10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 000-55780

Terra Secured Income Fund 5, LLC

(Exact name of registrant as specified in its charter)

Delaware	90-0967526
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

205 West 28th Street, 12th Floor

New York, New York 10001

(Address of principal executive offices) (Zip Code)

(212) 753-5100

(Registrant’s telephone number, including area code)

Securities registered pursuant to section 12(b) of the Securities Exchange Act of 1934:

None

Securities registered pursuant to section 12(g) of the Securities Exchange Act of 1934:

Units of Limited Liability Company Interests

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☑

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of August 11, 2023, the registrant had 6,622.2 units of limited liability company interests outstanding. No market value has been computed based upon the fact that no active trading market had been established as of the date of this document.

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Statements of Financial Condition as of June 30, 2023 (unaudited) and December 31, 2022	2
	Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)	3
	Statements of Changes in Members’ Capital for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)	4
	Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (unaudited)	5
	Schedules of Investment as of June 30, 2023 (unaudited) and December 31, 2022	6
	Notes to Financial Statements as of June 30, 2023 (unaudited)	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
Signatures		41

1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Terra Secured Income Fund 5, LLC

Statements of Financial Condition

	June 30, 2023		December 31, 2022
	(unaudited)
Assets
Equity investment in Terra JV, LLC at fair value (cost of $209,715,486 and   $215,070,522, respectively)	$	189,317,374	$	210,008,457
Cash and cash equivalents	71,781		102,256
Other assets	20,821		40,434
Total assets	$	189,409,976	$	210,151,147
Liabilities and Members’ Capital
Liabilities
Accounts payable and accrued expenses	$	245,691	$	161,088
Total liabilities	245,691		161,088
Commitments and contingencies (Note 5)
Members’ capital:
Managing member	—		—
Non-managing members	189,164,285		209,990,059
Total members’ capital	189,164,285		209,990,059
Total liabilities and members’ capital	$	189,409,976	$	210,151,147
Net asset value per unit	$	28,565	$	31,710

See notes to unaudited financial statements.

2

Terra Secured Income Fund 5, LLC

Statements of Operations

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Investment income
Dividend income	$	—	$	756,984	$	292,254	$	1,515,094
Other operating income	5		15		23		26
Total investment income	5		756,999		292,277		1,515,120
Operating expenses
Professional fees	105,069		133,139		316,401		260,199
Other	935		1,527		2,393		2,919
Total operating expenses	106,004		134,666		318,794		263,118
Net investment (loss) income	(105,999)		622,333		(26,517)		1,252,002
Net change in unrealized (depreciation) appreciation on    investment	(14,064,801)		3,572,487		(15,336,047)		4,591,009
Net (decrease) increase in members’ capital resulting    from operations	$	(14,170,800)	$	4,194,820	$	(15,362,564)	$	5,843,011
Per unit data:
Net investment (loss) income per unit	$	(16)	$	94	$	(4)	$	189
Net (decrease) increase in members’ capital resulting from    operations per unit	$	(2,140)	$	633	$	(2,320)	$	881
Weighted average units outstanding	6,622.2		6,626.2		6,622.2		6,630.9

See notes to unaudited financial statements.

3

Terra Secured Income Fund 5, LLC

Statements of Changes in Members’ Capital

(Unaudited)

	Managing Member		Non-Managing Members		Total
Balance, January 1, 2023	$	—	$	209,990,059	$	209,990,059
Capital distributions	—		(2,731,607)		(2,731,607)
Decrease in members’ capital resulting from operations:
Net investment income	—		79,482		79,482
Net change in unrealized depreciation on investment	—		(1,271,246)		(1,271,246)
Net decrease in members’ capital resulting from operations	—		(1,191,764)		(1,191,764)
Balance, March 31, 2023	—		206,066,688		206,066,688
Capital distributions	—		(2,731,603)		(2,731,603)
Increase in members’ capital resulting from operations:
Net investment loss	—		(105,999)		(105,999)
Net change in unrealized depreciation on investment	—		(14,064,801)		(14,064,801)
Net decrease in members’ capital resulting from operations	—		(14,170,800)		(14,170,800)
Balance, June 30, 2023	$	—	$	189,164,285	$	189,164,285

	Managing Member		Non-Managing Members		Total
Balance, January 1, 2022	$	—	$	218,076,577	$	218,076,577
Capital distributions	—		(2,979,044)		(2,979,044)
Increase in members’ capital resulting from operations:
Net investment income	—		629,669		629,669
Net change in unrealized appreciation on investment	—		1,018,522		1,018,522
Net increase in members’ capital resulting from operations	—		1,648,191		1,648,191
Balance, March 31, 2022	—		216,745,724		216,745,724
Capital distributions	—		(2,813,249)		(2,813,249)
Capital redemptions	—		(400,728)		(400,728)
Increase in members’ capital resulting from operations:
Net investment income	—		622,333		622,333
Net change in unrealized appreciation on investment	—		3,572,487		3,572,487
Net increase in members’ capital resulting from operations	—		4,194,820		4,194,820
Balance, June 30, 2022	$	—	$	217,726,567	$	217,726,567

See notes to unaudited financial statements.

4

Terra Secured Income Fund 5, LLC

Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net (decrease) increase in members’ capital resulting from operations	$	(15,362,564)	$	5,843,011
Adjustments to reconcile net increase in members’ capital resulting from   operations to net cash provided by operating activities:
Return of capital on investment	5,355,036		4,340,218
Net change in unrealized depreciation (appreciation) on investment	15,336,047		(4,591,009)
Changes in operating assets and liabilities:
Decrease in other assets	19,613		15,000
Increase in accounts payable and accrued expenses	84,603		44,742
Net cash provided by operating activities	5,432,735		5,651,962
Cash flows from financing activities:
Distributions paid	(5,463,210)		(5,792,293)
Payment for capital redemptions	—		(400,728)
Net cash used in financing activities	(5,463,210)		(6,193,021)
Net decrease in cash and cash equivalents	(30,475)		(541,059)
Cash and cash equivalents at beginning of period	102,256		836,052
Cash and cash equivalents at end of period	$	71,781	$	294,993

See notes to unaudited financial statements.

5

Terra Secured Income Fund 5, LLC

Schedule of Investment

June 30, 2023 (Unaudited) and December 31, 2022

Terra Secured Income Fund 5, LLC (the “Company”) invested substantially all of its equity capital in the purchase of shares of common stock of Terra Property Trust, Inc. (“Terra Property Trust”), an affiliate, through its parent, Terra JV, LLC (“Terra JV”). As of both June 30, 2023 and December 31, 2022, Terra JV held 70.0% of the issued and outstanding shares of Terra Property Trust’s common stock, and the Company and Terra Secured Income Fund 7, LLC (“Terra Fund 7”) owned an 87.6% and 12.4% percentage interest, respectively, in Terra JV, and Terra JV became the Company’s only investment (Note 4). Accordingly, as of both June 30, 2023 and December 31, 2022, the Company indirectly beneficially owned 61.3% of the outstanding shares of common stock of Terra Property Trust through Terra JV. Additionally, as of both June 30, 2023 and December 31, 2022, Terra JV was jointly-controlled by the Company and Terra Fund 7.

    The following table presents a summary of the Company’s investment as of June 30, 2023 and December 31, 2022:

		Percentage Interest		June 30, 2023						December 31, 2022
Investment	Date Acquired			Cost		Fair Value		% of Members’ Capital		Cost		Fair Value		% of Members’ Capital
Terra JV, LLC	3/2/2020	87.6	%	$	209,715,486	$	189,317,374	100.1	%	$	215,070,522	$	210,008,457	100.0	%

The following table presents a schedule of loans held for investment by Terra Property Trust at 100% and the Company’s pro-rata share of the fair value at June 30, 2023:

Portfolio Company	Collateral Location	Property Type	Coupon Rate		Current Interest Rate		Exit Fee		Acquisition Date	Maturity Date	Principal Amount		Amortized Cost		Fair Value (1)		Pro Rata Fair Value (2)		% (3)
Loans held for investment:
Mezzanine loans:
150 Blackstone River Road, LLC	US - MA	Industrial	8.5	%	8.5	%	—	%	9/21/2017	9/6/2027	$	7,000,000	$	7,000,000	$	6,557,811	$	4,019,938	2.1	%
610 Walnut Investors LLC (4)(5)	US - CA	Office	Term SOFR + 12.0% (2.0% Floor)		17.1	%	1.0	%	8/30/2022	9/7/2024	20,244,654		20,401,547		20,407,825		12,509,997		6.6	%
Dwight Mezz II, LLC	US - CA	Student    housing	11.0	%	11.0	%	—	%	5/11/2017	5/6/2027	3,000,000		2,925,837		2,891,786		1,772,665		0.9	%
UNJ Sole Member, LLC (6)	US - CA	Mixed-use	Term SOFR + 10.15% (4.85% Floor)		15.3	%	1.0	%	11/24/2021	6/1/2027	7,444,357		7,485,029		7,468,372		4,578,112		2.4	%
											37,689,011		37,812,413		37,325,794		22,880,712		12.0	%
Preferred equity investments:
370 Lex Part Deux, LLC (7)	US - NY	Office	Term SOFR + 8.36% (2.44% Floor)		13.5	%	—	%	12/17/2018	7/9/2022	67,726,792		67,726,793		56,454,778		34,606,779		18.2	%
Ann Street JV LLC	US - GA	Multifamily	14.0	%	14.0	%	1.0	%	11/12/2021	6/7/2024	16,339,266		16,685,384		16,235,521		9,952,374		5.3	%
Asano Bankers Hill, LLC	US - CA	Mixed-use	SOFR + 15.0% (0.25% Floor)		20.1	%	1.0	%	2/2/2022	2/5/2025	18,567,296		18,935,757		19,354,303		11,864,188		6.3	%
REEC Harlem Holdings Company, LLC (8)	US - NY	Mixed-use	LIBOR + 12.5%		17.7	%	—	%	3/9/2018	3/9/2023	15,258,233		15,258,233		2,358,983		1,446,057		0.8	%
RS JZ Driggs, LLC (9)	US - NY	Multifamily	12.3%		12.3	%	1.0	%	5/1/2018	1/1/2021	5,351,053		5,351,053		5,351,053		3,280,195		1.7	%
											123,242,640		123,957,220		99,754,638		61,149,593		32.3	%

See notes to unaudited financial statements.

6

Terra Secured Income Fund 5, LLC

Schedule of Investment (Continued)

June 30, 2023 (Unaudited) and December 31, 2022

Terra Property Trust’s Schedule of Loans Held for Investment as of June 30, 2023 (Continued):

Portfolio Company	Collateral Location	Property Type	Coupon Rate		Current Interest Rate		Exit Fee		Acquisition Date	Maturity Date	Principal Amount		Amortized Cost		Fair Value (1)		Pro Rata Fair Value (2)		% (3)
Loans held for investment:
First mortgages:
14th & Alice Street Owner, LLC (10)	US - CA	Multifamily	LIBOR + 4.0% (0.25% Floor)		9.2	%	2.0	%	10/15/2021	4/15/2023	$	1,364,944	$	1,364,944	$	—	$	—	—	%
1389 Peachtree St, LP; 1401 Peachtree St, LP;    1409 Peachtree St, LP (11)	US - GA	Office	Term SOFR + 4.61%		9.8	%	0.5	%	2/22/2019	8/10/2023	58,865,991		59,155,584		55,139,746		33,800,664		17.9	%
AGRE DCP Palm Springs, LLC (11)	US - CA	Hotel - full/    select service	Term SOFR +5.1% (1.8% Floor)		10.3	%	1.5	%	12/12/2019	1/1/2024	43,222,382		43,826,614		43,499,719		26,665,328		14.1	%
AARSHW Property LLC (12)(13)	US - NJ	Industrial	SOFR +7.5% (0.15% Floor)		12.6	%	0.9	%	3/7/2022	8/17/2024	57,340,667		57,865,942		58,221,180		35,689,583		18.8	%
AAESUF Property LLC (12)	US - NJ	Land	SOFR + 11.95% (0.05% Floor)		17.0	%	5%-10%		3/15/2022	3/1/2024	20,031,209		20,825,909		21,140,968		12,959,413		6.9	%
American Gilsonite Company	US - UT	Infrastructure	14.0	%	14.0	%	1.0	%	8/31/2021	8/31/2023	21,250,000		21,556,794		21,467,893		13,159,818		7.0	%
Fourth Street's Kingswood, LLC (12)(14)	US - WA	Multifamily	Term SOFR + 7.75% (4.25% Floor)		12.9	%	1.0	%	3/24/2023	3/24/2026	6,400,791		6,120,513		6,445,560		3,951,128		2.1	%
Grandview’s Remington Place, LLC (15)	US - WA	Multifamily	Term SOFR + 4.45% (0.05% Floor)		9.6	%	0.5	%	4/22/2022	4/22/2024	23,100,000		23,203,590		23,236,153		14,243,762		7.5	%
Hillsborough Owners LLC	US - NC	Mixed-use	Term SOFR + 8.1% (0.25% Floor)		13.3	%	1.0	%	10/27/2021	11/1/2023	21,476,465		21,578,080		21,627,967		13,257,944		7.0	%
Mesa AZ Industrial Owner, LLC (4)(12)	US - AZ	Land	Term SOFR + 12.7% (2.3% Floor)		17.8	%	1.0	%	9/15/2022	9/14/2023	31,000,000		31,296,394		31,296,394		19,184,690		10.1	%
NB Factory TIC 1, LLC (15)	US - UT	Student housing	Term SOFR + 5.0% (0.25% Floor)		10.1	%	3.3	%	8/16/2021	3/5/2024	28,000,000		28,842,742		28,917,484		17,726,418		9.4	%
Patrick Henry Recovery Acquisition, LLC (11)	US - CA	Office	Term SOFR +3.06% (1.5% Floor)		8.2	%	0.3	%	11/25/2019	12/1/2023	18,000,000		18,043,198		17,923,436		10,987,066		5.8	%
The Lux Washington, LLC (12)	US - WA	Multifamily	Term SOFR + 7.1% (0.75% floor)		12.3	%	1.0	%	7/22/2021	1/22/2024	23,468,419		23,746,824		23,748,850		14,558,045		7.7	%
University Park Berkeley, LLC (12)	US - CA	Multifamily	Term SOFR + 5.50% (4.00% Floor)		10.6	%	1.0	%	3/30/2023	10/5/2024	27,402,924		27,750,542		27,748,949		17,010,106		9.0	%
											380,923,792		385,177,670		380,414,299		233,193,965		123.3	%
Total gross loans held for investment											541,855,443		546,947,303		517,494,731		317,224,270		167.6	%
Obligations under participation agreements (4)(5)											(13,678,820)		(13,789,070)		(13,789,071)		(8,452,701)		(4.5)	%
Allowance for credit losses											—		(33,128,796)		—		—		—	%
Net loans held for investment											$	528,176,623	$	500,029,437	$	503,705,660	$	308,771,569	163.1	%

See notes to unaudited financial statements.

7

Terra Secured Income Fund 5, LLC

Schedule of Investment (Continued)

June 30, 2023 (Unaudited) and December 31, 2022

Terra Property Trust’s Schedule of Loans Held for Investment as of June 30, 2023 (Continued):

Operating real estate:
Description	Acquisition Date		Fair Value of Real Estate (1)		Encumbrance		Net Investment		Pro Rata Net Investment (2)		% (3)(17)
Multi-tenant office building in Santa Monica, CA (16)	7/30/2018		$	27,603,118	$	27,603,118	$	—	$	—	—		%
Industrial buildings in Dallas/Fort Worth, TX	3/24/2023		48,798,273		32,368,367		16,429,906		10,071,532		5.3		%
Industrial buildings in Dallas/Fort Worth, TX (18)	5/25/2023		83,288,961		40,250,000		43,038,961		26,382,883		13.9		%
			$159,690,352		$100,221,485		$59,468,867		$36,454,415		19.2		%
Portfolio Company	Dividend Yield		Acquisition Date		Maturity Date		Shares		Cost		Fair Value			Pro Rata Fair Value (2)		% (3)
Marketable securities (19):
Corporate Bonds
Terra Property Trust, Inc. Corporate Bonds	6.0	%	Various		6/30/2026		63,367		$	1,188,019	$	1,203,973		$	738,035	0.39	%

Equity investments:
Portfolio Company	Ownership Interest	Cost		Fair Value		Pro Rata Fair Value (2)		% (3)
Mavik Real Estate Special Opportunities Fund, LP - limited partnership interest (20)	14.9%	$	18,136,440	$	17,669,396	$	10,831,340	5.7	%
LEL Arlington JV LLC - limited liability member units (21)	27.2%	6,689,133		7,483,563		4,587,424		2.4	%
LEL NW 49th JV LLC - limited liability member units (21)	27.2%	1,546,725		2,516,474		1,542,599		0.8	%
TCG Corinthian FL Portfolio JV LLC (21)	34.0%	6,236,696		7,105,467		4,355,651		2.3	%
		$	32,608,994	$	34,774,900	$	21,317,014	11.2	%

__________________________

(1)Because there is no readily available market for these investments, these loans were valued using significant unobservable inputs under Level 3 of the fair value hierarchy and were approved in good faith by Terra REIT Advisors, LLC (“Terra REIT Advisors”), Terra Property Trust’s manager, pursuant to Terra Property Trust’s valuation policy.

(2)Amount represents the Company’s portion, or 61.3%, of the fair value or net investment value.

(3)Percentage is based on the Company’s pro rata share of the fair value or net investment value over the Company’s total members’ capital of $189.2 million at June 30, 2023.

(4)Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

(5)The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

(6)Terra Property Trust purchased a portion of the interest in this loan from Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party real estate investment trust managed by Terra REIT Advisors, via a participation agreement.

8

(7)This loan is currently in maturity default. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $2.5 million and $4.8 million, respectively, on this loan because recovery of such income was doubtful. As of June 30, 2023, Terra Property Trust recorded an allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

(8)This loan is currently in maturity default. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $1.0 million and $1.8 million, respectively, on this loan because recovery of such income was doubtful. Additionally, the fair value of the loan declined as a result of a decline in the fair value of the collateral. As of June 30, 2023, Terra Property Trust recorded an allowance for credit losses of $12.9 million on the loan as a result of a decline in the fair value of the collateral.

(9)This loan is in maturity default. Terra Property Trust initiated a litigation to seek full repayment of the loan from the sponsor. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $0.3 million and $0.5 million, respectively, on this loan because recovery of such income was doubtful.

(10)Terra Property Trust does not anticipate a full recovery of the remaining principal balance, as such, the loan is fully reserved.

(11)These loans were used as collateral for $85.4 million of borrowings under a repurchase agreement.

(12)These loans were used as collateral for $105.4 million of borrowings under a revolving line of credit.

(13)Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

(14)Terra Property Trust is committed to fund up to $39.0 million of first mortgage as well as $3.0 million of subordinated loan. The subordinated loan bears interest at an annual rate of Term SOFR plus 12.0% with a Term SOFR floor of 4.25%.

(15)These loans were used as collateral for $37.5 million of borrowings under a repurchase agreement.

(16) Terra Property Trust acquired this property through foreclosure of a $54.0 million first mortgage. The mortgage loan payable on this property is currently in default. Terra Property Trust has sought to convey its interest in the office building and ground lease in lieu of foreclosure. Additionally, during the three and six months ended June 30, 2023, Terra Property Trust recognized an impairment charge of $11.8 million to reduce the carrying value of the real estate property to its estimated fair value.

(17)Percentage is based on Terra Property Trust’s net exposure on the property (real estate owned less encumbrance).

(18)In May 2023, Terra Property Trust acquired five industrial buildings for $3.5 million cash payment and the settlement of a mezzanine loan that was accounted for as an equity investment and five senior loans that were held for investment.

(19)From time to time, Terra Property Trust may invest in short-term debt and equity securities. These securities are comprised of shares of common and preferred stock and bonds.

(20)On August 3, 2020, Terra Property Trust entered into a subscription agreement with Mavik Real Estate Special Opportunities Fund, LP (“RESOF”) whereby Terra Property Trust committed to fund up to $50.0 million to purchase a limited partnership interest in RESOF. RESOF’s primary investment objective is to generate attractive risk-adjusted returns by purchasing performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. As of June 30, 2023, the unfunded commitment was $37.4 million.

(21)As of June 30, 2023, Terra Property Trust beneficially owned equity interest in three joint ventures that invest in real estate properties.

See notes to unaudited financial statements.

9

Terra Secured Income Fund 5, LLC

Schedule of Investment (Continued)

June 30, 2023 (Unaudited) and December 31, 2022

The following table presents a schedule of loans held for investment held by Terra Property Trust as of December 31, 2022:

Portfolio Company	Collateral Location	Property Type	Coupon Rate		Current Interest Rate		Exit Fee		Acquisition Date	Maturity Date	Principal Amount		Amortized Cost		Fair Value (1)		Pro Rata Fair Value (2)		% (3)
Loans held for investment:
Mezzanine loans:
150 Blackstone River Road, LLC	US - MA	Industrial	8.5	%	8.5	%	—	%	9/21/2017	9/6/2027	$	7,000,000	$	7,000,000	$	6,638,219	$	4,069,228	1.9	%
610 Walnut Investors LLC (4)(5)	US - CA	Office	Term SOFR + 12.0% (2.0% Floor)		16.4	%	1.0	%	8/30/2022	9/7/2024	18,625,738		18,738,386		18,767,281		11,504,343		5.5	%
Dwight Mezz II, LLC	US - CA	Student    housing	11.0	%	11.0	%	—	%	5/11/2017	5/6/2027	3,000,000		2,916,369		2,914,042		1,786,308		0.9	%
Havemeyer TSM LLC (6)	US - NY	Mixed-use	15.0	%	15.0	%	1.0	%	12/18/2020	3/1/2023	3,282,208		3,313,813		3,315,293		2,032,275		1.0	%
UNJ Sole Member, LLC (6)	US - CA	Mixed-use	15.0	%	15.0	%	1.0	%	11/24/2021	6/1/2027	7,444,357		7,482,547		7,371,101		4,518,485		2.2	%
											39,352,303		39,451,115		39,005,936		23,910,639		11.5	%
Preferred equity investments:
370 Lex Part Deux, LLC (7)	US - NY	Office	LIBOR + 8.25% (2.44% Floor)		12.6	%	—	%	12/17/2018	7/9/2022	67,586,792		67,586,792		56,338,079		34,535,242		16.5	%
Ann Street JV LLC	US - GA	Multifamily	14.0	%	14.0	%	1.0	%	11/12/2021	6/7/2024	15,217,540		15,648,482		15,127,126		9,272,928		4.4	%
Asano Bankers Hill, LLC	US - CA	Mixed-use	SOFR + 15.0% (0.25% Floor)		19.1	%	1.0	%	2/2/2022	7/31/2024	17,450,623		17,920,424		17,578,839		10,775,828		5.1	%
REEC Harlem Holdings Company, LLC (8)	US - NY	Mixed-use	LIBOR + 12.5%		16.9	%	—	%	3/9/2018	3/9/2023	15,983,234		15,983,234		3,090,588		1,894,530		0.9	%
RS JZ Driggs, LLC (9)	US - NY	Multifamily	12.3	%	12.3	%	1.0	%	5/1/2018	1/1/2021	4,993,245		4,993,245		4,993,245		3,060,859		1.5	%
											121,231,434		122,132,177		97,127,877		59,539,387		28.4	%
First mortgages:
14th & Alice Street Owner, LLC (10)	US - CA	Multifamily	LIBOR + 4.0% (0.25% Floor)		8.4	%	2.0	%	10/15/2021	4/15/2023	1,364,944		1,364,944		—		—		—	%
1389 Peachtree St, LP; 1401 Peachtree St, LP;    1409 Peachtree St, LP (11)	US - GA	Office	LIBOR + 4.5%		8.9	%	0.5	%	2/22/2019	8/10/2023	57,184,178		57,453,482		56,844,322		34,845,569		16.7	%
330 Tryon DE LLC (11)	US - NC	Office	Term SOFR + 4.25% (0.1% Floor)		8.6	%	0.5	%	2/7/2019	3/1/2024	22,800,000		22,902,215		22,687,235		13,907,275		6.6	%
AGRE DCP Palm Springs, LLC (11)	US - CA	Hotel - full/    select service	LIBOR +5.0% (1.8% Floor)		9.4	%	1.5	%	12/12/2019	1/1/2024	43,222,382		43,758,804		43,062,933		26,397,578		12.6	%
AARSHW Property LLC (12)(13)	US - NJ	Industrial	SOFR +7.5% (0.15% Floor)		11.6	%	0.9	%	3/7/2022	8/17/2024	44,368,331		44,669,513		44,702,632		27,402,713		13.0	%
AAESUF Property LLC (11)	US - NJ	Land	SOFR + 11.95% (0.05% Floor)		16.0	%	5%-10%		3/15/2022	3/1/2024	17,860,291		18,288,969		18,587,586		11,394,190		5.4	%

See notes to unaudited financial statements.

10

Terra Property Trust’s Schedule of Loans Held for Investment as of December 31, 2022 (Continued):

Portfolio Company	Collateral Location	Property Type	Coupon Rate		Current Interest Rate		Exit Fee		Acquisition Date	Maturity Date	Principal Amount		Amortized Cost		Fair Value (1)		Pro Rata Fair Value (2)		% (3)
Loans held for investment:
First mortgages (Continued):
American Gilsonite Company	US - UT	Infrastructure	14.0	%	14.0	%	1.0	%	8/31/2021	8/31/2023	$	21,250,000	$	21,840,359	$	21,443,528	$	13,144,883	6.3	%
Dallas - Big Town Owner, LLC (12)	US - TX	Industrial	Term SOFR + 4.5% (2.5% Floor)		8.9	%	1.0	%	12/28/2022	12/27/2025	26,635,183		26,838,830		26,838,830		16,452,203		7.8	%
Dallas - Oakland Owner, LLC (12)	US - TX	Industrial	Term SOFR + 4.5% (2.5% Floor)		8.9	%	1.0	%	12/28/2022	12/27/2025	9,673,597		9,747,559		9,747,559		5,975,254		2.8	%
Dallas - US HWY 80 Owner, LLC (12)	US - TX	Industrial	Term SOFR + 4.5% (2.5% Floor)		8.9	%	1.0	%	12/28/2022	12/27/2025	11,395,169		11,482,294		11,482,294		7,038,646		3.4	%
Dallas - 11333 Pagemill Owner, LLC (12)	US - TX	Industrial	Term SOFR + 4.5% (2.5% Floor)		8.9	%	1.0	%	12/28/2022	12/27/2025	12,296,945		12,390,965		12,390,965		7,595,662		3.6	%
Dallas - 11221 Pagemill Owner, LLC (12)	US - TX	Industrial	Term SOFR + 4.5% (2.5% Floor)		8.9	%	1.0	%	12/28/2022	12/27/2025	7,624,106		7,682,398		7,682,398		4,709,310		2.2	%
Grandview’s Madison Place, LLC (14)	US - WA	Multifamily	Term SOFR + 4.45% (0.05% Floor)		8.8	%	0.8	%	2/10/2022	2/10/2025	17,000,000		17,105,928		17,105,928		10,485,934		5.0	%
Grandview’s Remington Place, LLC (14)	US - WA	Multifamily	Term SOFR + 4.45% (0.05% Floor)		8.8	%	0.5	%	4/22/2022	4/22/2024	23,100,000		23,199,620		23,203,343		14,223,649		6.8	%
Hillsborough Owners LLC	US - NC	Mixed-use	LIBOR + 8.0% (0.25% Floor)		12.4	%	1.0	%	10/27/2021	11/1/2023	20,720,028		21,138,947		20,947,571		12,840,861		6.1	%
Mesa AZ Industrial Owner, LLC (4)(12)	US - AZ	Land	Term SOFR + 12.7% (2.3% Floor)		17.1	%	1.0	%	9/15/2022	9/14/2023	31,000,000		31,276,468		31,276,468		19,172,475		9.1	%
NB Factory TIC 1, LLC (14)	US - UT	Student housing	LIBOR + 5.0% (0.25% Floor)		9.4	%	3.3	%	8/16/2021	3/5/2023	28,000,000		28,857,892		28,902,234		17,717,069		8.4	%
Patrick Henry Recovery Acquisition, LLC (11)	US - CA	Office	LIBOR +2.95% (1.5% Floor)		7.3	%	0.3	%	11/25/2019	12/1/2023	18,000,000		18,041,782		17,824,300		10,926,296		5.2	%
The Lux Washington, LLC (12)	US - WA	Multifamily	LIBOR + 7.0% (0.75% floor)		11.4	%	1.0	%	7/22/2021	1/22/2024	16,571,267		16,722,091		16,882,333		10,348,870		4.9	%
University Park Berkeley, LLC (11)	US - CA	Multifamily	LIBOR + 5.5% (4.0% Floor)		8.6	%	0.8	%	2/27/2020	3/1/2023	26,342,468		26,536,122		26,472,938		16,227,911		7.7	%
											456,408,889		461,299,182		458,085,397		280,806,348		133.6	%

See notes to unaudited financial statements.

