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: 001-40496

Terra Property Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland	81-0963486
(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)

(212) 753-5100

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of exchange on which registered
6.00% Notes due 2026	TPTA	New York Stock Exchange

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

Class B Common Stock, $0.01 par value per share

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 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 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	þ	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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of August 11, 2023, the registrant had 24,335,575 shares of Class B Common Stock, $0.01 par value, 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.	Consolidated Financial Statements:
	Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022	2
	Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited)	3
	Consolidated Statements of Changes in Equity for the three and six months ended June 30, 2023 and 2022 (unaudited)	4
	Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 4.	Controls and Procedures	65
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	66
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	67
Item 6.	Exhibits	67
Signatures		69

1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Terra Property Trust, Inc.

Consolidated Balance Sheets

	June 30, 2023		December 31, 2022
	(unaudited)
Assets
Cash and cash equivalents	$	51,808,573	$	28,567,825
Restricted cash	3,201,935		4,633,204
Cash held in escrow by lender	3,086,398		3,268,563
Loans held for investment, net of allowance for credit losses of $32,992,709    and $25,471,890	475,173,171		584,417,939
Loans held for investment acquired through participation, net of allowance for     credit losses of $136,087 and none	38,645,336		42,072,828
Equity investment in unconsolidated investments	32,608,994		62,498,340
Real estate owned, net (Note 6)
Land, building and building improvements, net	162,063,697		46,660,226
Lease intangible assets, net	14,069,928		2,568,461
Operating lease right-of-use asset	27,370,242		27,378,786
Deal deposit	—		4,241,892
Interest receivable	3,889,641		4,100,501
Other assets	7,784,490		2,928,327
Total assets	$	819,702,405	$	813,336,892
Liabilities and Equity
Liabilities:
Term loan payable	$	14,850,000	$	25,000,000
Unsecured notes payable, net of debt issuance cost	117,433,372		116,530,673
Repurchase agreements payable, net of deferred financing fees	122,070,840		169,304,710
Obligations under participation agreements (Note 8 )	13,789,070		12,680,594
Mortgage loans payable, net of deferred financing fees and other	98,687,185		29,488,326
Revolving line of credit payable, net of deferred financing fees	105,260,351		89,807,448
Interest reserve and other deposits held on investments	3,201,935		4,633,204
Operating lease liability	27,370,242		27,378,786
Lease intangible liabilities, net (Note 6)	16,827,043		8,646,840
Due to Manager (Note 8)	3,431,790		3,935,997
Interest payable	1,746,183		1,058,001
Accounts payable and accrued expenses	3,816,487		1,452,236
Unearned income	757,580		378,018
Other liabilities	1,315,374		1,159,885
Total liabilities	530,557,452		491,454,718
Commitments and contingencies (Note 10)
Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized and none issued	—		—
12.5% Series A Cumulative Non-Voting Preferred Stock at liquidation preference,    125 shares authorized and no shares and 125 shares issued and outstanding at    June 30, 2023 and December 31, 2022, respectively	—		125,000
Class A Common Stock, $0.01 par value, 450,000,000 shares authorized and no    shares issued, at both June 30, 2023 and December 31, 2022	—		—
Class B Common Stock, $0.01 par value, 450,000,000 shares authorized and    24,335,513 and 24,335,370 shares issued and outstanding at June 30, 2023 and     December 31, 2022, respectively	243,354		243,354
Additional paid-in capital	444,451,801		444,449,813
Accumulated deficit	(155,550,202)		(122,935,993)
Total equity	289,144,953		321,882,174
Total liabilities and equity	$	819,702,405	$	813,336,892

See notes to consolidated financial statements.

2

Terra Property Trust, Inc.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues
Interest income	$	15,878,453	$	10,274,051	$	31,494,260	$	19,156,202
Real estate operating revenue	2,803,934		2,991,321		4,136,903		5,970,775
Prepayment fee income	—		1,174,760		—		1,174,760
Other operating income	100,068		247,981		153,463		498,646
	18,782,455		14,688,113		35,784,626		26,800,383
Operating expenses
Operating expenses reimbursed to Manager	2,120,029		2,140,635		4,297,033		4,069,198
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
Provision for credit losses	4,652,644		25,633		3,802,593		75,929
Real estate operating expenses	1,864,212		1,247,328		3,074,124		2,465,291
Depreciation and amortization	1,756,664		1,718,373		2,438,477		3,436,745
Impairment charge	11,765,540		—		11,765,540		1,604,989
Professional fees	787,427		1,011,354		1,767,322		1,753,872
Directors’ fees	83,750		36,247		180,214		72,499
Other	188,631		374,203		403,875		457,624
	25,820,320		8,590,119		32,798,553		17,809,917
Operating (loss) income	(7,037,865)		6,097,994		2,986,073		8,990,466
Other income and expenses
Interest expense from obligations under    participation agreements	(576,915)		(1,238,655)		(1,109,061)		(2,313,764)
Interest expense on repurchase agreements    payable	(2,946,797)		(1,665,283)		(6,003,303)		(2,421,109)
Interest expense on mortgage loans payable	(1,640,972)		(520,829)		(2,387,100)		(1,039,446)
Interest expense on revolving line of credit	(2,540,047)		(700,737)		(4,505,581)		(1,225,031)
Interest expense on term loan payable	(355,468)		—		(707,031)		(164,969)
Interest expense on unsecured notes payable	(2,405,267)		(1,432,877)		(4,799,573)		(2,863,060)
Interest expense on secured borrowing	—		(556,855)		—		(1,109,640)
Unrealized gains (losses) on investments, net	51,224		(34,950)		57,808		(133,994)
Loss on sale of real estate	—		(51,984)		—		(51,984)
(Loss) income from equity investment in     unconsolidated investments	(1,759,934)		1,364,332		(2,196,794)		2,783,667
Realized (losses) gains on investments, net	(25,024)		32,278		(25,024)		83,411
	(12,199,200)		(4,805,560)		(21,675,659)		(8,455,919)
Net (loss) income	$	(19,237,065)	$	1,292,434	$	(18,689,586)	$	534,547
Series A preferred stock dividend declared	—		$	(3,906)	$	(3,907)	$	(7,812)
Net (loss) income allocable to common stock	$	(19,237,065)	$	1,288,528	$	(18,693,493)	$	526,735
(Loss) income per share — basic and diluted	$	(0.79)	$	0.07	$	(0.77)	$	0.03
Weighted-average shares — basic and diluted	24,335,430		19,487,460		24,335,402		19,487,460
Distributions declared per common share	$	0.19	$	0.19	$	0.38	$	0.39

See notes to consolidated financial statements.

3

Terra Property Trust, Inc.

Consolidated Statements of Changes in Equity

(Unaudited)

	Preferred Stock		12.5% Series A Cumulative Non-Voting Preferred Stock			Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit
						$0.01 Par Value			$0.01 Par Value
			Shares	Amount		Shares	Amount		Shares	Amount						Total equity
Balance at January 1, 2023	$	—	125	$	125,000	—	$	—	24,335,370	$	243,354	$	444,449,813	$	(122,935,993)	$	321,882,174
Cumulative effect of credit loss     accounting standard effective     January 1, 2023 (Note 2)	—		—	—		—	—		—	—		—		(4,619,723)		(4,619,723)
Shares issued from reinvestment of      shareholder distributions	—		—	—		—	—		34	—		478		—		478
Redemption of Series A Preferred    Stock	—		(125)	(125,000)		—	—		—	—		—		—		(125,000)
Distributions declared on common    shares ($0.19 per share)	—		—	—		—	—		—	—		—		(4,650,492)		(4,650,492)
Distributions declared on preferred    shares	—		—	—		—	—		—	—		—		(3,907)		(3,907)
Net income	—		—	—		—	—		—	—		—		547,479		547,479
Balance at March 31, 2023	—		—	—		—	—		24,335,404	243,354		444,450,291		(131,662,636)		313,031,009
Shares issued from reinvestment of      shareholder distributions	—		—	—		—	—		109	—		1,510		—		1,510
Distributions declared on common    shares ($0.19 per share)	—		—	—		—	—		—	—		—		(4,650,501)		(4,650,501)
Net loss	—		—	—		—	—		—	—		—		(19,237,065)		(19,237,065)
Balance at June 30, 2023	$	—	—	$	—	—	$	—	24,335,513	$	243,354	$	444,451,801	$	(155,550,202)	$	289,144,953

See notes to consolidated financial statements.

4

Terra Property Trust, Inc.

Consolidated Statements of Changes in Equity (Continued)

(Unaudited)

	Preferred Stock		12.5% Series A Cumulative Non-Voting Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit
						$0.01 Par Value
			Shares	Amount		Shares	Amount						Total equity
Balance at January 1, 2022	$	—	125	$	125,000	19,487,460	$	194,875	$	373,443,672	$	(99,919,969)	$	273,843,578
Distributions declared on common shares ($0.20 per share)	—		—	—		—	—		—		(3,893,595)		(3,893,595)
Distributions declared on preferred shares	—		—	—		—	—		—		(3,906)		(3,906)
Net loss	—		—	—		—	—		—		(757,887)		(757,887)
Balance at March 31, 2022	—		125	125,000		19,487,460	194,875		373,443,672		(104,575,357)		269,188,190
Distributions declared on common shares ($0.19 per share)	—		—	—		—	—		—		(3,780,568)		(3,780,568)
Distributions declared on preferred shares	—		—	—		—	—		—		(3,906)		(3,906)
Net income	—		—	—		—	—		—		1,292,434		1,292,434
Balance at June 30, 2022	$	—	125	$	125,000	19,487,460	$	194,875	$	373,443,672	$	(107,067,397)	$	266,696,150

See notes to consolidated financial statements.

