v3.25.2
Secured Notes Payable
 6 Months Ended
Jun. 30, 2025
Debt Disclosure [Abstract]  
Secured Notes Payable Lines of Credit, Mortgage Payable and Churchill Facility
Line of Credit – Needham Bank
The Company has maintained a Credit and Security Agreement (the “Credit Agreement”) with Needham Bank, a Massachusetts co-operative bank, as the administrative agent (“Needham”) for the lenders party thereto (the “Lenders”) with respect to revolving credit facility (“Needham Credit Facility”) with commitments of $50.0 million and $65.0 million, subject to borrowing base limitations and covenant compliance, at June 30, 2025 and December 31, 2024, respectively.
On March 20, 2025, the Company entered into a new Credit Agreement with Needham, replacing the prior Needham Credit Facility, which was fully repaid and terminated on the same date. The 2025 Needham Credit Facility matures on March 2, 2026, and includes an option to extend the term by one year upon satisfaction of certain conditions. Under the new agreement, SN Holdings, a wholly owned subsidiary of the Company, serves as the borrower, and the Company serves as guarantor of all obligations. The 2025 Needham Credit Facility is secured by a first priority lien on all the assets of SN Holdings, and includes a requirement that SN Holdings maintain assets equal to at least two times the outstanding principal balance under the facility. In addition, SN Holdings is required to collaterally assign to Needham a portfolio of mortgage loans with an outstanding principal balance of no less than the greater of $30.0 million or the full drawn balance on the facility. The Company, as guarantor, has also granted Needham a blanket lien on substantially all of its assets, with the ability to request lien releases to facilitate other financings. The 2025 Needham Credit Facility, at the subsidiary borrower level, is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements, including a covenant that requires SN Holdings to maintain: (A) a ratio of Adjusted EBITDA (as defined in the Credit Agreement) to Debt Service (as defined in the Credit Agreement) of not less than 1.40 to 1.0, tested on a trailing-twelve-month basis at the end of each fiscal quarter; (B) a sum of cash, cash equivalents (at the consolidated guarantor level) and availability under the facility equal to or greater than $10 million; and (C) an Asset Coverage Ratio (as defined) of at least 150%.
As of June 30, 2025 and December 31, 2024, the total outstanding principal balances on the respective Needham Credit Facilities were $26.2 million and $40.0 million, respectively, with interest rates of 7.25% and 7.25%, respectively.
Loans under the 2025 Needham Credit Facility accrue interest at the greater of (i) the annual rate of interest equal to the “prime rate,” as published in the “Money Rates” column of The Wall Street Journal minus one-quarter of one percent (0.25%), and (ii) four and one-half percent (4.50%). Interest is paid monthly. All outstanding revolving loans and accrued
but unpaid interest are due and payable on the maturity date. As of June 30, 2025, SN Holdings had $78.9 million of assets pledged to Needham.
The Company was in compliance with all facility covenants as of June 30, 2025.
Mortgage Payable– New Haven Bank
The Company has financed its headquarters property located at 568 East Main Street, Branford, Connecticut with an adjustable-rate first lien non-recourse mortgage loan from New Haven Bank in the original principal amount of $1.7 million (the “NHB Mortgage”). The NHB Mortgage accrues interest at an initial rate of 5.75% per annum for the first 60 months. The interest rate will be adjusted on each of March 1, 2028, and March 1, 2033, to the then published 5-year Federal Home Loan Bank of Boston Classic Advance Rate, plus 1.75%. Beginning on April 1, 2023, and through March 1, 2038, principal and interest will be due and payable on a monthly basis. All payments under the NHB Mortgage are amortized based on a 20-year amortization schedule. Over the next five years, the Company is scheduled to make principal payments of approximately $50,000 to $64,000 annually. The unpaid principal amount of the loan and all accrued and unpaid interest are due and payable in full on March 1, 2038.
As of June 30, 2025 and December 31, 2024, the total outstanding principal balance on the NHB Mortgage was $1.0 million and $1.0 million, respectively.