11

Terra Property Trust’s Schedule of Loans Held for Investment as of December 31, 2022 (Continued):

Portfolio Company	Collateral Location	Property Type	Coupon Rate		Current Interest Rate		Exit Fee		Acquisition Date	Maturity Date	Principal Amount		Amortized Cost		Fair Value (1)		Pro Rata Fair Value (2)		% (3)
Loans held for investment:
Credit facility:
William A. Shopoff & Cindy L. Shopoff (15)	US - CA	Industrial	15.0	%	15.0	%	1.0	%	10/4/2021	4/4/2023	$	28,802,833	$	29,080,183	$	28,926,544	$	17,731,971	8.4	%
											28,802,833		29,080,183		28,926,544		17,731,971		8.4	%
Total gross loans held for investment											645,795,459		651,962,657		623,145,754		381,988,345		181.9	%
Obligations under participation agreements (4)(5)											(12,584,958)		(12,680,594)		(12,680,595)		(7,773,205)		(3.7)	%
Allowance for credit losses											—		(25,471,890)		—		—		—	%
Net loans held for investment											$	633,210,501	$	613,810,173	$	610,465,159	$	374,215,140	178.2	%

Operating real estate:
Description	Acquisition Date		Fair Value of Real Estate (1)		Encumbrance		Net Investment		Pro Rata Net Investment (2)		% (3)(17)
Multi-tenant office building in Santa Monica, CA (16)	7/30/2018		$	52,500,000	$	29,252,308	$	23,247,692	$	14,250,835	6.8		%
Portfolio Company	Dividend Yield		Acquisition Date		Maturity Date		Shares		Cost		Fair Value			Pro Rata Fair Value (2)		% (3)
Marketable securities (18):
Corporate Bonds
Terra Property Trust, Inc. Corporate Bonds	6.0	%	Various		6/30/2026		7,398		$	136,265	$	147,960		$	90,699	0.04	%
Total marketable securities									$	136,265	$	147,960		$	90,699	0.04	%
Equity investments:
Portfolio Company							Ownership Interest		Cost		Fair Value			Pro Rata Fair Value (2)		% (3)
Mavik Real Estate Special Opportunities Fund, LP - limited partnership interest (19)							27.9%		$	36,794,674	$	35,718,022		$	21,895,147	10.4	%
LEL Arlington JV LLC - limited liability member units (20)							27.2%		7,271,603		7,483,563			4,587,424		2.2	%
LEL NW 49th JV LLC - limited liability member units (20)							27.2%		1,521,556		2,519,781			1,544,626		0.7	%
TCG Corinthian FL Portfolio JV LLC (20)							34.0%		6,896,816		7,426,291			4,552,316		2.2	%
SF-Dallas Industrial, LLC (21)							N/A		10,013,691		10,013,691			6,138,393		2.9	%
									$	62,498,340	$	63,161,348		$	38,717,906	18.4	%

See notes to unaudited financial statements.

12

__________________________

(1)Because there is no readily available market for these investments, these loans were valued using significant unobservable inputs under Level 3 of the fair value hierarchy and were approved in good faith by Terra REIT Advisors, Terra Property Trust’s manager, pursuant to Terra Property Trust’s valuation policy.

(2)Amount represents the Company’s portion, or 61.3%, of the fair value or net investment value.

(3)Percentage is based on the Company’s pro rata share of the fair value or net investment value over the Company’s total members’ capital of $210.0 million at December 31, 2022.

(4)Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

(5)The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

(6)Terra Property Trust purchased a portion of the interest in this loan from Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party real estate investment trust managed by Terra REIT Advisors, via a participation agreement.

(7)This loan is currently in maturity default. For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $3.7 million on this loan because recovery of such income was doubtful. As of December 31, 2022, Terra Property Trust recorded a specific allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

(8)For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $2.9 million on this loan because recovery of such income was doubtful. Additionally, the fair value of the loan declined as a result of a decline in the fair value of the collateral. As of December 31, 2022, Terra Property Trust recorded a specific allowance for credit losses of $12.9 million on the loan as a result of a decline in the fair value of the collateral.

(9)This loan is in maturity default. Terra Property Trust initiated a litigation to seek full repayment of the loan from the sponsor. For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $2.0 million on this loan because recovery of such income was doubtful.

(10)This loan is classified as a trouble debt restructuring. Terra Property Trust does not anticipate a full recovery of the remaining principal balance, as such, the loan is fully reserved.

(11)These loans were used as collateral for $119.8 million of borrowings under a repurchase agreement.

(12)These loans were used as collateral for $90.1 million of borrowings under a revolving line of credit.

(13)Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

(14)These loans were used as collateral for $51.1 million of borrowings under a repurchase agreement.

(15)Amount included $3.0 million of incremental borrowing that bears interest at an annual rate of Term SOFR plus 7.0% with a SOFR floor of 4.30%.

(16)Terra Property Trust acquired this property through foreclosure of a $54.0 million first mortgage.

(17)Percentage is based on Terra Property Trust’s net exposure on the property (real estate owned less encumbrance).

(18)From time to time, Terra Property Trust may invest in short-term debt and equity securities. These securities are comprised of shares of common and preferred stock and bonds.

(19)On August 3, 2020, Terra Property Trust entered into a subscription agreement with RESOF whereby Terra Property Trust committed to fund up to $50.0 million to purchase a limited partnership interest in RESOF. RESOF’s primary investment objective is to generate attractive risk-adjusted returns by purchasing performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. As of December 31, 2022, the unfunded commitment was $22.4 million.

(20)As of December 31, 2022, Terra Property Trust beneficially owned equity interest in three joint ventures that invest in real estate properties.

(21)On December 28, 2022, Terra Property Trust originated a $10.0 million mezzanine loan to a borrower to finance the acquisition of a real estate portfolio. Additionally, Terra Property Trust entered into a residual profit-sharing agreement with the borrower where the borrower will pay Terra Property Trust an additional amount of 35.0% of remaining net cash flow from the sale of the real estate portfolio. Terra Property Trust accounts for this arrangement using the equity method of accounting.

See notes to unaudited financial statements.

13

Terra Secured Income Fund 5, LLC

Notes to Financial Statements (Unaudited)

June 30, 2023

Note 1. Business

    Terra Secured Income Fund 5, LLC (the “Company”) is a real estate credit focused company that originates, structures, funds and manages high yielding commercial real estate investments, including mezzanine loans, first mortgage loans, subordinated mortgage loans and preferred equity investments throughout the United States. The Company’s loans finance the acquisition, construction, development or redevelopment of quality commercial real estate in the United States. The Company focuses on the origination of middle market loans in the approximately $10 million to $50 million range, to finance properties in primary and secondary markets. The Company was formed as a Delaware limited liability company on April 24, 2013 and commenced operations on August 8, 2013. The Company makes substantially all of its investments and conducts substantially all of its real estate lending business through Terra Property Trust, which has elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2016. The Company’s investment objectives are to (i) preserve its members’ capital contributions, (ii) realize income from its investments and (iii) make monthly distributions to its members from cash generated from investments. There can be no assurances that the Company will be successful in meeting its investment objectives.

    In December 2015, the members approved the merger of Terra Secured Income Fund, LLC (“Terra Fund 1”), Terra Secured Income Fund 2, LLC (“Terra Fund 2”), Terra Secured Income Fund 3, LLC (“Terra Fund 3”) and Terra Secured Income Fund 4, LLC (“Terra Fund 4”) with and into subsidiaries of the Company (individually, each a “Terra Fund” and collectively, the “Terra Funds”) through a series of separate mergers effective January 1, 2016 (collectively, the “Mergers”). Following the Mergers, the Company contributed the consolidated portfolio of net assets of the five Terra Funds to Terra Property Trust, a newly-formed and wholly-owned subsidiary of the Company that elected to be taxed as a REIT, in exchange for the shares of common stock of Terra Property Trust. Upon completion of the Mergers, the Company became the parent company of Terra Funds 1 through 4 and the direct and indirect sole common stockholder of, and began conducting substantially all of its real estate lending business through, Terra Property Trust.

    On March 2, 2020, Terra Fund 1, Terra Fund 2 and Terra Fund 3 merged with and into Terra Fund 4, with Terra Fund 4 continuing as the surviving company (the “Terra Fund Merger”), and the Company consolidated its holdings of shares of common stock of Terra Property Trust in Terra Fund 4. Subsequent to the Terra Fund Merger, the legal name of Terra Fund 4 was changed to Terra JV, LLC (“Terra JV”). On March 2, 2020, Terra Property Trust engaged in a series of transactions pursuant to which Terra Property Trust issued an aggregate of 4,574,470.35 shares of its common stock in exchange for the settlement of an aggregate of $49.8 million of participation interests in loans that Terra Property Trust owned, cash of $25.5 million and other working capital.

    The Company’s investment activities are externally managed by Terra Fund Advisors, LLC (“Terra Fund Advisors” or the “Manager”). The Company does not currently have any employees and does not expect to have any employees. Services necessary for the Company’s business are provided by individuals who are employees of the Manager or its affiliates or by individuals who were contracted by the Company or by the Manager or its affiliates to work on behalf of the Company pursuant to the terms of the operating agreement, as amended.

    The Company’s amended and restated operating agreement provides that the Company’s existence will continue until December 31, 2023, unless sooner terminated. However, the Company expects that prior to such date it will consummate a liquidity transaction, which could occur as early as this year and may include an orderly liquidation of its assets or an alternative liquidity event such as a strategic business combination, a sale of the Company or an initial public offering and listing of Terra Property Trust’s shares of common stock on a national securities exchange. The Manager would pursue an alternative liquidity event only if it believes such a transaction would be in the best interests of the Company’s members.

On October 1, 2022 (the “Closing Date”), pursuant to that certain Agreement and Plan of Merger, dated as of May 2, 2022 (the “Terra BDC Merger Agreement”), Terra Income Fund 6, Inc. (“Terra BDC”) merged with and into Terra Income Fund 6, LLC, a wholly owned subsidiary of Terra Property Trust (“Terra LLC”), with Terra LLC continuing as the surviving entity of the merger (the “BDC Merger”) and as a wholly owned subsidiary of Terra Property Trust (Note 4). As of June 30, 2023, Terra JV, former shareholders of Terra BDC and Terra Offshore REIT held 70.0%, 19.9% and 10.1% of the issued and outstanding shares of Terra Property Trust’s common stock, respectively, and the Company and Terra Fund 7 owned an 87.6% and 12.4% percentage interest, respectively, in Terra JV (Note 4). Accordingly, as of June 30, 2023, the Company indirectly beneficially owned 61.3% of the outstanding shares of common stock of Terra Property Trust through Terra JV. The Company does not

14

Notes to Unaudited Financial Statements

consolidate Terra JV because the Company and Terra Fund 7 share joint approval rights with respect to certain major decisions that are taken by Terra JV and Terra Property Trust (Note 4).

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

    The interim financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include all of the Company’s accounts. The accompanying interim financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. The Company is an investment company, as defined under U.S. GAAP, and applies accounting and reporting guidance in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately differ from those estimates, and those differences could be material.

Equity Investment in Terra JV

    Equity investment in Terra JV represents the Company’s equity interest in Terra JV, which was initially recorded at cost. Subsequent to the asset contribution, the equity investment is reported, at each reporting date, at fair value on the statements of financial condition. Change in fair value is reported in net change in unrealized appreciation or depreciation on investment on the statements of operations.

Revenue Recognition

    Dividend Income: Dividend income associated with the Company’s ownership of Terra JV or Terra Property Trust is recognized on the record date as declared by Terra JV or Terra Property Trust. Any excess of distributions over Terra JV or Terra Property Trust’s cumulative taxable net income are recorded as return of capital.

    Other Operating Income: All other income is recognized when earned.

Cash and Cash Equivalents

The Company considers all highly liquid investments, with original maturities of ninety days or less when purchased, as cash equivalents. Cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains all of its cash at financial institutions which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation.

Income Taxes

    No provision for U.S. federal and state income taxes has been made in the accompanying financial statements, as individual members are responsible for their proportionate share of the Company’s taxable income. The Company, however, may be liable for New York City Unincorporated Business Tax (the “NYC UBT”) and similar taxes of various other municipalities. New York City imposes the NYC UBT at a statutory rate of 4% on net income generated from ordinary business activities carried on in New York City. For the three and six months ended June 30, 2023 and 2022, none of the Company’s income was subject to the NYC UBT.

    Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statements and tax basis assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. Such deferred tax assets and liabilities were not material.

    The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes, nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in its statements of operations. For the three and six months ended June 30, 2023 and 2022, the Company did not incur any interest or penalties.

15

Notes to Unaudited Financial Statements

Although the Company files federal and state tax returns, its primary tax jurisdiction is federal. The Company’s 2019-2022 federal tax years remain subject to examination by the Internal Revenue Service.

Recent Accounting Pronouncement

London Interbank Offered Rate (“LIBOR”) is a benchmark interest rate referenced in a variety of agreements that are used by all types of entities. In July 2017, the U.K. Financial Conduct Authority, which regulates the LIBOR administrator, ICE Benchmark Administration Limited (“IBA”), announced that it would cease to compel banks to participate in setting LIBOR as a benchmark by the end of 2021, which was subsequently delayed to June 30, 2023. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition (“ASU 2021-01”). In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848) — Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”). ASU 2022-06 deferred the sunset date of ASU 2020-04 to December 31, 2024. In the event LIBOR is unavailable, Terra Property Trust’s investment documents provide for a substitute index, on a basis generally consistent with market practice, intended to put Terra Property Trust in substantially the same economic position as LIBOR. As a result, the Company does not expect the reference rate reform and the adoption of ASU 2020-04 and ASU 2021-01 to have a material impact on its financial statements and disclosures.

Note 3. Investment and Fair Value

Equity Investment in Terra JV

The Company invested substantially all of its equity capital in the purchase of shares of common stock of Terra Property Trust. As of both June 30, 2023 and December 31, 2022, Terra JV held 70.0% of the issued and outstanding shares of Terra Property Trust’s common stock, and the Company and Terra Fund 7 owned an 87.6% and 12.4% percentage interest, respectively, in Terra JV, and Terra JV became the Company’s only investment (Note 4).

The following tables present a summary of the Company’s investment at June 30, 2023 and December 31, 2022:

	June 30, 2023						December 31, 2022
Investment	Cost		Fair Value		% of Members’ Capital		Cost		Fair Value		% of Members’ Capital
87.6% interest in Terra JV, LLC	$	209,715,486	$	189,317,374	100.1	%	$	215,070,522	$	210,008,457	100.0	%

For the three months ended June 30, 2023 and 2022, the Company received $2.8 million and $2.9 million of distributions from Terra JV, of which $2.8 million and $2.1 million were returns of capital, respectively. For the six months ended June 30, 2023 and 2022, the Company received $5.6 million and $5.9 million of distributions from Terra JV, of which $5.4 million and $4.3 million were returns of capital, respectively.

16

Notes to Unaudited Financial Statements

        As of both June 30, 2023 and December 31, 2022, the Company indirectly beneficially owned 61.3% of the outstanding shares of common stock of Terra Property Trust (Note 4). The following tables present the summarized financial information of Terra Property Trust:

	June 30, 2023		December 31, 2022
Carrying value of loans held for investment	$	513,818,507	$	626,490,767
Equity investment in unconsolidated investments	32,608,994		62,498,340
Real estate owned, net	176,133,625		49,228,687
Cash, cash equivalent and restricted cash	58,096,906		36,469,592
Other assets	39,044,373		38,649,506
Total assets	819,702,405		813,336,892
Term loan payable, unsecured notes payable, obligations under participation    agreements, repurchase agreement payable, mortgage loan payable, revolving    line of credit and secured borrowing	(472,090,818)		(442,811,751)
Accounts payable, accrued expenses and other liabilities	(41,639,591)		(39,996,127)
Lease intangible liabilities	(16,827,043)		(8,646,840)
Total liabilities	(530,557,452)		(491,454,718)
Total equity	$	289,144,953	$	321,882,174

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	18,782,455	$	14,688,113	$	35,784,626	$	26,800,383
Expenses	(36,285,786)		(14,705,355)		(52,310,202)		(28,946,936)
Equity (loss) income from unconsolidated    investments	(1,759,934)		1,364,332		(2,196,794)		2,783,667
Other gains (losses)	26,200		(54,656)		32,784		(102,567)
Net (loss) income	$	(19,237,065)	$	1,292,434	$	(18,689,586)	$	534,547

Fair Value Measurements

    The Company follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 established a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the state of the marketplace (including the existence and transparency of transactions between market participants). Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments measured and reported at fair value are classified and disclosed into one of the following categories based on the inputs as follows:

        Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access.

      Level 2 — Pricing inputs are other than quoted prices in active markets, including, but not limited to, quoted prices for similar assets and liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs.

       Level 3 — Significant unobservable inputs are based on the best information available in the circumstances, to the extent observable inputs are not available, including the Company’s own assumptions used in determining the fair value of investments. Fair value for these investments is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and

17

Notes to Unaudited Financial Statements

financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment.

     In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

Assets and Liabilities Reported at Fair Value

    The following tables summarize the Company’s equity investment at fair value on a recurring basis as of June 30, 2023 and December 31, 2022:

	June 30, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Investment:
Equity investment in Terra JV	$	—	$	—	$	189,317,374	$	189,317,374

	December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Investment:
Equity investment in Terra JV	$	—	$	—	$	210,008,457	$	210,008,457

    Changes in Level 3 investment for the six months ended June 30, 2023 and 2022 were as follows:

	Equity Investment in Terra JV
	Six Months Ended June 30,
	2023		2022
Beginning balance	$	210,008,457	$	217,324,720
Return of capital	(5,355,036)		(4,340,218)
Net change in unrealized (depreciation) appreciation on investment	(15,336,047)		4,591,009
Ending balance	$	189,317,374	$	217,575,511
Net change in unrealized (depreciation) appreciation on investment for the period    relating to those Level 3 assets that were still held by the Company	$	(15,336,047)	$	4,591,009

    Transfers between levels, if any, are recognized at the beginning of the period in which transfers occur. For the six months ended June 30, 2023 and 2022, there were no transfers.

The Company estimated that its other financial assets and liabilities had fair values that approximated their carrying values at June 30, 2023 and December 31, 2022 due to their short-term nature.

Valuation Process for Fair Value Measurement

    Market quotations are not readily available for the Company’s investment in Terra Property Trust or Terra JV, which is included in Level 3 of the fair value hierarchy. The fair value of the Company’s sole investment takes into consideration the fair value of Terra Property Trust’s assets and liabilities which are valued utilizing a yield approach, i.e., a discounted cash flow methodology. In following this methodology, loans are evaluated individually, and management takes into account, in determining the risk-adjusted discount rate for each of Terra Property Trust’s loans, relevant factors, which may include available current market data on applicable yields of comparable debt/preferred equity instruments; market credit spreads and yield curves; the investment’s yield; covenants of the investment, including prepayment provisions; the portfolio company’s ability to make payments, its net operating income, debt-service coverage ratio; construction progress reports and construction budget analysis; the nature, quality, and realizable value of any collateral (and loan-to-value ratio); and the forces that influence the local markets in which the asset (the collateral) is purchased and sold, such as capitalization rates, occupancy rates, rental rates, replacement costs and the anticipated duration of each real estate-related loan. The fair value of Terra Property Trust’s

18

Notes to Unaudited Financial Statements

investment in an office building is determined using the discounted cash flow or direct capitalization method as appropriate. The fair value of Terra Property Trust’s investment in eight industrial buildings is based on the purchase price.

The Manager designates a valuation committee to oversee the entire valuation process of Terra Property Trust’s Level 3 investments. The valuation committee is comprised of members of the Manager’s senior management, deal and portfolio management teams, who meet on a quarterly basis, or more frequently as needed, to review Terra Property Trust investments being valued as well as the inputs used in the proprietary valuation model. Valuations determined by the valuation committee are supported by pertinent data and, in addition to a proprietary valuation model, are based on market data, third-party valuation data and discount rates or other methods the valuation committee deems to be appropriate.

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 investments as of June 30, 2023 and December 31, 2022. The tables are not intended to be all-inclusive, but instead identify the significant unobservable inputs relevant to the determination of fair values.

	Fair Value		Primary Valuation Technique	Unobservable Inputs	June 30, 2023
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Equity investment in Terra JV	$	189,317,374	Discounted cash flow (1)(2)	Discount rate (1)(2)	6.01	%	19.54	%	19.78	%

	Fair Value		Primary Valuation Technique	Unobservable Inputs	December 31, 2022
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Equity investment in Terra JV	$	210,008,457	Discounted cash flow (1)(2)	Discount rate (1)(2)	5.22	%	18.51	%	16.80	%

_______________

(1)Discounted cash flows and discount rates applied to Terra Property Trust’s assets and liabilities.

(2)As of June 30, 2023, the fair value of Terra Property Trust’s investment in an office building was determined using the discounted cash flow method with discount rate of 8.50%. As of December 31, 2022, the fair value of the office building was determined using direct capitalization method with capitalization rate ranges from 6.00% to 6.25% and December 31, 2022. The fair value of Terra Property Trust’s investment in eight industrial buildings are based on the purchase price.

Risks and Uncertainties

    The Company’s investment in Terra Property Trust through Terra JV is highly illiquid and there is no assurance that the Company will achieve its investment objectives, including targeted returns. Terra Property Trust’s loans are highly illiquid. Due to the illiquidity of the loans, valuation of the loans may be difficult, as there generally will be no established markets for these loans.

As the Company’s investment is carried at fair value with fair value changes recognized in the statements of operations, any changes in fair value would directly affect the Company’s members’ capital.

Note 4. Related Party Transactions

Operating Agreement

    The Company has an operating agreement, as amended, with Terra Fund Advisors. The operating agreement, as amended, is scheduled to terminate on December 31, 2023 unless the Company is dissolved earlier. Starting January 1, 2016, the Company conducts all of its real estate lending business through Terra Property Trust. As such, Terra Property Trust is responsible for management compensation paid and operating expenses reimbursed to its manager pursuant to a management agreement with the manager.

Dividend Income

    As discussed in Note 3, for the three months ended June 30, 2023 and 2022, the Company received $2.8 million and $2.9 million of distributions from Terra JV, of which $2.8 million and $2.1 million were returns of capital, respectively. For the six months ended June 30, 2023 and 2022, the Company received $5.6 million and $5.9 million of distributions from Terra JV, of which $5.4 million and $4.3 million were returns of capital, respectively.

19

Notes to Unaudited Financial Statements

BDC Merger

On the Closing Date, pursuant to the Terra BDC Merger Agreement, Terra BDC merged with and into Terra LLC, with Terra LLC surviving as a wholly owned subsidiary of Terra Property Trust. The Certificate of Merger and Articles of Merger with respect to the BDC Merger were filed with the Secretary of State of the State of Delaware and State Department of Assessments and Taxation of Maryland, respectively, with an effective time and date of 12:02 a.m., Eastern Time, on the Closing Date (the “Effective Time”).

At the Effective Time, except for any shares of common stock, par value $0.001 per share, of Terra BDC (“Terra BDC Common Stock”) held by Terra Property Trust or any wholly owned subsidiary of Terra Property Trust or Terra BDC, which shares were automatically retired and ceased to exist with no consideration paid therefor, each issued and outstanding share of Terra BDC Common Stock was automatically cancelled and retired and converted into the right to receive (i) 0.595 shares of Class B Common Stock, par value $0.01 per share of Terra Property Trust (“TPT Class B Common Stock”) and (ii) cash, without interest, in lieu of any fractional shares of TPT Class B Common Stock otherwise issuable in an amount, rounded to the nearest whole cent, determined by multiplying (x) the fraction of a share of TPT Class B Common Stock to which such holder would otherwise be entitled by (y) $14.38.

Pursuant to the terms of the transactions described in the Terra BDC Merger Agreement, approximately 4,847,910 shares of TPT Class B Common Stock were issued to former Terra BDC stockholders in connection with the BDC Merger, based on the number of outstanding shares of Terra BDC Common Stock as of the Closing Date. Following the consummation of the BDC Merger, former Terra BDC stockholders owned approximately 19.9% of the common equity of Terra Property Trust and the Company indirectly beneficially owned approximately 61.3% of the common equity of Terra Property Trust.

Note 5. Commitments and Contingencies

The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. The Manager has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.

The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material adverse effect upon its financial condition or results of operations.

Note 6. Members’ Capital

    As of both June 30, 2023 and December 31, 2022, the Company had 6,622.2 units outstanding. The net asset value per unit was $28,565 and $31,710 as of June 30, 2023 and December 31, 2022, respectively.

Capital Distributions

    At the discretion of the Manager, the Company may make distributions from net cash flow from operations, net disposition proceeds, or other cash available for distribution. Distributions are made to holders of Continuing Income Units (regular units of limited liability company interest in the Company) in proportion to their unit holdings until they receive a return of their initial Deemed Capital Contribution, as defined in the operating agreement, plus a preferred return ranging from 8.5% to 9.0% depending on the historical preferred return applicable to their Terra Funds units, after which time distributions are made 15% to the Manager which the Company refers to as the carried interest distribution, and 85% to the holders of Continuing Income Units. The preferred return applicable to the Continuing Income Units sold in the offering concurrent with the Mergers is 8.5%.

For the three months ended June 30, 2023 and 2022, the Company made total distributions to non-managing members of $2.7 million and $2.8 million, respectively. For the six months ended June 30, 2023 and 2022, the Company made total distributions to non-managing members of $5.4 million and $5.8 million, respectively. For the three and six months ended June 30, 2023 and 2022, the Company did not accrue or make any carried interest distributions to the Manager.

20

Notes to Unaudited Financial Statements

Capital Redemptions

    At the discretion of the Manager, a reserve of 5% of cash from operations may be established in order to repurchase units from non-managing members. The Manager is under no obligation to redeem non-managing members’ units. As of June 30, 2023 and December 31, 2022, no such reserve was established. For the three and six months ended June 30, 2023, the Company did not redeem any units. For the three and six months ended June 30, 2022, the Company redeemed 12.2 units for $0.4 million.

Allocation of Income (Loss)

    Profits and losses are allocated to the members in proportion to the units held in a given calendar year.

Note 7. Financial Highlights

    The financial highlights represent the per unit operating performance, return and ratios for the non-managing members’ class, taken as a whole, for the six months ended June 30, 2023 and 2022. These financial highlights consist of the operating performance, the internal rate of return (“IRR”) since inception of the Company, and the expense and net investment income ratios which are annualized except for the non-recurring expenses.

    The IRR, net of all fees and carried interest (if any), is computed based on actual dates of the cash inflows (capital contributions), outflows (capital distributions), and the ending capital at the end of the respective period (residual value) of the non-managing members’ capital account.

    The following summarizes the Company’s financial highlights for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023			2022
Per unit operating performance:
Net asset value per unit, beginning of period	$	31,710		$	32,860
(Decrease) increase in members’ capital from operations (1):
Net investment (loss) income	(4)			189
Net change in unrealized (depreciation) appreciation on investment	(2,316)			692
Total (decrease) increase in members’ capital from operations	(2,320)			881
Distributions to members (2):
Capital distributions	(825)			(874)
Net decrease in members’ capital resulting from distributions	(825)			(874)
Net asset value per unit, end of period	$	28,565		$	32,867
Ratios to average net assets:
Expenses	0.31		%	0.24		%
Net investment (loss) income	(0.03)		%	1.14		%
IRR, beginning of period	4.65		%	4.91		%
IRR, end of period	3.79		%	4.98		%

._______________

(1)The per unit data was derived by using the weighted average units outstanding during the applicable periods, which were 6,622.2 and 6,630.9 for the six months ended June 30, 2023 and 2022.

(2)The per unit data for distributions reflects the actual amount of distributions paid per unit during the periods.

Note 8. Subsequent Events

Management has evaluated subsequent events through the date the financial statements were available to be issued. Management has determined that there are no material events other than the ones below that would require adjustment to, or disclosure in, the Company’s financial statements.

21

Notes to Unaudited Financial Statements

Termination of WMC Merger Agreement

On June 28, 2023, Terra Property Trust announced it entered into an Agreement and Plan of Merger, dated as of June 27, 2023 (the “WMC Merger Agreement”), with Western Asset Mortgage Capital Corporation, a Delaware corporation (“WMC”). On July 27, 2023, WMC notified Terra Property Trust that its board of directors determined that a proposal from AG Mortgage Investment Trust, Inc. (“MITT”) to acquire WMC was a “Parent Superior Proposal” under the WMC Merger Agreement and that WMC’s board of directors intended to terminate the WMC Merger Agreement unless WMC received a revised proposal from Terra Property Trust by a specified deadline such that WMC’s board of directors determined that MITT’s proposal was no longer a “Parent Superior Proposal.”

On August 8, 2023, WMC terminated the WMC Merger Agreement pursuant to its terms (the “Termination”), and Terra Property Trust was paid a termination fee of $3.0 million.

Upon the Termination, the amended and restated management agreement Terra Property Trust entered into with WMC and the Manager on June 27, 2023, terminated in accordance with its terms. Terra Property Trust continues to be managed by the Manager pursuant to the terms of the existing Management Agreement between Terra Property Trust and the Manager.

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

    The information contained in this section should be read in conjunction with our unaudited financial statements and related notes thereto and other financial information included elsewhere in this quarterly report on Form 10-Q. In this report, the “Company,” “we,” “us” and “our” refer to Terra Secured Income Fund 5, LLC.

FORWARD-LOOKING STATEMENTS

    We make forward-looking statements in this quarterly report on Form 10-Q within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections. The forward-looking statements contained in this quarterly report on Form 10-Q may include, but are not limited to, statements as to:

•our expected financial performance, operating results and our ability to make distributions to our members in the future;

•Terra Property Trust’s ability to achieve the expected synergies, cost savings and other benefits from the BDC Merger (as defined below);

•risks associated with achieving expected synergies, cost savings and other benefits from Terra Property Trust’s increased scale.