5

Terra Property Trust, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net (loss) income	$	(18,689,586)	$	534,547
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	2,438,477		3,436,745
Provision for credit losses	3,802,593		75,929
Impairment charge	11,765,540		1,604,989
Amortization of net purchase premiums on loans	823,785		122,783
Straight-line rent adjustments	22,197		719,036
Amortization of deferred financing costs	1,143,668		1,135,225
Amortization of discount on unsecured notes payable	815,300		228,281
Amortization of above- and below-market rent intangibles	(609,983)		(492,749)
Amortization and accretion of investment-related fees, net	(475,043)		(467,910)
Amortization of above-market rent ground lease	(65,174)		(65,175)
Realized loss (gain) on investments, net	25,024		(83,411)
Unrealized (gains) losses on investments, net	(57,808)		133,994
Loss on sale of real estate	—		51,984
Distributions received from equity investment in unconsolidated investments	5,087,025		225,280
Loss (income) from equity investment in unconsolidated investments	4,001,731		(1,991,014)
Changes in operating assets and liabilities:
Deal deposits	4,241,892		—
Interest receivable	(245,790)		(710,459)
Due from related party	(255,142)		2,605,639
Other assets	(3,232,943)		(1,383,519)
Due to Manager	(439,232)		281,058
Unearned income	379,562		160,042
Interest payable	688,182		(509,427)
Accounts payable and accrued expenses	1,451,483		(16,274)
Other liabilities	(609,921)		(2,223,662)
Net cash provided by operating activities	12,005,837		3,371,932
Cash flows from investing activities:
Origination and purchase of loans	(63,775,372)		(120,420,961)
Proceeds from repayments of loans	98,977,506		56,610,198
Purchase of real estate properties	(52,313,739)		—
Purchase of held-for-maturity securities	(20,025,024)		—
Proceeds from redemption of held-for-maturity securities	20,000,000		—
Purchase of marketable securities	(1,051,754)		—
Proceeds from sale of marketable securities	—		1,259,417
Return of capital on equity interests in unconsolidated investments	10,650,947		—
Cash acquired in purchase of real estate	712,608		—
Purchase of equity interests in unconsolidated investments	—		(20,915,067)
Proceeds from sale of real estate	—		8,585,500
Distributions in excess equity income	—		497,920
Net cash used in investing activities	(6,824,828)		(74,382,993)

6

Terra Property Trust, Inc.

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

	Six Months Ended June 30,
	2023		2022
Cash flows from financing activities:
Proceeds from borrowings under repurchase agreements	1,300,858		148,089,549
Proceeds from borrowings under revolving line of credit	57,032,155		41,169,295
Proceeds from mortgage loan payable	72,618,367		—
Proceeds from obligations under participation agreements	1,093,862		16,522,472
Repayments of borrowings under repurchase agreements	(49,344,783)		—
Repayments of obligations under participation agreements	—		(15,000,000)
Repayments of borrowings under revolving line of credit	(41,720,000)		(30,920,124)
Distributions paid	(9,302,911)		(7,681,975)
Repayment of borrowings under the term loan	(10,000,000)		(93,763,471)
Proceeds from secured borrowing	—		3,629,034
Repayment of mortgage principal	(1,649,191)		(413,065)
Change in interest reserve and other deposits held on investments	(1,431,269)		10,041
Payment of financing costs	(2,025,783)		(975,947)
Redemption of Series A Preferred Stock	(125,000)		—
Net cash provided by financing activities	16,446,305		60,665,809
Net increase (decrease) in cash, cash equivalents and restricted cash	21,627,314		(10,345,252)
Cash, cash equivalents and restricted cash at beginning of period	36,469,592		51,098,647
Cash, cash equivalents and restricted cash at end of period (Note 2)	$	58,096,906	$	40,753,395

	Six Months Ended June 30,
	2023		2022
Supplemental Disclosure of Cash Flows Information:
Cash paid for interest	$	16,864,499	$	10,482,040
Supplemental non-cash information:
Reinvestment of stockholder distributions	$	1,988	$	—

7

Supplemental non-cash investing information:

In May 2023, the Company acquired five industrial buildings for a $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. The following table presents a summary of the total capitalized costs and the values of the net assets acquired:

Total Capitalized Costs:
Cash and cash equivalents	$	3,515,466
Loans held for investment	68,737,877
Equity investment in unconsolidated investment	10,149,642
Interest receivable	456,650
Other assets	429,326
	$	83,288,961
Net Assets Acquired
Cash and cash equivalents	$	712,608
Other assets	33,802
Land	14,457,149
Buildings and Improvements	65,365,376
Intangible asset and liability:
In-please lease	8,403,667
Below-market rent	(4,770,870)
Accounts payable and accrued expenses	(912,771)
	$	83,288,961

See notes to consolidated financial statements.

8

Terra Property Trust, Inc.

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2023

Note 1. Business

    Terra Property Trust, Inc. (and, together with its consolidated subsidiaries, the “Company” or “Terra Property Trust”) was incorporated under the Maryland General Corporation Law on December 31, 2015. Terra Property Trust is 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. 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.

    On January 1, 2016, Terra Secured Income Fund 5, LLC (“Terra Fund 5”), the Company’s then parent, contributed its consolidated portfolio of net assets to the Company pursuant to a contribution agreement in exchange for shares of the Company’s common stock. Upon receipt of the contribution of the consolidated portfolio of net assets from Terra Fund 5, the Company commenced its operations on January 1, 2016. On March 2, 2020, the Company engaged in a series of transactions pursuant to which the Company 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 held by the Company, cash of $25.5 million and other working capital.

    The Company has elected to be taxed, and to qualify annually thereafter, as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), commencing with the taxable year ended December 31, 2016. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. The Company also operates its business in a manner that permits it to maintain its exemption from registration as an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”).

    The Company’s investment activities are externally managed by Terra REIT Advisors, LLC (“Terra REIT Advisors” or the “Manager”), a subsidiary of the Company’s sponsor, Terra Capital Partners, LLC (“Terra Capital Partners”), pursuant to a management agreement (the “Management Agreement”), under the oversight of the Company’s board of directors (the “Board”) (Note 8). 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 by individuals who were contracted by the Company or by the Manager to work on behalf of the Company pursuant to the terms of the Management Agreement.

On October 1, 2022, pursuant to that certain Agreement and Plan of Merger, dated as of May 2, 2022 (the “Merger Agreement”), Terra Income Fund 6, Inc. (“Terra BDC”), merged with and into Terra Income Fund 6, LLC (“Terra LLC”), a wholly owned subsidiary of the Company, with Terra LLC continuing as the surviving entity of the merger (the “BDC Merger”) and as a wholly owned subsidiary of the Company (Note 3).

As of June 30, 2023, Terra JV, LLC (“Terra JV”), former shareholders of Terra BDC and Terra Offshore Funds REIT, LLC (“Terra Offshore REIT”) held 70.0%, 19.9% and 10.1% of the issued and outstanding shares of the Company’s common stock, respectively.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

    The consolidated financial statements include all of the Company’s accounts and those of its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation.

The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (“VIE”) or voting interest model. The Company is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. If the Company determines it does not hold a variable

9

Notes to Unaudited Consolidated Financial Statements

interest in a VIE, it then applies the voting interest model. Under the voting interest model, the Company consolidates an entity when it holds a majority voting interest in an entity.

The Company accounts for investments in which it has significant influence but not a controlling financial interest using the equity method of accounting (see Note 5).

VIE Model

An entity is considered to be a VIE if any of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the holders of the equity investment at risk, as a group, lack either the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the entity or the obligation to absorb the entity’s expected losses or right to receive the entity’s expected residual returns, or (c) the voting rights of some equity investors are disproportionate to their obligation to absorb losses of the entity, their rights to receive returns from an entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights.

Under the VIE model, limited partnerships are considered VIEs unless a limited partner holds substantive kick-out or participating rights over a general partner. The Company consolidates entities that are VIEs when the Company determines it is the primary beneficiary. Generally, the primary beneficiary of a VIE is a reporting entity that has (a) the power to direct the activities that most significantly affect the VIE’s economic performance, and (b) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

Loans Held for Investment

    The Company originates, acquires, and structures, or acquires through participations, real estate-related loans generally to be held to maturity (collectively the “loans”). Loans held for investment are carried at the principal amount outstanding, adjusted for the accretion of discounts on investments and exit fees, and the amortization of premiums on investments and origination fees. The Company’s preferred equity investments, which are economically similar to mezzanine loans and subordinate to any loans but senior to common equity, are accounted for as loans held for investment. Loans are carried at amortized cost less allowance for credit losses.

Current Expected Credit Losses Reserve

Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, became effective for the Company on January 1, 2023. ASC 326 mandates the use of a current expected credit loss (“CECL”) model for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” credit model previously required under United States generally accepted accounting principles (“U.S. GAAP”). The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event under the previous “incurred loss” methodology. The CECL model applies to the Company’s loan portfolio and the held-to-maturity debt securities which are carried at amortized cost, including future funding commitments for which the Company does not have the unconditional right to cancel. Amortized cost is defined as the principal amount outstanding, adjusted for the accretion of purchase discounts and disposition fees, and amortization of purchase premiums and origination fees, and includes accrued interest receivable related to these loans and securities. As permitted by ASC 326, the Company elected not to measure an allowance for credit losses on accrued interest receivable (which is presented separately on the consolidated balance sheet), but rather write off in a timely manner by reversing interest income that would likely be uncollectible. The Company’s adoption of the CECL model resulted in a $4.6 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to accumulated deficit as of January 1, 2023. Subsequent to the adoption of the CECL model, any increase or decrease to the CECL reserve is recorded in earnings on the consolidated statements of operations.

The Company utilizes information obtained from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. The Company does not have a meaningful history of realized credit losses on its loan portfolio so it has subscribed to a third-party database service to provide the Company with industry losses for its loans. The Company utilizes a loan loss model that is widely used among banks and commercial mortgage REITs and is marketed by a leading commercial mortgage-based security data analytics provider. It employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. The Company provides specific loan-level inputs which include loan-to-value and debt service coverage ratio metrics, as well as principal balances, property type, location, coupon rate, coupon rate type, original or remaining term, expected repayment dates and contractual future funding

10

Notes to Unaudited Consolidated Financial Statements

commitments. The Company selects from a group of independent five-year macroeconomic forecasts included in the model that are updated regularly based on current economic trends. Because the Company’s loan portfolio is comprised of a small number of loans, the Company measures the CECL reserve based on an evaluation of each loan as its own segregated asset. Based on the inputs, the loan loss model determines a loan loss rate through the generation of probability of defaults (PD) and loss given defaults (LGD) for each loan. The CECL reserve is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. These results require a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance for credit losses. Changes in such estimates can significantly affect the expected credit losses.

The calculation of the estimate of expected credit loss considers historical experience and current conditions for each loan and reasonable and supportable forecasts about the future. The reasonable and supportable forecast period is determined based on the Company’s assessment of the most likely scenario of assumptions and plausible outcomes for the U.S. economy, current portfolio composition, level of historical loss forecast estimates, material changes in growth and credit strategy and other factors that may affect its loss experience. The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed.

Beyond the Company’s reasonable and supportable forecast period, the Company generally reverts to historical loss information, pooled by asset type and investment structure, over the remaining loan period, taken from a period that most accurately reflects the expectation of conditions expected to exist during the period of reversion. The Company may adjust historical loss information for differences in risk that may not reflect the characteristics of its current portfolio, including but not limited to, loan-to-value and debt service coverage ratios, among other relevant factors. The method of reversion selected represents the best estimate of the collectability of the investments and is reevaluated each reporting period. The Company generally expects to use an average historical loss for reversion, utilizing an immediate or straight-line method for the remaining life of the loans.

