Greetings, and welcome to the Sachem Capital Corp. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Armen Kassabian, Investor Relations. Thank you, sir. You may begin.

Good morning, and thank you for joining Sachem Capital Corp.'s Third Quarter 2025 Earnings Conference Call. On the call from Sachem Capital today is Chief Executive Officer, John Villano, CPA; and Executive Vice President and Chief Financial Officer, Jeff Walraven. This morning, the company announced its operating and financial results for the quarter ended September 30, 2025. The press release is posted on the company's website, www.sachemcapitalcorp.com. In addition, the company filed its Form 10-Q today, which can be accessed on the company's website as well as the SEC's website at www.sec.gov. As a reminder, remarks made on today's conference call may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. These include the risks detailed in our annual Form 10-K and this Form 10-Q, such as those related to nonperforming loans, credit losses and market conditions. We do not undertake any obligation to update our forward-looking statements in light of new information or future events. For a more detailed discussion of the factors that may affect the company's results, please refer to our earnings release for this quarter and to our most recent SEC filings. During this call, the company will be discussing certain non-GAAP financial measures. More information about these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are contained in our SEC filings. With that, I'll now turn the call over to John.

Thank you, and thanks to everyone for joining us today. I will begin by reviewing our operating and portfolio activities for the third quarter and provide an update on our strategic progress. I will then turn the call over to Jeff to discuss our financial results and balance sheet. Then we will open the call to questions from our analysts. During the quarter, we continued working towards growing our lending platform while taking further steps to strengthen our financial position. Our efforts over the past year to protect our balance sheet have had a meaningful impact on stabilizing our portfolio while avoiding potentially dilutive financings. We are now well positioned for growth as opportunities arise. Building on the progress made in the first half of the year, in the third quarter, we remained focused on strengthening Sachem's balance sheet and improving liquidity. During the quarter, we fully repaid and delisted our SCCC 7.75% unsecured unsubordinated notes due September 30, 2025, utilizing proceeds from our recent senior secured private placement, availability on our revolving credit facility and loan repayments. The timely repayment of these notes reflect the strength of our balance sheet and underlying portfolio and enhance our financial flexibility. During the third quarter, our portfolio continued to perform in line with expectations. We still have approximately $104.1 million gross unpaid principal balance of nonperforming loans included in loans held for investment or $93 million net, down $15.5 million gross, $9 million net from the $119.6 million gross and $102 million net as of June 30, 2025. Our REO net increased nominally by $300,000 or 1.5% over the June 30 quarter. The quarter-over-quarter activity included our Urbane operations intentionally converting 2 land assets totaling $4.3 million into investment in developmental real estate entitled for multifamily development to be contributed to a…

Thank you, John. I'll now walk you through Sachem Capital's financial highlights for the quarter and year-to-date. I'll start with 3 takeaways upfront. First, sequential quarterly revenue improved. Second, credit costs moderated as reserves stepped down. And third, we efficiently repaid the September bond maturity while extending duration and keeping liquidity intact. As to our results and revenue mix, total revenue for the quarter was $12 million versus $14.8 million in the third quarter of '24 and up 11.4% from $10.8 million in the second quarter of '25. The revenue mix this quarter was $8.3 million of interest income on loans, $2 million of loan fees, $1.1 million from LLC investments, $0.1 million from other investment income and $0.5 million of other income. The year-over-year decline reflects a smaller performing loan portfolio and a higher nonaccrual mix. The sequential quarter lift alternatively reflects modest growth in average loan performing balances and steady fee generation. Lastly, gains on equity securities of $1.36 million sit below operating income. Two quick pieces of color on the above. Our loan yield on average performing loan balance of roughly $268 million for the quarter, our effective interest rate was approximately 12.4%, which is consistent with the performing loan return profile in this rate environment. Inside the $2 million of loan fees, we recognized $0.84 million of origination modification fees, $0.19 million of extensions and $0.48 million of late and other fees. Now speaking to expenses and the bottom line. Quarterly operating expenses were $12.4 million, down from $19.6 million a year ago. The big swing factor was the provision for credit losses, which fell to $0.8 million from $8.1 million as last year's reserve build gave way to a steadier credit cadence. Interest expense was $6.6 million. Compensation and benefits were $2.3 million, reflecting team…

Thanks, Jeff. We continue to believe Sachem is well positioned as a leader in small balance real estate finance. Our key priorities are resolving our remaining REO and NPLs, further enhancing liquidity with the goal of capitalizing on our robust pipeline of opportunities to originate new loans that meet our underwriting standards. As markets normalize over time, we believe our disciplined approach will drive book value stability, support our dividend and deliver long-term value for our shareholders. Thank you, and we will now open the call to questions from our analysts.