•the availability of attractive risk-adjusted investment opportunities in our target asset class and other real estate-related investments that satisfy our objectives and strategies;

•the origination or acquisition of our targeted assets, including the timing of originations or acquisitions;

•volatility in our industry, interest rates and spreads, the debt or equity markets, the general economy or the real estate market specifically, whether the results of market events or otherwise;

•changes in our investment objectives and business strategy;

•the availability of financing on acceptable terms or at all;

•the performance and financial condition of our borrowers;

•changes in interest rates and the market value of our assets;

•borrower defaults or decreased recovery rates from our borrowers;

•changes in prepayment rates on our loans;

•our use of financial leverage;

•actual and potential conflicts of interest with any of the following affiliated entities: Terra Fund Advisors, LLC (“Terra Fund Advisors” or our “Manager”), Terra REIT Advisors, LLC (“Terra REIT Advisors”), Terra Income Advisors, LLC; Terra Capital Partners, LLC (“Terra Capital Partners”), our sponsor; Terra JV, LLC (“Terra JV”); Terra Property Trust, Inc. (“Terra Property Trust”); Terra Income Fund 6, LLC (formerly Terra Merger Sub, LLC), Terra Property Trust’s wholly owned subsidiary (“Terra LLC”); Terra Income Fund 6, Inc. (“Terra BDC”); Terra Secured Income Fund 5 International; Terra Income Fund International; Terra Secured Income Fund 7, LLC (“Terra Fund 7”); Terra Offshore Funds REIT, LLC (“Terra Offshore REIT”); Mavik Real Estate Special Opportunities Fund, LP (“RESOF”); or any of their affiliates;

•our dependence on our Manager or its affiliates and the availability of its senior management teams and other personnel;

23

•liquidity transactions that may be available to us or our subsidiaries or affiliates in the future, including a liquidation of assets, a sale of our company or its subsidiaries or affiliates, or a strategic business combination, a listing of the shares of common stock of Terra Property Trust on a national securities exchange, or an adoption of a share repurchase plan, in each case, which may include the distribution of our common stock of Terra Property Trust indirectly owned by our company and certain other fund vehicles managed by Terra Capital Partners or its affiliates to the ultimate investors in these vehicles, and the timing of any such transactions;

•actions and initiatives of the U.S. federal, state and local government and changes to the U.S. federal, state and local government policies and the execution and impact of these actions, initiatives and policies;

•limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our exclusion or exemption from registration under the Investment Company Act of 1940, as amended (the “1940 Act”), and Terra Property Trust to maintain its qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes; and

•the degree and nature of our competition.

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Part I — Item 1A. Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2022 and in “Part II - Item 1A. Risk Factors” in this quarterly report on Form 10-Q. Other factors that could cause actual results to differ materially include:

•changes in the economy;

•risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and

•future changes in laws or regulations and conditions in our operating areas.

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. Members are advised to consult any additional disclosures that we may make directly to members or through reports that we may file in the future with the Securities and Exchange Commission, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Overview

    We are a real estate credit focused company that originates, structures, funds and manages commercial real estate investments, including mezzanine loans, first mortgage loans, subordinated mortgage loans and preferred equity investments throughout the United States. Our loans finance the acquisition, construction, development or redevelopment of quality commercial real estate in the United States. We focus on the origination of middle market loans in the approximately $10 million to $50 million range, to finance properties primarily in primary and secondary markets. We believe loans in this size range are subject to less competition, offer higher risk adjusted returns than larger loans with similar risk metrics and facilitate portfolio diversification. We were formed as a Delaware limited liability company on April 24, 2013 and commenced operations on August 8, 2013. We make substantially all of our investments, and conduct substantially all of our real estate lending business, through Terra Property Trust, which has elected to be taxed as a REIT for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2016. Our investment objectives are to (i) preserve our members’ capital contributions, (ii) realize income from our investments and (iii) make monthly distributions to our members from cash generated from investments. There can be no assurances that we will be successful in meeting our investment objectives.

    On January 1, 2016, Terra Secured Income Fund, LLC (“Terra Fund”), Terra Fund Secured Income Fund 2, LLC (“Terra Fund 2”), Terra Secured Income Fund 3, LLC (“Terra Fund 3”) and Terra Secured Income Fund 4, LLC (“Terra Fund 4”) merged with and into our subsidiaries (collectively, the “Terra Funds”) through a series of separate mergers (collectively, the “Mergers”). Following the Mergers, we contributed the consolidated portfolio of our net assets and the net assets of the Terra Funds to Terra Property Trust in exchange for all of the shares of common stock of Terra Property Trust. We elected to engage

24

in the REIT formation transactions, to make our investments through Terra Property Trust and to provide our members with a more broadly diversified portfolio of assets, while providing us with enhanced access to capital and borrowings, lower operating costs and enhanced opportunities for growth.

    On March 2, 2020, Terra Fund 1, Terra Fund 2 and Terra Fund 3 merged with and into Terra Fund 4, with Terra Fund 4 continuing as the surviving company (the “Terra Fund Merger”), and we consolidated our holdings of shares of common stock of Terra Property Trust in Terra Fund 4. Subsequent to the Terra Fund Merger, the legal name of Terra Fund 4 was changed to Terra JV, LLC. On March 2, 2020, Terra Property Trust engaged in a series of transactions pursuant to which Terra Property Trust issued an aggregate of 4,574,470.35 shares of its common stock in exchange for the settlement of an aggregate of $49.8 million of participation interests in loans that Terra Property Trust owned, cash of $25.5 million and other working capital. Following the consummation of the BDC Merger (as defined below) and as of December 31, 2022, former Terra BDC stockholders owned approximately 19.9% of Terra Property Trust’s common equity, Terra JV held 70.0% of the issued and outstanding shares of Terra Property Trust’s common stock with the remainder of 10.1% held by Terra Offshore REIT; and we and Terra Fund 7 owned an 87.6% and 12.4% interest, respectively, in Terra JV. Accordingly, as of June 30, 2023, we indirectly beneficially owned 61.3% of the outstanding shares of common stock of Terra Property Trust through Terra JV.

As previously disclosed, we continue to explore alternative liquidity transactions on an opportunistic basis to maximize value for our investors. Examples of the alternative liquidity transactions that, depending on market conditions, may be available to us, or our subsidiaries or affiliates, include a listing of our shares of common stock of Terra Property Trust on a national securities exchange, adoption of a share repurchase plan, a liquidation of assets, a sale of our company or its subsidiaries or affiliates or a strategic business combination, in each case, which may include the in-kind distribution of shares of common stock of Terra Property Trust indirectly owned by our company and certain other fund vehicles managed by Terra Capital Partners or its affiliates to the ultimate investors in these vehicles. We cannot provide any assurance that any alternative liquidity transaction will be available to us or, if available, that we will pursue or be successful in completing any such alternative liquidity transaction.

Recent Developments

BDC Merger

On October 1, 2022 (the “Closing Date”), pursuant to that certain Agreement and Plan of Merger, dated as of May 2, 2022 (the “Terra BDC Merger Agreement”), Terra Income Fund 6, Inc. (“Terra BDC”) merged with and into Terra Income Fund 6, LLC, a wholly owned subsidiary of Terra Property Trust (“Terra LLC”), with Terra LLC continuing as the surviving entity of the merger (the “BDC Merger”) and as a wholly owned subsidiary of Terra Property Trust. The Certificate of Merger and Articles of Merger with respect to the BDC Merger were filed with the Secretary of State of the State of Delaware and the State Department of Assessments and Taxation of Maryland, respectively, with an effective time and date of 12:02 a.m., Eastern Time, on the Closing Date (the “Effective Time”).

At the Effective Time, except for any shares of common stock, par value $0.001 per share (“Terra BDC Common Stock”), of Terra BDC held by Terra Property Trust or any of its wholly owned subsidiaries or Terra BDC, which shares were automatically retired and ceased to exist with no consideration paid therefor, each issued and outstanding share of Terra BDC Common Stock was automatically cancelled and retired and converted into the right to receive (i) 0.595 shares of Class B Common Stock, par value $0.01 per share of Terra Property Trust (“TPT Class B Common Stock”), and (ii) cash, without interest, in lieu of any fractional shares of TPT Class B Common Stock otherwise issuable in an amount, rounded to the nearest whole cent, determined by multiplying (x) the fraction of a share of TPT Class B Common Stock to which such holder would otherwise be entitled by (y) $14.38.

Pursuant to the terms of the transactions described in the Terra BDC Merger Agreement, approximately 4,847,910 shares of TPT Class B Common Stock were issued to former Terra BDC stockholders in connection with the BDC Merger, based on the number of outstanding shares of Terra BDC Common Stock as of the Closing Date. Following the consummation of the BDC Merger, former Terra BDC stockholders owned approximately 19.9% of the common equity of Terra Property Trust and we indirectly beneficially owned approximately 61.3% of the common equity of Terra Property Trust.

25

Portfolio Summary

Net Loan Portfolio

The following tables provide a summary of Terra Property Trust’s net loan portfolio as of June 30, 2023 and December 31, 2022:

	June 30, 2023
	Fixed Rate			Floating Rate (1)(2)(3)			Total Gross Loans			Obligations under Participation Agreements			Total Net Loans
Number of loans	5			18			23			1			23
Principal balance	$	52,940,319		$	488,915,124		$	541,855,443		$	13,678,820		$	528,176,623
Amortized cost	53,069,799			460,748,708			513,818,507			13,789,070			500,029,437
Fair value	52,504,064			464,990,667			517,494,731			13,789,071			503,705,660
Weighted average coupon rate	13.22		%	12.77		%	12.82		%	17.14		%	12.71		%
Weighted-average remaining    term (years)	1.47			0.59			0.69			1.19			0.68

	December 31, 2022
	Fixed Rate			Floating Rate (1)(2)(3)			Total Gross Loans			Obligations under Participation Agreements			Total Net Loans
Number of loans	8			23			31			1			31
Principal balance	$	90,990,183		$	554,805,276		$	645,795,459		$	12,584,958		$	633,210,501
Amortized cost	92,274,998			534,215,769			626,490,767			12,680,594			613,810,173
Fair value	90,729,098			532,416,656			623,145,754			12,680,595			610,465,159
Weighted average coupon rate	13.82		%	11.23		%	11.59		%	16.36		%	11.50		%
Weighted-average remaining    term (years)	1.35			1.10			1.14			1.69			1.13

_______________

(1)These loans pay a coupon rate of London Interbank Offered Rate (“LIBOR”), Secured Overnight Financing Rate (“SOFR”), or forward-looking term rate SOFR (“Term SOFR”) plus a fixed spread. Coupon rates shown were determined using LIBOR of 5.22%, average SOFR of 5.07% and Term SOFR of 5.14% as of June 30, 2023, and LIBOR of 4.39%, average SOFR of 4.06% and Term SOFR of 4.36% as of December 31, 2022, respectively.

(2)As of June 30, 2023 and December 31, 2022, amount included $336.8 million and $413.1 million of senior mortgages used as collateral for $228.3 million and $261.0 million of borrowings under credit facilities, respectively.

(3)As of June 30, 2023 and December 31, 2022, 16 and 21 loans, respectively, were subject to a LIBOR, SOFR, or Term SOFR floor, as applicable.

Real Estate Ownership

In addition to Terra Property Trust’s net loan portfolio, as of June 30, 2023, Terra Property Trust owned eight industrial buildings acquired in 2023 and a multi-tenant office building acquired pursuant to a foreclosure; and as of December 31, 2022, Terra Property Trust owned a multi-tenant office building acquired pursuant to a foreclosure. The real estate and related lease intangible assets and liabilities had a net carrying value of $159.3 million and $40.6 million as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023, the mortgage loans payable encumbering the industrial buildings and the multi-tenant office building had an outstanding principal amount of $100.2 million and as of December 31, 2022, the mortgage loans payable encumbering the multi-tenant office building had an outstanding principal amount of $29.3 million.

26

Equity Investments

Additionally, as of June 30, 2023 and December 31, 2022, Terra Property Trust owned 14.9% and 50.0%, respectively, of equity interest in a limited partnership that invests primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. Terra Property Trust also beneficially owned equity interests in three joint ventures that invest in real estate properties. In 2022, in connection with a mezzanine loan Terra Property Trust originated, Terra Property Trust entered into a residual profit-sharing arrangement with the borrower. Terra Property Trust accounted for this arrangement as an equity investment. In May 2023, we purchased the underlying assets and the $10 million mezzanine loan was settled in connection with the purchase. As of June 30, 2023 and December 31, 2022, these equity investments had total carrying values of $32.6 million and $62.5 million, respectively.

Portfolio Investment Activity    

Net loan Portfolio

    For the three months ended June 30, 2023 and 2022, Terra Property Trust invested $7.5 million and $0.3 million in new and add-on investments and had $6.4 million and $10.6 million of repayments, resulting in net investments of $1.1 million and net repayment of investments of $10.9 million, respectively. Amounts are net of obligations under participation agreements, secured borrowing, borrowings under the master repurchase agreement, the term loan, the repurchase agreements and the revolving line of credit.

For the six months ended June 30, 2023 and 2022, Terra Property Trust invested $33.2 million and $25.7 million in new and add-on investments and had $46.3 million and $11.9 million of repayments, resulting in net repayments of $13.1 million and net investments of $13.7 million, respectively. Amounts are net of obligations under participation agreements, secured borrowing, borrowings under the master repurchase agreement, the term loan, the repurchase agreements and the revolving line of credit.

Real Estate Ownership

Additionally, in the first quarter of 2023, Terra Property Trust purchased three industrial buildings in Texas for total capitalized costs of $48.8 million. In the second quarter of 2023, Terra Property Trust purchased another five industrial buildings in Texas and the related mezzanine loan that was accounted for as an equity investment and five senior loans that were accounted as loans held for investment were settled in connection with the acquisition. The five industrial buildings have total capitalized costs of $83.3 million. In connection with these acquisitions, Terra Property Trust obtained mortgage financing totaling $72.6 million.

27

Portfolio Information

    The tables below set forth the types of assets in Terra Property Trust’s portfolio, as well as the property type and geographic location of the properties securing the loans in the portfolio, on a net loan basis, which represents Terra Property Trust’s proportionate share of the loans, based on its economic ownership of these loans.

	June 30, 2023								December 31, 2022
Investment Structure	Principal Balance		Amortized Cost		Fair Value		% of Total		Principal Balance		Amortized Cost		Fair Value		% of Total
First mortgages	$	380,923,792	$	385,177,670	$	380,414,299	54.3	%	$	456,408,889	$	461,299,182	$	458,085,397	63.1	%
Preferred equity    investments	123,242,640		123,957,220		99,754,638		14.3	%	121,231,434		122,132,177		97,127,877		13.4	%
Mezzanine loans	24,010,191		24,023,343		23,536,723		3.4	%	26,767,345		26,770,521		26,325,341		3.6	%
Credit facility	—		—		—		—	%	28,802,833		29,080,183		28,926,544		4.0	%
Allowance for    credit losses	—		(33,128,796)		—		—	%	—		(25,471,890)		—		—	%
Total loan    investments	$	528,176,623	500,029,437		503,705,660		72.0	%	$	633,210,501	613,810,173		610,465,159		84.1	%
Marketable securities			1,188,019		1,203,973		0.2	%			136,265		147,960		—	%
Real estate owned			159,306,582		159,690,352		22.8	%			40,581,847		52,500,000		7.2	%
Equity investment in    unconsolidated Investments			32,608,994		34,774,900		5.0	%			62,498,340		63,161,348		8.7	%
Total			$	693,133,032	$	699,374,885	100.0	%			$	717,026,625	$	726,274,467	100.0	%

	June 30, 2023								December 31, 2022
Property Type	Principal Balance		Amortized Cost		Fair Value		% of Total		Principal Balance		Amortized Cost		Fair Value		% of Total
Office	$	151,158,617	$	151,538,052	$	136,136,714	19.4	%	$	171,611,750	$	172,042,063	$	159,780,622	22.0	%
Multifamily	103,427,397		104,222,850		102,766,086		14.7	%	104,589,464		105,570,432		103,784,913		14.3	%
Industrial	64,340,667		64,865,942		64,778,991		9.3	%	147,796,164		148,891,742		148,409,441		20.4	%
Mixed use	62,746,351		63,257,099		50,809,625		7.3	%	64,880,450		65,838,965		52,303,392		7.2	%
Infill land	51,031,209		52,122,303		52,437,362		7.5	%	48,860,291		49,565,437		49,864,054		6.9	%
Hotel - full/select    service	43,222,382		43,826,614		43,499,719		6.2	%	43,222,382		43,758,804		43,062,933		5.9	%
Student housing	31,000,000		31,768,579		31,809,270		4.5	%	31,000,000		31,774,261		31,816,276		4.4	%
Infrastructure	21,250,000		21,556,794		21,467,893		3.1	%	21,250,000		21,840,359		21,443,528		3.0	%
Allowance for credit    losses	—		(33,128,796)		—		—	%	—		(25,471,890)		—		—	%
Total loan    investments	$	528,176,623	500,029,437		503,705,660		72.0	%	$	633,210,501	613,810,173		610,465,159		84.1	%
Marketable securities			1,188,019		1,203,973		0.2	%			136,265		147,960		—	%
Real estate owned			159,306,582		159,690,352		22.8	%			40,581,847		52,500,000		7.2	%
Equity investment in unconsolidated    investments			32,608,994		34,774,900		5.0	%			62,498,340		63,161,348		8.7	%
Total			$	693,133,032	$	699,374,885	100.0	%			$	717,026,625	$	726,274,467	100.0	%

28

	June 30, 2023								December 31, 2022
Geographic Location	Principal Balance		Amortized Cost		Fair Value		% of Total		Principal Balance		Amortized Cost		Fair Value		% of Total
United States
California	$	125,567,737	$	126,944,398	$	125,505,319	18.0	%	$	151,668,387	$	153,158,967	$	150,237,383	20.8	%
New York	88,336,078		88,336,079		64,164,814		9.2	%	91,845,479		91,877,084		67,737,205		9.3	%
New Jersey	77,371,876		78,691,851		79,362,148		11.3	%	62,228,622		62,958,482		63,290,218		8.7	%
Georgia	75,205,257		75,840,968		71,375,267		10.2	%	72,401,718		73,101,964		71,971,448		9.9	%
Washington	52,969,210		53,070,927		53,430,563		7.6	%	56,671,267		57,027,639		57,191,604		7.9	%
Utah	49,250,000		50,399,536		50,385,377		7.2	%	49,250,000		50,698,251		50,345,762		6.9	%
Arizona	31,000,000		31,296,394		31,296,394		4.5	%	31,000,000		31,276,468		31,276,468		4.3	%
North Carolina	21,476,465		21,578,080		21,627,967		3.1	%	43,520,028		44,041,162		43,634,806		6.0	%
Massachusetts	7,000,000		7,000,000		6,557,811		0.9	%	7,000,000		7,000,000		6,638,219		0.9	%
Texas	—		—		—		—	%	67,625,000		68,142,046		68,142,046		9.4	%
Allowance for    credit losses	—		(33,128,796)		—		—	%	—		(25,471,890)		—		—	%
Total loan    investments	$	528,176,623	500,029,437		503,705,660		72.0	%	$	633,210,501	613,810,173		610,465,159		84.1	%
Marketable securities			1,188,019		1,203,973		0.2	%			136,265		147,960		—	%
Real estate owned - California			27,603,118		27,603,118		3.9	%			40,581,847		52,500,000		7.2	%
Real estate owned - Texas			131,703,464		132,087,234		18.9	%			—		—		—	%
Equity investment in    unconsolidated Investments			32,608,994		34,774,900		5.0	%			62,498,340		63,161,348		8.7	%
Total			$	693,133,032	$	699,374,885	100.0	%			$	717,026,625	$	726,274,467	100.0	%

Factors Impacting Operating Results

    Our results of operations are affected by a number of factors and primarily depend on, among other things, the level of the interest income generated by Terra Property Trust from targeted assets, the market value of our assets and the supply of, and demand for, real estate-related loans, including mezzanine loans, first mortgage loans, subordinated mortgage loans, preferred equity investments and other loans related to high quality commercial real estate in the United States, and the financing and other costs associated with our business. Interest income and borrowing costs of Terra Property Trust may vary as a result of changes in interest rates, which could impact the net interest we receive on our assets. Our operating results may also be impacted by conditions in the financial markets and unanticipated credit events experienced by borrowers under our loan assets.

Market Risk

    Terra Property Trust’s loans are highly illiquid, and there is no assurance that it will achieve its investment objectives, including targeted returns. Due to the illiquidity of the loans, valuation of Terra Property Trust’s loans may be difficult, as there generally will be no established markets for these loans.

Credit Risk

    Credit risk represents the potential loss that Terra Property Trust would incur if the borrowers failed to perform pursuant to the terms of their obligations to Terra Property Trust. Terra Property Trust manages exposure to credit risk by limiting exposure to any one individual borrower and any one asset class. Additionally, Terra Property Trust employs an asset management approach and monitors the portfolio of loans through, at a minimum, quarterly financial review of property performance including net operating income, loan-to-value ratio, debt service coverage ratio, and the debt yield. Terra Property Trust also requires certain borrowers to establish a cash reserve, as a form of additional collateral, for the purpose of providing for future interest or property-related operating payments.

    The performance and value of Terra Property Trust’s loans depend upon the sponsors’ ability to operate or manage the development of the respective properties that serve as collateral so that each property’s value ultimately supports the repayment of the loan balance. Mezzanine loans and preferred equity investments are subordinate to senior mortgage loans and, therefore,

29

involve a higher degree of risk. In the event of a default, mezzanine loans and preferred equity investments will be satisfied only after the senior lender’s investment is fully recovered. As a result, in the event of a default, Terra Property Trust may not recover all of its investments.

    In addition, Terra Property Trust is exposed to the risks generally associated with the commercial real estate market, including variances in occupancy rates, capitalization rates, absorption rates, and other macroeconomic factors beyond its control. Terra Property Trust seeks to manage these risks through its underwriting and asset management processes.

        We and Terra Property Trust maintain all of our cash at financial institutions which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation.

Concentration Risk

    Terra Property Trust holds real estate-related loans. Thus, its loan portfolio may be subject to a more rapid change in value than would be the case if it were required to maintain a wide diversification among industries, companies and types of loans. The result of such concentration in real estate assets is that a loss in such loans could materially reduce Terra Property Trust’s capital.

Liquidity Risk

    Liquidity risk represents the possibility that we may not be able to sell, directly or indirectly, our equity interest in Terra Property Trust or Terra JV at a reasonable price in times of low trading volume, high volatility and financial stress.

Interest Rate Risk

    Interest rate risk represents the effect from a change in interest rates, which could result in an adverse change in the fair value of our interest-bearing financial instruments. With respect to Terra Property Trust’s business operations, increases in interest rates, in general, may over time cause: (i) the interest expense associated with variable rate borrowings to increase; (ii) the value of real estate-related loans to decline; (iii) coupons on variable rate loans to reset, although on a delayed basis, to higher interest rates; (iv) to the extent applicable under the terms of Terra Property Trust’s investments, prepayments on real estate-related loans to slow; and (v) to the extent we enter into interest rate swap agreements as part of Terra Property Trust’s hedging strategy, the value of these agreements to increase.

    Conversely, decreases in interest rates, in general, may over time cause: (i) the interest expense associated with variable rate borrowings to decrease; (ii) the value of real estate-related loans to increase; (iii) coupons on variable rate real estate-related loans to reset, although on a delayed basis, to lower interest rates (iv) to the extent applicable under the terms of Terra Property Trust’s investments, prepayments on real estate-related loans to increase; and (v) to the extent Terra Property Trust enters into interest rate swap agreements as part of its hedging strategy, the value of these agreements to decrease.

Prepayment Risk

    Prepayments can either positively or adversely affect the yields on Terra Property Trust’s loans. Prepayments on debt instruments, where permitted under the debt documents, are influenced by changes in current interest rates and a variety of economic, geographic and other factors beyond our control, and consequently, such prepayment rates cannot be predicted with certainty. If Terra Property Trust does not collect a prepayment fee in connection with a prepayment or are unable to invest the proceeds of such prepayments received, the yield on the portfolio will decline. In addition, Terra Property Trust may acquire assets at a discount or premium and if the asset does not repay when expected, the anticipated yield may be impacted. Under certain interest rate and prepayment scenarios Terra Property Trust may fail to recoup fully its cost of acquisition of certain loans.

Extension Risk

    Extension risk is the risk that Terra Property Trust’s assets will be repaid at a slower rate than anticipated and generally increases when interest rates rise. In which case, to the extent Terra Property Trust has financed the acquisition of an asset, Terra Property Trust may have to finance its asset at potentially higher costs without the ability to reinvest principal into higher yielding securities because borrowers prepay their mortgages at a slower pace than originally expected, adversely impacting its net interest spread, and thus its net interest income.

30

Real Estate Risk

    The market values of commercial and residential mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; retroactive changes to building or similar codes; pandemics; natural disasters; and other acts of god. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause Terra Property Trust to suffer losses.

Use of Leverage

    Terra Property Trust deploys moderate amounts of leverage as part of its operating strategy, which may consist of borrowings under first mortgage financings, warehouse facilities, term loans, repurchase agreements and other credit facilities. While borrowing and leverage present opportunities for increasing total return, they may have the effect of potentially creating or increasing losses.

Results of Operations

    The following table presents the comparative results of our operations for the three and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,						Six Months Ended June 30,
	2023		2022		Change		2023		2022		Change
Investment income
Dividend income	$	—	$	756,984	$	(756,984)	$	292,254	$	1,515,094	$	(1,222,840)
Other operating income	5		15		$	(10)	23		26		(3)
Total investment income	5		756,999		(756,994)		292,277		1,515,120		(1,222,843)
Operating expenses
Professional fees	105,069		133,139		(28,070)		316,401		260,199		56,202
Other	935		1,527		(592)		2,393		2,919		(526)
Total operating expenses	106,004		134,666		(28,662)		318,794		263,118		55,676
Net investment (loss) income	(105,999)		622,333		(728,332)		(26,517)		1,252,002		(1,278,519)
Net change in unrealized (depreciation)    appreciation on investment	(14,064,801)		3,572,487		(17,637,288)		(15,336,047)		4,591,009		(19,927,056)
Net (decrease) increase in members’    capital resulting from operations	$	(14,170,800)	$	4,194,820	$	(18,365,620)	$	(15,362,564)	$	5,843,011	$	(21,205,575)

Dividend Income

    Dividend income associated with our indirect ownership of Terra Property Trust primarily represents our proportionate share of Terra Property Trust’s net income or loss for the period. Any excess of distributions received from Terra Property Trust over its net income is recorded as return of capital. As of both June 30, 2023 and December 31, 2022, through Terra JV we indirectly beneficially owned 61.3% of the outstanding shares of common stock of Terra Property Trust.

For the three months ended June 30, 2023 and 2022, we received distributions of $2.8 million and $2.9 million, or $0.19 and $0.19 per share, respectively, from Terra Property Trust, of which none and $0.8 million was recorded as dividend income and $2.8 million and $2.1 million was recorded as return of capital, respectively.

    For the six months ended June 30, 2023 and 2022, we received distributions of $5.6 million and $5.9 million, or $0.38 and $0.39 per share, respectively, from Terra Property Trust, of which $0.3 million and $1.5 million was recorded as dividend income and $5.4 million and $4.3 million was recorded as return of capital, respectively.

For the three months ended June 30, 2023, Terra Property Trust recorded a net loss of $19.2 million, compared to net income of $1.3 million recorded in the same period in 2022. The change in Terra Property Trust’s net income (loss) was primarily due to an increase in real estate operating loss of $13.7 million as a result of an impairment charge of $11.8 million recorded in the second quarter of 2023 to write down the carrying value of the office building to its estimated fair value; an

31

increase in allowance for credit losses of $4.6 million as a result of a decline in the fair value of the collateral of the loans; an increase in equity loss of $3.1 million from RESOF and the joint ventures due to adjustments made to equity income as a result of the dilution in Terra Property Trust’s ownership interest in RESOF as new investors were admitted in 2022 and 2023 and an increase in depreciation and amortization expense, and interest expense recorded by the joint ventures; and prepayment fee income of $1.2 million recognized in 2022 (there was no such prepayment fee income for the three months ended June 30, 2023), partially offset by an increase in net interest income of $2.4 million as a result of an increase in the weighted average principal balance of net loans and an increase in the weighted average coupon rate on net loans due to new loans Terra Property Trust entered into as well as loans acquired in connection with the BDC Merger.

For the six months ended June 30, 2023, Terra Property Trust recorded a net loss of $18.7 million, compared to net income of $0.5 recorded in the same period in 2022. The change in Terra Property Trust’s net income (loss) was primarily due to an increase in real estate operating loss of $13.0 million as a result of an impairment charge of $11.8 million recorded in the second quarter of 2023 to write down the carrying value of the office building to its estimated fair value; an increase in allowance for credit losses of $3.7 million as a result of a decline in the fair value of the collateral of the loans; an increase in equity loss of $5.0 million from RESOF and the joint ventures due to adjustments made to equity income as a result of the dilution in Terra Property Trust’s ownership interest in RESOF as new investors were admitted in 2022 and 2023 and an increase in depreciation and amortization expense, and interest expense recorded by the joint ventures; an increase of $1.4 million in fees paid and operating expenses reimbursed to Terra REIT Advisors, as a result of an increase in total assets under management; and prepayment fee income of $1.2 million recognized in 2022 (there was no such prepayment fee income for the three months ended June 30, 2023), partially offset by an increase in net interest income of $5.3 million as a result of an increase in the weighted average principal balance of net loans and an increase in the weighted average coupon rate on net loans due to new loans Terra Property Trust entered into as well as loans acquired in connection with the BDC Merger.