The Company also performs a qualitative assessment beyond model estimates and applies qualitative adjustments as necessary. The Company’s qualitative analysis includes a review of data that may directly impact its estimates including internal and external information about the loan or property including current market conditions, asset specific conditions, property operations or borrower/sponsor details (i.e., refinance, sale, bankruptcy) which allows the Company to determine the amount of the expected loss more accurately and reasonably for these investments. The Company also evaluates the contractual life of its loans to determine if changes are needed for contractual extension options, renewals, modifications, and prepayments.

During the loan review process, if the Company determines that it is not able to collect all amounts due for both principal and interest according to the contractual terms of a loan, the Company considers that loan non-performing. For all non-performing loans, such as those in default, collateral-dependent or modified loans, including historical troubled debt restructurings, the Company removes these loans from the industry loss rate approach described above and analyzes them separately. The credit loss reserve for these loans is calculated as any excess of the amortized cost of the loan over (i) the present value of expected future cash flows discounted at the appropriate discount rate or (ii) the fair value of collateral, if repayment is expected solely from the collateral.

Some of the Company’s loans include commitments to fund incremental proceeds to the borrowers over the life of the loan and these unfunded commitments are also subject to the CECL model because the Company does not have an unconditional right to cancel such commitments. The CECL reserve related to unfunded commitments is recorded as a component of other liabilities on the Company’s consolidated balance sheets. This CECL reserve is estimated using the same method outlined above for the Company’s outstanding loan balances, and increases or decreases in the CECL reserve relating to unfunded commitments are also recorded in earnings on the consolidated statements of operations.

    As discussed below in Recent Accounting Pronouncements, the Company adopted the provisions of Accounting Standards Update (“ASU”) 2022-02 Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) concurrently with the adoption of CECL on January 1, 2023, prospectively.

Equity Investment in Unconsolidated Investments

The Company accounts for its equity interests in unconsolidated investments under the equity method of accounting, i.e., at cost, increased or decreased by its share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting.

11

Notes to Unaudited Consolidated Financial Statements

The Company evaluates its equity investment unconsolidated investments on a periodic basis to determine if there are any indicators that the value of its equity investments may be impaired and whether or not that impairment is other-than-temporary. To the extent an impairment has occurred and is determined to be other-than-temporary, the Company measures the charge as the excess of the carrying value of its investment over its estimated fair value, which is determined by calculating its share of the estimated fair market value of the underlying net assets based on the terms of the applicable partnership or joint venture agreements.

Marketable Securities

    The Company from time to time invests in short term debt and equity securities. These securities are classified as available-for-sale and are carried at fair value. Changes in the fair value of equity securities are recognized in earnings. Changes in the fair value of debt securities are reported in other comprehensive income until a gain or loss on the securities is realized.

Held-to-Maturity Debt Securities

The Company classifies debt securities for which it has both the positive intent and ability to hold until maturity of the security as held-to-maturity debt securities. These securities are recorded at amortized cost with changes in amortized cost recognized in earnings until realized. Held-to-maturity debt securities are subject to the CECL reserve described above.

Real Estate Owned, Net

    Real estate acquired is recorded at its estimated fair value at acquisition and is shown net of accumulated depreciation and impairment charges.

    Acquisition of properties generally are accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs, are accumulated and then allocated to individual assets and liabilities acquired based upon their relative fair value. The Company allocates the purchase price of its real estate acquisitions to land, building, tenant improvements, acquired in-place leases, intangibles for the value of any above or below market leases at fair value and to any other identified intangible assets or liabilities. The Company amortizes the value allocated to in-place leases over the remaining lease term, which is reported in depreciation and amortization expense on its consolidated statements of operations. The value allocated to above or below market leases are amortized over the remaining lease term as an adjustment to rental income.

    Real estate assets are depreciated using the straight-line method over their estimated useful lives: buildings and improvements - not to exceed 40 years, and tenant improvements - shorter of the lease term or life of the asset. Ordinary repairs and maintenance which are not reimbursed by the tenants are expensed as incurred. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their estimated useful life.

    Management reviews the Company’s real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate assets. If impaired, the real estate asset will be written down to its estimated fair value.

Leases

    The Company determines if an arrangement is a lease at inception. Operating leases in which the Company is the lessee are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. 

    ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s lease typically does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made in advance and excludes lease incentives if there were any. The Company’s lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.

12

Notes to Unaudited Consolidated Financial Statements

Revenue Recognition

    Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

    Interest Income: Interest income is accrued based upon the outstanding principal amount and contractual terms of the loans and preferred equity investments that the Company expects to collect, and it is accrued and recorded on a daily basis. Discounts and premiums on investments purchased are accreted or amortized over the expected life of the respective loan using the effective yield method, and are included in interest income in the consolidated statements of operations. Loan origination fees and exit fees, net of portions attributable to obligations under participation agreements, are capitalized and amortized or accreted to interest income over the life of the investment using the effective yield method. Outstanding interest receivable is assessed for recoverability. The Company generally reverses the accrued and unpaid interest against interest income and no longer accrues for the interest when, in the opinion of the Manager, recovery of income and principal becomes doubtful. Interest is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.

    The Company holds loans in its portfolio that contain paid-in-kind (“PIK”) interest provisions. The PIK interest, which represents contractually deferred interest that is added to the principal balance that is due at maturity, is recorded on the accrual basis.

    Real Estate Operating Revenues: Real estate operating revenue is derived from leasing of space to various types of tenants. The leases are for fixed terms of varying length and generally provide for annual rent increases and expense reimbursements to be paid in monthly installments. Lease revenue, or rental income from leases, is recognized on a straight-line basis over the term of the respective leases. Additionally, the Company recorded above- and below-market lease intangibles, which are included in real estate owned, net, in connection with the acquisition of the real estate properties. These intangible assets and liabilities are amortized to lease revenue over the remaining contractual lease term.

    Other Revenues: Prepayment fee income is recognized as prepayments occur. All other income is recognized when earned.

Cash, Cash Equivalents and Restricted Cash

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.

    Restricted cash represents cash held as additional collateral by the Company on behalf of the borrowers related to the investments in loans or preferred equity instruments for the purpose of such borrowers making interest and property-related operating payments. Restricted cash is not available for general corporate purposes. The related liability is recorded in “Interest reserve and other deposits held on investments” on the consolidated balance sheets.

    Cash held in escrow by lender represents amounts funded to an escrow account for debt services and tenant improvements. Cash held in escrow is restricted and is not available for general corporate purposes.

    The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its consolidated statements of cash flows as of:

	June 30,
	2023		2022
Cash and cash equivalents	$	51,808,573	$	28,978,788
Restricted cash	3,201,935		7,421,852
Cash held in escrow by lender	3,086,398		4,352,755
Total cash, cash equivalents and restricted cash shown in the consolidated    statements of cash flows	$	58,096,906	$	40,753,395

13

Notes to Unaudited Consolidated Financial Statements

 Participation Interests

Loan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. For the investments for which participation has been granted, the interest earned on the entire loan balance is recorded within “Interest income” and the interest related to the participation interest is recorded within “Interest expense from obligations under participation agreements” in the consolidated statements of operations. Interest expense from obligations under participation agreement is reversed when recovery of interest income on the related loan becomes doubtful. See “Obligations under Participation Agreements” in Note 9 for additional information.

Term Loan

    The Company previously financed certain of its senior loans through borrowings under an indenture and credit agreement. The Company accounted for the borrowings as a term loan, which was carried at the contractual amount (cost), net of unamortized deferred financing fees. On February 18, 2022, the Company refinanced the Term Loan (as defined below) with a new repurchase agreement. See “Goldman Master Purchase Agreement” in Note 9 for additional information. In connection with the BDC Merger, the Company assumed a $25.0 million term loan. In June 2023, the Company made a repayment of $10.0 million on the Term Loan. The Company classified this Term Loan as term loan payable on the consolidated balance sheets.

Repurchase Agreements

The Company finances certain of its senior loans held for investment through repurchase transactions under master repurchase agreements. The Company accounts for the repurchase transactions as secured borrowing transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees. See “Repurchase Agreements” in Note 9 for additional information.

Fair Value Measurements

    U.S. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The Company has not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, obligations under participation agreements, secured borrowing, unsecured notes, mortgage loan payable, term loan payable, repurchase agreement payment and revolving line of credit. Such financial instruments are carried at cost, less impairment, where applicable. Marketable securities are financial instruments that are reported at fair value.

Deferred Financing Costs

    Deferred financing costs represent fees and expenses incurred in connection with obtaining financing for investments. These costs are presented in the consolidated balance sheets as a direct deduction of the debt liability to which the costs pertain. These costs are amortized using the effective interest method and are included in interest expense on the applicable borrowings in the consolidated statements of operations over the life of the borrowings.

Income Taxes

    The Company has elected to be taxed as a REIT under the Internal Revenue Code commencing with the taxable year ended December 31, 2016. In order to qualify as a REIT, the Company is required, among other things, to distribute dividends equal to at least 90% of its REIT net taxable income to the stockholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. Any gains from the sale of foreclosed properties within two years are subject to U.S. federal and state income taxes at regular corporate rates. As of June 30, 2023, the Company has satisfied all the requirements for a REIT.

14

Notes to Unaudited Consolidated Financial Statements

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of Accounting Standards Codification (“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 consolidated 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 major tax jurisdiction is federal. The Company’s 2019-2022 federal tax returns remain subject to examination by the Internal Revenue Service.

Earnings Per Share

    The Company has a simple equity capital structure with only common stock outstanding as of June 30, 2023 and common stock and preferred stock outstanding as of December 31, 2022. As a result, earnings per share, as presented, represent both basic and dilutive per-share amounts for the periods presented in the consolidated financial statements. Income per basic share of common stock is calculated by dividing net income allocable to common stock by the weighted-average number of shares of common stock issued and outstanding during such period.

Use of Estimates

    The preparation of consolidated 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 consolidated 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.

Segment Information

    The Company’s primary business is originating, acquiring and structuring real estate-related loans related to high quality commercial real estate. From time to time, the Company may acquire real estate encumbering the senior loans through foreclosure, may invest in real estate related joint ventures and may directly acquire real estate properties. The Company operates in a single segment focused on mezzanine loans, other loans and preferred equity investments, and to a lesser extent, owning and managing real estate.

