of investments in securities.
Added
In addition, the Company has retained and further enhanced its interest in the existing approximate $12.3 million first mortgage secured by a separate and unrelated waterfront development parcel in Naples. The Company does not control or manage development activities related to the waterfront parcel and is not assuming development responsibility for that asset.
Removed
Total liabilities at December 31, 2024 were $310.3 million compared to $390.8 million at December 31, 2023, a decrease of $80.5 million, or 20.6%. This decrease was principally due to repaying in full two tranches of our unsecured unsubordinated five-year notes that matured in June and December of 2024. The total amount repaid was $58.2 million.
Added
The Company will continue to monitor this loan held for investment with respect to this parcel in its capacity as a senior secured lender, consistent with its objective of protecting principal and maximizing value.
Removed
In addition, we closed our Wells Fargo line of credit, which had an outstanding balance of $27.3 million. Finally, there was a decrease in advances from borrowers of $7.0 million. These decreases were partaially offset by our outstanding balance on the Churchill Credit Facility which increased by $7.2 million.
Added
Management believes that consolidating control of the condominium assets while maintaining a secured lender position on the waterfront parcel simplifies the overall capital structure, enhances execution clarity, and positions the Company to actively manage and monetize the assets it directly controls over time.
Removed
On March 20, 2025, we terminated our existing Needham Credit Facility and replaced it with a new Needham Credit Facility.
Added
Needham Credit Facility Update On January 21, 2026, the Company entered into Amendment No. 2 to its Credit, Security and Guaranty Agreement with Needham Bank, as administrative agent, and the lenders party thereto, with respect to the Company’s $50.0 million revolving credit facility.
Removed
Except as described below, the new Needham Credit Facility is identical to the old Needham Credit Facility in all material respects: ● First, the borrower under the new Needham Credit Facility is SN Holdings LLC, a Connecticut limited liability company formed and wholly owned by Sachem for the sole purpose of acting as the borrower under the new agreement.
Added
The amendment extends the stated maturity of the facility from March 2, 2026 to 43 Table of Contents March 2, 2028, and provides the Company with the ability to request an additional one-year extension to March 2, 2029, subject to lender consent and customary conditions. All other material terms of the credit facility remain unchanged.
Removed
Sachem is the guarantor of all SN Holdings’ obligations under the new Needham Credit Facility. ● Second, SN Holdings, in its capacity as borrower, granted Needham a lien on all its assets. SN Holdings is required to maintain assets equal to two times the outstanding balance on the new Needham Credit Facility.
Added
Significant estimates include the provisions for current expected credit losses and real estate owned, See Note 2 – Significant Accounting Policies for further details. Revenue Recognition Interest income from commercial loans is recognized, as earned, over the loan period, whereas origination and modification fee revenue on commercial loans are amortized over the term of the respective notes.
Removed
In addition, SN Holdings is required to collaterally assign to Needham mortgage loans having an outstanding principal balance in an amount no less than the greater of (i) $30 million and (ii) the aggregate principal outstanding principal balance on the new Needham Credit Facility. ● Third, Sachem, in its capacity as guarantor, agreed to grant Needham a blanket lien on all its assets.
Added
Real Estate Owned (“REO”) REO acquired through foreclosure is initially measured at fair value and is thereafter subject to an ongoing impairment analysis.
Removed
However, Needham is required to release its lien at Sachem’s request to facilitate other financing by Sachem and subsidiaries level. ● Fourth, the new Needham Credit Facility is a committed facility of up $50 million, subject to borrowing base limitations and facility covenant compliance. ● Fifth, the new Needham Credit Facility retained the same maturity of March 2, 2026 as original term with the option to extend one year provided we are in compliance with all the covenants and other terms and conditions of the new Needham Credit Facility. 45 Table of Contents Simultaneously with the execution and delivery of the Credit, Security and Guaranty Agreement, dated as of March 20, 2025, among SN Holdings, Sachem and Needham, which governs the new Needham Credit Facility, Sachem repaid the entire outstanding balance on the old credit facility, $39.6 million, and SN Holdings drew $36.1 million on the new credit facility, reducing our outstanding indebtedness by $3.5 million.
Added
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.
Removed
As of March 20, 2025, the Company was no longer in violation of any Needham Credit Facility covenants. On April 1, 2025, SN Holdings is required to make a principal payment of $9.9 million, further reducing the outstanding indebtedness to $26.2 million.
Added
Any impairment losses or recoveries are included in the Consolidated Statements of Operations. 45 Table of Contents Results of Operations Our results of operations depend primarily on net interest income, the credit performance of our loan portfolio, and the effectiveness of our operating platform.
Removed
A copy of the Credit, Security and Guaranty Agreement, dated as of March 20, 2025, among SN Holdings, Sachem and Needham, is filed as Exhibit 10.8 to this Report.
Added
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.
Removed
Subsequent Events On February 24, 2025, the Board authorized and the Company declared a dividend of $0.484375 per share on the Company’s 7.75% Series A Preferred Stock payable on March 31, 2025 to Series A Preferred Stock shareholders of record on March 15, 2025.