Net Loan Portfolio

    In assessing the performance of Terra Property Trust’s loans, we believe it is appropriate to evaluate the loans on an economic basis, that is, gross loans net of obligations under participation agreements and secured borrowing, term loan payable, revolving line of credit and repurchase agreement payable.

     The following table presents a reconciliation of Terra Property Trust’s loan portfolio on a weighted average basis from gross to net for the three and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,
	2023				2022
	Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)		Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)
Total portfolio
Gross loans	$	606,761,243	12.4	%	$	557,341,571	8.4	%
Obligations under participation agreements    and secured borrowing	(13,459,586)		17.1	%	(85,476,509)		10.5	%
Repurchase agreements payable	(147,054,763)		7.0	%	(186,274,094)		3.5	%
Revolving line of credit	(117,050,294)		8.5	%	(61,522,134)		4.0	%
Net loans (3)	$	329,196,600	16.0	%	$	224,068,834	13.0	%
Senior loans
Gross loans	481,108,382		11.8	%	417,597,220		7.2	%
Obligations under participation agreements    and secured borrowing	—		—	%	(37,883,729)		8.1	%
Repurchase agreements payable	(147,054,763)		7.0	%	(186,274,094)		3.5	%
Revolving line of credit	(117,050,294)		8.5	%	(61,522,134)		4.0	%
Net loans (3)	$	217,003,325	16.8	%	$	131,917,263	13.5	%
Subordinated loans (4)
Gross loans	125,652,861		14.3	%	139,744,351		12.3	%
Obligations under participation agreements	(13,459,586)		17.1	%	(47,592,780)		12.5	%
Net loans (3)	$	112,193,275	14.0	%	$	92,151,571	12.2	%

32

	Six months ended June 30,
	2023				2022
	Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)		Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)
Total portfolio
Gross loans	$	620,485,639	12.3	%	$	531,915,282	8.4	%
Obligations under participation agreements    and secured borrowing	(13,181,738)		17.1	%	(82,267,911)		10.5	%
Repurchase agreements payable	(157,207,602)		7.0	%	(144,128,510)		3.5	%
Term loan payable	—		—	%	(20,836,327)		5.3	%
Revolving line of credit	(107,111,725)		8.5	%	(53,252,643)		5.0	%
Net loans (3)	$	342,984,574	15.7	%	$	231,429,891	11.8	%
Senior loans
Gross loans	489,904,811		11.7	%	394,099,125		7.1	%
Obligations under participation agreements    and secured borrowing	—		—	%	(37,026,717)		8.1	%
Repurchase agreements payable	(157,207,602)		7.0	%	(144,128,510)		3.5	%
Term loan payable	—		—	%	(20,836,327)		5.3	%
Revolving line of credit	(107,111,725)		8.5	%	(53,252,643)		5.0	%
Net loans (3)	$	225,585,484	16.5	%	$	138,854,928	11.7	%
Subordinated loans (4)
Gross loans	130,580,828		14.3	%	137,816,157		12.3	%
Obligations under participation agreements	(13,181,738)		17.1	%	(45,241,194)		12.4	%
Net loans (3)	$	117,399,090	14.0	%	$	92,574,963	12.3	%

_______________

(1)Amount is calculated based on the number of days each loan is outstanding.

(2)Amount is calculated based on the underlying principal amount of each loan.

(3)The weighted average coupon rate represents net interest income over the period calculated using the weighted average coupon rate and weighted average principal amount shown on the table (interest income on the loans less interest expense) divided by the weighted average principal amount of the net loans during the period.

(4)Subordinated loans include mezzanine loans, preferred equity investments and credit facilities.

Net Change in Unrealized (Depreciation) Appreciation on Investment

    Net change in unrealized appreciation on investment reflects the change in Terra Property Trust’s fair value during the reporting period. There may be fluctuations in unrealized gains and losses of the underlying portfolio as loans within the portfolio approach their respective maturity dates. In addition, the unrealized gains or losses in the portfolio may fluctuate over time due to changes in the market yields.

For the three and six months June 30, 2023, we recorded a net change on unrealized depreciation on investment of $14.1 million and $15.3 million, respectively, primarily due to a decrease in the fair value of Terra Property Trust’s office building and a decrease in the fair value of a loan in the Terra Property Trust’s loan portfolio.

For the three and six months ended June 30, 2022, we recorded an increase in net change in unrealized appreciation on investment of $3.6 million and $4.6 million, respectively, primarily due to a decrease in the trading price of Terra Property Trust’s unsecured notes payable, partially offset by a decrease in the fair value of Terra Property Trust’s investments resulting from increases in the underlying discount rates due to the macro-economic conditions.

Net (Decrease) Increase in Members’ Capital Resulting from Operations

    For the three and six months ended June 30, 2023 net decrease in members’ capital was $14.2 million and $15.4 million, respectively, as compared to a net increase in members’ capital of $4.2 million and $5.8 million, respectively, for the same periods in 2022.

33

Financial Condition, Liquidity and Capital Resources

    Liquidity is a measure of our ability to meet potential cash requirements, including funding and maintaining our assets and operations, making distributions to our members and other general business needs. Our primary cash requirements for the next twelve months are making the discretionary recurring distributions to our members. We expect to use cash distributions received from Terra Property Trust to meet such cash requirements. Distributions are made at the discretion of Terra Property Trust’s board of directors and will depend upon, among other things, its actual results of operations and liquidity.

Terra Property Trust expects to fund approximately $35.4 million of the unfunded commitments to borrowers during the next twelve months. Terra Property Trust expects to maintain sufficient cash on hand to fund such commitments through matching these commitments with principal repayments on outstanding loans or draw downs on its credit facilities. Additionally, Terra Property Trust had $27.6 million of borrowings outstanding under a mortgage loan payable that bear interest at an annual rate of Term SOFR plus 3.85% with a Term SOFR floor of 2.23%, that is collateralized by an office building. The mortgage loan payable matured on May 31, 2023. Terra Property Trust has sought to convey its interest in the office building and ground lease in lieu of foreclosure. In connection with the BDC Merger, Terra Property Trust assumed a $25.0 million term loan. This term loan bore interest at an annual rate of 5.625% and was to mature on July 1, 2023. In June 2023, the term loan was amended to extend the maturity date to March 31, 2024 and to increase the rate to a floating rate based on SOFR plus 7.375% with a SOFR floor of 5.0%. In connection with the amendment, total commitment on the term loan was reduced to $15.0 million. Terra Property Trust expects to either maintain sufficient liquidity to repay the facility or refinance the facility. Terra Property Trust’s line of credit with outstanding principal balance of $105.4 million matures on March 12, 2024 and its GS repurchase agreement with outstanding principal balance of $85.4 million matures on February 18, 2024 (see Summary of Financing below). Terra Property Trust expects to extend the maturity of both facilities by another year.

Summary of Financing

The table below summarizes Terra Property Trust’s debt financing as of June 30, 2023:

Type of Financing	Maximum Amount Available		Outstanding Balance		Amount Remaining Available		Interest Rate	Maturity Date
Fixed Rate:
Senior unsecured notes	N/A		$	85,125,000	N/A		6.00%	6/30/2026
Senior unsecured notes	N/A		38,375,000		N/A		7.00%	3/31/2026
Mortgage loan payable	N/A		40,250,000		N/A		6.254%	6/6/2028
			$	163,750,000
Variable Rate:
Mortgage loan payable	N/A		$	27,603,118	N/A		Term SOFR plus 3.85% with a Term SOFR floor of 2.23%	5/31/2023
Mortgage loan payable	N/A		32,368,367		N/A		Term SOFR +3.5% (Term SOFR Floor of 3.75%)	4/9/2027
Term loan	N/A		15,000,000		N/A		SOFR plus 7.375% with a SOFR floor of 5.0%	3/31/2024
Line of credit	$	125,000,000	105,448,019		$	19,551,981	Term SOFR plus 3.35% with a combined floor of 6.00%	3/12/2024
UBS repurchase agreement	195,000,000		37,450,000		157,550,000		Term SOFR plus a spread ranging from 1.60% to 2.25%	11/7/2024
GS repurchase agreement	200,000,000		85,382,682		114,617,318		Term SOFR (subject to underlying loan floors on a case-by-case basis) plus a spread ranging from 1.75% to 3.00%	2/18/2024
	$	520,000,000	$	303,252,186	$	291,719,299

Cash Flows Provided by Operating Activities

2023 — For the six months ended June 30, 2023, cash flows provided by operating activities were $5.4 million, primarily due to $5.6 million of dividends received from Terra JV, of which $5.4 million was recorded as a return of capital.

2022 — For the six months ended June 30, 2022, cash flows provided by operating activities were $5.7 million, primarily due to $5.9 million of dividends received from Terra JV, of which $4.3 million was recorded as a return of capital.

34

Cash Flows used in Financing Activities

2023 — For the six months ended June 30, 2023, cash flows used in financing activities were $5.5 million, related to distributions paid to members of $5.5 million.

2022 — For the six months ended June 30, 2022, cash flows used in financing activities were $6.2 million, primarily related to distributions paid to members of $5.8 million and payment for capital redemptions of $0.4 million.

Critical Accounting Policies and Use of Estimates

    Our financial statements are prepared in conformity with United States generally accepted accounting principles, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management has utilized available information, including industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. As we execute our expected operating plans, we will describe additional critical accounting policies in the notes to our future financial statements in addition to those discussed below.

Fair Value Measurements

    The fair value of our investment is categorized based on the priority of the inputs to the valuation technique and categorized into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

    Our investment was recorded at fair value on our statements of assets and liabilities and were categorized based on the inputs valuation techniques as follows:

•Level 1. Quoted prices for identical assets or liabilities in an active market.

•Level 2. Financial assets and liabilities whose values are based on the following:

◦Quoted prices for similar assets or liabilities in active markets.

◦Quoted prices for identical or similar assets or liabilities in non-active markets.

◦Pricing models whose inputs are observable for substantially the full term of the asset or liability.

◦Pricing models whose inputs are derived principally from or corroborated by observable market data for substantially full term of the asset or liability.

•Level 3. Prices or valuation techniques based on inputs that are both unobservable and significant to the overall fair value measurement.

    Unobservable inputs reflect our assumptions about the factors that market participants would use in pricing an asset or liability, and would be based on the best information available.

    Any changes to the valuation methodology will be reviewed by management to ensure the changes are appropriate. As markets and products develop and the pricing for certain products becomes more transparent, we will continue to refine our valuation methodologies. The methods used may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we anticipate that our valuation methods will be appropriate and

35

consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. We will use inputs that are current as of the measurement date, which may include periods of market dislocation, during which price transparency may be reduced.

Management Agreement with Terra REIT Advisors

    Terra Property Trust currently pays the following fees to Terra REIT Advisors pursuant to a management agreement:

    Origination and Extension Fee. An origination fee in the amount of 1.0% of the amount used to originate, acquire, fund, acquire or structure real estate-related investments, including any third-party expenses related to such loan. In the event that the term of any real estate-related loan is extended, Terra REIT Advisors also receives an extension fee equal to the lesser of (i) 1.0% of the principal amount of the loan being extended or (ii) the amount of fee paid by the borrower in connection with such extension.

    Asset Management Fee. A monthly asset management fee at an annual rate equal to 1.0% of the aggregate funds under management, which includes the loan origination amount or aggregate gross acquisition cost, as applicable, for each real estate-related loan and cash held by Terra Property Trust.

    Asset Servicing Fee. A monthly asset servicing fee at an annual rate equal to 0.25% of the aggregate gross origination price or aggregate gross acquisition price for each real estate related loan then held by Terra Property Trust (inclusive of closing costs and expenses).

    Disposition Fee. A disposition fee in the amount of 1.0% of the gross sale price received by Terra Property Trust from the disposition of each loan, but not upon the maturity, prepayment, workout, modification or extension of a loan unless there is a corresponding fee paid by the borrower, in which case the disposition fee will be the lesser of (i) 1.0% of the principal amount of the loan and (ii) the amount of the fee paid by the borrower in connection with such transaction. If Terra Property Trust takes ownership of a property as a result of a workout or foreclosure of a loan, Terra Property Trust will pay a disposition fee upon the sale of such property equal to 1.0% of the sales price.

    Transaction Breakup Fee. In the event that Terra Property Trust receives any “breakup fees,” “busted-deal fees,” termination fees, or similar fees or liquidated damages from a third-party in connection with the termination or non-consummation of any loan or disposition transaction, Terra REIT Advisors will be entitled to receive one-half of such amounts, in addition to the reimbursement of all out-of-pocket fees and expenses incurred by Terra REIT Advisors with respect to its evaluation and pursuit of such transactions.

    In addition to the fees described above, Terra Property Trust reimburses Terra REIT Advisors for operating expenses incurred in connection with services provided to the operations of Terra Property Trust, including Terra Property Trust’s allocable share of Terra REIT Advisors’s overhead, such as rent, employee costs, utilities, and technology costs.

The following table presents a summary of fees paid and costs reimbursed to Terra REIT Advisors in the aggregate in connection with providing services to Terra Property Trust:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Origination and extension fee expense (1)(2)	$	343,159	$	381,947	$	814,607	$	1,068,312
Asset management fee	2,105,049		1,640,628		4,102,476		3,128,723
Asset servicing fee	496,374		395,718		966,899		745,047
Operating expenses reimbursed to Terra REIT Advisors	2,120,029		2,140,635		4,297,033		4,069,198
Disposition fee (3)	917,750		479,500		1,208,563		479,500
Total	$	5,982,361	$	5,038,428	$	11,389,578	$	9,490,780

_______________

(1)Origination and extension fee expense is generally offset with origination and extension fee income. Any excess is deferred and amortized to interest income over the term of the loan.

(2)Amount for the six months ended June 30, 2023 excluded $0.5 million of origination fees paid to the Terra REIT Advisors in connection with the acquisition of the three industrial buildings in 2023. Amount for the six months ended June 30, 2022 excluded $0.2 million, of origination fees paid to Terra REIT Advisors in connection with its equity investment in an

36

unconsolidated investment. These origination fees were capitalized to the carrying value of the unconsolidated investment as a transaction cost.

(3)Disposition fee is generally offset with exit fee income and included in interest income on the consolidated statements of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We may be subject to financial market risks, including changes in interest rates. To the extent that we borrow money to make investments, our net investment income will be dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of rising interest rates, our cost of funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

    As of June 30, 2023, Terra Property Trust had two investments with an aggregate principal balance of $16.6 million, net of obligations under participation agreements, that provide for interest income at an annual rate of LIBOR plus a spread, six of which are subject to a LIBOR floor. A decrease of 100 basis points in LIBOR would decrease Terra Property Trust’s annual interest income, net of interest expense on participation agreements, by approximately $0.2 million, and an increase of 100 basis points in LIBOR would increase Terra Property Trust’s annual interest income, net of interest expense on participation agreements, by approximately $0.2 million. Additionally, Terra Property Trust had 16 investments with an aggregate principal balance of $458.6 million that provide for interest income at an annual rate of SOFR or Term SOFR plus a spread, 15 of which were subject to a SOFR or Term SOFR floor. A decrease of 100 basis points in SOFR or Term SOFR would decrease Terra Property Trust’s annual interest income by $4.9 million, and an increase of 100 basis points would increase Terra Property Trust’s annual interest income by $5.0 million.

    Additionally, as of June 30, 2023, Terra Property Trust had $27.6 million of borrowings outstanding under a mortgage loan payable that bear interest at an annual rate of Term SOFR plus a spread that is collateralized by an office building; $32.4 million of borrowings outstanding under another mortgage loan payable that bear interest an annual rate of Term SOFR plus a spread that is collateralized by three industrial buildings; a revolving line of credit with an outstanding balance of $105.4 million that bears interest at an annual rate of Term SOFR plus a spread that is collateralized by $165.6 million of first mortgages; a repurchase agreement with an outstanding balance of $37.5 million that bears interest at an annual rate of LIBOR or Term SOFR, as applicable, plus a spread that is collateralized by $51.1 million of first mortgages; another repurchase agreement with an outstanding balance of $85.4 million that bears interest at an annual rate of Term SOFR plus a spread that is collateralized by $120.1 million of first mortgages; and a $15.0 million of term loan that bears interest at an annual rate of SOFR plus a spread of 7.375% with a SOFR floor of 5.0%. A decrease of 100 basis points in LIBOR and Term SOFR would decrease Terra Property Trust’s annual interest expense by approximately $2.9 million, and an increase of 100 basis points in LIBOR and Term SOFR would increase our annual interest expense by approximately $3.0 million.

    In July 2017, the U.K. Financial Conduct Authority, which regulates the LIBOR administrator, IBA, announced that it would cease to compel banks to participate in setting LIBOR as a benchmark by the end of 2021, which has subsequently been delayed to June 30, 2023. The Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions convened by the U.S. Federal Reserve, has recommended SOFR as a more robust reference rate alternative to U.S. dollar LIBOR. SOFR is calculated based on overnight transactions under repurchase agreements, backed by Treasury securities. SOFR is observed and backward looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members. Given that SOFR is a secured rate backed by government securities, it will be a rate that does not take into account bank credit risk (as is the case with LIBOR). SOFR is therefore likely to be lower than LIBOR and is less likely to correlate with the funding costs of financial institutions. Whether or not SOFR attains market traction as a LIBOR replacement tool remains in question. As such, the future of LIBOR at this time is uncertain.

    Potential changes, or uncertainty related to such potential changes, may adversely affect the market for LIBOR-based loans, including Terra Property Trust’s portfolio of LIBOR-indexed, floating-rate loans, or the cost of its borrowings. In addition, changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based loans, including the value of the LIBOR-indexed, floating-rate loans in Terra Property Trust’s portfolio, or the cost of its borrowings. In the event LIBOR is unavailable, Terra Property Trust’s investment documents provide for a substitute index, on a basis generally consistent with market practice, intended to put us in substantially the same economic position as LIBOR.

We may hedge against interest rate fluctuations by using standard hedging instruments, such as futures, options and forward contracts, subject to the requirements of the 1940 Act. While hedging activities may insulate us against adverse changes in

37

interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates. For the three and six months ended June 30, 2023 and 2022, we did not engage in interest rate hedging activities.

In addition, we may have risks regarding portfolio valuation. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies — Fair Value Measurements” in this quarterly report on Form 10-Q.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including the chief executive officer and chief financial officer of our Manager (performing functions equivalent to those a principal executive officer and principal financial officer of our company would perform if we had any officers), of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based on that evaluation, the chief executive officer and chief financial officer of our Manager concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute assurance that it will detect or uncover failures within our company to disclose material information otherwise required to be set forth in our periodic reports.

Changes in Internal Control Over Financial Reporting

    During the most recent fiscal quarter, there was no change in our internal controls over financial reporting, as defined under

Rule 13a-15(f) under the Exchange Act, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II

Item 1. Legal Proceedings.

From time to time, we, Terra Property Trust, Terra JV and our Manager may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of Terra Property Trust’s rights under contracts with its portfolio companies. Additionally, as of June 30, 2023, Terra Property Trust owned a multi-tenant office building that is subject to a ground lease. The ground lease provides for a new base rent every 5 years based on the greater of the annual base rent for the prior lease year or 9% of the fair market value of the land. The next rent reset on the ground lease is scheduled for November 1, 2025. Terra Property Trust is currently litigating with the landlord with respect to the appropriate method for determining the fair value of the land for purposes of setting the ground rent – Terra Ocean Ave., LLC v. Ocean Avenue Santa Monica Realty LLC, Superior Court of California, Los Angeles County, Case No. 20STCV34217. Terra Property Trust believes this determination should be based on comparable sales, while the landlord insists that the rent under the ground lease itself is also relevant. Terra Property Trust’s position has prevailed in all three of the prior arbitrations to reset the ground rent. Terra Property Trust intends vigorously to pursue the litigation. While Terra Property Trust believes its arguments will likely prevail, the outcome of the legal proceeding cannot be predicted with certainty. If the landlord prevails, the future rent reset determinations could result in significantly higher ground rent, which would likely result in a significant diminution in the value of Terra Property Trust’s interest in the ground lease and the office building.

On July 7, 2023, Centennial Bank filed a complaint for breach of guaranty against Terra Property Trust in the United States District Court, Southern District of New York (SDNY). The complaint relates to a loan made by Centennial Bank to Terra Ocean Ave., LLC (“Terra Ocean”), and alleges that Centennial Bank allegedly made a mistake in July 2021, in demanding a prepayment of $11.3 million instead of $28.5 million with respect to the loan, and that Terra Property Trust, as guarantor in certain limited respects, must now pay the difference (i.e. $17.2 million) plus interest and attorneys’ fees and costs. Centennial Bank’s now alleges that its mistake in determining the prepayment amount was caused by the wrongful failure to disclose the then-current status of the Lease Litigation by Terra Ocean and/or Terra Property Trust. On July 24, 2023, Terra Property Trust, through counsel appeared in the action. Although the action is in its initial stages, Terra Property Trust is seeking a dismissal of the complaint at the pleading stage and, if not successful, is prepared to vigorously defend itself through trial. Terra Property Trust believes the claim by Centennial Bank is without merit.

38

Also on July 17, 2023, Centennial Bank filed a complaint against Terra Ocean for: (i) Breach of Contract; (ii) Judicial Foreclosure and Deficiency Judgment; and (iii) Specific Performance and Appointment of Receiver in the Superior Court of the State of California, County of Los Angeles. Centennial Bank seeks to foreclose on the deed of trust encumbering the tenant’s interest in the above-mentioned multi-tenant office building and ground lease. In the complaint, Centennial Bank alleges that its loan to Terra Ocean is in default and the outstanding principal amount of the loan is $27.6 million as of the filing of the complaint. Prior to Centennial Bank filing its complaints against Terra Property Trust and Terra Ocean, Terra Ocean sought to convey its interest in the ground lease in lieu of foreclosure. Terra Ocean is in the process of preparing an appropriate response to Centennial Bank’s claims in this action.

Item 1A. Risk Factors.

There have been no material changes from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6.  Exhibits.

    The following exhibits are filed with this report. Documents other than those designated as being filed herewith are incorporated herein by reference.

Exhibit No.	Description and Method of Filing
2.1	Agreement and Plan of Merger by and among the registrant, Terra Capital Advisors, LLC, Terra Secured Income Fund Merger Sub, LLC, and Terra Secured Income Fund, dated January 1, 2016 (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form 10 (File No. 000-55780) filed with the SEC on April 28, 2017).
2.2	Agreement and Plan of Merger by and among the registrant, Terra Capital Advisors, LLC, Terra Secured Income Fund Merger Sub 2, LLC, and Terra Secured Income Fund 2, LLC, dated January 1, 2016 (incorporated by reference to Exhibit 2.2 to the Registration Statement on Form 10 (File No. 000-55780) filed with the SEC on April 28, 2017).
2.3	Agreement and Plan of Merger by and among the registrant, Terra Capital Advisors, LLC, Terra Secured Income Fund Merger Sub 3, LLC, and Terra Secured Income Fund 3, LLC, dated January 1, 2016 (incorporated by reference to Exhibit 2.3 to the Registration Statement on Form 10 (File No. 000-55780) filed with the SEC on April 28, 2017).
2.4	Agreement and Plan of Merger by and among the registrant, Terra Capital Advisors, Terra Capital Advisors 2, Terra Secured Income Fund 4, LLC, and Terra Secured Income Fund 4, LLC, dated January 1, 2016 (incorporated by reference to Exhibit 2.4 to the Registration Statement on Form 10 (File No. 000-55780) filed with the SEC on April 28, 2017).
2.5	Contribution Agreement by and among Terra Secured Income Fund, LLC, Terra Secured Income Fund 2, LLC, Terra Secured Income Fund 3, LLC, Terra Secured Income Fund 4, LLC, the registrant, and Terra Property Trust, Inc., dated January 1, 2016 (incorporated by reference to Exhibit 2.5 to the Registration Statement on Form 10 (File No. 000-55780) filed with the SEC on April 28, 2017).
2.6	Amendment No. 1 to the Contribution Agreement by and among Terra Secured Income Fund, LLC, Terra Secured Income Fund 2, LLC, Terra Secured Income Fund 3, LLC, Terra Secured Income Fund 4, LLC, the registrant, and Terra Property Trust, Inc., dated December 31, 2016 (incorporated by reference to Exhibit 2.6 to the Registration Statement on Form 10 (File No. 000-55780) filed with the SEC on April 28, 2017).

39

Exhibit No.	Description and Method of Filing
2.7	Agreement and Plan of Merger, dated February 28, 2020, by and among Terra Property Trust, Inc., Terra Property Trust 2, Inc. and Terra Secured Income Fund 7, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 000-56117) filed with the SEC on March 5, 2020).
2.8	Agreement and Plan of Merger, dated as of May 2, 2022, by and among Terra Property Trust, Inc., Terra Income Fund 6, Inc., Terra Merger Sub, LLC, Terra Income Advisors, LLC and Terra REIT Advisors, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Terra Income Fund 6, Inc. with the SEC on May 5, 2022).
3.1	Amended and Restated Limited Liability Company Agreement of the registrant, dated January 1, 2016 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 (File No. 000-55780) filed with the SEC on April 28, 2017).
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File Included as Exhibit 101 (embedded within the Inline XBRL document)

_______________

* Filed herewith.

** Furnished herewith.

40

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in the capacities indicated* thereunto duly authorized.

Date: August 11, 2023

TERRA SECURED INCOME FUND 5, LLC
By:	/s/ Vikram S. Uppal
	Vikram S. Uppal
	Chief Executive Officer and Chief Investment Officer
	(Principal Executive Officer)
By:	/s/ Gregory M. Pinkus
	Gregory M. Pinkus
	Chief Financial Officer and Chief Operating Officer,
	(Principal Financial and Accounting Officer)

___________

*  The registrant is a limited liability company managed by Terra Fund Advisors, LLC, its sole and managing member and the persons are signing in their respective capacities as officers of Terra Fund Advisors, LLC.

41

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vikram S. Uppal*, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Terra Secured Income Fund 5, LLC;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 11, 2023
		/s/ Vikram S. Uppal
		Vikram S. Uppal
		Chief Executive Officer
		(Principal Executive Officer)

___________

*  The registrant is a limited liability company managed by Terra Fund Advisors, LLC, its sole and managing member and the persons are signing in their respective capacities as officers of Terra Fund Advisors, LLC.

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory M. Pinkus*, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Terra Secured Income Fund 5, LLC;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 11, 2023
		/s/ Gregory M. Pinkus
		Gregory M. Pinkus
		Chief Financial Officer and Chief Operating Officer
		(Principal Financial and Principal Accounting Officer)

___________

*  The registrant is a limited liability company managed by Terra Fund Advisors, LLC, its sole and managing member and the persons are signing in their respective capacities as officers of Terra Fund Advisors, LLC.

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Terra Secured Income Fund 5, LLC. (the “Company”) for the quarterly period ended June 30, 2023, as filed with the Securities Exchange Commission on the date hereof (the “Report”), I, Vikram S. Uppal*, Chief Executive Officer of Terra Fund Advisors, LLC, and I, Gregory M. Pinkus*, Chief Financial Officer of Terra Fund Advisors, LLC, each certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 11, 2023
		/s/ Vikram S. Uppal
		Vikram S. Uppal
		Chief Executive Officer
		(Principal Executive Officer)
		/s/ Gregory M. Pinkus
		Gregory M. Pinkus
		Chief Financial Officer and Chief Operating Officer
		(Principal Financial and Principal Accounting Officer)

___________

*  The registrant is a limited liability company managed by Terra Fund Advisors, LLC, its sole and managing member and the persons are signing in their respective capacities as officers of Terra Fund Advisors, LLC.

Pursuant to the Securities and Exchange Commission Release 33-8238, dated June 5, 2003, this certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.