Recent Accounting Pronouncements

    In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. In April 2019, the FASB issued additional amendments to clarify the scope of ASU 2016-13 and address issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. In May 2019, the FASB issued ASU 2019-05 — Targeted Transition Relief, which provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. In October 2019, the FASB decided that for smaller reporting companies, ASU 2016-13 and related amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company meets the definition of a smaller reporting company under the regulation of the Securities and Exchange Commission. The Company adopted this ASU and related amendments on January 1, 2023. The adoption of ASU 2016-13 resulted in an incremental reserve of approximately $4.6 million, which included a reserve on future loan funding commitments. The Company recorded the cumulative effect of initially applying this guidance as an adjustment to Accumulated deficit using the modified retrospective method of adoption.

    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 has subsequently been 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

15

Notes to Unaudited Consolidated Financial Statements

December 31, 2024. In the event LIBOR is unavailable, the Company’s investment documents provide for a substitute index, on a basis generally consistent with market practice, intended to put the Company 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 consolidated financial statements and disclosures.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates troubled debt restructuring guidance for organizations that adopted the amendments in ASU 2016-13 while providing for additional disclosures for loan modifications. ASU 2022-02 also amends the vintage disclosure guidance for public business entities. The Company adopted the provisions of ASU 2022-02 concurrently with the adoption of ASU 2016-03. The adoption of ASU 2022-02 did not have any material impact on the Company’s financial condition and results of operations.

Note 3. BDC Merger

BDC Merger

On October 1, 2022 (the “Closing Date”), pursuant to the Merger Agreement, Terra BDC merged with and into Terra LLC, with Terra LLC surviving as a wholly owned subsidiary of the Company. 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 (the “SDAT”), 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 the Company or any wholly owned subsidiary of the Company 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 the newly designated Class B Common Stock, par value $0.01 per share (“Class B Common Stock”) and (ii) cash, without interest, in lieu of any fractional shares of 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 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 Merger Agreement, approximately 4,847,910 shares of 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 the Company.

The Company and Terra BDC prepared their respective financial statements in accordance with generally accepted accounting principles in the United States. The BDC Merger is accounted for using the acquisition method of accounting, with the Company being treated as the accounting acquirer. In identifying the Company as the acquiring entity for accounting purposes, the Company and Terra BDC took into account a number of factors, including the relative size of the merging companies, which entity issues additional shares in conjunction with the BDC Merger, the relative voting interests of the respective stockholders after consummation of the BDC Merger, and the composition of the Board and senior management of the combined company after consummation of the BDC Merger.

The Company, as the acquirer, accounted for the BDC Merger as an asset acquisition and all direct acquisition-related costs are capitalized to the total cost of the assets acquired and liabilities assumed. Pursuant to Accounting Standard Codification Topic 805, Business Combination, total cost is allocated to the assets acquired and liabilities assumed on a relative fair value basis.

16

Notes to Unaudited Consolidated Financial Statements

The following table summarizes the total consideration and the fair values of assets acquired and liabilities assumed in the BDC Merger:

Total Consideration
Fair value of Terra Property Trust shares of common stock issued	$	71,054,620
Cash paid for fractional shares	12,920
Transaction costs	2,283,785
	$	73,351,325
Assets Acquired and Liabilities Assumed at Fair Value
Cash and cash equivalents	$	24,321,951
Restricted cash	260,614
Loans held for investment	77,562,528
Loans held for investment acquired through participation	36,793,313
Interest receivable	1,367,044
Other assets	55,465
Term loan payable	(25,000,000)
Unsecured notes payable	(33,770,000)
Obligations under participation agreements	(6,114,979)
Interest reserve and other deposits held on investments	(260,614)
Due to manager	(682,541)
Interest payable	(53,186)
Accounts payable and accrued expenses	(740,824)
Other liabilities	(387,446)
Net assets acquired	$	73,351,325

The fair value of the 4,847,910 shares of the Class B Common Stock was determined based on the Company’s net asset value per share of $14.66 as of October 1, 2022.

Net Gain on Extinguishment of Obligations Under Participation Agreements

As discussed in Note 8, in the normal course of business, the Company may enter into participation agreements with related parties, primarily other affiliated funds managed by the Manager, and to a lesser extent, unrelated parties. As a result of the BDC Merger, the obligations under participation agreements with Terra BDC totaling $37.0 million were effectively extinguished and the Company recognized a net gain of $3.4 million, representing the difference between the carrying value of the Company’s obligations under participation agreements and the fair value of Terra BDC’s investments acquired through participation agreements.

Appointment of Directors

As of the Effective Time and in accordance with the Merger Agreement, the size of the Board was increased by three members and each of Spencer Goldenberg, Adrienne Everett and Gaurav Misra (each a “Terra BDC Designee”, and collectively, the “Terra BDC Designees”) were elected to the Board to fill the vacancies created by such increase, with each Terra BDC Designee to serve until the Company’s next annual meeting of stockholders and until his or her successor is duly elected and qualifies. Each of the other members of the Board immediately prior to the Effective Time continued as members following the Effective Time.

Voting Support Agreement

On the Closing Date, the Company, Terra JV and Terra Offshore REIT entered into a Voting Support Agreement (the “2022 Voting Agreement”). Pursuant to the 2022 Voting Agreement, effective as of the Closing Date, Terra JV and Terra

17

Notes to Unaudited Consolidated Financial Statements

Offshore REIT have agreed to, at any meeting of the Company’s stockholders called for the purpose of electing directors (or by any consent in writing or by electronic transmission in lieu of any such meeting), cast all votes entitled to be cast by each of them in favor of the election of the Terra BDC Designees until the earlier of (i) the first anniversary of the Closing Date, (ii) the TPT Class B Common Stock Distributions (as defined in the 2022 Voting Agreement) or (iii) an amendment and restatement of the amended and restated management agreement between the Company and Terra REIT Advisors approved by the Company’s Board, including the Terra BDC Designees.

Indemnification Agreements

The Company has entered into customary indemnification agreements with each member of the Board (including each Terra BDC Designee). These agreements, among other things, require the Company to indemnify each director to the maximum extent permitted by Maryland law, including indemnification of expenses such as attorney’s fees, judgments, fines and settlement amounts incurred in any action or proceeding, including any action or proceeding by or in right of the Company, arising out of his or her service as a director.

Note 4. Loans Held for Investment

The Company elected the practical expedient under ASC 326 to exclude accrued interest from amortized cost. As of June 30, 2023 and December 31, 2022, accrued interest receivable of $3.9 million and $4.1 million, respectively, is included in interest receivable on the consolidated balance sheets, and is excluded from the amortized cost of loans held for investment.

Portfolio Summary

The following table provides a summary of the Company’s loan portfolio as of:

	June 30, 2023									December 31, 2022
	Fixed Rate			Floating Rate (1)(2)(3)			Total			Fixed Rate			Floating Rate (1)(2)(3)			Total
Number of loans	5			18			23			8			23			31
Principal balance	$	52,940,319		$	488,915,124		$	541,855,443		$	90,990,183		$	554,805,276		$	645,795,459
Carrying value	$	53,069,799		$	460,748,708		$	513,818,507		$	92,274,998		$	534,215,769		$	626,490,767
Fair value	$	52,504,064		$	464,990,667		$	517,494,731		$	90,729,098		$	532,416,656		$	623,145,754
Weighted-average coupon rate	13.22		%	12.77		%	12.82		%	13.82		%	11.23		%	11.59		%
Weighted-average remaining  term (years)	1.47			0.59			0.69			1.35			1.10			1.14

_______________

(1)These loans pay a coupon rate of LIBOR, Secured Overnight Financing Rate (“SOFR”), or forward-looking term rate based on SOFR (“Term SOFR”), as applicable, 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.

(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 (Note 9).

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

18

Notes to Unaudited Consolidated Financial Statements

Lending Activities

The following tables present the activities of the Company’s loan portfolio:

	Loans Held for Investment		Loans Held for Investment through Participation Interests		Total
Balance, January 1, 2023	$	584,417,939	$	42,072,828	$	626,490,767
Cumulative effect of credit loss accounting standard effective    January 1, 2023 (Note 2)	(4,123,143)		(126,909)		(4,250,052)
New loans made	63,775,372		—		63,775,372
Principal repayments received	(95,695,298)		(3,282,208)		(98,977,506)
Net amortization of premiums on loans	(823,785)		—		(823,785)
Settlement of loans in exchange for real estate properties (Note 6)	(68,737,877)		—		(68,737,877)
Accrual, payment and accretion of investment-related fees and other,    net	(242,361)		(9,197)		(251,558)
Provision for credit losses	(3,397,676)		(9,178)		(3,406,854)
Balance, June 30, 2023	$	475,173,171	$	38,645,336	$	513,818,507

	Loans Held for Investment		Loans Held for Investment through Participation Interests		Total
Balance, January 1, 2022	$	457,329,582	$	12,343,732	$	469,673,314
New loans made	119,461,668		959,293		120,420,961
Principal repayments received	(56,610,198)		—		(56,610,198)
Net amortization of premiums on loans	(122,783)		—		(122,783)
Accrual, payment and accretion of investment-related fees and other,    net	537,682		19,355		557,037
Provision for credit losses	(75,929)		—		(75,929)
Balance, June 30, 2022	$	520,520,022	$	13,322,380	$	533,842,402

Portfolio Information

    The tables below detail the types of loans in the Company’s loan portfolio, as well as the property type and geographic location of the properties securing these loans as of:

	June 30, 2023						December 31, 2022
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
First mortgages	$	380,923,792	$	385,177,670	75.0	%	$	456,408,889	$	461,299,182	73.7	%
Preferred equity investments	123,242,640		123,957,220		24.1	%	121,231,434		122,132,177		19.5	%
Mezzanine loans	37,689,011		37,812,413		7.3	%	39,352,303		39,451,115		6.3	%
Credit facility	—		—		—	%	28,802,833		29,080,183		4.6	%
Allowance for credit losses	—		(33,128,796)		(6.4)	%	—		(25,471,890)		(4.1)	%
Total	$	541,855,443	$	513,818,507	100.0	%	$	645,795,459	$	626,490,767	100.0	%

19

Notes to Unaudited Consolidated Financial Statements

	June 30, 2023						December 31, 2022
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Office	$	164,837,437	$	165,327,122	32.2	%	$	184,196,708	$	184,722,657	29.4	%
Multifamily	103,427,397		104,222,850		20.3	%	104,589,464		105,570,432		16.9	%
Industrial	64,340,667		64,865,942		12.6	%	147,796,164		148,891,742		23.8	%
Mixed-use	62,746,351		63,257,099		12.3	%	64,880,450		65,838,965		10.5	%
Infill land	51,031,209		52,122,303		10.1	%	48,860,291		49,565,437		7.9	%
Hotel - full/select service	43,222,382		43,826,614		8.5	%	43,222,382		43,758,804		7.0	%
Student housing	31,000,000		31,768,579		6.2	%	31,000,000		31,774,261		5.1	%
Infrastructure	21,250,000		21,556,794		4.2	%	21,250,000		21,840,359		3.5	%
Allowance for credit losses	—		(33,128,796)		(6.4)	%	—		(25,471,890)		(4.1)	%
Total	$	541,855,443	$	513,818,507	100.0	%	$	645,795,459	$	626,490,767	100.0	%