Added
Years ended December 31, 2025 and 2024 Year Ended December 31, 2025 2024 $ Change % Change Interest income from loans 32,222 43,154 (10,932) (25.3) % Interest income from limited liability company investments 4,838 5,127 (289) (5.6) % Interest expense and amortization of deferred financing costs (25,390) (27,798) (2,408) (8.7) % Net interest income 11,670 20,483 (8,813) (43.0) % Net interest margin 3.1 % 4.4 % Provision for credit losses related to loans held for investment (3,280) (26,928) (23,648) (87.8) % Gain (loss) on sale of loans 121 (21,973) 22,094 100.5 % Change in valuation allowance related to loans held for sale 1,014 (4,880) 5,894 120.8 % Net interest income (loss) after provision for credit losses related to loans held for investment, gain (loss) on sale of loans, and changes in valuation allowance related to loans held for sale 9,525 (33,298) 42,823 128.6 % Other income Fee income from loans 5,978 8,594 (2,616) (30.4) % Income from limited liability company investments 467 112 355 317.0 % Other investment income 141 391 (250) (64.0) % Gain on investment securities 1,566 178 1,388 779.8 % Other income 1,726 122 1,604 1,314.8 % Total other income 9,878 9,397 481 5.1 % Operating expenses Compensation and employee benefits (7,661) (6,824) 837 12.3 % General and administrative expenses (6,482) (6,841) (359) (5.2) % Impairment loss on real estate owned (1,060) (492) 568 115.4 % Gain on sale of investments in developmental real estate, real estate owned, and property and equipment, net 4,055 439 3,616 823.7 % Other expenses (1,947) (1,952) (5) (0.3) % Total operating expenses (13,095) (15,670) (2,575) (16.4) % Net income (loss) 6,308 (39,571) 45,879 115.9 % Preferred stock dividends (4,472) (4,304) 168 3.9 % Net income (loss) attributable to common shareholders 1,836 (43,875) 45,711 104.2 % Basic and diluted earnings (losses) per Common Share $ 0.04 $ (0.93) Basic and diluted weighted average Common Shares outstanding 46,893,413 47,413,012 Net income (loss) and Net income (loss) attributable to common shareholders are the primary metrics by which we assess our business performance.
Removed
The payment represents the full amount of the dividend accruing from December 30, 2024 through and including March 29, 2025. On March, 5, 2025, the Board authorized and declared a quarterly dividend of $0.05 per Common Share to be paid to shareholders of record as of the close of trading on the NYSE American on March 17, 2025.
Added
Accordingly, we closely monitor the primary drivers which consist of the following: 46 Table of Contents Net interest income Net interest income represents the largest component of our net income and is evaluated on both an absolute basis and relative to our provision for credit losses and operating expenses.
Removed
The dividend is payable on March 31, 2025. On March 10, 2025, our Compensation Committee authorized (i) a grant of 420,168 restricted Common Shares to John L.
Added
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.
Removed
Villano, which shares had a fair market value on the date of grant of approximately $500,000; and (ii) a one-time bonus grant of 20,000 restricted Common Shares to each of our non-employee directors, Arthur Goldberg, Brian Prinz, Leslie Bernhard and Jeffery Walraven. Each of our non-employee directors, with the exception of Mr.
Added
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.
Removed
Walraven, also had the option, at his or her election, to receive the fair market value equivalent of his or her grant in a lump sum cash payment of $23,800. An aggregate of 60,000 restricted Common Shares were granted to our non-employee directors, which shares had an aggregate fair market value on the date of grant of approximately $71,400. Ms.
Added
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. 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.
Removed
Bernhard elected to receive the lump sum cash payment. We identified subsequent to the above March 10, 2025 action of the Company’s Compensation Committee regarding authorization of issuance of 420,168 of restricted Common Shares to John L. Villano under the effective 2016 Equity Compensation Plan that it had over authorized on the total issuance by 320,168 shares.
Added
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.
Removed
The over issuance is a result of a specified limitation in the Plan that no more than 100,000 Common Shares may be made subject to awards to a single individual in a single plan year, subject to adjustments as provided. No identified adjustment provisions were deemed applicable.
Added
Net interest income is evaluated both before and after interest expense associated with corporate debt and before and after provisions for credit losses.
Removed
As a result of this identification, it was also determined that in calendar 2023 and 2024 there were additional similar over issuances of 30,890 and 11,857, respectively. In total, there were 362,915 restricted Common Shares which have been issued in excess of Plan limitations, all of which still remain unvested and restricted.
Added
Interest income from loans - decreased year over year, primarily reflecting continuing lower net loan originations over the past eighteen months since our historical peak balance in loans held for in investment of $508.9 million in June 2024, which reduced the average unpaid principal balance of loans held for investment. • Average loans held for investment were $376.4 million and $468.8 million for the years ended December 31, 2025 and 2024, respectively.
Removed
No other plan years have identified any additional over issuances. In an immediate remediation of this matter, on March 24, 2025, John L. Villano voluntarily forfeited the 420,168 Common Shares that were granted on March 10, 2025. See Needham Credit Facility subsequent event as disclosed above in the “Liquidity” section.
Added
The effective yield on total loans held for investment was 8.6% and 9.2%. respectively. Results were also impacted by a higher level of nonperforming loans and real estate owned, which do not contribute interest income. • Average total performing loans held for investment were $269.3 million and $366.6 million for the years ended December 31, 2025 and 2024, respectively.
Removed
Management has evaluated subsequent events through March 31, 2025, the date on which the consolidated financial statements were available to be issued. Based on the evaluation, no adjustments were required in the accompanying consolidated financial statements.

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Other SACH 10-K year-over-year comparisons