Good day, ladies and gentlemen, and welcome to the Sachem Capital Third Quarter 2020 Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host for today, Mr. David Waldman with Investor Relations. Sir, the floor is yours.

Good morning and thank you for joining Sachem Capital Corp.'s Third Quarter 2020 Conference Call. On the call with us today is John Villano, CPA, Chief Executive Officer and Chief Financial Officer of Sachem Capital. On November 9, the company announced its operating results for the quarter ended September 30, 2020, and its financial condition as of that date. The press release is posted on the company's website, www.sachemcapitalcorp.com. In addition, the company filed its Form 10-Q with the Securities and Exchange Commission on November 6, which can be accessed on the company's website as well as the SEC's website at www.sec.gov. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at (212) 671-1021. Before Mr. Villano reviews the company's operating results for the third quarter of 2020 and the company's financial condition at September 30, 2020, we would like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in this conference call, including statements regarding our future results of operations and financial position, strategy and plans and our expectations for future operations, are forward-looking statements. The words anticipate, estimate, expect, project, plan, seek, intend, believe, may, might, will, should, could, likely, continue, design and the negative of such terms and other words in terms of similar expressions are intended to identify forward-looking statements these. Forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial conditions, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward and objectives -- these forward-looking statements are subject to several risks, uncertainties and assumptions as described in the company's quarterly report…

Thank you, and thanks to everyone for joining us today. I am pleased to report your company achieved strong financial results for the third quarter, despite the lingering effects of the COVID-19 pandemic. Our quarterly revenue increased 26% to $4.3 million compared to $3.4 million for the same period in 2019. We attribute this improvement to the fact that fix-and-flip market has continued to improve in our traditional markets as builders and developers scramble to satisfy the demand for move-in inventory. This is further illustrated by the increase in our loans in process and the increasing number of loan payoffs. As discussed on our last quarter call, once COVID took hold, we implemented stricter underwriting guidelines to reduce our lending risk by focusing on preservation of capital and careful maintenance of our existing portfolio. Due to improving conditions, effective July 1, 2020, we relaxed some of these measures by increasing our loan-to-value ratio back to 70%. However, we are still maintaining a cautionary approach. We saw robust demand for our loan products in the third quarter of 2020. We believe this demand was driven by several factors. First, with the overall improvement in our economy, specifically the Northeast, due in part to the easing of imposed government pandemic restrictions. Second, we believe we are very well positioned from a competitive standpoint. Banks and other traditional lenders have a limited desire to lend and cannot move quickly to handle the borrowers' desire to close quickly. Let's not forget, the fix-and-flip arena is highly competitive and a quick close often gets the contract for sale. Further, many nontraditional lenders remain undercapitalized. Third, the residential real estate market in Connecticut, our primary market, has stabilized and has proven quite resilient. The suburban areas we serve in New York and Connecticut have benefited from…

[Operator Instructions] We'll go first to Christopher Nolan at Ladenburg Thalmann.

John, what is the target leverage ratio going forward, please?

Chris, to be perfectly honest, our leverage grows in small chunks, right? So we did $14 million in September, we did $14 million in October. We are looking to a 1:1 leverage initially. At that point, we're going to evaluate, we're going to see how the company performs with the debt level. But let me add, in terms of our competitors, our debt -- our indebtedness is unbelievably low for companies in our space. Their debt-to-equity is in multiples. We haven't even gotten to 1:1 yet. So in terms of our debt appetite, it is strong. We are not [ rampant debt pigs ], so to speak. The debt has to be right and it has to be well timed.

Got you. Well, for the $14 million raised in October, does that include the underwriter's option, because I thought I read were.

I believe it was $13-plus million issued, totaling approximately $14 million. I do have access to this if you need more detail.

No, no. I thought it was $16 million. I'll go back and check. Okay. Florida, what is the -- how large do you expect to grow this as part of the portfolio?

So let me step back and say we have individuals in Florida. We are building relationships with loan originators. We are moving slowly in this space. We are trying to target Southern Florida from Fort Myers across through Fort Lauderdale and down. We have legal representation. We have appraisal services. And most importantly, we have some individuals that are acting as underwriters. And hopefully in the near future, if things go according to plan, they could be part of us. So it's slow and steady. And Chris, it's all about capital, right? We can go into any market and lend buckets of money. We just have to make sure that we have it, and we have continued sources for it. So it is...

Capital was definitely raised.

That's correct, yes.

[Operator Instructions] We'll go next to Rommel Dionisio at Aegis.

So thanks for the color on Florida. I wonder if you could just give us a little color on Texas, what your thoughts there in terms of maybe timing, particular regions you're looking at, how you plan to attack that market? Just as you did on -- just as you gave us some nice color on Florida.

Okay. So back before the real onset of COVID, and I'm talking January and February of 2020, we were building a relationship with a small, let's call it, Sachem-like lender in Austin, Texas. And we had started doing a few loans. They are well managed. They are funded with partner capital. Many of their partners, I am familiar with. So we started an arrangement, where we were lending together, relatively small. I don't think we did $2 million of loans. And then once COVID took hold, we backed away. And we kept our distance. We worked our way through. They worked their way through a little bit. And we have now begun discussions with them once again.

Congrats on the quarter.

Thank you.

And we'll return to Christopher Nolan at Ladenburg Thalmann.

John, funding strategies, given that the stock is currently below books, what are you thinking about raising capital in 2021, assuming that you don't get a share price bump in trade above books?

Well, I -- selling shares is difficult for us, right? We have to -- we're still working through the shares that we sold a year ago in July, right? So we have an increased share count. We would rather not sell shares in the near future, especially at this price. So we think we have room to pack on a little bit more debt. And once we do that, we're going to see how the company feels, right? We're going to see how cash flow is affected and things like that. And then we'll decide. And my guess is we'll decide probably towards the end of the first quarter, again depending on share price. We never want to sell shares cheaply. And we also understand that the sale of shares by us makes it tough on our shareholders as well if there's any kind of decline in price. So debt first. Equity, maybe sometime next year, say, the end of the first quarter. But again, it all depends on how this -- the world continues to evolve and the performance of our notes as well.

Final question. Given the raise in October, are you using that to pay down the outstanding balance on the credit facility?

No. So what we are doing is we have an account that has, as of today, $41 million in it. We are borrowing off of it. It is just a step above bond-proof. And we pull from it. So we don't have an operating line of credit where we can pay down excess cash. So what we'll do is we'll park our bond funds there, and then we start ripping through that money as the loans come to be. We are expecting a fairly strong push for the quarter. And like I said in our call, our pipeline is strong. And it's quite large, as a matter of fact, and we're probably going to be dipping into those funds significantly over the next month.

Got you. And on the balance sheet, that short-term investments for those bonds?

The short term, it's, I would say, a very few stocks, mutual funds, preferred stocks of large quality -- good quality companies.

And with no other questions holding, Mr. Villano, I'll turn the conference back to you for any additional or closing comments.

Okay. Thank you all for joining us today. Stay tuned. We're still writing our book here. So be patient and talk to you in another 3 or 4 months. Take care. Bye now.

Ladies and gentlemen, that will conclude today's presentation. We thank you for your participation. You may disconnect at this time, and have a great day.