	June 30, 2023						December 31, 2022
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	139,246,557	$	140,733,468	27.3	%	$	164,253,345	$	165,839,561	26.5	%
New York	88,336,078		88,336,079		17.2	%	91,845,479		91,877,084		14.7	%
New Jersey	77,371,876		78,691,851		15.3	%	62,228,622		62,958,482		10.0	%
Georgia	75,205,257		75,840,968		14.8	%	72,401,718		73,101,964		11.7	%
Washington	52,969,210		53,070,927		10.3	%	56,671,267		57,027,639		9.1	%
Utah	49,250,000		50,399,536		9.8	%	49,250,000		50,698,251		8.1	%
Arizona	31,000,000		31,296,394		6.1	%	31,000,000		31,276,468		5.0	%
North Carolina	21,476,465		21,578,080		4.2	%	43,520,028		44,041,162		7.0	%
Massachusetts	7,000,000		7,000,000		1.4	%	7,000,000		7,000,000		1.1	%
Texas	—		—		—	%	67,625,000		68,142,046		10.9	%
Allowance for credit losses	—		(33,128,796)		(6.4)	%	—		(25,471,890)		(4.1)	%
Total	$	541,855,443	$	513,818,507	100.0	%	$	645,795,459	$	626,490,767	100.0	%

Current Expected Credit Losses Reserve

As described in Note 2, on January 1, 2023, the Company adopted the provisions of ASU 2016-13, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses. The adoption of ASU 2016-13 resulted in a $4.6 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to accumulated deficits as of January 1, 2023.

The following table presents the activity in allowance for credit loss for funded loans:

	Six Months Ended June 30,
	2023		2022
Allowance for credit losses, beginning of period	$	25,471,890	$	13,658,481
Cumulative effect of credit loss accounting standard effective    January 1, 2023 (Note 2)	4,250,052		—
Provision for credit losses (1)	3,406,854		75,929
Charge-offs	—		—
Recoveries	—		—
Allowance for credit losses, end of period	$	33,128,796	$	13,734,410

20

Notes to Unaudited Consolidated Financial Statements

_______________

(1)Prior to the adoption of the CECL model on January 1, 2023, the Company recorded an allowance for credit losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4”, plus (ii) 5% of the aggregate carrying amount of loans rated as a “5”, plus (iii) non-performing loan reserves, if any.

Certain of the Company’s loans contain provisions for future fundings, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. These unfunded commitments amounted to approximately $53.2 million and $47.3 million as of June 30, 2023 and December 31, 2022, respectively. The following table presents the activity in the liability for credit losses on unfunded commitments:

	Six Months Ended June 30, 2023
Liability for credit losses on unfunded commitments, beginning of period	$	—
Cumulative effect of credit loss accounting standard effective January 1, 2023 (Note 2)	369,671
Provision for credit losses	395,739
Liability for credit losses on unfunded commitments, end of period	$	765,410

The liability for credit losses on unfunded commitments is included in other liabilities on the consolidated balance sheets.

Accrued Interest Receivable

The Company elected not to measure a CECL reserve on accrued interest receivable due to the Company’s policy of writing off uncollectible accrued interest receivable balances in a timely matter. If the Company determines it has uncollectible accrued interest receivable, it generally would reverse the accrued and unpaid interest against interest income and no longer accrues for interest. For the three and six months ended June 30, 2023 and 2022, the Company did not reverse any interest income accrual because all accrued interest income were deemed collectible. As of June 30, 2023 and 2022, the Company had three and two loans that were in default, and suspended interest income accrual of $3.7 million and $1.2 million for the three months ended June 30, 2023 and 2022, respectively, because recovery of such income was doubtful. For the six months ended June 30, 2023 and 2022, the Company suspended interest income accrual of $7.2 million and $2.3 million on three and two loans, respectively, because recovery of such income was doubtful. As of June 30, 2023 and December 31, 2022, there was no outstanding interest receivable on these loans.

Non-Performing Loans

As discussed in Note 2, for loans that are considered non-performing, the Company removes them from the industry loss rate approach and analyzes them separately. As of June 30, 2023 and December 31, 2022, the Company had four non-performing loans with total carrying value of $89.7 million and $89.9 million, respectively. The allowance for credit losses for these non-performing loans were $25.5 million as of both June 30, 2023 and December 31, 2022.

Loan Risk Rating

The Company assesses the risk factors of each loan and assigns each loan a risk rating between 1 and 5, which is an average of the numerical ratings in the following categories: (i) sponsor capability and financial condition; (ii) loan and collateral performance relative to underwriting; (iii) quality and stability of collateral cash flows and/or reserve balances; and (iv) loan to value. Based on a 5-point scale, the Company’s loans are rated “1” through “5”, from less risk to greater risk, as follows:

Risk Rating	Description
1	Very low risk
2	Low risk
3	Moderate/average risk
4	Higher risk
5	Highest risk

21

Notes to Unaudited Consolidated Financial Statements

    The following table presents the amortized cost of the Company’s loan portfolio by year of origination and loan risk rating as of June 30, 2023:

 

	June 30, 2023
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2023		2022		2021		2020		2019		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	2	25,043,198		4.6	%	—		—		—		—		18,043,198		7,000,000
3	15	392,865,778		71.8	%	6,120,513		133,191,835		119,894,853		27,750,542		102,982,198		2,925,837
4	2	39,337,304		7.2	%	—		39,337,304		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	4	89,701,023		16.4	%	—		—		—		—		1,364,944		88,336,079
	23	546,947,303		100.0	%	$	6,120,513	$	172,529,139	$	119,894,853	$	27,750,542	$	122,390,340	$	98,261,916
Allowance for credit losses		(33,128,796)
Total, net of allowance for credit losses		$	513,818,507

The following table presents the principal balance and the amortized cost of the Company’s loans based on the loan risk rating as of December 31, 2022:

	December 31, 2022
Loan Risk Rating	Number of Loans	Principal Balance		Amortized Cost		% of Total
1	—	$	—	$	—	—	%
2	2	25,000,000		25,041,782		3.8	%
3	25	530,867,244		536,992,660		82.4	%
4	—	—		—		—	%
5	—	—		—		—	%
Non-performing (1)	4	89,928,215		89,928,215		13.8	%
	31	$	645,795,459	651,962,657		100.0	%
Allowance for credit losses				(25,471,890)
Total, net of allowance for credit losses				$	626,490,767

_______________

(1)Because these loans have an event of default, they were removed from the pool of loans on which a general allowance was calculated and were evaluated for collectability individually. As of December 31, 2022, the specific allowance for credit losses on these loans were $25.5 million, as a result of a decline in the fair value of the respective collateral.

Troubled Debt Restructuring

As of December 31, 2022, there was one investment that qualified as troubled debt restructuring.

In December 2022, the borrower of a $40.1 million senior loan experienced financial difficulty and offered to repay the loan for $38.7 million. The remaining $1.4 million was converted to subordinated equity that accrues dividends at 8.0% and the Company is entitled to receive waterfall profit upon a sale. The Company does not anticipate a full recovery of the equity position and does not expect to receive any additional income. As a result, the remaining $1.4 million is reflected as a loan receivable and it is fully reserved for as of June 30, 2023 and December 31, 2022. The Company classified this loan modification as a TDR as it met all the conditions to be considered a TDR pursuant to ASC 310-40.

22

Notes to Unaudited Consolidated Financial Statements

The following table summarizes the recorded investment of TDR as of the date of restructuring:

Number of loans modified	1
Pre-modified recorded carrying value	$	40,072,138
Post-modified recorded carrying value (1)	$	1,364,944

_______________

(1) As of June 30, 2023 and December 31, 2022, the principal balance of this loan was the same as the carrying value. The Company recorded an allowance for credit losses of $1.4 million to fully reserve for the unpaid principal balance. There was no income from this investment from the date of modification on December 28, 2022 through June 30, 2023.

Note 5. Equity Investment in Unconsolidated Investments

The Company owns interests in a limited partnership and three joint ventures. The Company accounts for its interests in these investments under the equity method of accounting (Note 2). The Company classifies distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities.

Equity Investment in a Limited Partnership

On August 3, 2020, the Company entered into a subscription agreement with Mavik Real Estate Special Opportunities Fund, LP (“RESOF”) whereby the Company 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. RESOF may also opportunistically originate high-yield mortgages or loans in real estate special situations including rescue financings, bridge loans, restructurings and bankruptcies (including debtor-in-possession loans). The general partner of RESOF is Mavik Real Estate Special Opportunities Fund GP, LLC, which is a subsidiary of the Company’s sponsor, Terra Capital Partners. As of June 30, 2023 and December 31, 2022, the unfunded commitment was $37.4 million and $22.4 million, respectively.

The Company evaluated its equity interest in RESOF and determined it does not have a controlling financial interest and is not the primary beneficiary. Accordingly, the equity interest in RESOF is accounted for as an equity method investment. As of June 30, 2023 and December 31, 2022, the Company owned 14.9% and 27.9% of the equity interest in RESOF, respectively. As of June 30, 2023 and December 31, 2022, the carrying value of the Company’s investment in RESOF was $18.1 million and $36.8 million, respectively. For the three and six months ended June 30, 2023, the Company recorded equity loss from RESOF of $1.2 million and $0.9 million, respectively, as a result of adjustments made to equity income due to the dilution in the Company’s ownership interest in RESOF as new investors were admitted in 2022 and 2023. For the three and six months ended June 30, 2023, the Company received distributions from RESOF of $0.9 million and $4.7 million, respectively. For the three and six months ended June 30, 2022, the Company recorded equity income from RESOF of $1.6 million and $2.9 million, respectively, and received no distributions from RESOF.

In connection with the equity investment in RESOF, the Company paid origination fees to the Manager totaling $0.5 million, to be amortized to equity income on a straight-line basis over the life of RESOF.