XML

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 11, 2023
Document And Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	000-55780
Entity Registrant Name	Terra Secured Income Fund 5, LLC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	90-0967526
Entity Address, Address Line One	205 West 28th Street
Entity Address, Address Line Two	12th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10001
City Area Code	212
Local Phone Number	753-5100
Title of 12(g) Security	Units of Limited Liability Company Interests
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,622.2
Entity Central Index Key	0001581874
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false
Current Fiscal Year End Date	--12-31

XML

Statements of Financial Condition - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Assets
Equity investment in Terra JV, LLC at fair value (cost of $209,715,486 and $215,070,522, respectively)	$ 189,317,374
Cash and cash equivalents	71,781	$ 102,256
Other assets	20,821	40,434
Total assets	189,409,976	210,151,147
Liabilities
Accounts payable and accrued expenses	245,691	161,088
Total liabilities	245,691	161,088
Commitments and contingencies (Note 5)
Members’ capital:
Total members’ capital	189,164,285	209,990,059
Total liabilities and members’ capital	$ 189,409,976	$ 210,151,147
Net asset value per unit (in dollar per unit)	$ 28,565	$ 31,710
Managing member
Members’ capital:
Total members’ capital	$ 0	$ 0
Non-managing members
Members’ capital:
Total members’ capital	$ 189,164,285	$ 209,990,059

XML

Statements of Financial Condition (Parenthetical) - USD ($)		Jun. 30, 2023		Dec. 31, 2022
Investment, Identifier [Axis]: 1389 Peachtree St, LP; 1401 Peachtree St, LP; 1409 Peachtree St, LP
Amortized Cost		$ 59,155,584	[1]	$ 57,453,482	[2]
Investment, Identifier [Axis]: 14th & Alice Street Owner, LLC
Amortized Cost		1,364,944	[3]	1,364,944	[4]
Investment, Identifier [Axis]: 150 Blackstone River Road, LLC
Amortized Cost		7,000,000		7,000,000
Investment, Identifier [Axis]: 330 Tryon DE LLC
Amortized Cost	[2]			22,902,215
Investment, Identifier [Axis]: 370 Lex Part Deux, LLC
Amortized Cost		67,726,793	[5]	67,586,792	[6]
Investment, Identifier [Axis]: 610 Walnut Investors LLC
Amortized Cost		20,401,547	[7],[8]	18,738,386	[9],[10]
Investment, Identifier [Axis]: AAESUF Property LLC
Amortized Cost		20,825,909	[11]	18,288,969	[2]
Investment, Identifier [Axis]: AARSHW Property LLC
Amortized Cost		57,865,942	[11],[12]	44,669,513	[13],[14]
Investment, Identifier [Axis]: AGRE DCP Palm Springs, LLC
Amortized Cost		43,826,614	[1]	43,758,804	[2]
Investment, Identifier [Axis]: American Gilsonite Company
Amortized Cost		21,556,794		21,840,359
Investment, Identifier [Axis]: Ann Street JV LLC
Amortized Cost		16,685,384		15,648,482
Investment, Identifier [Axis]: Asano Bankers Hill, LLC
Amortized Cost		18,935,757		17,920,424
Investment, Identifier [Axis]: Dallas - US HWY 80 Owner, LLC
Amortized Cost	[14]			11,482,294
Investment, Identifier [Axis]: Dallas - 11221 Pagemill Owner, LLC
Amortized Cost	[14]			7,682,398
Investment, Identifier [Axis]: Dallas - 11333 Pagemill Owner, LLC
Amortized Cost	[14]			12,390,965
Investment, Identifier [Axis]: Dallas - Big Town Owner, LLC
Amortized Cost	[14]			26,838,830
Investment, Identifier [Axis]: Dallas - Oakland Owner, LLC
Amortized Cost	[14]			9,747,559
Investment, Identifier [Axis]: Dwight Mezz II, LLC
Amortized Cost		2,925,837		2,916,369
Investment, Identifier [Axis]: Fourth Street's Kingswood, LLC
Amortized Cost	[11],[15]	6,120,513
Investment, Identifier [Axis]: Grandview’s Madison Place, LLC
Amortized Cost	[16]			17,105,928
Investment, Identifier [Axis]: Grandview’s Remington Place, LLC
Amortized Cost		23,203,590	[17]	23,199,620	[16]
Investment, Identifier [Axis]: Havemeyer TSM LLC
Amortized Cost	[18]			3,313,813
Investment, Identifier [Axis]: Hillsborough Owners LLC
Amortized Cost		21,578,080		21,138,947
Investment, Identifier [Axis]: Mesa AZ Industrial Owner, LLC
Amortized Cost		31,296,394	[7],[11]	31,276,468	[9],[14]
Investment, Identifier [Axis]: NB Factory TIC 1, LLC
Amortized Cost		28,842,742	[17]	28,857,892	[16]
Investment, Identifier [Axis]: Patrick Henry Recovery Acquisition, LLC
Amortized Cost		18,043,198	[1]	18,041,782	[2]
Investment, Identifier [Axis]: REEC Harlem Holdings Company, LLC
Amortized Cost		15,258,233	[19]	15,983,234	[20]
Investment, Identifier [Axis]: RS JZ Driggs, LLC
Amortized Cost		5,351,053	[21]	4,993,245	[22]
Investment, Identifier [Axis]: Terra JV, LLC
Amortized Cost		209,715,486		215,070,522
Investment, Identifier [Axis]: Terra Property Trust, Inc. Corporate Bonds
Amortized Cost		1,188,019	[23]	136,265	[24]
Investment, Identifier [Axis]: The Lux Washington, LLC
Amortized Cost		23,746,824	[11]	16,722,091	[14]
Investment, Identifier [Axis]: UNJ Sole Member, LLC
Amortized Cost		7,485,029	[25]	7,482,547	[18]
Investment, Identifier [Axis]: University Park Berkeley, LLC
Amortized Cost		$ 27,750,542	[11]	26,536,122	[2]
Investment, Identifier [Axis]: William A. Shopoff & Cindy L. Shopoff
Amortized Cost	[26]			$ 29,080,183

[1] These loans were used as collateral for $85.4 million of borrowings under a repurchase agreement.

[2] These loans were used as collateral for $119.8 million of borrowings under a repurchase agreement.

[3] Terra Property Trust does not anticipate a full recovery of the remaining principal balance, as such, the loan is fully reserved.

[4] This loan is classified as a trouble debt restructuring. Terra Property Trust does not anticipate a full recovery of the remaining principal balance, as such, the loan is fully reserved.

[5] This loan is currently in maturity default. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $2.5 million and $4.8 million, respectively, on this loan because recovery of such income was doubtful. As of June 30, 2023, Terra Property Trust recorded an allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

[6] This loan is currently in maturity default. For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $3.7 million on this loan because recovery of such income was doubtful. As of December 31, 2022, Terra Property Trust recorded a specific allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

[7] Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

[8] The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

[9] Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

[10] The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

[11] These loans were used as collateral for $105.4 million of borrowings under a revolving line of credit.

[12] Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

[13] Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

[14] These loans were used as collateral for $90.1 million of borrowings under a revolving line of credit.

[15] Terra Property Trust is committed to fund up to $39.0 million of first mortgage as well as $3.0 million of subordinated loan. The subordinated loan bears interest at an annual rate of Term SOFR plus 12.0% with a Term SOFR floor of 4.25%.

[16] These loans were used as collateral for $51.1 million of borrowings under a repurchase agreement.

[17] These loans were used as collateral for $37.5 million of borrowings under a repurchase agreement.

[18] Terra Property Trust purchased a portion of the interest in this loan from Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party real estate investment trust managed by Terra REIT Advisors, via a participation agreement.

[19] This loan is currently in maturity default. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $1.0 million and $1.8 million, respectively, on this loan because recovery of such income was doubtful. Additionally, the fair value of the loan declined as a result of a decline in the fair value of the collateral. As of June 30, 2023, Terra Property Trust recorded an allowance for credit losses of $12.9 million on the loan as a result of a decline in the fair value of the collateral.

[20] For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $2.9 million on this loan because recovery of such income was doubtful. Additionally, the fair value of the loan declined as a result of a decline in the fair value of the collateral. As of December 31, 2022, Terra Property Trust recorded a specific allowance for credit losses of $12.9 million on the loan as a result of a decline in the fair value of the collateral.

[21] This loan is in maturity default. Terra Property Trust initiated a litigation to seek full repayment of the loan from the sponsor. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $0.3 million and $0.5 million, respectively, on this loan because recovery of such income was doubtful.

[22] This loan is in maturity default. Terra Property Trust initiated a litigation to seek full repayment of the loan from the sponsor. For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $2.0 million on this loan because recovery of such income was doubtful.

[23] From time to time, Terra Property Trust may invest in short-term debt and equity securities. These securities are comprised of shares of common and preferred stock and bonds.

[24] From time to time, Terra Property Trust may invest in short-term debt and equity securities. These securities are comprised of shares of common and preferred stock and bonds.

[25] Terra Property Trust purchased a portion of the interest in this loan from Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party real estate investment trust managed by Terra REIT Advisors, via a participation agreement.

[26] Amount included $3.0 million of incremental borrowing that bears interest at an annual rate of Term SOFR plus 7.0% with a SOFR floor of 4.30%.

XML

Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Dividend income	$ 0	$ 756,984	$ 292,254	$ 1,515,094
Other operating income	5	15	23	26
Total investment income	5	756,999	292,277	1,515,120
Operating expenses
Professional fees	105,069	133,139	316,401	260,199
Other	935	1,527	2,393	2,919
Total operating expenses	106,004	134,666	318,794	263,118
Net investment (loss) income	(105,999)	622,333	(26,517)	1,252,002
Net change in unrealized (depreciation) appreciation on investment	(14,064,801)	3,572,487	(15,336,047)	4,591,009
Net (decrease) increase in members’ capital resulting from operations	$ (14,170,800)	$ 4,194,820	$ (15,362,564)	$ 5,843,011
Per unit data:
Net investment (loss) income per unit (in USD per unit)	$ (16)	$ 94	$ (4)	$ 189
Net (decrease) increase in members’ capital resulting from operations per unit (in USD per unit)	$ (2,140)	$ 633	$ (2,320)	$ 881
Weighted average units outstanding (in units)	6,622.2	6,626.2	6,622.2	6,630.9

XML

Statements of Changes in Members’ Capital - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Changes in Members' Capital [Roll Forward]
Balance, beginning of period	$ 206,066,688	$ 209,990,059	$ 216,745,724	$ 218,076,577	$ 209,990,059	$ 218,076,577
Capital distributions	(2,731,603)	(2,731,607)	(2,813,249)	(2,979,044)
Capital redemptions			(400,728)		0	(400,728)
Increase (Decrease) in members’ capital resulting from operations
Net investment income	(105,999)	79,482	622,333	629,669	(26,517)	1,252,002
Net change in unrealized (depreciation) appreciation on investment	(14,064,801)	(1,271,246)	3,572,487	1,018,522	(15,336,047)	4,591,009
Net (decrease) increase in members’ capital resulting from operations	(14,170,800)	(1,191,764)	4,194,820	1,648,191	(15,362,564)	5,843,011
Balance, end of period	189,164,285	206,066,688	217,726,567	216,745,724	189,164,285	217,726,567
Managing Member
Changes in Members' Capital [Roll Forward]
Balance, beginning of period	0	0	0	0	0	0
Capital distributions	0	0	0	0
Capital redemptions			0
Increase (Decrease) in members’ capital resulting from operations
Net investment income	0	0	0	0
Net change in unrealized (depreciation) appreciation on investment	0	0	0	0
Net (decrease) increase in members’ capital resulting from operations	0	0	0	0
Balance, end of period	0	0	0	0	0	0
Non-Managing Members
Changes in Members' Capital [Roll Forward]
Balance, beginning of period	206,066,688	209,990,059	216,745,724	218,076,577	209,990,059	218,076,577
Capital distributions	(2,731,603)	(2,731,607)	(2,813,249)	(2,979,044)	(5,400,000)	(5,800,000)
Capital redemptions			(400,728)
Increase (Decrease) in members’ capital resulting from operations
Net investment income	(105,999)	79,482	622,333	629,669
Net change in unrealized (depreciation) appreciation on investment	(14,064,801)	(1,271,246)	3,572,487	1,018,522
Net (decrease) increase in members’ capital resulting from operations	(14,170,800)	(1,191,764)	4,194,820	1,648,191
Balance, end of period	$ 189,164,285	$ 206,066,688	$ 217,726,567	$ 216,745,724	$ 189,164,285	$ 217,726,567

XML

Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net (decrease) increase in members’ capital resulting from operations	$ (15,362,564)	$ 5,843,011
Adjustments to reconcile net increase in members’ capital resulting from operations to net cash provided by operating activities:
Return of capital on investment	5,355,036	4,340,218
Net change in unrealized depreciation (appreciation) on investment	15,336,047	(4,591,009)
Changes in operating assets and liabilities:
Decrease in other assets	19,613	15,000
Increase in accounts payable and accrued expenses	84,603	44,742
Net cash provided by operating activities	5,432,735	5,651,962
Cash flows from financing activities:
Distributions paid	(5,463,210)	(5,792,293)
Payment for capital redemptions	0	(400,728)
Net cash used in financing activities	(5,463,210)	(6,193,021)
Net decrease in cash and cash equivalents	(30,475)	(541,059)
Cash and cash equivalents at beginning of period	102,256	836,052
Cash and cash equivalents at end of period	$ 71,781	$ 294,993

XML

Schedule of Investment - USD ($)		6 Months Ended		12 Months Ended
		Jun. 30, 2023		Dec. 31, 2022
Schedule of Investments
Fair Value		$ 189,317,374
Allowance for credit losses		(33,128,796)		$ (25,471,890)	[1],[2]
Terra Property Trust
Schedule of Investments
Amortized Cost		500,029,437		613,810,173	[1],[2]
Fair Value		$ 503,705,660	[3]	$ 610,465,159	[1],[2],[4]
% of Members’ Capital		163.10%	[5]	178.20%	[1],[2],[6]
Principal amount		$ 528,176,623		$ 633,210,501	[1],[2]
Pro Rata Fair Value		308,771,569	[7]	374,215,140	[1],[2],[8]
Terra Property Trust | Obligations Under Participation Agreements
Schedule of Investments
Amortized Cost		(13,789,070)	[9],[10]	(12,680,594)	[1],[2]
Fair Value		$ (13,789,071)	[3],[9],[10]	$ (12,680,595)	[1],[2],[4]
% of Members’ Capital		(4.50%)	[5],[9],[10]	3.70%	[1],[2],[6]
Principal amount		$ (13,678,820)	[9],[10]	$ (12,584,958)	[1],[2]
Pro Rata Fair Value		(8,452,701)	[7],[9],[10]	(7,773,205)	[1],[2],[8]
Mavik Real Estate Special Opportunities Fund, LP
Schedule of Investments
Amortized Cost		18,136,440	[11]	36,794,674	[12]
Fair Value		$ 17,669,396	[11]	$ 35,718,022	[12]
% of Members’ Capital		5.70%	[5],[11]	10.40%	[6],[12]
Pro Rata Fair Value		$ 10,831,340	[7],[11]	$ 21,895,147	[8],[12]
Percentage Interest		14.90%	[11]	27.90%	[12]
LEL Arlington JV LLC
Schedule of Investments
Amortized Cost		$ 6,689,133	[13]	$ 7,271,603	[14]
Fair Value		$ 7,483,563	[13]	$ 7,483,563	[14]
% of Members’ Capital		2.40%	[5],[13]	2.20%	[6],[14]
Pro Rata Fair Value		$ 4,587,424	[7],[13]	$ 4,587,424	[8],[14]
Percentage Interest		27.20%	[13]	27.20%	[14]
LEL NW 49th JV LLC
Schedule of Investments
Amortized Cost		$ 1,546,725	[13]	$ 1,521,556	[14]
Fair Value		$ 2,516,474	[13]	$ 2,519,781	[14]
% of Members’ Capital		0.80%	[5],[13]	0.70%	[6],[14]
Pro Rata Fair Value		$ 1,542,599	[7],[13]	$ 1,544,626	[8],[14]
Percentage Interest		27.20%	[13]	27.20%	[14]
TCG Corinthian FL Portfolio JV LLC
Schedule of Investments
Amortized Cost		$ 6,236,696	[13]	$ 6,896,816	[14]
Fair Value		$ 7,105,467	[13]	$ 7,426,291	[14]
% of Members’ Capital		2.30%	[5],[13]	2.20%	[6],[14]
Pro Rata Fair Value		$ 4,355,651	[7],[13]	$ 4,552,316	[8],[14]
Percentage Interest		34.00%	[13]	34.00%	[14]
SF-Dallas Industrial, LLC
Schedule of Investments
Amortized Cost	[15]			$ 10,013,691
Fair Value	[15]			$ 10,013,691
% of Members’ Capital	[6],[15]			2.90%
Pro Rata Fair Value	[8],[15]			$ 6,138,393
Percentage Interest				35.00%
Mezzanine Loan
Schedule of Investments
Amortized Cost		$ 37,812,413		$ 39,451,115
Fair Value		$ 37,325,794	[3]	$ 39,005,936	[4]
% of Members’ Capital		12.00%	[5]	11.50%	[6]
Principal amount		$ 37,689,011		$ 39,352,303
Pro Rata Fair Value		22,880,712	[7]	23,910,639	[8]
Preferred Equity Investment
Schedule of Investments
Amortized Cost		123,957,220		122,132,177
Fair Value		$ 99,754,638	[3]	$ 97,127,877	[4]
% of Members’ Capital		32.30%	[5]	28.40%	[6]
Principal amount		$ 123,242,640		$ 121,231,434
Pro Rata Fair Value		61,149,593	[7]	59,539,387	[8]
First Mortgage
Schedule of Investments
Amortized Cost				461,299,182
Fair Value	[4]			$ 458,085,397
% of Members’ Capital	[6]			133.60%
Principal amount				$ 456,408,889
Pro Rata Fair Value	[8]			280,806,348
Loans held for investment
Schedule of Investments
Amortized Cost				29,080,183
Fair Value	[4]			$ 28,926,544
% of Members’ Capital	[6]			8.40%
Principal amount				$ 28,802,833
Pro Rata Fair Value	[8]			17,731,971
Total gross loans held for investment
Schedule of Investments
Amortized Cost		385,177,670
Fair Value	[3]	$ 380,414,299
% of Members’ Capital	[5]	123.30%
Principal amount		$ 380,923,792
Pro Rata Fair Value	[7]	233,193,965
Total gross loans held for investment | Terra Property Trust
Schedule of Investments
Amortized Cost				651,962,657
Fair Value	[4]			$ 623,145,754
% of Members’ Capital	[6]			181.90%
Principal amount				$ 645,795,459
Pro Rata Fair Value	[8]			381,988,345
Marketable Securities
Schedule of Investments
Amortized Cost	[16]			136,265
Fair Value	[16]			$ 147,960
% of Members’ Capital	[6],[16]			0.04%
Pro Rata Fair Value	[8],[16]			$ 90,699
Operating Real Estate
Schedule of Investments
Fair Value	[3]	$ 159,690,352
% of Members’ Capital	[5],[17]	19.20%
Encumbrance		$ 100,221,485
Net Investment		59,468,867
Pro Rata Net Investment	[7]	36,454,415
Equity Investments
Schedule of Investments
Amortized Cost		32,608,994		62,498,340
Fair Value		$ 34,774,900		$ 63,161,348
% of Members’ Capital		11.20%	[5]	18.40%	[6]
Pro Rata Fair Value		$ 21,317,014	[7]	$ 38,717,906	[8]
Terra Property Trust | Terra Property Trust
Schedule of Investments
Amortized Cost	[1],[2]	546,947,303
Fair Value	[1],[2],[3]	$ 517,494,731
% of Members’ Capital	[5]	167.60%
Principal amount	[1],[2]	$ 541,855,443
Pro Rata Fair Value	[1],[2],[7]	317,224,270
Investment, Identifier [Axis]: 1389 Peachtree St, LP; 1401 Peachtree St, LP; 1409 Peachtree St, LP
Schedule of Investments
Amortized Cost		59,155,584	[18]	57,453,482	[19]
Fair Value		$ 55,139,746	[3],[18]	$ 56,844,322	[4],[19]
% of Members’ Capital		17.90%	[5],[18]	16.70%	[6],[19]
Coupon rate, basis spread (as a percent)		4.61%	[18]	4.50%	[19]
Current Interest Rate		9.80%	[18]	8.90%	[19]
Exit fee (as a percent)		0.50%	[18]	0.50%	[19]
Principal amount		$ 58,865,991	[18]	$ 57,184,178	[19]
Pro Rata Fair Value		33,800,664	[7],[18]	34,845,569	[8],[19]
Investment, Identifier [Axis]: 14th & Alice Street Owner, LLC
Schedule of Investments
Amortized Cost		1,364,944	[20]	1,364,944	[21]
Fair Value		$ 0	[3],[20]	$ 0	[4],[21]
% of Members’ Capital		0.00%	[5],[20]	0.00%	[6],[21]
Coupon rate, basis spread (as a percent)		4.00%	[20]	4.00%	[19]
Coupon rate, floor (as a percent)		0.25%	[20]	0.25%	[19]
Current Interest Rate		9.20%	[20]	8.40%	[21]
Exit fee (as a percent)		2.00%	[20]	2.00%	[21]
Principal amount		$ 1,364,944	[20]	$ 1,364,944	[21]
Pro Rata Fair Value		0	[7],[20]	0	[8],[21]
Investment, Identifier [Axis]: 150 Blackstone River Road, LLC
Schedule of Investments
Amortized Cost		7,000,000		7,000,000
Fair Value		$ 6,557,811	[3]	$ 6,638,219	[4]
% of Members’ Capital		2.10%	[5]	1.90%	[6]
Coupon rate (as a percent)		8.50%		8.50%
Current Interest Rate		8.50%		8.50%
Exit fee (as a percent)		0.00%		0.00%
Principal amount		$ 7,000,000		$ 7,000,000
Pro Rata Fair Value		4,019,938	[7]	4,069,228	[8]
Investment, Identifier [Axis]: 330 Tryon DE LLC
Schedule of Investments
Amortized Cost	[19]			22,902,215
Fair Value	[4],[19]			$ 22,687,235
% of Members’ Capital	[6],[19]			6.60%
Coupon rate, basis spread (as a percent)	[19]			4.25%
Coupon rate, floor (as a percent)	[19]			0.10%
Current Interest Rate	[19]			8.60%
Exit fee (as a percent)	[19]			0.50%
Principal amount	[19]			$ 22,800,000
Pro Rata Fair Value	[8],[19]			13,907,275
Investment, Identifier [Axis]: 370 Lex Part Deux, LLC
Schedule of Investments
Amortized Cost		67,726,793	[22]	67,586,792	[23]
Fair Value		$ 56,454,778	[3],[22]	$ 56,338,079	[4],[23]
% of Members’ Capital		18.20%	[5],[22]	16.50%	[6],[23]
Coupon rate, basis spread (as a percent)		8.36%	[22]	8.25%	[23]
Coupon rate, floor (as a percent)		2.44%	[22]	2.44%	[23]
Current Interest Rate		13.50%	[22]	12.60%	[23]
Exit fee (as a percent)		0.00%	[22]	0.00%	[23]
Principal amount		$ 67,726,792	[22]	$ 67,586,792	[23]
Pro Rata Fair Value		34,606,779	[7],[22]	34,535,242	[8],[23]
Investment, Identifier [Axis]: 610 Walnut Investors LLC
Schedule of Investments
Amortized Cost		20,401,547	[9],[10]	18,738,386	[1],[2]
Fair Value		$ 20,407,825	[3],[9],[10]	$ 18,767,281	[1],[2],[4]
% of Members’ Capital		6.60%	[5],[9],[10]	5.50%	[1],[2],[6]
Coupon rate, basis spread (as a percent)		12.00%	[9],[10]	12.00%	[1],[2]
Coupon rate, floor (as a percent)		2.00%	[9],[10]	2.00%	[1],[2]
Current Interest Rate		17.10%	[9],[10]	16.40%	[1],[2]
Exit fee (as a percent)		1.00%	[9],[10]	1.00%	[1],[2]
Principal amount		$ 20,244,654	[9],[10]	$ 18,625,738	[1],[2]
Pro Rata Fair Value		12,509,997	[7],[9],[10]	11,504,343	[1],[2],[8]
Investment, Identifier [Axis]: AAESUF Property LLC
Schedule of Investments
Amortized Cost		20,825,909	[24]	18,288,969	[19]
Fair Value		$ 21,140,968	[3],[24]	$ 18,587,586	[4],[19]
% of Members’ Capital		6.90%	[5],[24]	5.40%	[6],[19]
Coupon rate, basis spread (as a percent)		11.95%	[24]	11.95%	[19]
Coupon rate, floor (as a percent)		0.05%	[24]	0.05%	[19]
Current Interest Rate		17.00%	[24]	16.00%	[19]
Exit fee, minimum (as a percent)		5.00%	[24]	5.00%	[18]
Exit fee, maximum (as a percent)		10.00%	[24]	10.00%	[18]
Principal amount		$ 20,031,209	[24]	$ 17,860,291	[19]
Pro Rata Fair Value		12,959,413	[7],[24]	11,394,190	[8],[19]
Investment, Identifier [Axis]: AARSHW Property LLC
Schedule of Investments
Amortized Cost		57,865,942	[24],[25]	44,669,513	[26],[27]
Fair Value		$ 58,221,180	[3],[24],[25]	$ 44,702,632	[4],[26],[27]
% of Members’ Capital		18.80%	[5],[24],[25]	13.00%	[6],[26],[27]
Coupon rate, basis spread (as a percent)		7.50%	[24],[25]	7.50%	[26],[27]
Coupon rate, floor (as a percent)		0.15%	[24],[25]	0.15%	[26],[27]
Current Interest Rate		12.60%	[24],[25]	11.60%	[26],[27]
Exit fee (as a percent)		0.90%	[24],[25]	0.90%	[26],[27]
Principal amount		$ 57,340,667	[24],[25]	$ 44,368,331	[26],[27]
Pro Rata Fair Value		35,689,583	[7],[24],[25]	27,402,713	[8],[26],[27]
Investment, Identifier [Axis]: AGRE DCP Palm Springs, LLC
Schedule of Investments
Amortized Cost		43,826,614	[18]	43,758,804	[19]
Fair Value		$ 43,499,719	[3],[18]	$ 43,062,933	[4],[19]
% of Members’ Capital		14.10%	[5],[18]	12.60%	[6],[19]
Coupon rate, basis spread (as a percent)		5.10%	[18]	5.00%	[19]
Coupon rate, floor (as a percent)		1.80%	[18]	1.80%	[19]
Current Interest Rate		10.30%	[18]	9.40%	[19]
Exit fee (as a percent)		1.50%	[18]	1.50%	[19]
Principal amount		$ 43,222,382	[18]	$ 43,222,382	[19]
Pro Rata Fair Value		26,665,328	[7],[18]	26,397,578	[8],[19]
Investment, Identifier [Axis]: American Gilsonite Company
Schedule of Investments
Amortized Cost		21,556,794		21,840,359
Fair Value		$ 21,467,893	[3]	$ 21,443,528	[4]
% of Members’ Capital		7.00%	[5]	6.30%	[6]
Coupon rate (as a percent)		14.00%		14.00%
Current Interest Rate		14.00%		14.00%
Exit fee (as a percent)		1.00%		1.00%
Principal amount		$ 21,250,000		$ 21,250,000
Pro Rata Fair Value		13,159,818	[7]	13,144,883	[8]
Investment, Identifier [Axis]: Ann Street JV LLC
Schedule of Investments
Amortized Cost		16,685,384		15,648,482
Fair Value		$ 16,235,521	[3]	$ 15,127,126	[4]
% of Members’ Capital		5.30%	[5]	4.40%	[6]
Coupon rate (as a percent)		14.00%		14.00%
Current Interest Rate		14.00%		14.00%
Exit fee (as a percent)		1.00%		1.00%
Principal amount		$ 16,339,266		$ 15,217,540
Pro Rata Fair Value		9,952,374	[7]	9,272,928	[8]
Investment, Identifier [Axis]: Asano Bankers Hill, LLC
Schedule of Investments
Amortized Cost		18,935,757		17,920,424
Fair Value		$ 19,354,303	[3]	$ 17,578,839	[4]
% of Members’ Capital		6.30%	[5]	5.10%	[6]
Coupon rate, basis spread (as a percent)		15.00%		15.00%
Coupon rate, floor (as a percent)		0.25%		0.25%
Current Interest Rate		20.10%		19.10%
Exit fee (as a percent)		1.00%		1.00%
Principal amount		$ 18,567,296		$ 17,450,623
Pro Rata Fair Value		11,864,188	[7]	10,775,828	[8]
Investment, Identifier [Axis]: Dallas - US HWY 80 Owner, LLC
Schedule of Investments
Amortized Cost	[27]			11,482,294
Fair Value	[4],[27]			$ 11,482,294
% of Members’ Capital	[6],[27]			3.40%
Coupon rate, basis spread (as a percent)	[27]			4.50%
Coupon rate, floor (as a percent)	[27]			2.50%
Current Interest Rate	[27]			8.90%
Exit fee (as a percent)	[27]			1.00%
Principal amount	[27]			$ 11,395,169
Pro Rata Fair Value	[8],[27]			7,038,646
Investment, Identifier [Axis]: Dallas - 11221 Pagemill Owner, LLC
Schedule of Investments
Amortized Cost	[27]			7,682,398
Fair Value	[4],[27]			$ 7,682,398
% of Members’ Capital	[6],[27]			2.20%
Coupon rate, basis spread (as a percent)	[27]			4.50%
Coupon rate, floor (as a percent)	[27]			2.50%
Current Interest Rate	[27]			8.90%
Exit fee (as a percent)	[27]			1.00%
Principal amount	[27]			$ 7,624,106
Pro Rata Fair Value	[8],[27]			4,709,310
Investment, Identifier [Axis]: Dallas - 11333 Pagemill Owner, LLC
Schedule of Investments
Amortized Cost	[27]			12,390,965
Fair Value	[4],[27]			$ 12,390,965
% of Members’ Capital	[6],[27]			3.60%
Coupon rate, basis spread (as a percent)	[27]			4.50%
Coupon rate, floor (as a percent)	[27]			2.50%
Current Interest Rate	[27]			8.90%
Exit fee (as a percent)	[27]			1.00%
Principal amount	[27]			$ 12,296,945
Pro Rata Fair Value	[8],[27]			7,595,662
Investment, Identifier [Axis]: Dallas - Big Town Owner, LLC
Schedule of Investments
Amortized Cost	[27]			26,838,830
Fair Value	[4],[27]			$ 26,838,830
% of Members’ Capital	[6],[27]			7.80%
Coupon rate, basis spread (as a percent)	[27]			4.50%
Coupon rate, floor (as a percent)	[27]			2.50%
Current Interest Rate	[27]			8.90%
Exit fee (as a percent)	[27]			1.00%
Principal amount	[27]			$ 26,635,183
Pro Rata Fair Value	[8],[27]			16,452,203
Investment, Identifier [Axis]: Dallas - Oakland Owner, LLC
Schedule of Investments
Amortized Cost	[27]			9,747,559
Fair Value	[4],[27]			$ 9,747,559
% of Members’ Capital	[6],[27]			2.80%
Coupon rate, basis spread (as a percent)	[27]			4.50%
Coupon rate, floor (as a percent)	[27]			2.50%
Current Interest Rate	[27]			8.90%
Exit fee (as a percent)	[27]			1.00%
Principal amount	[27]			$ 9,673,597
Pro Rata Fair Value	[8],[27]			5,975,254
Investment, Identifier [Axis]: Dwight Mezz II, LLC
Schedule of Investments
Amortized Cost		2,925,837		2,916,369
Fair Value		$ 2,891,786	[3]	$ 2,914,042	[4]
% of Members’ Capital		0.90%	[5]	0.90%	[6]
Coupon rate (as a percent)		11.00%		11.00%
Current Interest Rate		11.00%		11.00%
Exit fee (as a percent)		0.00%		0.00%
Principal amount		$ 3,000,000		$ 3,000,000
Pro Rata Fair Value		1,772,665	[7]	1,786,308	[8]
Investment, Identifier [Axis]: Fourth Street's Kingswood, LLC
Schedule of Investments
Amortized Cost	[24],[28]	6,120,513
Fair Value	[3],[24],[28]	$ 6,445,560
% of Members’ Capital	[5],[24],[28]	2.10%
Coupon rate, basis spread (as a percent)	[24],[28]	7.75%
Coupon rate, floor (as a percent)	[24],[28]	4.25%
Current Interest Rate	[24],[28]	12.90%
Exit fee (as a percent)	[24],[28]	1.00%
Principal amount	[24],[28]	$ 6,400,791
Pro Rata Fair Value	[7],[24],[28]	3,951,128
Investment, Identifier [Axis]: Grandview’s Madison Place, LLC
Schedule of Investments
Amortized Cost	[29]			17,105,928
Fair Value	[4],[29]			$ 17,105,928
% of Members’ Capital	[6],[29]			5.00%
Coupon rate, basis spread (as a percent)	[29]			4.45%
Coupon rate, floor (as a percent)	[29]			0.05%
Current Interest Rate	[29]			8.80%
Exit fee (as a percent)	[29]			0.80%
Principal amount	[29]			$ 17,000,000
Pro Rata Fair Value	[8],[29]			10,485,934
Investment, Identifier [Axis]: Grandview’s Remington Place, LLC
Schedule of Investments
Amortized Cost		23,203,590	[30]	23,199,620	[29]
Fair Value		$ 23,236,153	[3],[30]	$ 23,203,343	[4],[29]
% of Members’ Capital		7.50%	[5],[30]	6.80%	[6],[29]
Coupon rate, basis spread (as a percent)		4.45%		4.45%
Coupon rate, floor (as a percent)		0.05%		0.05%
Current Interest Rate		9.60%	[30]	8.80%	[29]
Exit fee (as a percent)		0.50%	[30]	0.50%	[29]
Principal amount		$ 23,100,000	[30]	$ 23,100,000	[29]
Pro Rata Fair Value		14,243,762	[7],[30]	14,223,649	[8],[29]
Investment, Identifier [Axis]: Havemeyer TSM LLC
Schedule of Investments
Amortized Cost	[31]			3,313,813
Fair Value	[4],[31]			$ 3,315,293
% of Members’ Capital	[6],[31]			1.00%
Coupon rate (as a percent)	[31]			15.00%
Current Interest Rate	[31]			15.00%
Exit fee (as a percent)	[31]			1.00%
Principal amount	[31]			$ 3,282,208
Pro Rata Fair Value	[8],[31]			2,032,275
Investment, Identifier [Axis]: Hillsborough Owners LLC
Schedule of Investments
Amortized Cost		21,578,080		21,138,947
Fair Value		$ 21,627,967	[3]	$ 20,947,571	[4]
% of Members’ Capital		7.00%	[5]	6.10%	[6]
Coupon rate, basis spread (as a percent)		8.10%		8.00%
Coupon rate, floor (as a percent)		0.25%		0.25%
Current Interest Rate		13.30%		12.40%
Exit fee (as a percent)		1.00%		1.00%
Principal amount		$ 21,476,465		$ 20,720,028
Pro Rata Fair Value		13,257,944	[7]	12,840,861	[8]
Investment, Identifier [Axis]: Industrial buildings in Dallas/Fort Worth, TX 1
Schedule of Investments
Fair Value	[3]	$ 48,798,273
% of Members’ Capital	[5],[17]	5.30%
Encumbrance		$ 32,368,367
Net Investment		16,429,906
Pro Rata Net Investment	[7]	10,071,532
Investment, Identifier [Axis]: Industrial buildings in Dallas/Fort Worth, TX 2
Schedule of Investments
Fair Value	[3],[32]	$ 83,288,961
% of Members’ Capital	[5],[17],[32]	13.90%
Encumbrance	[32]	$ 40,250,000
Net Investment	[32]	43,038,961
Pro Rata Net Investment	[32]	26,382,883
Investment, Identifier [Axis]: Mesa AZ Industrial Owner, LLC
Schedule of Investments
Amortized Cost		31,296,394	[9],[24]	31,276,468	[1],[27]
Fair Value		$ 31,296,394	[3],[9],[24]	$ 31,276,468	[1],[4],[27]
% of Members’ Capital		10.10%	[5],[9],[24]	9.10%	[1],[6],[27]
Coupon rate, basis spread (as a percent)		12.70%	[9],[24]	12.70%	[1],[29]
Coupon rate, floor (as a percent)		2.30%	[9],[24]	2.30%	[1],[29]
Current Interest Rate		17.80%	[9],[24]	17.10%	[1],[27]
Exit fee (as a percent)		1.00%	[9],[24]	1.00%	[1],[27]
Principal amount		$ 31,000,000	[9],[24]	$ 31,000,000	[1],[27]
Pro Rata Fair Value		19,184,690	[7],[9],[24]	19,172,475	[1],[8],[27]
Investment, Identifier [Axis]: Multi-tenant office building in Santa Monica, CA
Schedule of Investments
Fair Value		$ 27,603,118	[3],[33]	$ 52,500,000	[4],[34]
% of Members’ Capital		0.00%	[5],[17],[33]	6.80%	[6],[34],[35]
Encumbrance		$ 27,603,118	[33]	$ 29,252,308	[34]
Net Investment		0	[33]	23,247,692	[34]
Pro Rata Net Investment		0	[7],[33]	14,250,835	[8],[34]
Investment, Identifier [Axis]: NB Factory TIC 1, LLC
Schedule of Investments
Amortized Cost		28,842,742	[30]	28,857,892	[29]
Fair Value		$ 28,917,484	[3],[30]	$ 28,902,234	[4],[29]
% of Members’ Capital		9.40%	[5],[30]	8.40%	[6],[29]
Coupon rate, basis spread (as a percent)		5.00%	[30]	5.00%	[29]
Coupon rate, floor (as a percent)		0.25%	[30]	0.25%	[29]
Current Interest Rate		10.10%	[30]	9.40%	[29]
Exit fee (as a percent)		3.30%	[30]	3.30%	[29]
Principal amount		$ 28,000,000	[30]	$ 28,000,000	[29]
Pro Rata Fair Value		17,726,418	[7],[30]	17,717,069	[8],[29]
Investment, Identifier [Axis]: Patrick Henry Recovery Acquisition, LLC
Schedule of Investments
Amortized Cost		18,043,198	[18]	18,041,782	[19]
Fair Value		$ 17,923,436	[3],[18]	$ 17,824,300	[4],[19]
% of Members’ Capital		5.80%	[5],[18]	5.20%	[6],[19]
Coupon rate, basis spread (as a percent)		3.06%	[18]	2.95%	[19]
Coupon rate, floor (as a percent)		1.50%	[18]	1.50%	[19]
Current Interest Rate		8.20%	[18]	7.30%	[19]
Exit fee (as a percent)		0.30%	[18]	0.30%	[19]
Principal amount		$ 18,000,000	[18]	$ 18,000,000	[19]
Pro Rata Fair Value		10,987,066	[7],[18]	10,926,296	[8],[19]
Investment, Identifier [Axis]: REEC Harlem Holdings Company, LLC
Schedule of Investments
Amortized Cost		15,258,233	[36]	15,983,234	[37]
Fair Value		$ 2,358,983	[3],[36]	$ 3,090,588	[4],[37]
% of Members’ Capital		0.80%	[5],[36]	0.90%	[6],[37]
Coupon rate, basis spread (as a percent)		12.50%	[36]	12.50%	[37]
Current Interest Rate		17.70%	[36]	16.90%	[37]
Exit fee (as a percent)		0.00%	[36]	0.00%	[37]
Principal amount		$ 15,258,233	[36]	$ 15,983,234	[37]
Pro Rata Fair Value		1,446,057	[7],[36]	1,894,530	[8],[37]
Investment, Identifier [Axis]: RS JZ Driggs, LLC
Schedule of Investments
Amortized Cost		5,351,053	[38]	4,993,245	[39]
Fair Value		$ 5,351,053	[3],[38]	$ 4,993,245	[4],[39]
% of Members’ Capital		1.70%	[5],[38]	1.50%	[6],[39]
Coupon rate (as a percent)		1230.00%	[38]	12.30%	[39]
Current Interest Rate		12.30%	[38]	12.30%	[39]
Exit fee (as a percent)		1.00%	[38]	1.00%	[39]
Principal amount		$ 5,351,053	[38]	$ 4,993,245	[39]
Pro Rata Fair Value		$ 3,280,195	[7],[38]	$ 3,060,859	[8],[39]
Investment, Identifier [Axis]: Terra JV, LLC
Schedule of Investments
Investment owned (as a percent)		87.60%		87.60%
Amortized Cost		$ 209,715,486		$ 215,070,522
Fair Value		$ 189,317,374		$ 210,008,457
% of Members’ Capital		100.10%		100.00%
Investment, Identifier [Axis]: Terra Property Trust, Inc. Corporate Bonds
Schedule of Investments
Amortized Cost		$ 1,188,019	[40]	$ 136,265	[16]
Fair Value		$ 1,203,973	[40]	$ 147,960	[16]
% of Members’ Capital		0.39%	[5],[40]	0.04%	[6],[16]
Pro Rata Fair Value		$ 738,035	[7],[40]	$ 90,699	[8],[16]
Dividend Yield		6.00%	[40]	6.00%	[16]
Shares		63,367	[40]	7,398	[16]
Investment, Identifier [Axis]: The Lux Washington, LLC
Schedule of Investments
Amortized Cost		$ 23,746,824	[24]	$ 16,722,091	[27]
Fair Value		$ 23,748,850	[3],[24]	$ 16,882,333	[4],[27]
% of Members’ Capital		7.70%	[5],[24]	4.90%	[6],[27]
Coupon rate, basis spread (as a percent)		7.10%	[24]	7.00%	[27]
Coupon rate, floor (as a percent)		0.75%	[24]	0.75%	[27]
Current Interest Rate		12.30%	[24]	11.40%	[27]
Exit fee (as a percent)		1.00%	[24]	1.00%	[27]
Principal amount		$ 23,468,419	[24]	$ 16,571,267	[27]
Pro Rata Fair Value		14,558,045	[7],[24]	10,348,870	[8],[27]
Investment, Identifier [Axis]: UNJ Sole Member, LLC
Schedule of Investments
Amortized Cost		7,485,029	[41]	7,482,547	[31]
Fair Value		$ 7,468,372	[3],[41]	$ 7,371,101	[4],[31]
% of Members’ Capital		2.40%	[5],[41]	2.20%	[6],[31]
Coupon rate (as a percent)	[31]			15.00%
Coupon rate, basis spread (as a percent)	[41]	10.15%
Coupon rate, floor (as a percent)	[41]	4.85%
Current Interest Rate		15.30%	[41]	15.00%	[31]
Exit fee (as a percent)		1.00%	[41]	1.00%	[31]
Principal amount		$ 7,444,357	[41]	$ 7,444,357	[31]
Pro Rata Fair Value		4,578,112	[7],[41]	4,518,485	[8],[31]
Investment, Identifier [Axis]: University Park Berkeley, LLC
Schedule of Investments
Amortized Cost		27,750,542	[24]	26,536,122	[19]
Fair Value		$ 27,748,949	[3],[24]	$ 26,472,938	[4],[19]
% of Members’ Capital		9.00%	[5],[24]	7.70%	[6],[19]
Coupon rate, basis spread (as a percent)		5.50%	[24]	5.50%	[19]
Coupon rate, floor (as a percent)		4.00%	[24]	4.00%	[19]
Current Interest Rate		10.60%	[24]	8.60%	[19]
Exit fee (as a percent)		1.00%	[24]	0.80%	[19]
Principal amount		$ 27,402,924	[24]	$ 26,342,468	[19]
Pro Rata Fair Value		$ 17,010,106	[7],[24]	16,227,911	[8],[19]
Investment, Identifier [Axis]: William A. Shopoff & Cindy L. Shopoff
Schedule of Investments
Amortized Cost	[42]			29,080,183
Fair Value	[4],[42]			$ 28,926,544
% of Members’ Capital	[6],[42]			8.40%
Coupon rate (as a percent)	[42]			15.00%
Current Interest Rate	[42]			15.00%
Exit fee (as a percent)	[42]			1.00%
Principal amount	[42]			$ 28,802,833
Pro Rata Fair Value	[8],[42]			$ 17,731,971

