Sachem stock slumps 17% as 2023 earnings slide on higher expenses, provisions

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Sachem Capital’s (NYSE:SACH) stock sank 17% in Monday midday trading after the mortgage REIT’s 2023 earnings dropped as expenses and provisions for expected losses climbed. In addition, the company said it expects 2024 to be challenging due to rising interest rates and interest rate compression, geopolitical concerns, property value fluctuations, and increased competition, among other factors.

For 2023, high interest rates, weakness in commercial real estate — specifically in office properties — and banking sector challenges led to lower values in certain commercial properties secured by its loans. As a result, full-year net income attributable to common shareholders slid 29% and EPS plunged 40% Y/Y.

Sachem’s (SACH) full-year net income attributable to common shareholders dropped to $12.1M from $17.2M in 2022. EPS of $0.27, far short of the $0.47 consensus, fell from $0.46 in the previous year.

2023 revenue of $65.6M, topping the average analyst estimate of $64.3M, increased from $52.3M a year ago.

Interest and amortization of deferred financing costs jumped to $29.2M from $21.5M in 2022. Provision for credit losses related to loans surged to $5.57M from $105K. And Sachem (SACH) recorded a $809K provision for credit losses related to available-for-sale debt securities in 2023, compared with no such provision in 2022.

Total operating costs and expenses of $49.7M increased from $31.4M a year earlier.

The mREIT didn’t break out its Q4 results.

Earlier, Sachem GAAP EPS of $0.27 misses by $0.20, revenue of $65.6M beats by $1.28M

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