23

Notes to Unaudited Consolidated Financial Statements

The following tables present summarized financial information of the Company’s equity investment in RESOF. Amounts provided are the total amounts attributable to the investment and do not represent the Company’s proportionate share:

	As of
	June 30, 2023		December 31, 2022
Investments at fair value (cost of $166,181,966 and $176,035,290, respectively)	$	167,673,063	$	178,283,703
Other assets	33,566,430		23,918,841
Total assets	201,239,493		202,202,544
Revolving line of credit, net of financing costs	27,648,565		14,795,985
Obligations under participation agreement (proceeds of $38,444,357 and     $41,726,565, respectively)	38,764,750		41,962,861
Other liabilities	16,193,681		17,120,804
Total liabilities	82,606,996		73,879,650
Partners’ capital	$	118,632,497	$	128,322,894

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total investment income	$	8,264,132	$	5,891,371	$	16,375,911	$	10,736,035
Total expenses	3,827,584		1,761,814		6,994,379		3,055,130
Net investment income	4,436,548		4,129,557		9,381,532		7,680,905
Unrealized (depreciation) appreciation on investments	(288,031)		1,493,140		(883,942)		1,562,191
Provision for income tax	(138,944)		—		(138,944)		—
Net increase in partners’ capital resulting from operations	$	4,009,573	$	5,622,697	$	8,358,646	$	9,243,096

Equity Investment in Joint Ventures

As of June 30, 2023 and December 31, 2022, the Company beneficially owned equity interests in three joint ventures that invest in real estate properties. The Company evaluated its equity interests in the joint ventures and determined it does not have a controlling financial interest and is not the primary beneficiary. Accordingly, the equity interests in the joint ventures are accounted for as equity method investments. In September 2022, the Company sold a 53% effective interest in two joint ventures and 59% effective interest in another joint venture for a total of $33.7 million and recognized a gain on sale of $0.8 million.

In December 2022, the Company originated a $10.0 million mezzanine loan to a borrower to finance the acquisition of a real estate portfolio. In connection with this mezzanine loan, the Company entered into a residual profit sharing agreement with the borrower where the borrower would pay the Company an additional amount of 35.0% of remaining net cash flow from the sale of the real estate portfolio. The Company accounted for this arrangement using the equity method of accounting. In May 2023, the Company purchased the underlying asset (Note 8) and the $10.0 million mezzanine loan was settled in connection with the purchase.

24

Notes to Unaudited Consolidated Financial Statements

The following table presents a summary of the Company’s equity investment in unconsolidated investments as of:

		June 30, 2023			December 31, 2022
Entity	Co-owner (1)	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
LEL Arlington JV LLC (1)	Affiliate/Third party	27.2%	$	6,689,133	27.2%	$	7,271,603
LEL NW 49th JV LLC (1)	Affiliate/Third party	27.2%	1,546,725		27.2%	1,521,556
TCG Corinthian FL Portfolio     JV LLV (1)(2)	Affiliate/Third Party	30.6%	6,236,696		30.6%	6,896,816
SF-Dallas Industrial, LLC (3)	N/A	N/A	—		N/A	10,013,691
			$	14,472,554		$	25,703,666

_______________

(1)The Company sold a portion of the interest in this investment to an affiliate in September 2022.

(2)This investment was purchased from a third party in March 2022.

(3)This investment that meets the definition of an equity investment was entered into in December 2022. As discussed above, this investment was settled in May 2023.

The following tables present estimated combined summarized financial information of the Company’s equity investment in the joint ventures. Amounts provided are the total amounts attributable to the joint ventures and do not represent the Company’s proportionate share:

	As of
	June 30, 2023		December 31, 2022
Net investments in real estate	$	191,629,757	$	192,616,298
Other assets	12,413,292		12,817,388
Total assets	204,043,049		205,433,686
Mortgage loan payable	148,454,820		147,740,645
Other liabilities	5,010,555		3,104,624
Total liabilities	153,465,375		150,845,269
Members’ capital	$	50,577,674	$	54,588,417

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	4,243,689	$	3,681,032	$	8,168,268	$	6,131,470
Operating expenses	(2,181,707)		(2,206,984)		(4,324,974)		(3,023,665)
Depreciation and amortization expense	(1,728,214)		(1,065,066)		(3,693,251)		(1,755,897)
Interest expense	(2,595,844)		(1,744,226)		(5,155,798)		(2,829,787)
Unrealized (losses) gains	(423,481)		1,170,866		(1,249,982)		1,406,377
Net (loss) income	$	(2,685,557)	$	(164,378)	$	(6,255,737)	$	(71,502)

For the three and six months ended June 30, 2023, the Company recorded net equity loss from the joint ventures and the mezzanine loan of $0.6 million and $1.3 million, respectively, and did not receive any distributions from the joint ventures. For the three and six months ended June 30, 2022, the Company recorded equity income from the joint ventures of $0.2 million and $0.1 million, respectively, and received distributions from the joint venture of $0.4 million and $0.7 million, respectively. In connection with these investments, the Company paid origination fee to the Manager totaling $0.5 million, to be amortized to equity income over the life of the respective joint venture.

25

Notes to Unaudited Consolidated Financial Statements

Note 6. Real Estate Owned, Net

Real Estate Activities

2023 — During the three and six months ended June 30, 2023, the Company recorded an impairment charge of $11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value.

Additionally, during the six months ended June 30, 2023, the Company entered into the following investments:

Property Location	Number of Properties	Date of Acquisition	Property Type	Total Capitalized Costs
Texas, United States	3	3/24/2023	Industrial	$	48,798,273
Texas, United States	5	5/25/2023	Industrial	83,288,961
				$	132,087,234

These acquisitions were deemed to be real estate asset acquisitions, and therefore total transaction costs were capitalized to the cost basis of the assets. The following table presents an allocation of the total capitalized costs:

Total Capitalized Costs:
Cash and cash equivalents	$	52,313,739
Loans held for investment	68,737,877
Equity investment in unconsolidated investment	10,149,642
Interest receivable	456,650
Other assets	429,326
	$	132,087,234
Net Assets Acquired
Cash and cash equivalents	$	712,608
Other assets	33,802
Land	23,785,004
Buildings and Improvements	104,613,728
Intangible assets and liabilities:
In-place lease (weighted-average expected life of 3.95 years)	12,719,000
Below-market rent (weighted-average expected life of 3.98 years)	(8,864,137)
Accounts payable and accrued expenses	(912,771)
	$	132,087,234

2022 — In June 2022, the Company sold the 4.9 acres of land it owned in Pennsylvania for net proceeds of $8.6 million, and recognized a net loss on sale of $0.1 million excluding impairment charges of $1.6 million and $3.4 million recognized in March 2022 and December 2021, respectively.

26

Notes to Unaudited Consolidated Financial Statements

Real Estate Owned, Net

    Real estate owned is comprised of eight industrial buildings located in Texas and a multi-tenant office building located in California, with lease intangible assets and liabilities. The following table presents the components of real estate owned, net as of:

	June 30, 2023						December 31, 2022
	Cost		Accumulated Depreciation/Amortization		Net		Cost		Accumulated Depreciation/Amortization		Net
Real estate:
Land	$	23,785,004	$	—	$	23,785,004	$	—	$	—	$	—
Building and building    improvements	144,574,158		(6,786,818)		137,787,340		51,725,969		(5,711,468)		46,014,501
Tenant improvements	1,854,640		(1,363,287)		491,353		1,854,640		(1,224,648)		629,992
Furniture and fixtures	236,000		(236,000)		—		236,000		(220,267)		15,733
Total real estate	170,449,802		(8,386,105)		162,063,697		53,816,609		(7,156,383)		46,660,226
Lease intangible assets:
In-place lease	27,701,537		(13,701,834)		13,999,703		14,982,538		(12,493,079)		2,489,459
Above-market rent	156,542		(86,317)		70,225		156,542		(77,540)		79,002
Total intangible assets	27,858,079		(13,788,151)		14,069,928		15,139,080		(12,570,619)		2,568,461
Lease intangible liabilities:
Below-market rent	(11,619,059)		3,047,407		(8,571,652)		(2,754,922)		2,428,647		(326,275)
Above-market ground lease	(8,896,270)		640,879		(8,255,391)		(8,896,270)		575,705		(8,320,565)
Total intangible liabilities	(20,515,329)		3,688,286		(16,827,043)		(11,651,192)		3,004,352		(8,646,840)
Total real estate	$	177,792,552	$	(18,485,970)	$	159,306,582	$	57,304,497	$	(16,722,650)	$	40,581,847

Real Estate Operating Revenues and Expenses

    The following table presents the components of real estate operating revenues and expenses that are included in the consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Real estate operating revenues:
Lease revenue	$	2,283,272	$	1,744,262	$	3,368,731	$	3,498,823
Other operating income	520,662		1,247,059		768,172		2,471,952
Total	$	2,803,934	$	2,991,321	$	4,136,903	$	5,970,775
Real estate operating expenses:
Utilities	$	69,919	$	56,171	$	106,333	$	101,505
Real estate taxes	537,681		344,727		892,361		691,159
Repairs and maintenances	256,187		169,817		463,552		327,233
Management fees	86,880		70,219		126,298		138,087
Lease expense, including amortization of above-market ground lease	487,163		487,163		974,326		974,326
Other operating expenses	426,382		119,231		511,254		232,981
Total	$	1,864,212	$	1,247,328	$	3,074,124	$	2,465,291

Leases

    As of June 30, 2023, the Company owned eight industrial buildings that were leased to ten tenants and a multi-tenant office building that was leased to three tenants. As of December 31, 2022, the Company owned a multi-tenant office building that was leased to three tenants. In addition, the office building is subject to a ground lease whereby the Company is the lessee (or a

27

Notes to Unaudited Consolidated Financial Statements

tenant) to the ground lease. The ground lease had a remaining lease term of 63.3 years as of June 30, 2023, and 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. The Company 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. The Company believes this determination should be based on comparable sales, while the landlord insists that the rent under the ground lease itself is also relevant. The Company’s position has prevailed in all three of the prior arbitrations to reset the ground rent. Since future rent reset determinations under the ground lease cannot be known at this time, the Company did not include any potential future rent increases in calculating the present value of future rent payments. The Company intends vigorously to pursue the litigation. While the Company 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 the Company’s interest in the ground lease and the office building.

Scheduled Future Minimum Rent Income 

    Scheduled future minimum rents, exclusive of renewals and expenses paid by tenants, under non-cancelable operating leases at June 30, 2023 are as follows: 

Years Ending December 31,	Total
2023 (July 1 through December 31)	$	4,650,111
2024	9,456,610
2025	4,940,447
2026	4,600,139
2027	3,162,610
Thereafter	5,821,613
Total	$	32,631,530

Scheduled Annual Net Amortization of Intangibles 

    Based on the intangible assets and liabilities recorded at June 30, 2023, scheduled annual net amortization of intangibles for each of the next five calendar years and thereafter is as follows:

Years Ending December 31,	Net Decrease in Real Estate Operating Revenue (1)		Increase in Depreciation and Amortization (1)		Decrease in Rent Expense (1)		Total
2023 (July 1 through December 31)	$	(1,567,274)	$	2,757,572	$	(65,174)	$	1,125,124
2024	(3,104,584)		5,467,389		(130,348)		2,232,457
2025	(1,549,275)		2,192,061		(130,348)		512,438
2026	(1,158,163)		1,780,528		(130,348)		492,017
2027	(444,207)		835,888		(130,348)		261,333
Thereafter	(677,924)		966,265		(7,668,825)		(7,380,484)
Total	$	(8,501,427)	$	13,999,703	$	(8,255,391)	$	(2,757,115)

_______________

(1)Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to lease revenues; amortization of in-place lease intangibles is included in depreciation and amortization; and amortization of above-market ground lease is recorded as a reduction to rent expense.