[1] Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

[2] The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

[3] Because there is no readily available market for these investments, these loans were valued using significant unobservable inputs under Level 3 of the fair value hierarchy and were approved in good faith by Terra REIT Advisors, LLC (“Terra REIT Advisors”), Terra Property Trust’s manager, pursuant to Terra Property Trust’s valuation policy.

[4] Because there is no readily available market for these investments, these loans were valued using significant unobservable inputs under Level 3 of the fair value hierarchy and were approved in good faith by Terra REIT Advisors, Terra Property Trust’s manager, pursuant to Terra Property Trust’s valuation policy.

[5] Percentage is based on the Company’s pro rata share of the fair value or net investment value over the Company’s total members’ capital of $189.2 million at June 30, 2023.

[6] Percentage is based on the Company’s pro rata share of the fair value or net investment value over the Company’s total members’ capital of $210.0 million at December 31, 2022.

[7] Amount represents the Company’s portion, or 61.3%, of the fair value or net investment value.

[8] Amount represents the Company’s portion, or 61.3%, of the fair value or net investment value.

[9] Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

[10] The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

[11] On August 3, 2020, Terra Property Trust entered into a subscription agreement with Mavik Real Estate Special Opportunities Fund, LP (“RESOF”) whereby Terra Property Trust committed to fund up to $50.0 million to purchase a limited partnership interest in RESOF. RESOF’s primary investment objective is to generate attractive risk-adjusted returns by purchasing performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. As of June 30, 2023, the unfunded commitment was $37.4 million.

[12] On August 3, 2020, Terra Property Trust entered into a subscription agreement with RESOF whereby Terra Property Trust committed to fund up to $50.0 million to purchase a limited partnership interest in RESOF. RESOF’s primary investment objective is to generate attractive risk-adjusted returns by purchasing performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. As of December 31, 2022, the unfunded commitment was $22.4 million.

[13] As of June 30, 2023, Terra Property Trust beneficially owned equity interest in three joint ventures that invest in real estate properties.

[14] As of December 31, 2022, Terra Property Trust beneficially owned equity interest in three joint ventures that invest in real estate properties.

[15] On December 28, 2022, Terra Property Trust originated a $10.0 million mezzanine loan to a borrower to finance the acquisition of a real estate portfolio. Additionally, Terra Property Trust entered into a residual profit-sharing agreement with the borrower where the borrower will pay Terra Property Trust an additional amount of 35.0% of remaining net cash flow from the sale of the real estate portfolio. Terra Property Trust accounts for this arrangement using the equity method of accounting.

[16] From time to time, Terra Property Trust may invest in short-term debt and equity securities. These securities are comprised of shares of common and preferred stock and bonds.

[17] Percentage is based on Terra Property Trust’s net exposure on the property (real estate owned less encumbrance).

[18] These loans were used as collateral for $85.4 million of borrowings under a repurchase agreement.

[19] These loans were used as collateral for $119.8 million of borrowings under a repurchase agreement.

[20] Terra Property Trust does not anticipate a full recovery of the remaining principal balance, as such, the loan is fully reserved.

[21] This loan is classified as a trouble debt restructuring. Terra Property Trust does not anticipate a full recovery of the remaining principal balance, as such, the loan is fully reserved.

[22] This loan is currently in maturity default. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $2.5 million and $4.8 million, respectively, on this loan because recovery of such income was doubtful. As of June 30, 2023, Terra Property Trust recorded an allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

[23] This loan is currently in maturity default. For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $3.7 million on this loan because recovery of such income was doubtful. As of December 31, 2022, Terra Property Trust recorded a specific allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

[24] These loans were used as collateral for $105.4 million of borrowings under a revolving line of credit.

[25] Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

[26] Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

[27] These loans were used as collateral for $90.1 million of borrowings under a revolving line of credit.

[28] Terra Property Trust is committed to fund up to $39.0 million of first mortgage as well as $3.0 million of subordinated loan. The subordinated loan bears interest at an annual rate of Term SOFR plus 12.0% with a Term SOFR floor of 4.25%.

[29] These loans were used as collateral for $51.1 million of borrowings under a repurchase agreement.

[30] These loans were used as collateral for $37.5 million of borrowings under a repurchase agreement.

[31] Terra Property Trust purchased a portion of the interest in this loan from Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party real estate investment trust managed by Terra REIT Advisors, via a participation agreement.

[32] In May 2023, Terra Property Trust acquired five industrial buildings for $3.5 million cash payment and the settlement of a mezzanine loan that was accounted for as an equity investment and five senior loans that were held for investment.

[33] Terra Property Trust acquired this property through foreclosure of a $54.0 million first mortgage. The mortgage loan payable on this property is currently in default. Terra Property Trust has sought to convey its interest in the office building and ground lease in lieu of foreclosure. Additionally, during the three and six months ended June 30, 2023, Terra Property Trust recognized an impairment charge of $11.8 million to reduce the carrying value of the real estate property to its estimated fair value.

[34] Terra Property Trust acquired this property through foreclosure of a $54.0 million first mortgage.

[35] Percentage is based on Terra Property Trust’s net exposure on the property (real estate owned less encumbrance).

[36] This loan is currently in maturity default. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $1.0 million and $1.8 million, respectively, on this loan because recovery of such income was doubtful. Additionally, the fair value of the loan declined as a result of a decline in the fair value of the collateral. As of June 30, 2023, Terra Property Trust recorded an allowance for credit losses of $12.9 million on the loan as a result of a decline in the fair value of the collateral.

[37] For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $2.9 million on this loan because recovery of such income was doubtful. Additionally, the fair value of the loan declined as a result of a decline in the fair value of the collateral. As of December 31, 2022, Terra Property Trust recorded a specific allowance for credit losses of $12.9 million on the loan as a result of a decline in the fair value of the collateral.

[38] This loan is in maturity default. Terra Property Trust initiated a litigation to seek full repayment of the loan from the sponsor. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $0.3 million and $0.5 million, respectively, on this loan because recovery of such income was doubtful.

[39] This loan is in maturity default. Terra Property Trust initiated a litigation to seek full repayment of the loan from the sponsor. For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $2.0 million on this loan because recovery of such income was doubtful.

[40] From time to time, Terra Property Trust may invest in short-term debt and equity securities. These securities are comprised of shares of common and preferred stock and bonds.

[41] Terra Property Trust purchased a portion of the interest in this loan from Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party real estate investment trust managed by Terra REIT Advisors, via a participation agreement.

[42] Amount included $3.0 million of incremental borrowing that bears interest at an annual rate of Term SOFR plus 7.0% with a SOFR floor of 4.30%.

XML

Schedule of Investment - Additional Information (Parenthetical)	Jun. 30, 2023	Dec. 31, 2022
Terra Property Trust
Schedule of Investments
Percentage Interest	70.00%	70.00%
% of Members’ Capital	87.60%
Terra JV, LLC
Schedule of Investments
Percentage Interest	87.60%	87.60%
Terra Fund Five | Terra JV, LLC
Schedule of Investments
Percentage Interest	87.60%	87.60%
Terra Fund Seven
Schedule of Investments
% of Members’ Capital	12.40%
Terra Fund Seven | Terra JV, LLC
Schedule of Investments
Percentage Interest	12.40%	12.40%
Terra Property Trust
Schedule of Investments
Percent of common stock indirect owned	61.30%	61.30%
Terra JV, LLC
Schedule of Investments
% of Members’ Capital	70.00%

XML

Schedule of Investment - Footnotes (Parenthetical)		1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
		May 31, 2023 USD ($) senior_loan building	Jun. 30, 2023 USD ($) venture		Jun. 30, 2023 USD ($) venture		Dec. 31, 2022 USD ($) venture		Dec. 28, 2022 USD ($)	Aug. 03, 2020 USD ($)
Investments
Total members’ capital			$ 189,164,285		$ 189,164,285		$ 209,990,059
Incremental borrowing							$ 3,000,000
Impairment charge			$ 11,800,000		$ 11,800,000
Number of joint venture | venture			3		3		3
SF-Dallas Industrial, LLC
Investments
Percentage Interest							35.00%
Investment, Identifier [Axis]: 14th & Alice Street Owner, LLC
Investments
Coupon rate, floor (as a percent)			0.25%	[1]	0.25%	[1]	0.25%	[2]
Investment, Identifier [Axis]: 330 Tryon DE LLC
Investments
Coupon rate, floor (as a percent)	[2]						0.10%
Investment, Identifier [Axis]: 370 Lex Part Deux, LLC
Investments
Interest income accrual suspended			$ 2,500,000		$ 4,800,000
Coupon rate, floor (as a percent)			2.44%	[3]	2.44%	[3]	2.44%	[4]
Investment, Identifier [Axis]: 610 Walnut Investors LLC
Investments
Coupon rate, floor (as a percent)			2.00%	[5],[6]	2.00%	[5],[6]	2.00%	[7],[8]
Investment, Identifier [Axis]: AAESUF Property LLC
Investments
Coupon rate, floor (as a percent)			0.05%	[9]	0.05%	[9]	0.05%	[2]
Investment, Identifier [Axis]: AARSHW Property LLC
Investments
Coupon rate, floor (as a percent)			0.15%	[9],[10]	0.15%	[9],[10]	0.15%	[11],[12]
Investment, Identifier [Axis]: AGRE DCP Palm Springs, LLC
Investments
Coupon rate, floor (as a percent)			1.80%	[13]	1.80%	[13]	1.80%	[2]
Investment, Identifier [Axis]: Asano Bankers Hill, LLC
Investments
Coupon rate, floor (as a percent)			0.25%		0.25%		0.25%
Investment, Identifier [Axis]: Dallas - US HWY 80 Owner, LLC
Investments
Coupon rate, floor (as a percent)	[12]						2.50%
Investment, Identifier [Axis]: Dallas - 11221 Pagemill Owner, LLC
Investments
Coupon rate, floor (as a percent)	[12]						2.50%
Investment, Identifier [Axis]: Dallas - 11333 Pagemill Owner, LLC
Investments
Coupon rate, floor (as a percent)	[12]						2.50%
Investment, Identifier [Axis]: Dallas - Big Town Owner, LLC
Investments
Coupon rate, floor (as a percent)	[12]						2.50%
Investment, Identifier [Axis]: Dallas - Oakland Owner, LLC
Investments
Coupon rate, floor (as a percent)	[12]						2.50%
Investment, Identifier [Axis]: Fourth Street's Kingswood, LLC
Investments
Coupon rate, floor (as a percent)	[9],[14]		4.25%		4.25%
Investment, Identifier [Axis]: Grandview’s Madison Place, LLC
Investments
Coupon rate, floor (as a percent)	[15]						0.05%
Investment, Identifier [Axis]: Grandview’s Remington Place, LLC
Investments
Coupon rate, floor (as a percent)			0.05%		0.05%		0.05%
Investment, Identifier [Axis]: Hillsborough Owners LLC
Investments
Coupon rate, floor (as a percent)			0.25%		0.25%		0.25%
Investment, Identifier [Axis]: Industrial buildings in Dallas/Fort Worth, TX 1
Investments
Mortgage loan payable			$ 32,368,367		$ 32,368,367
Investment, Identifier [Axis]: Industrial buildings in Dallas/Fort Worth, TX 2
Investments
Mortgage loan payable	[16]		$ 40,250,000		$ 40,250,000
Investment, Identifier [Axis]: Mesa AZ Industrial Owner, LLC
Investments
Coupon rate, floor (as a percent)			2.30%	[5],[9]	2.30%	[5],[9]	2.30%	[7],[15]
Investment, Identifier [Axis]: Multi-tenant office building in Santa Monica, CA
Investments
Mortgage loan payable			$ 27,603,118	[17]	$ 27,603,118	[17]	$ 29,252,308	[18]
Investment, Identifier [Axis]: NB Factory TIC 1, LLC
Investments
Coupon rate, floor (as a percent)			0.25%	[19]	0.25%	[19]	0.25%	[15]
Investment, Identifier [Axis]: Patrick Henry Recovery Acquisition, LLC
Investments
Coupon rate, floor (as a percent)			1.50%	[13]	1.50%	[13]	1.50%	[2]
Investment, Identifier [Axis]: RS JZ Driggs, LLC
Investments
Interest income accrual suspended			$ 300,000		$ 500,000		$ 2,000,000
Investment, Identifier [Axis]: The Lux Washington, LLC
Investments
Coupon rate, floor (as a percent)			0.75%	[9]	0.75%	[9]	0.75%	[12]
Investment, Identifier [Axis]: UNJ Sole Member, LLC
Investments
Coupon rate, floor (as a percent)	[20]		4.85%		4.85%
Investment, Identifier [Axis]: University Park Berkeley, LLC
Investments
Coupon rate, floor (as a percent)			4.00%	[9]	4.00%	[9]	4.00%	[2]
SOFR
Investments
Fixed rate (as a percent)							7.00%
Coupon rate, floor (as a percent)							4.30%
Terra Property Trust
Investments
Interest income accrual suspended							$ 2,900,000
Specific allowance for loan loss					$ 12,900,000		12,900,000
Mezzanine loan to a borrower to finance the acquisition									$ 10,000,000
Terra Property Trust | Revolving Credit Facility
Investments
Mortgage loan payable			$ 105,400,000		105,400,000		90,100,000
Preferred Equity Investment | Terra Property Trust
Investments
Interest income accrual suspended			1,000,000		1,800,000		3,700,000
Specific allowance for loan loss					11,200,000		11,200,000
Term loan | Terra Property Trust
Investments
Mortgage loan payable			85,400,000		85,400,000		119,800,000
Repurchase agreement borrowings			37,500,000		37,500,000
First Mortgage | Terra Property Trust
Investments
Incremental borrowing			$ 4,000,000		4,000,000		$ 4,000,000
Funding commitment					$ 39,000,000
Fixed rate (as a percent)			20.00%		20.00%		20.00%
Subordinated Loan | Terra Property Trust
Investments
Funding commitment					$ 3,000,000
Subordinated Loan | Terra Property Trust | SOFR
Investments
Fixed rate (as a percent)			12.00%		12.00%
Coupon rate, floor (as a percent)			4.25%		4.25%
Repurchase Agreements | Terra Property Trust
Investments
Mortgage loan payable							$ 51,100,000
Real Estate Investment | Terra Property Trust
Investments
Real estate acquired through foreclosure			$ 54,000,000		$ 54,000,000		54,000,000
Number of building acquired | building		5
Payments to acquire real estate		$ 3,500,000
Equity Method Investments
Investments
Total commitment										$ 50,000,000
Fair value, investments, entities that calculate net asset value per share, unfunded commitments			$ 37,400,000		$ 37,400,000		$ 22,400,000
Equity Method Investments | Terra Property Trust
Investments
Number of senior loan | senior_loan		5
Terra Property Trust
Investments
Percent of common stock indirect owned			61.30%		61.30%		61.30%

[1] Terra Property Trust does not anticipate a full recovery of the remaining principal balance, as such, the loan is fully reserved.

[2] These loans were used as collateral for $119.8 million of borrowings under a repurchase agreement.

[3] This loan is currently in maturity default. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $2.5 million and $4.8 million, respectively, on this loan because recovery of such income was doubtful. As of June 30, 2023, Terra Property Trust recorded an allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

[4] This loan is currently in maturity default. For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $3.7 million on this loan because recovery of such income was doubtful. As of December 31, 2022, Terra Property Trust recorded a specific allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

[5] Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

[6] The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

[7] Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

[8] The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

[9] These loans were used as collateral for $105.4 million of borrowings under a revolving line of credit.

[10] Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

[11] Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

[12] These loans were used as collateral for $90.1 million of borrowings under a revolving line of credit.

[13] These loans were used as collateral for $85.4 million of borrowings under a repurchase agreement.

[14] Terra Property Trust is committed to fund up to $39.0 million of first mortgage as well as $3.0 million of subordinated loan. The subordinated loan bears interest at an annual rate of Term SOFR plus 12.0% with a Term SOFR floor of 4.25%.

[15] These loans were used as collateral for $51.1 million of borrowings under a repurchase agreement.

[16] In May 2023, Terra Property Trust acquired five industrial buildings for $3.5 million cash payment and the settlement of a mezzanine loan that was accounted for as an equity investment and five senior loans that were held for investment.

[17] Terra Property Trust acquired this property through foreclosure of a $54.0 million first mortgage. The mortgage loan payable on this property is currently in default. Terra Property Trust has sought to convey its interest in the office building and ground lease in lieu of foreclosure. Additionally, during the three and six months ended June 30, 2023, Terra Property Trust recognized an impairment charge of $11.8 million to reduce the carrying value of the real estate property to its estimated fair value.

