Line of Credit and Mortgage Payable |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Debt Disclosure [Abstract] | |
| Line of Credit and Mortgage Payable | Line of Credit and Mortgage Payable Line of Credit – Needham Bank The Company has 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 a committed $50.0 million revolving credit facility (the “Needham Credit Facility”), subject to borrowing based limitations and facility covenant compliance. Under the Credit Agreement, the borrower is SN Holdings and the Company is the guarantor of all SN Holdings’ obligations under the Credit Agreement. SN Holdings, in its capacity as borrower, has granted Needham a lien on all its assets. SN Holdings is required to maintain assets equal to 2.0 times of the outstanding balance on the new credit facility. 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) $30.0 million and (ii) the aggregate principal outstanding principal balance on the facility. The Company, in its capacity as guarantor, has agreed to grant Needham a blanket lien on all its assets. However, Needham is required to release its lien at the Company’s request to facilitate other financings in accordance with the terms of the Credit Agreement. Loans under the 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%). All amounts borrowed under the Needham Credit Facility are secured by a first priority lien on virtually all of the Company’s assets. Assets excluded from the lien include real estate owned by the Company (other than real estate acquired pursuant to foreclosure). Prior to Amendment No.2 (defined below), the Needham Credit Facility was due to expire on March 2, 2026 and the Company had a right to extend the term for one year upon the consent of Needham and the Lenders, which consent could not be unreasonably withheld, and so long as it is not in default and satisfies certain other conditions. On January 21, 2026, the Company entered into Amendment No. 2 (“Amendment No. 2”) to the Credit Agreement. Amendment No. 2 extends the maturity date of the Needham Credit Facility from March 2, 2026 to March 2, 2028 and provides for an additional conditional one year extension to March 2, 2029. All other terms of the Credit Agreement remain unchanged. All outstanding revolving loans and accrued but unpaid interest is due and payable on the expiration date. The Company may terminate the Needham Credit Facility at any time without premium or penalty by delivering written notice to Needham at least ten (10) days prior to the proposed date of termination. The Needham Credit Facility 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 the Company 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 and availability under the facility equal to or greater than $10.0 million; and (C) an asset coverage ratio of at least 150%. As of March 31, 2026 and December 31, 2025, the total outstanding principal balance on the Needham Credit Facility was $29.0 million and $19.0 million, respectively, with an interest rate of 6.50% and 6.50%, respectively. As of March 31, 2026 and December 31, 2025, the Company was in compliance with all debt covenants. Mortgage Payable On February 28, 2023, the Company entered into an adjustable-rate mortgage loan with 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 loan are amortized based on a 20-year amortization schedule. Over the next five years, the Company is scheduled to make principal payments ranging from $47,000 to $59,000 annually, with the remaining balance due thereafter. The unpaid principal amount of the loan and all accrued and unpaid interest are due and payable in full on March 1, 2038. The loan is a non-recourse obligation, secured by a first mortgage lien on the property located at 568 East Main Street, Branford, Connecticut. As of March 31, 2026 and December 31, 2025, the total outstanding principal balance on the NHB Mortgage was $0.9 million and $0.9 million, respectively. Senior Secured Notes PayableOn 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 "Senior Secured Note Purchase Agreement"). An initial draw of $50.0 million was made at closing, an additional draw of $40.0 million was made in September 2025, and the remaining $10.0 million was drawn in March 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 using the effective interest method and amortization by year is as follows: 2026 - $481,000, 2027 - $718,000, 2028 - $804,000, 2029 - $894,000, and 2030 - $401,000. 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 Senior Secured Note Purchase 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 Company was in compliance with all debt covenants as of March 31, 2026 and December 31, 2025. The Senior Secured Note Purchase 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.
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