28

Notes to Unaudited Consolidated Financial Statements

Supplemental Ground Lease Disclosures

    Supplemental balance sheet information related to the ground lease was as follows as of:    

	June 30, 2023			December 31, 2022
Operating lease
Operating lease right-of-use asset	$	27,370,242		$	27,378,786
Operating lease liability	$	27,370,242		$	27,378,786
Weighted average remaining lease term — operating lease (years)	63.3			63.8
Weighted average discount rate — operating lease	7.6		%	7.6		%

    The component of lease expense for the ground lease was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	519,750	$	519,750	$	1,039,500	$	1,039,500

Supplemental non-cash information related to the ground lease was as follows:

	Six Months Ended June 30,
	2023		2022
Amounts included in the measurement of lease liability:
Operating cash flows from an operating lease	$	1,039,500	$	1,039,500
Right-of-use asset obtained in exchange for lease obligations:
Operating lease	$	1,039,500	$	1,039,500

    Maturities of operating lease liability as of June 30, 2023 was as follows:

Years Ending December 31,	Operating Lease
2023 (July 1 through December 31)	$	1,039,500
2024	2,079,000
2025	2,079,000
2026	2,079,000
2027	2,079,000
Thereafter	122,227,875
Total lease payments	131,583,375
Less: Imputed interest	(104,213,133)
Total	$	27,370,242

Note 7. 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

29

Notes to Unaudited Consolidated Financial Statements

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 are 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.

As of June 30, 2023 and December 31, 2022, the Company had not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, held-to-maturity debt securities, obligations under participation agreements, term loan payable, repurchase agreement payable, mortgage loan payable and revolving line of credit. Such financial instruments are carried at cost, less impairment or less net deferred costs, where applicable. Marketable securities and derivatives are financial instruments that are reported at fair value.

Financial Instruments Carried at Fair Value on a Recurring Basis

    From time to time, the Company may invest in short-term debt and equity securities which are classified as available-for-sale securities, which are presented at fair value and included in Other assets in the consolidated balance sheet. Changes in the fair value of equity securities are recognized in earnings. Changes in the fair value of debt securities are reported in other comprehensive income until the securities are realized.

As discussed in Note 9, in March 2023, the Company entered into a loan agreement with a lender to provide financing for the acquisition of real estate properties (Note 6). In connection with the financing, the Company purchased an interest rate cap for $258,500 to effectively cap the related index rate at 5.0%. The interest rate cap met all the criteria of a derivative under ASC 815, but it did not meet the criteria under ASC 815-20-25 to qualify for hedging accounting. As such, the interest rate cap is reported at fair value and is included in other assets in the consolidated balance sheet, and the change in the fair value of the interest rate cap is reported in income.

The following tables present fair value measurements of marketable securities and derivatives, by major class according to the fair value hierarchy as of:

	June 30, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	5,041,526	$	—	$	—	$	5,041,526
Marketable securities - debt securities (2)	1,203,973		—		—		1,203,973
Derivative - interest rate cap (2)	—		—		281,028		281,028
Total	$	6,245,499	$	—	$	281,028	$	6,526,527

_______________

30

Notes to Unaudited Consolidated Financial Statements

(1) Amount is included in cash and cash equivalents on the consolidated balance sheets.

(2) Amount is included in other assets on the consolidated balance sheets.

	December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable Securities:
Debt securities	$	147,960	$	—	$	—	$	147,960
Total	$	147,960	$	—	$	—	$	147,960

    

The following table presents the activities of the marketable securities and derivatives:

	Six Months Ended June 30,
	2023				2022
	Marketable Securities		Derivatives		Marketable Securities
Beginning balance	$	147,960	$	—	$	1,310,000
Purchases	1,051,754		258,500		—
Proceeds from sale	—		—		(1,259,417)
Amortization of interest rate cap	—		(31,021)		—
Reclassification of net realized gains on marketable securities    into earnings	—		—		83,411
Unrealized (losses) gains on marketable securities and derivatives	4,259		53,549		(133,994)
Ending balance	$	1,203,973	$	281,028	$	—

Financial Instruments Not Carried at Fair Value

In the first quarter of 2023, the Company purchased $20.0 million of corporate bonds with a coupon rate of 6.125% with a maturity date of May 15, 2023. The Company classified these bonds as held-to-maturity debt securities, as it had the intent and ability to hold these securities until maturity. These securities were recorded at amortized cost and were fully redeemed at par on May 15, 2023.

The following table presents the carrying value and estimated fair value of the Company’s financial instruments that are not carried at fair value on the consolidated balance sheets as of:

		June 30, 2023						December 31, 2022
	Level	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Loans:
Loans held for investment	3	$	503,411,086	$	508,301,967	$	478,729,965	$	604,068,894	$	609,889,829	$	581,182,892
Loans held for investment    acquired through    participation	3	38,444,357		38,645,336		38,764,766		41,726,565		42,072,828		41,962,862
Allowance for loan losses		—		(33,128,796)		—		—		(25,471,890)		—
Total loans		$	541,855,443	$	513,818,507	$	517,494,731	$	645,795,459	$	626,490,767	$	623,145,754
Liabilities:
Term loan payable	3	$	15,000,000	$	14,850,000	$	15,000,000	$	25,000,000	$	25,000,000	$	25,000,000
Unsecured notes payable	1	123,500,000		117,433,372		101,228,000		123,500,000		116,530,673		103,481,748
Repurchase agreement    payable	3	122,832,682		122,070,840		122,832,682		170,876,606		169,304,710		170,876,606
Obligations under participation    agreements	3	13,678,820		13,789,070		13,789,071		12,584,958		12,680,594		12,680,595
Mortgage loan payable	3	100,221,485		98,687,185		100,487,973		29,252,308		29,488,326		29,394,870
Revolving line of credit    payable	3	105,448,019		105,260,351		105,448,019		90,135,865		89,807,448		90,135,865
Total liabilities		$	480,681,006	$	472,090,818	$	458,785,745	$	451,349,737	$	442,811,751	$	431,569,684

31

Notes to Unaudited Consolidated Financial Statements

    The Company estimated that its other financial assets and liabilities, not included in the tables above, had fair values that approximated their carrying values at both June 30, 2023 and December 31, 2022 due to their short-term nature.

Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges)

The Company periodically assesses whether there are any indicators that the value of its real estate investments may be impaired or that their carrying value may not be recoverable (Note 2).

The following tables present information about assets for which the Company recorded an impairment charge and that were measured at fair value on a non-recurring basis:

	Three Months Ended June 30,
	2023				2022
	Fair Value		Impairment Charges		Fair Value		Impairment Charges
Impairment Charges
Real estate and intangibles	$	27,603,118	$	11,765,540	$	—	$	—
			$	11,765,540			$	—

	Six Months Ended June 30,
	2023				2022
	Fair Value		Impairment Charges		Fair Value		Impairment Charges
Impairment Charges
Real estate and intangibles	$	27,603,118	$	11,765,540	$	8,395,011	$	1,604,989
			$	11,765,540			$	1,604,989

Impairment charges, and their related triggering events and fair value measurements, recognized during the three and six months ended June 30, 2023 and 2022 were as follows:

Real Estate and Intangibles

The impairment charges described below are reflected within Impairment charges in the consolidated statements of operations.

During the three and six months ended June 30, 2023, the Company recorded an impairment charge of $11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value. The fair value measurement was determined by estimating discounted cash flows using two significant unobservable inputs, which were the cash flow discount rate (8.50%) and terminal capitalization rate (7.50%).

For the six months June 30, 2022, the Company recorded an impairment charge of $1.6 million on the 4.9 acres of land located in Pennsylvania to reduce the carrying value of the land to its estimated fair value, which was based on the selling price in the purchase and sale agreement. The land was sold in June 2022. There was no impairment charge recorded for the three months ended June 30, 2022.

Valuation Process for Fair Value Measurement

    The fair value of the Company’s investment in equity securities, held-to-maturity debt securities and its unsecured notes payable is determined based on quoted prices in an active market and is classified as Level 1 of the fair value hierarchy.

    Market quotations are not readily available for the Company’s real estate-related loan investments, all of which are included in Level 3 of the fair value hierarchy, and therefore these investments are valued utilizing a yield approach, i.e. a discounted cash flow methodology to arrive at an estimate of the fair value of each respective investment in the portfolio using an estimated market yield. In following this methodology, investments are evaluated individually, and management takes into account, in determining the risk-adjusted discount rate for each of the Company’s investments, relevant factors, which may include available current market data on applicable yields of comparable debt/preferred equity instruments; market credit

32

Notes to Unaudited Consolidated Financial Statements

spreads and yield curves; the investment’s yield; covenants of the investment, including prepayment provisions; the portfolio company’s ability to make payments, net operating income and 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); 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 and replacement costs; and the anticipated duration of each real estate-related loan investment.

The Manager designates a valuation committee to oversee the entire valuation process of the Company’s Level 3 loans. 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 the Company 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, industry accepted third-party valuation models and discount rates or other methods the valuation committee deems to be appropriate. Because there is no readily available market for these investments, the fair values of these investments are approved in good faith by the Company’s board of directors (which is made up exclusively of independent directors).

    The fair values of the Company’s mortgage loan payable, secured borrowing, term loan payable and revolving line of credit are determined by discounting the contractual cash flows at the interest rate the Company estimates such arrangements would bear if executed in the current market.