[18] Terra Property Trust acquired this property through foreclosure of a $54.0 million first mortgage.

[19] These loans were used as collateral for $37.5 million of borrowings under a repurchase agreement.

[20] Terra Property Trust purchased a portion of the interest in this loan from Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party real estate investment trust managed by Terra REIT Advisors, via a participation agreement.

XML

Business

6 Months Ended

Jun. 30, 2023

Limited Liability Companies LLCs [Abstract]

Business

Business

    Terra Secured Income Fund 5, LLC (the “Company”) is a real estate credit focused company that originates, structures, funds and manages high yielding commercial real estate investments, including mezzanine loans, first mortgage loans, subordinated mortgage loans and preferred equity investments throughout the United States. The Company’s loans finance the acquisition, construction, development or redevelopment of quality commercial real estate in the United States. The Company focuses on the origination of middle market loans in the approximately $10 million to $50 million range, to finance properties in primary and secondary markets. The Company was formed as a Delaware limited liability company on April 24, 2013 and commenced operations on August 8, 2013. The Company makes substantially all of its investments and conducts substantially all of its real estate lending business through Terra Property Trust, which has elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2016. The Company’s investment objectives are to (i) preserve its members’ capital contributions, (ii) realize income from its investments and (iii) make monthly distributions to its members from cash generated from investments. There can be no assurances that the Company will be successful in meeting its investment objectives.

    In December 2015, the members approved the merger of Terra Secured Income Fund, LLC (“Terra Fund 1”), Terra Secured Income Fund 2, LLC (“Terra Fund 2”), Terra Secured Income Fund 3, LLC (“Terra Fund 3”) and Terra Secured Income Fund 4, LLC (“Terra Fund 4”) with and into subsidiaries of the Company (individually, each a “Terra Fund” and collectively, the “Terra Funds”) through a series of separate mergers effective January 1, 2016 (collectively, the “Mergers”). Following the Mergers, the Company contributed the consolidated portfolio of net assets of the five Terra Funds to Terra Property Trust, a newly-formed and wholly-owned subsidiary of the Company that elected to be taxed as a REIT, in exchange for the shares of common stock of Terra Property Trust. Upon completion of the Mergers, the Company became the parent company of Terra Funds 1 through 4 and the direct and indirect sole common stockholder of, and began conducting substantially all of its real estate lending business through, Terra Property Trust.

    On March 2, 2020, Terra Fund 1, Terra Fund 2 and Terra Fund 3 merged with and into Terra Fund 4, with Terra Fund 4 continuing as the surviving company (the “Terra Fund Merger”), and the Company consolidated its holdings of shares of common stock of Terra Property Trust in Terra Fund 4. Subsequent to the Terra Fund Merger, the legal name of Terra Fund 4 was changed to Terra JV, LLC (“Terra JV”). On March 2, 2020, Terra Property Trust engaged in a series of transactions pursuant to which Terra Property Trust issued an aggregate of 4,574,470.35 shares of its common stock in exchange for the settlement of an aggregate of $49.8 million of participation interests in loans that Terra Property Trust owned, cash of $25.5 million and other working capital.

    The Company’s investment activities are externally managed by Terra Fund Advisors, LLC (“Terra Fund Advisors” or the “Manager”). The Company does not currently have any employees and does not expect to have any employees. Services necessary for the Company’s business are provided by individuals who are employees of the Manager or its affiliates or by individuals who were contracted by the Company or by the Manager or its affiliates to work on behalf of the Company pursuant to the terms of the operating agreement, as amended.

    The Company’s amended and restated operating agreement provides that the Company’s existence will continue until December 31, 2023, unless sooner terminated. However, the Company expects that prior to such date it will consummate a liquidity transaction, which could occur as early as this year and may include an orderly liquidation of its assets or an alternative liquidity event such as a strategic business combination, a sale of the Company or an initial public offering and listing of Terra Property Trust’s shares of common stock on a national securities exchange. The Manager would pursue an alternative liquidity event only if it believes such a transaction would be in the best interests of the Company’s members.

On October 1, 2022 (the “Closing Date”), pursuant to that certain Agreement and Plan of Merger, dated as of May 2, 2022 (the “Terra BDC Merger Agreement”), Terra Income Fund 6, Inc. (“Terra BDC”) merged with and into Terra Income Fund 6, LLC, a wholly owned subsidiary of Terra Property Trust (“Terra LLC”), with Terra LLC continuing as the surviving entity of the merger (the “BDC Merger”) and as a wholly owned subsidiary of Terra Property Trust (Note 4). As of June 30, 2023, Terra JV, former shareholders of Terra BDC and Terra Offshore REIT held 70.0%, 19.9% and 10.1% of the issued and outstanding shares of Terra Property Trust’s common stock, respectively, and the Company and Terra Fund 7 owned an 87.6% and 12.4% percentage interest, respectively, in Terra JV (Note 4). Accordingly, as of June 30, 2023, the Company indirectly beneficially owned 61.3% of the outstanding shares of common stock of Terra Property Trust through Terra JV. The Company does not

consolidate Terra JV because the Company and Terra Fund 7 share joint approval rights with respect to certain major decisions that are taken by Terra JV and Terra Property Trust (Note 4).

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

    The interim financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include all of the Company’s accounts. The accompanying interim financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. The Company is an investment company, as defined under U.S. GAAP, and applies accounting and reporting guidance in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately differ from those estimates, and those differences could be material.

Equity Investment in Terra JV

    Equity investment in Terra JV represents the Company’s equity interest in Terra JV, which was initially recorded at cost. Subsequent to the asset contribution, the equity investment is reported, at each reporting date, at fair value on the statements of financial condition. Change in fair value is reported in net change in unrealized appreciation or depreciation on investment on the statements of operations.

Revenue Recognition

    Dividend Income: Dividend income associated with the Company’s ownership of Terra JV or Terra Property Trust is recognized on the record date as declared by Terra JV or Terra Property Trust. Any excess of distributions over Terra JV or Terra Property Trust’s cumulative taxable net income are recorded as return of capital.

    Other Operating Income: All other income is recognized when earned.

Cash and Cash Equivalents

The Company considers all highly liquid investments, with original maturities of ninety days or less when purchased, as cash equivalents. Cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains all of its cash at financial institutions which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation.

Income Taxes

    No provision for U.S. federal and state income taxes has been made in the accompanying financial statements, as individual members are responsible for their proportionate share of the Company’s taxable income. The Company, however, may be liable for New York City Unincorporated Business Tax (the “NYC UBT”) and similar taxes of various other municipalities. New York City imposes the NYC UBT at a statutory rate of 4% on net income generated from ordinary business activities carried on in New York City. For the three and six months ended June 30, 2023 and 2022, none of the Company’s income was subject to the NYC UBT.

    Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statements and tax basis assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. Such deferred tax assets and liabilities were not material.

    The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes, nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in its statements of operations. For the three and six months ended June 30, 2023 and 2022, the Company did not incur any interest or penalties.

Although the Company files federal and state tax returns, its primary tax jurisdiction is federal. The Company’s 2019-2022 federal tax years remain subject to examination by the Internal Revenue Service.

Recent Accounting Pronouncement

London Interbank Offered Rate (“LIBOR”) is a benchmark interest rate referenced in a variety of agreements that are used by all types of entities. In July 2017, the U.K. Financial Conduct Authority, which regulates the LIBOR administrator, ICE Benchmark Administration Limited (“IBA”), announced that it would cease to compel banks to participate in setting LIBOR as a benchmark by the end of 2021, which was subsequently delayed to June 30, 2023. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition (“ASU 2021-01”). In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848) — Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”). ASU 2022-06 deferred the sunset date of ASU 2020-04 to December 31, 2024. In the event LIBOR is unavailable, Terra Property Trust’s investment documents provide for a substitute index, on a basis generally consistent with market practice, intended to put Terra Property Trust in substantially the same economic position as LIBOR. As a result, the Company does not expect the reference rate reform and the adoption of ASU 2020-04 and ASU 2021-01 to have a material impact on its financial statements and disclosures.

XML

Investment and Fair Value

6 Months Ended

Jun. 30, 2023

Investments [Abstract]

Investments And Fair Value

Investment and Fair Value

Equity Investment in Terra JV

The Company invested substantially all of its equity capital in the purchase of shares of common stock of Terra Property Trust. As of both June 30, 2023 and December 31, 2022, Terra JV held 70.0% of the issued and outstanding shares of Terra Property Trust’s common stock, and the Company and Terra Fund 7 owned an 87.6% and 12.4% percentage interest, respectively, in Terra JV, and Terra JV became the Company’s only investment (Note 4).

The following tables present a summary of the Company’s investment at June 30, 2023 and December 31, 2022:

	June 30, 2023						December 31, 2022
Investment	Cost		Fair Value		% of Members’ Capital		Cost		Fair Value		% of Members’ Capital
87.6% interest in Terra JV, LLC	$	209,715,486	$	189,317,374	100.1	%	$	215,070,522	$	210,008,457	100.0	%

For the three months ended June 30, 2023 and 2022, the Company received $2.8 million and $2.9 million of distributions from Terra JV, of which $2.8 million and $2.1 million were returns of capital, respectively. For the six months ended June 30, 2023 and 2022, the Company received $5.6 million and $5.9 million of distributions from Terra JV, of which $5.4 million and $4.3 million were returns of capital, respectively.

        As of both June 30, 2023 and December 31, 2022, the Company indirectly beneficially owned 61.3% of the outstanding shares of common stock of Terra Property Trust (Note 4). The following tables present the summarized financial information of Terra Property Trust:

	June 30, 2023		December 31, 2022
Carrying value of loans held for investment	$	513,818,507	$	626,490,767
Equity investment in unconsolidated investments	32,608,994		62,498,340
Real estate owned, net	176,133,625		49,228,687
Cash, cash equivalent and restricted cash	58,096,906		36,469,592
Other assets	39,044,373		38,649,506
Total assets	819,702,405		813,336,892
Term loan payable, unsecured notes payable, obligations under participation    agreements, repurchase agreement payable, mortgage loan payable, revolving    line of credit and secured borrowing	(472,090,818)		(442,811,751)
Accounts payable, accrued expenses and other liabilities	(41,639,591)		(39,996,127)
Lease intangible liabilities	(16,827,043)		(8,646,840)
Total liabilities	(530,557,452)		(491,454,718)
Total equity	$	289,144,953	$	321,882,174

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	18,782,455	$	14,688,113	$	35,784,626	$	26,800,383
Expenses	(36,285,786)		(14,705,355)		(52,310,202)		(28,946,936)
Equity (loss) income from unconsolidated    investments	(1,759,934)		1,364,332		(2,196,794)		2,783,667
Other gains (losses)	26,200		(54,656)		32,784		(102,567)
Net (loss) income	$	(19,237,065)	$	1,292,434	$	(18,689,586)	$	534,547

Fair Value Measurements

    The Company follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 established a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the state of the marketplace (including the existence and transparency of transactions between market participants). Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments measured and reported at fair value are classified and disclosed into one of the following categories based on the inputs as follows:

        Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access.

      Level 2 — Pricing inputs are other than quoted prices in active markets, including, but not limited to, quoted prices for similar assets and liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs.

       Level 3 — Significant unobservable inputs are based on the best information available in the circumstances, to the extent observable inputs are not available, including the Company’s own assumptions used in determining the fair value of investments. Fair value for these investments is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and

financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment.

     In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

Assets and Liabilities Reported at Fair Value

    The following tables summarize the Company’s equity investment at fair value on a recurring basis as of June 30, 2023 and December 31, 2022:

	June 30, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Investment:
Equity investment in Terra JV	$	—	$	—	$	189,317,374	$	189,317,374

	December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Investment:
Equity investment in Terra JV	$	—	$	—	$	210,008,457	$	210,008,457

    Changes in Level 3 investment for the six months ended June 30, 2023 and 2022 were as follows:

	Equity Investment in Terra JV
	Six Months Ended June 30,
	2023		2022
Beginning balance	$	210,008,457	$	217,324,720
Return of capital	(5,355,036)		(4,340,218)
Net change in unrealized (depreciation) appreciation on investment	(15,336,047)		4,591,009
Ending balance	$	189,317,374	$	217,575,511
Net change in unrealized (depreciation) appreciation on investment for the period    relating to those Level 3 assets that were still held by the Company	$	(15,336,047)	$	4,591,009

    Transfers between levels, if any, are recognized at the beginning of the period in which transfers occur. For the six months ended June 30, 2023 and 2022, there were no transfers.

The Company estimated that its other financial assets and liabilities had fair values that approximated their carrying values at June 30, 2023 and December 31, 2022 due to their short-term nature.

Valuation Process for Fair Value Measurement

    Market quotations are not readily available for the Company’s investment in Terra Property Trust or Terra JV, which is included in Level 3 of the fair value hierarchy. The fair value of the Company’s sole investment takes into consideration the fair value of Terra Property Trust’s assets and liabilities which are valued utilizing a yield approach, i.e., a discounted cash flow methodology. In following this methodology, loans are evaluated individually, and management takes into account, in determining the risk-adjusted discount rate for each of Terra Property Trust’s loans, relevant factors, which may include available current market data on applicable yields of comparable debt/preferred equity instruments; market credit spreads and yield curves; the investment’s yield; covenants of the investment, including prepayment provisions; the portfolio company’s ability to make payments, its net operating income, debt-service coverage ratio; construction progress reports and construction budget analysis; the nature, quality, and realizable value of any collateral (and loan-to-value ratio); and the forces that influence the local markets in which the asset (the collateral) is purchased and sold, such as capitalization rates, occupancy rates, rental rates, replacement costs and the anticipated duration of each real estate-related loan. The fair value of Terra Property Trust’s

investment in an office building is determined using the discounted cash flow or direct capitalization method as appropriate. The fair value of Terra Property Trust’s investment in eight industrial buildings is based on the purchase price.

The Manager designates a valuation committee to oversee the entire valuation process of Terra Property Trust’s Level 3 investments. The valuation committee is comprised of members of the Manager’s senior management, deal and portfolio management teams, who meet on a quarterly basis, or more frequently as needed, to review Terra Property Trust investments being valued as well as the inputs used in the proprietary valuation model. Valuations determined by the valuation committee are supported by pertinent data and, in addition to a proprietary valuation model, are based on market data, third-party valuation data and discount rates or other methods the valuation committee deems to be appropriate.

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 investments as of June 30, 2023 and December 31, 2022. The tables are not intended to be all-inclusive, but instead identify the significant unobservable inputs relevant to the determination of fair values.

	Fair Value		Primary Valuation Technique	Unobservable Inputs	June 30, 2023
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Equity investment in Terra JV	$	189,317,374	Discounted cash flow (1)(2)	Discount rate (1)(2)	6.01	%	19.54	%	19.78	%

	Fair Value		Primary Valuation Technique	Unobservable Inputs	December 31, 2022
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Equity investment in Terra JV	$	210,008,457	Discounted cash flow (1)(2)	Discount rate (1)(2)	5.22	%	18.51	%	16.80	%

_______________

(1)Discounted cash flows and discount rates applied to Terra Property Trust’s assets and liabilities.

(2)As of June 30, 2023, the fair value of Terra Property Trust’s investment in an office building was determined using the discounted cash flow method with discount rate of 8.50%. As of December 31, 2022, the fair value of the office building was determined using direct capitalization method with capitalization rate ranges from 6.00% to 6.25% and December 31, 2022. The fair value of Terra Property Trust’s investment in eight industrial buildings are based on the purchase price.

Risks and Uncertainties

    The Company’s investment in Terra Property Trust through Terra JV is highly illiquid and there is no assurance that the Company will achieve its investment objectives, including targeted returns. Terra Property Trust’s loans are highly illiquid. Due to the illiquidity of the loans, valuation of the loans may be difficult, as there generally will be no established markets for these loans.

As the Company’s investment is carried at fair value with fair value changes recognized in the statements of operations, any changes in fair value would directly affect the Company’s members’ capital.

XML

Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Operating Agreement

    The Company has an operating agreement, as amended, with Terra Fund Advisors. The operating agreement, as amended, is scheduled to terminate on December 31, 2023 unless the Company is dissolved earlier. Starting January 1, 2016, the Company conducts all of its real estate lending business through Terra Property Trust. As such, Terra Property Trust is responsible for management compensation paid and operating expenses reimbursed to its manager pursuant to a management agreement with the manager.

Dividend Income

    As discussed in Note 3, for the three months ended June 30, 2023 and 2022, the Company received $2.8 million and $2.9 million of distributions from Terra JV, of which $2.8 million and $2.1 million were returns of capital, respectively. For the six months ended June 30, 2023 and 2022, the Company received $5.6 million and $5.9 million of distributions from Terra JV, of which $5.4 million and $4.3 million were returns of capital, respectively.

BDC Merger

On the Closing Date, pursuant to the Terra BDC Merger Agreement, Terra BDC merged with and into Terra LLC, with Terra LLC surviving as a wholly owned subsidiary of Terra Property Trust. The Certificate of Merger and Articles of Merger with respect to the BDC Merger were filed with the Secretary of State of the State of Delaware and State Department of Assessments and Taxation of Maryland, respectively, with an effective time and date of 12:02 a.m., Eastern Time, on the Closing Date (the “Effective Time”).

At the Effective Time, except for any shares of common stock, par value $0.001 per share, of Terra BDC (“Terra BDC Common Stock”) held by Terra Property Trust or any wholly owned subsidiary of Terra Property Trust or Terra BDC, which shares were automatically retired and ceased to exist with no consideration paid therefor, each issued and outstanding share of Terra BDC Common Stock was automatically cancelled and retired and converted into the right to receive (i) 0.595 shares of Class B Common Stock, par value $0.01 per share of Terra Property Trust (“TPT Class B Common Stock”) and (ii) cash, without interest, in lieu of any fractional shares of TPT Class B Common Stock otherwise issuable in an amount, rounded to the nearest whole cent, determined by multiplying (x) the fraction of a share of TPT Class B Common Stock to which such holder would otherwise be entitled by (y) $14.38.

Pursuant to the terms of the transactions described in the Terra BDC Merger Agreement, approximately 4,847,910 shares of TPT Class B Common Stock were issued to former Terra BDC stockholders in connection with the BDC Merger, based on the number of outstanding shares of Terra BDC Common Stock as of the Closing Date. Following the consummation of the BDC Merger, former Terra BDC stockholders owned approximately 19.9% of the common equity of Terra Property Trust and the Company indirectly beneficially owned approximately 61.3% of the common equity of Terra Property Trust.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. The Manager has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.

The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material adverse effect upon its financial condition or results of operations.

XML

Members' Capital

6 Months Ended

Jun. 30, 2023

Limited Liability Company (LLC) Members' Equity [Abstract]

Members' Capital

Members’ Capital

    As of both June 30, 2023 and December 31, 2022, the Company had 6,622.2 units outstanding. The net asset value per unit was $28,565 and $31,710 as of June 30, 2023 and December 31, 2022, respectively.

Capital Distributions

    At the discretion of the Manager, the Company may make distributions from net cash flow from operations, net disposition proceeds, or other cash available for distribution. Distributions are made to holders of Continuing Income Units (regular units of limited liability company interest in the Company) in proportion to their unit holdings until they receive a return of their initial Deemed Capital Contribution, as defined in the operating agreement, plus a preferred return ranging from 8.5% to 9.0% depending on the historical preferred return applicable to their Terra Funds units, after which time distributions are made 15% to the Manager which the Company refers to as the carried interest distribution, and 85% to the holders of Continuing Income Units. The preferred return applicable to the Continuing Income Units sold in the offering concurrent with the Mergers is 8.5%.

For the three months ended June 30, 2023 and 2022, the Company made total distributions to non-managing members of $2.7 million and $2.8 million, respectively. For the six months ended June 30, 2023 and 2022, the Company made total distributions to non-managing members of $5.4 million and $5.8 million, respectively. For the three and six months ended June 30, 2023 and 2022, the Company did not accrue or make any carried interest distributions to the Manager.

Capital Redemptions

    At the discretion of the Manager, a reserve of 5% of cash from operations may be established in order to repurchase units from non-managing members. The Manager is under no obligation to redeem non-managing members’ units. As of June 30, 2023 and December 31, 2022, no such reserve was established. For the three and six months ended June 30, 2023, the Company did not redeem any units. For the three and six months ended June 30, 2022, the Company redeemed 12.2 units for $0.4 million.

Allocation of Income (Loss)

    Profits and losses are allocated to the members in proportion to the units held in a given calendar year.

XML

Financial Highlights

6 Months Ended

Jun. 30, 2023

Investment Company, Financial Highlights [Abstract]

Financial Highlights

Financial Highlights

    The financial highlights represent the per unit operating performance, return and ratios for the non-managing members’ class, taken as a whole, for the six months ended June 30, 2023 and 2022. These financial highlights consist of the operating performance, the internal rate of return (“IRR”) since inception of the Company, and the expense and net investment income ratios which are annualized except for the non-recurring expenses.

    The IRR, net of all fees and carried interest (if any), is computed based on actual dates of the cash inflows (capital contributions), outflows (capital distributions), and the ending capital at the end of the respective period (residual value) of the non-managing members’ capital account.

    The following summarizes the Company’s financial highlights for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023			2022
Per unit operating performance:
Net asset value per unit, beginning of period	$	31,710		$	32,860
(Decrease) increase in members’ capital from operations (1):
Net investment (loss) income	(4)			189
Net change in unrealized (depreciation) appreciation on investment	(2,316)			692
Total (decrease) increase in members’ capital from operations	(2,320)			881
Distributions to members (2):
Capital distributions	(825)			(874)
Net decrease in members’ capital resulting from distributions	(825)			(874)
Net asset value per unit, end of period	$	28,565		$	32,867
Ratios to average net assets:
Expenses	0.31		%	0.24		%
Net investment (loss) income	(0.03)		%	1.14		%
IRR, beginning of period	4.65		%	4.91		%
IRR, end of period	3.79		%	4.98		%

._______________

(1)The per unit data was derived by using the weighted average units outstanding during the applicable periods, which were 6,622.2 and 6,630.9 for the six months ended June 30, 2023 and 2022.

(2)The per unit data for distributions reflects the actual amount of distributions paid per unit during the periods.

XML

Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent EventsManagement has evaluated subsequent events through the date the financial statements were available to be issued. Management has determined that there are no material events other than the ones below that would require adjustment to, or disclosure in, the Company’s financial statements.

Termination of WMC Merger Agreement

On June 28, 2023, Terra Property Trust announced it entered into an Agreement and Plan of Merger, dated as of June 27, 2023 (the “WMC Merger Agreement”), with Western Asset Mortgage Capital Corporation, a Delaware corporation (“WMC”). On July 27, 2023, WMC notified Terra Property Trust that its board of directors determined that a proposal from AG Mortgage Investment Trust, Inc. (“MITT”) to acquire WMC was a “Parent Superior Proposal” under the WMC Merger Agreement and that WMC’s board of directors intended to terminate the WMC Merger Agreement unless WMC received a revised proposal from Terra Property Trust by a specified deadline such that WMC’s board of directors determined that MITT’s proposal was no longer a “Parent Superior Proposal.”

On August 8, 2023, WMC terminated the WMC Merger Agreement pursuant to its terms (the “Termination”), and Terra Property Trust was paid a termination fee of $3.0 million.

Upon the Termination, the amended and restated management agreement Terra Property Trust entered into with WMC and the Manager on June 27, 2023, terminated in accordance with its terms. Terra Property Trust continues to be managed by the Manager pursuant to the terms of the existing Management Agreement between Terra Property Trust and the Manager.

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation     The interim financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include all of the Company’s accounts. The accompanying interim financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. The Company is an investment company, as defined under U.S. GAAP, and applies accounting and reporting guidance in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, Financial Services — Investment Companies.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately differ from those estimates, and those differences could be material.

Equity Investment in Terra JV

Equity Investment in Terra JV    Equity investment in Terra JV represents the Company’s equity interest in Terra JV, which was initially recorded at cost. Subsequent to the asset contribution, the equity investment is reported, at each reporting date, at fair value on the statements of financial condition. Change in fair value is reported in net change in unrealized appreciation or depreciation on investment on the statements of operations.

Revenue Recognition

Revenue Recognition

    Dividend Income: Dividend income associated with the Company’s ownership of Terra JV or Terra Property Trust is recognized on the record date as declared by Terra JV or Terra Property Trust. Any excess of distributions over Terra JV or Terra Property Trust’s cumulative taxable net income are recorded as return of capital.

    Other Operating Income: All other income is recognized when earned.

Cash and Cash Equivalents

Cash and Cash Equivalents The Company considers all highly liquid investments, with original maturities of ninety days or less when purchased, as cash equivalents. Cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains all of its cash at financial institutions which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation.

Income Taxes

Income Taxes

    No provision for U.S. federal and state income taxes has been made in the accompanying financial statements, as individual members are responsible for their proportionate share of the Company’s taxable income. The Company, however, may be liable for New York City Unincorporated Business Tax (the “NYC UBT”) and similar taxes of various other municipalities. New York City imposes the NYC UBT at a statutory rate of 4% on net income generated from ordinary business activities carried on in New York City. For the three and six months ended June 30, 2023 and 2022, none of the Company’s income was subject to the NYC UBT.

    Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statements and tax basis assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. Such deferred tax assets and liabilities were not material.

    The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes, nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in its statements of operations. For the three and six months ended June 30, 2023 and 2022, the Company did not incur any interest or penalties.

Although the Company files federal and state tax returns, its primary tax jurisdiction is federal. The Company’s 2019-2022 federal tax years remain subject to examination by the Internal Revenue Service.

Recent Accounting Pronouncement

Recent Accounting Pronouncement

London Interbank Offered Rate (“LIBOR”) is a benchmark interest rate referenced in a variety of agreements that are used by all types of entities. In July 2017, the U.K. Financial Conduct Authority, which regulates the LIBOR administrator, ICE Benchmark Administration Limited (“IBA”), announced that it would cease to compel banks to participate in setting LIBOR as a benchmark by the end of 2021, which was subsequently delayed to June 30, 2023. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition (“ASU 2021-01”). In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848) — Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”). ASU 2022-06 deferred the sunset date of ASU 2020-04 to December 31, 2024. In the event LIBOR is unavailable, Terra Property Trust’s investment documents provide for a substitute index, on a basis generally consistent with market practice, intended to put Terra Property Trust in substantially the same economic position as LIBOR. As a result, the Company does not expect the reference rate reform and the adoption of ASU 2020-04 and ASU 2021-01 to have a material impact on its financial statements and disclosures.

Fair Value Measurements

The Company follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 established a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the state of the marketplace (including the existence and transparency of transactions between market participants). Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments measured and reported at fair value are classified and disclosed into one of the following categories based on the inputs as follows:

        Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access.

      Level 2 — Pricing inputs are other than quoted prices in active markets, including, but not limited to, quoted prices for similar assets and liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs.

       Level 3 — Significant unobservable inputs are based on the best information available in the circumstances, to the extent observable inputs are not available, including the Company’s own assumptions used in determining the fair value of investments. Fair value for these investments is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and

financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment.

     In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

XML

Investment and Fair Value (Tables) - Terra Property Trust

6 Months Ended

Jun. 30, 2023

Investments

Summary Investment Holdings

The following tables present a summary of the Company’s investment at June 30, 2023 and December 31, 2022:

	June 30, 2023						December 31, 2022
Investment	Cost		Fair Value		% of Members’ Capital		Cost		Fair Value		% of Members’ Capital
87.6% interest in Terra JV, LLC	$	209,715,486	$	189,317,374	100.1	%	$	215,070,522	$	210,008,457	100.0	%

Summary of Financial Information

The following tables present the summarized financial information of Terra Property Trust:

	June 30, 2023		December 31, 2022
Carrying value of loans held for investment	$	513,818,507	$	626,490,767
Equity investment in unconsolidated investments	32,608,994		62,498,340
Real estate owned, net	176,133,625		49,228,687
Cash, cash equivalent and restricted cash	58,096,906		36,469,592
Other assets	39,044,373		38,649,506
Total assets	819,702,405		813,336,892
Term loan payable, unsecured notes payable, obligations under participation    agreements, repurchase agreement payable, mortgage loan payable, revolving    line of credit and secured borrowing	(472,090,818)		(442,811,751)
Accounts payable, accrued expenses and other liabilities	(41,639,591)		(39,996,127)
Lease intangible liabilities	(16,827,043)		(8,646,840)
Total liabilities	(530,557,452)		(491,454,718)
Total equity	$	289,144,953	$	321,882,174

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	18,782,455	$	14,688,113	$	35,784,626	$	26,800,383
Expenses	(36,285,786)		(14,705,355)		(52,310,202)		(28,946,936)
Equity (loss) income from unconsolidated    investments	(1,759,934)		1,364,332		(2,196,794)		2,783,667
Other gains (losses)	26,200		(54,656)		32,784		(102,567)
Net (loss) income	$	(19,237,065)	$	1,292,434	$	(18,689,586)	$	534,547

Summary of Company's Equity Investment at Fair Value on a Recurring Basis

The following tables summarize the Company’s equity investment at fair value on a recurring basis as of June 30, 2023 and December 31, 2022:

	June 30, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Investment:
Equity investment in Terra JV	$	—	$	—	$	189,317,374	$	189,317,374

	December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Investment:
Equity investment in Terra JV	$	—	$	—	$	210,008,457	$	210,008,457

Summary Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation

Changes in Level 3 investment for the six months ended June 30, 2023 and 2022 were as follows:

	Equity Investment in Terra JV
	Six Months Ended June 30,
	2023		2022
Beginning balance	$	210,008,457	$	217,324,720
Return of capital	(5,355,036)		(4,340,218)
Net change in unrealized (depreciation) appreciation on investment	(15,336,047)		4,591,009
Ending balance	$	189,317,374	$	217,575,511
Net change in unrealized (depreciation) appreciation on investment for the period    relating to those Level 3 assets that were still held by the Company	$	(15,336,047)	$	4,591,009

Summary of Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 investments as of June 30, 2023 and December 31, 2022. The tables are not intended to be all-inclusive, but instead identify the significant unobservable inputs relevant to the determination of fair values.