Churchill MRA Funding I LLC Repurchase Financing Facility
On July 21, 2021, the Company consummated a $200 million master repurchase financing facility (“Churchill Facility”) with Churchill MRA Funding I LLC (“Churchill”), a subsidiary of Churchill Real Estate, a vertically integrated real estate finance company based in New York, New York. The Company uses the proceeds from the Churchill Facility to finance the continued expansion of its lending business and for general corporate purposes. Under the terms of the Churchill Facility, the Company has the right, but not the obligation, to sell mortgage loans to Churchill, and Churchill has the right, but not the obligation, to purchase those loans. In addition, the Company has the right and, in some instances the obligation, to repurchase those loans from Churchill. The amount that Churchill will pay for each mortgage loan it purchases will vary based on the attributes of the loan and various other factors. The repurchase price is calculated by applying an interest factor, as defined, to the purchase price of the mortgage loan. The Company has also pledged the mortgage loans sold to Churchill to secure its repurchase obligation. The cost of capital under the Churchill Facility is equal to the sum of (a) the greater of (i) 0.25% and (ii) the 90-day SOFR (which replaced the 90-day LIBOR) plus (b) 3%-4%, depending on the aggregate principal amount of the mortgage loans held by Churchill at that time. As of June 30, 2025 and December 31, 2024, the effective interest rate charged under the facility was 8.32% and 8.69%, respectively.
The Churchill Facility is subject to other terms and conditions, including representations and warranties, covenants and agreements typically found in these types of financing arrangements. Under one such covenant, the Company (A) is prohibited from (i) paying any dividends or making distributions in excess of 90% of its taxable income, (ii) incurring any indebtedness or (iii) purchasing any of its capital stock, unless, it has an asset coverage ratio of at least 150%; and (B) must maintain unencumbered cash and cash equivalents in an amount equal to or greater than 2.50% of the amount of its repurchase obligations. Churchill has the right to terminate the Churchill Facility at any time upon 180 days prior notice to the Company. The Company then has an additional 180 days after termination to repurchase all the mortgage loans held by Churchill.
The following table summarizes the outstanding balances under the Churchill Facility:
June 30, 2025December 31, 2024
Total
Outstanding		RateTotal
Outstanding		Rate
(in thousands)(in thousands)
Repurchase Agreement$14,442 8.32 %$33,708 8.69 %
Total$14,442 $33,708 
The following table summarizes loans held for investment pledged as collateral under the Churchill Facility:
June 30, 2025December 31, 2024
Total Carrying Value
Loans Pledged		Number of LoansTotal Carrying Value
Loans Pledged		Number of Loans
(in thousands)(in thousands)
Loans held for investment sold under the repurchase agreement$34,144 10$66,365 17
Total$34,144 $66,365 
The following table summarizes the contractual maturities for loans held for investment sold under the Churchill Facility agreement:
June 30, 2025December 31, 2024
(in thousands)
Maturing within one year$27,174 $56,050 
After one but within two years6,970 10,315 
Total$34,144 $66,365 
The NHB Mortgage and the Churchill Facility contain cross-default provisions.
Secured Notes Payable
On June 11, 2025, Holdings, an indirect, wholly-owned subsidiary of the Company, consummated a private placement of $100.0 million aggregate principal amount of Senior Secured Notes due June 11, 2030 (the "Senior Secured Notes") to various institutional investors under a Note Purchase and Guaranty Agreement (the "Agreement"). An initial draw of $50.0 million was made at closing, and the remaining $50.0 million may be drawn at any time on or prior to May 15, 2026. The Senior Secured Notes bear interest at a fixed rate of 9.875% per annum, with interest only payable quarterly on the 1st day of March, June, September and December, and include a commitment fee of 1.0% on the undrawn portion of the Senior Secured Notes. The Company paid an approximately $1.5 million original issue discount on the $100.0 million aggregate principal amount which is part of the $3.6 million of deferred financing costs recorded related to the Senior Secured Notes. The deferred financing costs will be amortized over the five year term of the Senior Secured Notes at $0.7 million per year.
The Senior Secured Notes allow optional prepayment subject to a declining make-whole amount during the first three years, a declining prepayment premium in the fourth year, and then no make-whole payment or prepayment premium after the fourth year through maturity. Upon a change of control, holders of the Senior Secured Notes have the right to prepayment, if accepted, at 101% of the outstanding principal. The Agreement contains affirmative and negative covenants customary for similar secured debt instruments, including:
•Minimum asset coverage ratio,
•Leverage and liquidity requirements,
•Restrictions on additional indebtedness, asset sales, and distributions under certain conditions, and
•Maintenance of REIT status by the Company.
The Agreement includes customary events for similar secured debt instruments. Payment of the amounts due on the Senior Secured Notes is fully and unconditionally guaranteed by the Company and Sachem Capital Corporation Intermediate, LLC, a wholly-owned subsidiary of the Company.