Business Context and Reporting Period
Company: Sachem Capital Corp.
Filing Type: Form 8-K (Current Report)
Date of Report: June 11, 2025
Event: Entry into a Material Definitive Agreement regarding a new private placement of Senior Secured Notes.
Key Financial Metrics and Transaction Details
- Debt Instrument: $100 million aggregate principal amount of Senior Secured Notes due June 11, 2030.
- Interest Rate: Fixed at 9.875% per annum, payable quarterly.
- Drawdown Schedule: $50 million drawn at closing; remaining $50 million must be drawn by May 15, 2026.
- Commitment Fee: 1.0% on the undrawn portion of the Notes.
- Upfront Costs: Approximately $1.5 million original issue discount paid.
- Guarantors: Fully and unconditionally guaranteed by Sachem Capital Corp. and Sachem Capital Corporation Intermediate, LLC.
Material Changes and Use of Proceeds
The Company has entered a new material debt agreement. The proceeds from the Notes are intended for:
- Repayment of existing facility balances.
- Origination of new investments.
- Redemption of 7.75% unsecured notes maturing in September 2025.
Prepayment Terms: Optional prepayment is subject to a declining make-whole amount for the first three years, a declining prepayment premium in the fourth year, and no premium after the fourth year. Change of control triggers a right to prepayment at 101% of outstanding principal.
Covenants, Risks, and Contingencies
The Note Purchase and Guaranty Agreement includes customary affirmative and negative covenants, specifically:
- Minimum asset coverage ratio requirements.
- Leverage and liquidity requirements.
- Restrictions on additional indebtedness, asset sales, and distributions under certain conditions.
- Maintenance of REIT status by the Company.
Regulatory Status: The Notes are not registered under the Securities Act and may not be offered or sold in the U.S. absent an effective registration statement or applicable exemption.
Investor Verification Checklist
- Verify the specific terms of the "declining make-whole" and prepayment premium schedules in the full Note Purchase and Guaranty Agreement (Exhibit 4.1).
- Confirm the Company's current leverage and liquidity ratios to ensure compliance with the new covenants.
- Monitor the timeline for the redemption of the 7.75% unsecured notes due September 2025 to assess refinancing execution.
- Review the press release (Exhibit 99.1) for any additional commentary on the strategic rationale for the 9.875% interest rate in the current market environment.