	Fair Value		Primary Valuation Technique	Unobservable Inputs	June 30, 2023
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Equity investment in Terra JV	$	189,317,374	Discounted cash flow (1)(2)	Discount rate (1)(2)	6.01	%	19.54	%	19.78	%

	Fair Value		Primary Valuation Technique	Unobservable Inputs	December 31, 2022
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Equity investment in Terra JV	$	210,008,457	Discounted cash flow (1)(2)	Discount rate (1)(2)	5.22	%	18.51	%	16.80	%

_______________

(1)Discounted cash flows and discount rates applied to Terra Property Trust’s assets and liabilities.

(2)As of June 30, 2023, the fair value of Terra Property Trust’s investment in an office building was determined using the discounted cash flow method with discount rate of 8.50%. As of December 31, 2022, the fair value of the office building was determined using direct capitalization method with capitalization rate ranges from 6.00% to 6.25% and December 31, 2022. The fair value of Terra Property Trust’s investment in eight industrial buildings are based on the purchase price.

XML

Financial Highlights (Tables)

6 Months Ended

Jun. 30, 2023

Investment Company, Financial Highlights [Abstract]

Summary of Financial Highlights

The following summarizes the Company’s financial highlights for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023			2022
Per unit operating performance:
Net asset value per unit, beginning of period	$	31,710		$	32,860
(Decrease) increase in members’ capital from operations (1):
Net investment (loss) income	(4)			189
Net change in unrealized (depreciation) appreciation on investment	(2,316)			692
Total (decrease) increase in members’ capital from operations	(2,320)			881
Distributions to members (2):
Capital distributions	(825)			(874)
Net decrease in members’ capital resulting from distributions	(825)			(874)
Net asset value per unit, end of period	$	28,565		$	32,867
Ratios to average net assets:
Expenses	0.31		%	0.24		%
Net investment (loss) income	(0.03)		%	1.14		%
IRR, beginning of period	4.65		%	4.91		%
IRR, end of period	3.79		%	4.98		%

._______________

(1)The per unit data was derived by using the weighted average units outstanding during the applicable periods, which were 6,622.2 and 6,630.9 for the six months ended June 30, 2023 and 2022.

(2)The per unit data for distributions reflects the actual amount of distributions paid per unit during the periods.

XML

Business (Details) $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($) fund	Mar. 02, 2020 USD ($) shares
Terra JV, LLC
Subsidiary of Limited Liability Company or Limited Partnership
% of Members’ Capital	70.00%
Terra BDC
Subsidiary of Limited Liability Company or Limited Partnership
% of Members’ Capital	19.90%
Terra Offshore REIT
Subsidiary of Limited Liability Company or Limited Partnership
% of Members’ Capital	10.10%
Terra Property Trust
Subsidiary of Limited Liability Company or Limited Partnership
Number of investment funds | fund	5
Common stock issued (in shares) | shares		4,574,470.35
Participating mortgage loans, amount		$ 49.8
Cash		$ 25.5
% of Members’ Capital	87.60%
Beneficial ownership percentage	61.30%
Minimum
Subsidiary of Limited Liability Company or Limited Partnership
Principal amount	$ 10.0
Maximum
Subsidiary of Limited Liability Company or Limited Partnership
Principal amount	$ 50.0
Terra Fund Seven
Subsidiary of Limited Liability Company or Limited Partnership
% of Members’ Capital	12.40%

XML

Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
UBT at statutory rate	4.00%

XML

Investment and Fair Value (Narratives) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) building	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) building	Jun. 30, 2022 USD ($)	Dec. 31, 2022
Fair Value, Investment
Return of capital on investment			$ 5,355,036	$ 4,340,218
Terra JV, LLC | Related Party
Fair Value, Investment
Proceeds from equity method investment, distribution	$ 2,800,000	$ 2,900,000	5,600,000	5,900,000
Return of capital on investment	$ 2,800,000	$ 2,100,000	$ 5,400,000	$ 4,300,000
Terra Property Trust
Fair Value, Investment
Percentage Interest	70.00%		70.00%		70.00%
Terra JV, LLC
Fair Value, Investment
Percentage Interest	87.60%		87.60%		87.60%
Terra Property Trust
Fair Value, Investment
Percent of common stock indirect owned	61.30%		61.30%		61.30%
Terra JV, LLC | Office Building
Fair Value, Investment
Number of industrial buildings | building	8		8
Terra Fund Five | Terra JV, LLC
Fair Value, Investment
Percentage Interest	87.60%		87.60%		87.60%
Terra Fund Seven | Terra JV, LLC
Fair Value, Investment
Percentage Interest	12.40%		12.40%		12.40%

XML

Investment and Fair Value (Summary Investment Holdings) (Details) - USD ($)		Jun. 30, 2023		Dec. 31, 2022
Investments
Fair Value		$ 189,317,374
Investment, Identifier [Axis]: 1389 Peachtree St, LP; 1401 Peachtree St, LP; 1409 Peachtree St, LP
Investments
Cost		59,155,584	[1]	$ 57,453,482	[2]
Fair Value		$ 55,139,746	[1],[3]	$ 56,844,322	[2],[4]
% of Members’ Capital		17.90%	[1],[5]	16.70%	[2],[6]
Investment, Identifier [Axis]: 14th & Alice Street Owner, LLC
Investments
Cost		$ 1,364,944	[7]	$ 1,364,944	[8]
Fair Value		$ 0	[3],[7]	$ 0	[4],[8]
% of Members’ Capital		0.00%	[5],[7]	0.00%	[6],[8]
Investment, Identifier [Axis]: 150 Blackstone River Road, LLC
Investments
Cost		$ 7,000,000		$ 7,000,000
Fair Value		$ 6,557,811	[3]	$ 6,638,219	[4]
% of Members’ Capital		2.10%	[5]	1.90%	[6]
Investment, Identifier [Axis]: 330 Tryon DE LLC
Investments
Cost	[2]			$ 22,902,215
Fair Value	[2],[4]			$ 22,687,235
% of Members’ Capital	[2],[6]			6.60%
Investment, Identifier [Axis]: 370 Lex Part Deux, LLC
Investments
Cost		$ 67,726,793	[9]	$ 67,586,792	[10]
Fair Value		$ 56,454,778	[3],[9]	$ 56,338,079	[4],[10]
% of Members’ Capital		18.20%	[5],[9]	16.50%	[6],[10]
Investment, Identifier [Axis]: 610 Walnut Investors LLC
Investments
Cost		$ 20,401,547	[11],[12]	$ 18,738,386	[13],[14]
Fair Value		$ 20,407,825	[3],[11],[12]	$ 18,767,281	[4],[13],[14]
% of Members’ Capital		6.60%	[5],[11],[12]	5.50%	[6],[13],[14]
Investment, Identifier [Axis]: AAESUF Property LLC
Investments
Cost		$ 20,825,909	[15]	$ 18,288,969	[2]
Fair Value		$ 21,140,968	[3],[15]	$ 18,587,586	[2],[4]
% of Members’ Capital		6.90%	[5],[15]	5.40%	[2],[6]
Investment, Identifier [Axis]: AARSHW Property LLC
Investments
Cost		$ 57,865,942	[15],[16]	$ 44,669,513	[17],[18]
Fair Value		$ 58,221,180	[3],[15],[16]	$ 44,702,632	[4],[17],[18]
% of Members’ Capital		18.80%	[5],[15],[16]	13.00%	[6],[17],[18]
Investment, Identifier [Axis]: AGRE DCP Palm Springs, LLC
Investments
Cost		$ 43,826,614	[1]	$ 43,758,804	[2]
Fair Value		$ 43,499,719	[1],[3]	$ 43,062,933	[2],[4]
% of Members’ Capital		14.10%	[1],[5]	12.60%	[2],[6]
Investment, Identifier [Axis]: American Gilsonite Company
Investments
Cost		$ 21,556,794		$ 21,840,359
Fair Value		$ 21,467,893	[3]	$ 21,443,528	[4]
% of Members’ Capital		7.00%	[5]	6.30%	[6]
Investment, Identifier [Axis]: Ann Street JV LLC
Investments
Cost		$ 16,685,384		$ 15,648,482
Fair Value		$ 16,235,521	[3]	$ 15,127,126	[4]
% of Members’ Capital		5.30%	[5]	4.40%	[6]
Investment, Identifier [Axis]: Asano Bankers Hill, LLC
Investments
Cost		$ 18,935,757		$ 17,920,424
Fair Value		$ 19,354,303	[3]	$ 17,578,839	[4]
% of Members’ Capital		6.30%	[5]	5.10%	[6]
Investment, Identifier [Axis]: Dallas - US HWY 80 Owner, LLC
Investments
Cost	[18]			$ 11,482,294
Fair Value	[4],[18]			$ 11,482,294
% of Members’ Capital	[6],[18]			3.40%
Investment, Identifier [Axis]: Dallas - 11221 Pagemill Owner, LLC
Investments
Cost	[18]			$ 7,682,398
Fair Value	[4],[18]			$ 7,682,398
% of Members’ Capital	[6],[18]			2.20%
Investment, Identifier [Axis]: Dallas - 11333 Pagemill Owner, LLC
Investments
Cost	[18]			$ 12,390,965
Fair Value	[4],[18]			$ 12,390,965
% of Members’ Capital	[6],[18]			3.60%
Investment, Identifier [Axis]: Dallas - Big Town Owner, LLC
Investments
Cost	[18]			$ 26,838,830
Fair Value	[4],[18]			$ 26,838,830
% of Members’ Capital	[6],[18]			7.80%
Investment, Identifier [Axis]: Dallas - Oakland Owner, LLC
Investments
Cost	[18]			$ 9,747,559
Fair Value	[4],[18]			$ 9,747,559
% of Members’ Capital	[6],[18]			2.80%
Investment, Identifier [Axis]: Dwight Mezz II, LLC
Investments
Cost		$ 2,925,837		$ 2,916,369
Fair Value		$ 2,891,786	[3]	$ 2,914,042	[4]
% of Members’ Capital		0.90%	[5]	0.90%	[6]
Investment, Identifier [Axis]: Fourth Street's Kingswood, LLC
Investments
Cost	[15],[19]	$ 6,120,513
Fair Value	[3],[15],[19]	$ 6,445,560
% of Members’ Capital	[5],[15],[19]	2.10%
Investment, Identifier [Axis]: Grandview’s Madison Place, LLC
Investments
Cost	[20]			$ 17,105,928
Fair Value	[4],[20]			$ 17,105,928
% of Members’ Capital	[6],[20]			5.00%
Investment, Identifier [Axis]: Grandview’s Remington Place, LLC
Investments
Cost		$ 23,203,590	[21]	$ 23,199,620	[20]
Fair Value		$ 23,236,153	[3],[21]	$ 23,203,343	[4],[20]
% of Members’ Capital		7.50%	[5],[21]	6.80%	[6],[20]
Investment, Identifier [Axis]: Havemeyer TSM LLC
Investments
Cost	[22]			$ 3,313,813
Fair Value	[4],[22]			$ 3,315,293
% of Members’ Capital	[6],[22]			1.00%
Investment, Identifier [Axis]: Hillsborough Owners LLC
Investments
Cost		$ 21,578,080		$ 21,138,947
Fair Value		$ 21,627,967	[3]	$ 20,947,571	[4]
% of Members’ Capital		7.00%	[5]	6.10%	[6]
Investment, Identifier [Axis]: Industrial buildings in Dallas/Fort Worth, TX 1
Investments
Fair Value	[3]	$ 48,798,273
% of Members’ Capital	[5],[23]	5.30%
Investment, Identifier [Axis]: Industrial buildings in Dallas/Fort Worth, TX 2
Investments
Fair Value	[3],[24]	$ 83,288,961
% of Members’ Capital	[5],[23],[24]	13.90%
Investment, Identifier [Axis]: Mesa AZ Industrial Owner, LLC
Investments
Cost		$ 31,296,394	[11],[15]	$ 31,276,468	[13],[18]
Fair Value		$ 31,296,394	[3],[11],[15]	$ 31,276,468	[4],[13],[18]
% of Members’ Capital		10.10%	[5],[11],[15]	9.10%	[6],[13],[18]
Investment, Identifier [Axis]: Multi-tenant office building in Santa Monica, CA
Investments
Fair Value		$ 27,603,118	[3],[25]	$ 52,500,000	[4],[26]
% of Members’ Capital		0.00%	[5],[23],[25]	6.80%	[6],[26],[27]
Investment, Identifier [Axis]: NB Factory TIC 1, LLC
Investments
Cost		$ 28,842,742	[21]	$ 28,857,892	[20]
Fair Value		$ 28,917,484	[3],[21]	$ 28,902,234	[4],[20]
% of Members’ Capital		9.40%	[5],[21]	8.40%	[6],[20]
Investment, Identifier [Axis]: Patrick Henry Recovery Acquisition, LLC
Investments
Cost		$ 18,043,198	[1]	$ 18,041,782	[2]
Fair Value		$ 17,923,436	[1],[3]	$ 17,824,300	[2],[4]
% of Members’ Capital		5.80%	[1],[5]	5.20%	[2],[6]
Investment, Identifier [Axis]: REEC Harlem Holdings Company, LLC
Investments
Cost		$ 15,258,233	[28]	$ 15,983,234	[29]
Fair Value		$ 2,358,983	[3],[28]	$ 3,090,588	[4],[29]
% of Members’ Capital		0.80%	[5],[28]	0.90%	[6],[29]
Investment, Identifier [Axis]: RS JZ Driggs, LLC
Investments
Cost		$ 5,351,053	[30]	$ 4,993,245	[31]
Fair Value		$ 5,351,053	[3],[30]	$ 4,993,245	[4],[31]
% of Members’ Capital		1.70%	[5],[30]	1.50%	[6],[31]
Investment, Identifier [Axis]: Terra JV, LLC
Investments
Cost		$ 209,715,486		$ 215,070,522
Fair Value		$ 189,317,374		$ 210,008,457
% of Members’ Capital		100.10%		100.00%
Investment, Identifier [Axis]: Terra Property Trust, Inc. Corporate Bonds
Investments
Cost		$ 1,188,019	[32]	$ 136,265	[33]
Fair Value		$ 1,203,973	[32]	$ 147,960	[33]
% of Members’ Capital		0.39%	[5],[32]	0.04%	[6],[33]
Investment, Identifier [Axis]: The Lux Washington, LLC
Investments
Cost		$ 23,746,824	[15]	$ 16,722,091	[18]
Fair Value		$ 23,748,850	[3],[15]	$ 16,882,333	[4],[18]
% of Members’ Capital		7.70%	[5],[15]	4.90%	[6],[18]
Investment, Identifier [Axis]: UNJ Sole Member, LLC
Investments
Cost		$ 7,485,029	[34]	$ 7,482,547	[22]
Fair Value		$ 7,468,372	[3],[34]	$ 7,371,101	[4],[22]
% of Members’ Capital		2.40%	[5],[34]	2.20%	[6],[22]
Investment, Identifier [Axis]: University Park Berkeley, LLC
Investments
Cost		$ 27,750,542	[15]	$ 26,536,122	[2]
Fair Value		$ 27,748,949	[3],[15]	$ 26,472,938	[2],[4]
% of Members’ Capital		9.00%	[5],[15]	7.70%	[2],[6]
Investment, Identifier [Axis]: William A. Shopoff & Cindy L. Shopoff
Investments
Cost	[35]			$ 29,080,183
Fair Value	[4],[35]			$ 28,926,544
% of Members’ Capital	[6],[35]			8.40%
Terra JV, LLC
Investments
Percentage Interest		87.60%		87.60%
Terra JV, LLC
Investments
Fair Value		$ 189,317,374		$ 210,008,457
% of Members’ Capital		70.00%
Terra JV, LLC | Level 3
Investments
Fair Value				210,008,457
Terra JV, LLC | Level 3 | Investment, Identifier [Axis]: Terra JV, LLC
Investments
Fair Value		$ 189,317,374		$ 210,008,457

[1] These loans were used as collateral for $85.4 million of borrowings under a repurchase agreement.

[2] These loans were used as collateral for $119.8 million of borrowings under a repurchase agreement.

[3] Because there is no readily available market for these investments, these loans were valued using significant unobservable inputs under Level 3 of the fair value hierarchy and were approved in good faith by Terra REIT Advisors, LLC (“Terra REIT Advisors”), Terra Property Trust’s manager, pursuant to Terra Property Trust’s valuation policy.

[4] Because there is no readily available market for these investments, these loans were valued using significant unobservable inputs under Level 3 of the fair value hierarchy and were approved in good faith by Terra REIT Advisors, Terra Property Trust’s manager, pursuant to Terra Property Trust’s valuation policy.

[5] Percentage is based on the Company’s pro rata share of the fair value or net investment value over the Company’s total members’ capital of $189.2 million at June 30, 2023.

[6] Percentage is based on the Company’s pro rata share of the fair value or net investment value over the Company’s total members’ capital of $210.0 million at December 31, 2022.

[7] Terra Property Trust does not anticipate a full recovery of the remaining principal balance, as such, the loan is fully reserved.

[8] This loan is classified as a trouble debt restructuring. Terra Property Trust does not anticipate a full recovery of the remaining principal balance, as such, the loan is fully reserved.

[9] This loan is currently in maturity default. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $2.5 million and $4.8 million, respectively, on this loan because recovery of such income was doubtful. As of June 30, 2023, Terra Property Trust recorded an allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

[10] This loan is currently in maturity default. For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $3.7 million on this loan because recovery of such income was doubtful. As of December 31, 2022, Terra Property Trust recorded a specific allowance for credit losses of $11.2 million on the loan as a result of a decline in the fair value of the collateral.

[11] Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

[12] The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

[13] Terra Property Trust sold a portion of its interest in this loan through a participation agreement to a third party.

[14] The loan participations from Terra Property Trust do not qualify for sale accounting and therefore, the gross amount of these loans remain in Terra Property Trust’s consolidated balance sheets.

[15] These loans were used as collateral for $105.4 million of borrowings under a revolving line of credit.

[16] Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

[17] Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan.

[18] These loans were used as collateral for $90.1 million of borrowings under a revolving line of credit.

[19] Terra Property Trust is committed to fund up to $39.0 million of first mortgage as well as $3.0 million of subordinated loan. The subordinated loan bears interest at an annual rate of Term SOFR plus 12.0% with a Term SOFR floor of 4.25%.

[20] These loans were used as collateral for $51.1 million of borrowings under a repurchase agreement.

[21] These loans were used as collateral for $37.5 million of borrowings under a repurchase agreement.

[22] Terra Property Trust purchased a portion of the interest in this loan from Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party real estate investment trust managed by Terra REIT Advisors, via a participation agreement.

[23] Percentage is based on Terra Property Trust’s net exposure on the property (real estate owned less encumbrance).

[24] In May 2023, Terra Property Trust acquired five industrial buildings for $3.5 million cash payment and the settlement of a mezzanine loan that was accounted for as an equity investment and five senior loans that were held for investment.

[25] Terra Property Trust acquired this property through foreclosure of a $54.0 million first mortgage. The mortgage loan payable on this property is currently in default. Terra Property Trust has sought to convey its interest in the office building and ground lease in lieu of foreclosure. Additionally, during the three and six months ended June 30, 2023, Terra Property Trust recognized an impairment charge of $11.8 million to reduce the carrying value of the real estate property to its estimated fair value.

[26] Terra Property Trust acquired this property through foreclosure of a $54.0 million first mortgage.

[27] Percentage is based on Terra Property Trust’s net exposure on the property (real estate owned less encumbrance).

[28] This loan is currently in maturity default. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $1.0 million and $1.8 million, respectively, on this loan because recovery of such income was doubtful. Additionally, the fair value of the loan declined as a result of a decline in the fair value of the collateral. As of June 30, 2023, Terra Property Trust recorded an allowance for credit losses of $12.9 million on the loan as a result of a decline in the fair value of the collateral.

[29] For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $2.9 million on this loan because recovery of such income was doubtful. Additionally, the fair value of the loan declined as a result of a decline in the fair value of the collateral. As of December 31, 2022, Terra Property Trust recorded a specific allowance for credit losses of $12.9 million on the loan as a result of a decline in the fair value of the collateral.

[30] This loan is in maturity default. Terra Property Trust initiated a litigation to seek full repayment of the loan from the sponsor. For the three and six months ended June 30, 2023, Terra Property Trust suspended interest income accrual of $0.3 million and $0.5 million, respectively, on this loan because recovery of such income was doubtful.

[31] This loan is in maturity default. Terra Property Trust initiated a litigation to seek full repayment of the loan from the sponsor. For the year ended December 31, 2022, Terra Property Trust suspended interest income accrual of $2.0 million on this loan because recovery of such income was doubtful.

[32] From time to time, Terra Property Trust may invest in short-term debt and equity securities. These securities are comprised of shares of common and preferred stock and bonds.

[33] From time to time, Terra Property Trust may invest in short-term debt and equity securities. These securities are comprised of shares of common and preferred stock and bonds.

[34] Terra Property Trust purchased a portion of the interest in this loan from Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party real estate investment trust managed by Terra REIT Advisors, via a participation agreement.

[35] Amount included $3.0 million of incremental borrowing that bears interest at an annual rate of Term SOFR plus 7.0% with a SOFR floor of 4.30%.

XML

Investment and Fair Value (Summary of Financial Information of Terra Property Trust) (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Investment
Cash, cash equivalent and restricted cash	$ 71,781	$ 102,256	$ 294,993	$ 836,052
Total assets	189,409,976	210,151,147
Total liabilities	(245,691)	(161,088)
Terra Property Trust | Terra Property Trust
Fair Value, Investment
Equity investment in unconsolidated investments	32,608,994	62,498,340
Terra Property Trust | Equity Method Investment - Investee
Fair Value, Investment
Carrying value of loans held for investment	513,818,507	626,490,767
Real estate owned, net	176,133,625	49,228,687
Cash, cash equivalent and restricted cash	58,096,906	36,469,592
Other assets	39,044,373	38,649,506
Total assets	819,702,405	813,336,892
Term loan payable, unsecured notes payable, obligations under participation agreements, repurchase agreement payable, mortgage loan payable, revolving line of credit and secured borrowing	(472,090,818)	(442,811,751)
Accounts payable, accrued expenses and other liabilities	(41,639,591)	(39,996,127)
Lease intangible liabilities	(16,827,043)	(8,646,840)
Total liabilities	(530,557,452)	(491,454,718)
Total equity	$ 289,144,953	$ 321,882,174

XML

Investment and Fair Value (Summary of Financial Information) (Details) - Terra Property Trust - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Terra Property Trust
Investments
Equity (loss) income from unconsolidated investments	$ (1,759,934)	$ 1,364,332	$ (2,196,794)	$ 2,783,667
Equity Method Investment - Investee
Investments
Revenues	18,782,455	14,688,113	35,784,626	26,800,383
Expenses	(36,285,786)	(14,705,355)	(52,310,202)	(28,946,936)
Other gains (losses)	26,200	(54,656)	32,784	(102,567)
Net (loss) income	$ (19,237,065)	$ 1,292,434	$ (18,689,586)	$ 534,547

XML

Investment and Fair Value (Summary of Equity Investment at Fair Value on a Recurring Basis) (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair Value	$ 189,317,374
Terra JV, LLC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair Value	189,317,374	$ 210,008,457
Level 1 | Terra JV, LLC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair Value	0	0
Level 2 | Terra JV, LLC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair Value	$ 0	0
Level 3 | Terra JV, LLC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Fair Value		$ 210,008,457

XML

Investments and Fair Value (Summary of Changes in Level 3 Investments) (Details) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Net change in unrealized (depreciation) appreciation on investment	$ (14,064,801)	$ (1,271,246)	$ 3,572,487	$ 1,018,522	$ (15,336,047)	$ 4,591,009
Terra JV, LLC | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance		$ 210,008,457		$ 217,324,720	210,008,457	217,324,720
Return of capital					(5,355,036)	(4,340,218)
Net change in unrealized (depreciation) appreciation on investment					(15,336,047)	4,591,009
Ending balance	$ 189,317,374		$ 217,575,511		189,317,374	217,575,511
Net change in unrealized (depreciation) appreciation on investment for the period relating to those Level 3 assets that were still held by the Company					$ (15,336,047)	$ 4,591,009

XML

Investment and Fair Value (Summary of Valuation Techniques and Significant Unobservable Inputs) (Details)	Jun. 30, 2023 USD ($) building	Dec. 31, 2022 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 189,317,374
Terra JV, LLC
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value	$ 189,317,374	$ 210,008,457
Terra JV, LLC | Office Building
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Number of industrial buildings | building	8
Terra JV, LLC | Discount Rate | Discounted Cash Flow | Office Building
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	0.0850
Terra JV, LLC | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair Value		$ 210,008,457
Terra JV, LLC | Minimum | Cap rate | Direct Capitalization Method | Office Building
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate		0.0600
Terra JV, LLC | Minimum | Level 3 | Discount Rate | Discounted Cash Flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	0.0601	0.0522
Terra JV, LLC | Maximum | Cap rate | Direct Capitalization Method | Office Building
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate		0.0625
Terra JV, LLC | Maximum | Level 3 | Discount Rate | Discounted Cash Flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	0.1954	0.1851
Terra JV, LLC | Weighted Average | Level 3 | Discount Rate | Discounted Cash Flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	0.1978	0.1680

XML

Related Party Transactions (Operating Agreement and Dividend Income) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Investments
Return of capital on investment			$ 5,355,036	$ 4,340,218
Related Party | Terra JV, LLC
Investments
Proceeds from equity method investment, distribution	$ 2,800,000	$ 2,900,000	5,600,000	5,900,000
Return of capital on investment	$ 2,800,000	$ 2,100,000	$ 5,400,000	$ 4,300,000

XML

Related Party Transactions (Terra BDC Merger) (Details) - Terra BDC	Oct. 01, 2022 $ / shares shares
Investments
Business acquisition, equity interest issued or issuable, number of shares | shares	0.595
Business acquisition, share price	$ 14.38
Stock issued during period, shares, new issues (in shares) | shares	4,847,910
Percent of common stock direct owned	19.90%
Percent of common stock indirect owned	61.30%
Terra BDC
Investments
Common stock, par value (in dollars per share)	$ 0.001
Terra Property Trust | Class B Common Share
Investments
Common stock, par value (in dollars per share)	$ 0.01

XML

Members' Capital (Details) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Members Capital
Common units outstanding (in units)	6,622.2				6,622.2		6,622.2
Net asset value per unit (in dollar per unit)	$ 28,565		$ 32,867		$ 28,565	$ 32,867	$ 31,710	$ 32,860
Capital distributions	$ 2,731,603	$ 2,731,607	$ 2,813,249	$ 2,979,044
Payment for capital redemptions			$ 400,728		$ 0	$ 400,728
Shares repurchased			12.2		12.2
Capital redemptions			$ 400,000		$ 400,000
Managing member
Members Capital
Distribution percent					15.00%
Capital distributions	0	0	0	0
Carried interest distributions to the manager					0	0
Payment for capital redemptions			0
Non-Managing Members
Members Capital
Capital distributions	$ 2,731,603	$ 2,731,607	2,813,249	$ 2,979,044	$ 5,400,000	$ 5,800,000
Percent of cash repurchase capital units	5.00%				5.00%
Cash repurchase reserve	$ 0				$ 0		$ 0
Payment for capital redemptions			$ 400,728
Continuing Income Units Holder
Members Capital
Percent of distribution made to members depends on the historical preferred return applicable to Terra Fund units					8.50%
Distribution percent					85.00%
Continuing Income Units Holder | Minimum
Members Capital
Percent of distribution made to members depends on the historical preferred return applicable to Terra Fund units					8.50%
Continuing Income Units Holder | Maximum
Members Capital
Percent of distribution made to members depends on the historical preferred return applicable to Terra Fund units					9.00%

XML

Financial Highlights (Details) - $ / shares	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Investment Company, Financial Highlights [Roll Forward]
Net asset value per unit, beginning of period (in USD per unit)			$ 31,710	$ 32,860	$ 32,860
(Decrease) increase in members’ capital from operations
Net investment (loss) income (in USD per unit)	$ (16)	$ 94	(4)	189
Net change in unrealized (depreciation) appreciation on investment (in USD per unit)			(2,316)	692
Total (decrease) increase in members’ capital from operations (in USD per unit)	(2,140)	633	(2,320)	881
Distributions to members
Capital distributions (in USD per unit)			(825)	(874)
Net decrease in members’ capital resulting from distributions (in USD per unit)			(825)	(874)
Net asset value per unit, end of period (in USD per unit)	$ 28,565	$ 32,867	$ 28,565	$ 32,867	$ 31,710	$ 32,860
Ratios to average net assets:
Expenses			0.31%	0.24%
Net investment (loss) income			(0.03%)	1.14%
IRR			3.79%	4.98%	4.65%	4.91%
Weighted average units outstanding (in units)	6,622.2	6,626.2	6,622.2	6,630.9

XML

Subsequent Events (Details) $ in Millions	Aug. 08, 2023 USD ($)
Terra Property Trust | Subsequent Event
Subsequent Event
Termination fee	$ 3.0