Sachem Capital cancels debt deal due to market conditions

Even as several mortgage industry companies turned to the debt markets this week, Sachem Capital Corp., a hard money lender, has canceled its offering, citing market conditions.

A prospectus filed with the Securities and Exchange Commission on June 17, along with a press release from the same day, does not list a dollar amount for the offering, which would have had a five-year maturity.

Sachem issued a second press release 10 days later canceling the transaction.

"Our decision to withdraw our previously announced debt offering was based solely on our determination that the proposed pricing of the offering was unfavorable to the long-term interests of Sachem's business," CEO John Villano said in a press release.

Sachem is a real estate investment trust that originates and services short-term loans (three years or less) to real estate investors to fund acquisition, renovation, development, rehabilitation, or improvement of residential or commercial properties.

"We want to assure our shareholders and noteholders that Sachem has ample liquidity through its existing credit facilities and liquid mortgage portfolio to continue to execute on the business consistent with past practice," Villano said. "In addition, Sachem will continue its disciplined underwriting and loan origination processes to maximize risk adjusted returns for shareholders and to protect our capital."

When it comes to liquidity, Sachem has a $200 million master repurchase financing facility with a subsidiary of Churchill Real Estate; a margin loan account with Wells Fargo that allows us to borrow against our investment securities portfolio; and a $65 million revolving credit facility with Needham Bank, a Massachusetts co-operative bank, the offering prospectus said.

At the end of the first quarter, Sachem had approximately $25.9 million outstanding under the Churchill facility and $35 million from Needham's. It also had cash and cash equivalents of approximately $18.4 million.

During the past week, three companies, including another REIT, New York Investment Trust, priced debt transactions. That deal was for $60 million in 9.125% senior, unsecured notes due to mature on July 1, 2029.

Finance of America, a reverse mortgage lender, did a deal on a total of $350 million of debt that extended maturities from next year to 2026 and 2029.

Then Essent Group priced $500 million of senior unsecured notes, planning to use $425 million of proceeds to pay off the borrowings of a term loan so that it could be refinanced.