[Operator Instructions] Our first question comes from Christopher Nolan with Ladenburg Thalmann.

On the Naples property, what amount of the nonaccruals does that account for? And if the mediation on Friday is favorable, could that impact the allowance?

Chris, the Naples project is -- obviously, it's $50 million. It's approximately 14% of total loans and a very significant portion of our NPLs come just under half. But with respect to the mediation, our goal with the mediation is to secure the asset, right? We've done our best to protect asset value. Our borrower has kind of fallen off track. There is still some ongoing issues with second mortgage, which is comprised of former capital partners of our borrower. This mediation -- it's this Friday. It could be very significant to having Sachem take control of the asset and perhaps use the Urbane personnel to effectively manage and work through the sales process enables. We are considering if mediation goes well, a construction of what we call the South building, which we feel has strong marketability. It is a demand. Its price points are in line with the area, somewhat below what's going on in the area nowadays. But again, a lot depends on what happens on Friday. But I want to be clear. When we come out of that meeting on Friday, we will have a hard and fast route to resolving this issue.

And then as a follow-up question for Jeff. Jeff, in your comments, did you mention that the net charge-offs in the quarter was due to loans heading into real estate owned?

Yes, there was movement down into real estate owned. There's a schedule that is in the footnotes to -- it's in footnote 6 in REO in the [indiscernible]. And you can see there -- well, from a year-to-date perspective, charge-offs that went into REO was $8.3 million for specifically the, I guess, the quarter...

I think it's...

How much -- a good portion of that was in the quarter as there was a group of real estate that had moved into their plus, which monetizes or crystallizes actually the charge-offs that were previously in the CECL allowance.

[operator instructions] Our next question comes from Gaurav Mehta with Alliance Global Partners.

I wanted to ask you on the loan disbursement. In the prepared remarks, you gave a number for the loan disbursed during the quarter. I wanted to get some details on that number. Was that for unfunded loan commitments? Or were there any new loan originations this quarter?

There would be both.

Okay. And as far as the remaining unfunded commitment in your portfolio of around $47 million, what's the timing of that?

It would stretch out legitimately on that. I mean the number of unfunded commitments ranging between, call it, mid-$45 million and -- $55 million is kind of consistent quarter-over-quarter as we continue to turn over the portfolio. So that $47 million is legitimately spread over the next 12 to 18 months.

Okay. And then lastly, on the new loan originations, can you provide some detail on where the yields are for the loans that you're looking at in the market?

Our yields are -- our pricing of debt right now, we have not dropped yields with other market competitors. We are still able to earn our 12 and 2, perhaps maybe a little bit more. We don't feel the need that we need to discount. So our pricing is firm, and we'll need to stay firm, right? Our cost of debt has increased a bit, and we're not in a position where we can sit and discount our financing costs.

Our next question comes from Craig Kucera with Lucid Capital Markets.

Jeff, I think you mentioned that some of your G&A items increased this quarter because you had to take on some additional expenses related to REO and managing that. Is it fair to assume that, that will be recurring?

It really depends on the nature of the asset that has gone into REO. But yes, to the extent while REO balance stays where it is, but we're actively continuing to resolve that. We have a number of resolutions that are coming to a near end. But when it's in REO, we're -- we've got property taxes. We may have other preservation maintenance depending on where the property sits, how far along it was developed to make sure that there is no degradation of value.

I'd like to add one thing to Jeff's comment. Craig, excuse me, I'd like to add one thing to Jeff's comment. While the movement to REO increased, we company-wide looked that as positive. This is the culmination of a long-term battle with our borrowers to get control of our assets. And while the markets look at REO as being absolutely terrible, right, it really is the light at the end of the tunnel for us because we can now work on those projects. We're situated in a great place with our Urbane unit to work through these. And we touched on a few of them during the call. And it's the only way and the quickest way of unlocking our capital is really to dump it into the REO. So we're quite excited that we have now clarity on a large chunk of those NPLs.

Got it. And sort of excluding what could possibly happen with the Naples properties and the mediation event here this Friday. What are your expectations for kind of working out some NPLs here over the next, call it, 3 to 6 months?

Well, the process is ongoing. In a perfect sense, these things are resolved on the courthouse steps, right? And they don't come back. The NPL shows up, there's a cash infusion, whether there's a gain or a loss on the final tally, that's our best -- we'd like to see that first. The next best outcome is to gain control, like I mentioned. It is ongoing. There's a lot of activity in the pipeline. We will continue to see great improvement in the reduction of the NPLs. And I just want to be very clear, our post-COVID originations are not adding to the totals. So this is a finite number of issues that are going away, and there's really no new additions to the overall total.

We have reached the end of our question-and-answer session, which now concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.