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 loans 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 at June 30, 2023		Primary Valuation Technique	Unobservable Inputs	June 30, 2023
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	478,729,965	Discounted cash flow	Discount rate	8.79	%	17.14	%	12.21	%
Loans held for investment acquired through    participation, net	38,764,766		Discounted cash flow	Discount rate	15.30	%	17.84	%	17.35	%
Total Level 3 Assets	$	517,494,731
Liabilities:
Repurchase agreement payable	122,832,682		Discounted cash flow	Discount rate	6.01	%	7.61	%	6.97	%
Obligations under participation agreements	13,789,071		Discounted cash flow	Discount rate	17.14	%	17.14	%	17.14	%
Mortgage loan payable	100,487,973		Discounted cash flow	Discount rate	6.25	%	8.99	%	7.78	%
Term loan payable	15,000,000		Discounted cash flow	Discount rate	12.48	%	12.48	%	12.48	%
Revolving line of credit	105,448,019		Discounted cash flow	Discount rate	8.49	%	8.49	%	8.49	%
Total Level 3 Liabilities	$	357,557,745

	Fair Value at December 31, 2022		Primary Valuation Technique	Unobservable Inputs	December 31, 2022
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	581,182,892	Discounted cash flow	Discount rate	8.71	%	19.36	%	11.46	%
Loans held for investment acquired through    participation, net	41,962,862		Discounted cash flow	Discount rate	15.25	%	17.06	%	16.67	%
Total Level 3 Assets	$	623,145,754
Liabilities:
Repurchase agreement payable	170,876,606		Discounted cash flow	Discount rate	5.22	%	6.17	%	6.82	%
Obligations under participation agreements	12,680,595		Discounted cash flow	Discount rate	16.36	%	16.36	%	16.36	%
Mortgage loan payable	29,394,870		Discounted cash flow	Discount rate	8.24	%	8.24	%	8.24	%
Term loan payable	25,000,000		Discounted cash flow	Discount rate	5.63	%	5.63	%	5.63	%
Revolving line of credit	90,135,865		Discounted cash flow	Discount rate	7.64	%	7.64	%	7.64	%
Total Level 3 Liabilities	$	328,087,936

33

Notes to Unaudited Consolidated Financial Statements

Note 8. Related Party Transactions

Management Agreement

The Company entered into the Management Agreement with the Manager whereby the Manager is responsible for its day-to-day operations. The Management Agreement runs co-terminus with the amended and restated operating agreement for Terra Fund 5, which is scheduled to terminate on December 31, 2023 unless Terra Fund 5 is dissolved earlier. The following table presents a summary of fees paid and costs reimbursed to the Manager in connection with providing services to the Company that are included on the consolidated statements of operations:

	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 Manager	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 fee paid to the Manager 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 fee paid to the Manager in connection with the Company’s equity investment in an unconsolidated investment. This origination fee was 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.

Origination and Extension Fee Expense

Pursuant to the Management Agreement, the Manager or its affiliates receives an origination fee in the amount of 1% of the amount used to originate, fund, acquire or structure real estate-related investments, including any third-party expenses related to such loans. In the event that the term of any real estate-related loan held by the Company is extended, the Manager also receives an extension fee equal to the lesser of (i) 1% of the principal amount of the loan being extended or (ii) the amount of fee paid to the Company by the borrower in connection with such extension.

Asset Management Fee

Under the terms of the Management Agreement, the Manager or its affiliates provides the Company with certain investment management services in return for a management fee. The Company pays a monthly asset management fee at an annual rate of 1% of the aggregate funds under management, which includes the loan origination price or aggregate gross acquisition price, as defined in the Management Agreement, for each real estate related loan and cash held by the Company.

Asset Servicing Fee

The Manager or its affiliates receives from the Company a monthly servicing fee at an annual rate of 0.25% of the aggregate gross origination price or acquisition price, as defined in the Management Agreement, for each real estate-related loan held by the Company.

Transaction Breakup Fee

    In the event that the Company 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, the Manager 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 the Manager with respect to its evaluation and pursuit of such transactions. As of June 30, 2023 and December 31, 2022, the Company had not received any breakup fees.

34

Notes to Unaudited Consolidated Financial Statements

Operating Expenses

The Company reimburses the Manager for operating expenses incurred in connection with services provided to the operations of the Company, including the Company’s allocable share of the Manager’s overhead, such as rent, employee costs, utilities, and technology costs.

Disposition Fee

Pursuant to the Management Agreement, the Manager or its affiliates receives a disposition fee in the amount of 1% of the gross sale price received by the Company from the disposition of any real estate-related loan, or any portion of, or interest in, any real estate-related loan. The disposition fee is paid concurrently with the closing of any such disposition of all or any portion of any real estate-related loan or any interest therein, which is the lesser of (i) 1% of the principal amount of the loan or debt-related loan prior to such transaction or (ii) the amount of the fee paid by the borrower in connection with such transaction. If the Company takes ownership of a property as a result of a workout or foreclosure of a loan, the Company will pay a disposition fee upon the sale of such property equal to 1% of the sales price.

Cost Sharing and Reimbursement Agreement

The Company and Terra LLC have entered into a cost sharing and reimbursement agreement effective October 1, 2022, pursuant to which Terra LLC is responsible for its allocable share of the Company’s expenses, including fees paid by the Company to the Manager based on relative assets under management. These fees are eliminated in consolidation and therefore have no impact on the Company’s consolidated financial statements.

Distributions Paid

For the three months ended June 30, 2023 and 2022, the Company made distributions to investors totaling $4.7 million and $3.8 million, respectively, of which $4.7 million and $2.8 million were returns of capital, respectively. For the six months ended June 30, 2023 and 2022, the Company made distributions to investors totaling $9.3 million and $7.7 million, respectively, of which $8.8 million and $5.7 million were returns of capital, respectively (Note 11).

Due to Manager

    As of June 30, 2023 and December 31, 2022, approximately $3.4 million and $3.9 million, respectively, was due to the Manager, as reflected on the consolidated balance sheets, primarily related to the present value of the disposition fees on individual loans due to the Manager.

Mavik Real Estate Special Opportunities Fund, LP

On August 3, 2020, the Company entered into a subscription agreement with RESOF whereby the Company committed to fund up to $50.0 million to purchase limited partnership interests in RESOF. For more information on this investment, please see Note 5.

Participation Agreements

In the normal course of business, the Company may enter into participation agreements with related parties, primarily other affiliated funds managed by the Manager, and to a lesser extent, unrelated parties (the “Participants”). The purpose of the participation agreements is to allow the Company and an affiliate to originate a specified loan when, individually, the Company does not have the liquidity to do so or to achieve a certain level of portfolio diversification. The Company may transfer portions of its investments to other Participants or it may be a Participant to a loan held by another entity.

ASC 860, Transfers and Servicing (“ASC 860”), establishes accounting and reporting standards for transfers of financial assets. ASC 860-10 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The Company has determined that the participation agreements it enters into are accounted for as secured borrowings under ASC 860 (See “Participation interests” in Note 2 and “Obligations under Participation Agreements and Secured Borrowing” in (Note 9).

35

Notes to Unaudited Consolidated Financial Statements

Participation Interests Purchased by the Company

From time to time, the Company may purchase investments from affiliates pursuant to participation agreements. In accordance with the terms of each participation agreement, each Participant’s rights and obligations, as well as the proceeds received from the related borrower/issuer of the loan, are based upon their respective pro rata participation interest in the loan.

The table below lists the participation interests purchased by the Company pursuant to participation agreements as of:

	June 30, 2023
	Participating Interests	Principal Balance		Carrying Value
Mesa AZ Industrial Owner, LLC (1)	38.27%	$	31,000,000	$	31,296,394
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,485,029
Allowance for credit losses		—		(136,087)
		$	38,444,357	$	38,645,336

	December 31, 2022
	Participating Interests	Principal Balance		Carrying Value
Havemeyer TSM LLC (1)(2)	23.00%	$	3,282,208	$	3,313,813
Mesa AZ Industrial Owner, LLC (1)	38.27%	31,000,000		31,276,468
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,482,547
		$	41,726,565	$	42,072,828

________________

(1)The loan is held in the name of Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party REIT managed by the Manager.

(2)This loan was repaid in February 2023.

Transfers of Participation Interest by the Company

    The following tables summarize the loans that were subject to participation agreements with affiliated entities and third-parties as of:

					Transfers Treated as Obligations Under Participation Agreements as of June 30, 2023
	Principal Balance		Carrying Value		% Transferred		Principal Balance		Carrying Value
610 Walnut Investors LLC (1)	$	20,244,654	$	20,401,547	67.57	%	$	13,678,820	$	13,789,070
	$	20,244,654	$	20,401,547			$	13,678,820	$	13,789,070

					Transfers Treated as Obligations Under Participation Agreements as of December 31, 2022
	Principal Balance		Carrying Value		% Transferred		Principal Balance		Carrying Value
610 Walnut Investors LLC (1)	$	18,625,738	$	18,738,386	67.57	%	$	12,584,958	$	12,680,594
	$	18,625,738	$	18,738,386			$	12,584,958	$	12,680,594

________________

(1)Participant was a third party.

These investments are held in the name of the Company, but each of the Participant’s rights and obligations, including interest income and other income (e.g., exit fee, prepayment income) and related fees/expenses (e.g., disposition fees, asset management and asset servicing fees), are based upon their respective pro rata participation interest in such participated investments, as specified in the respective participation agreement. The Participants’ share of the investments is repayable only

36

Notes to Unaudited Consolidated Financial Statements

from the proceeds received from the related borrower/issuer of the investments and, therefore, the Participants also are subject to credit risk (i.e., risk of default by the underlying borrower/issuer). Pursuant to the participation agreements with these entities, the Company receives and allocates the interest income and other related investment income to the Participants based on their respective pro rata participation interest. The Participants pay any expenses, including any fees to the Manager, only on their respective pro rata participation interest, subject to the terms of the respective governing fee arrangements.

Note 9. Debt

Unsecured Notes Payable

The 6.00% Senior Notes Due 2026

On June 10, 2021, the Company issued $78.5 million in aggregate principal amount of its 6.00% notes due 2026 (the “initial note”), for net proceeds of $76.0 million after deducting underwriting commissions of $2.5 million, but before offering expenses payable by the Company. On June 25, 2021, the underwriters partially exercised their option to purchase an additional $6.6 million of the notes for net proceeds of $6.4 million (the “additional notes” and, together with the initial notes, the “6.00% Senior Notes Due 2026”), after deducting underwriting commissions of $0.2 million, but before offering expenses payable by us, which closed on June 29, 2021. Interest on the 6.00% Senior Notes Due 2026 is paid quarterly in arrears every March 30, June 30, September 30 and December 30, at a fixed rate of 6.00% per year, beginning September 30, 2021. The 6.00% Senior Notes Due 2026 mature on June 30, 2026, unless redeemed earlier by the Company, and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after June 10, 2023.

In connection with the issuance of the 6.00% Senior Notes Due 2026, the Company entered into (i) an Indenture, dated June 10, 2021 (the “Base Indenture”), by and between the Company and U.S. Bank National Association, as trustee (the “Trustee”), and (ii) the First Supplemental Indenture thereto, dated June 10, 2021 (the “Supplemental Indenture” and, collectively with the Base Indenture, the “Indenture”), by and between the Company and the Trustee. The Indenture contains certain covenants that, among other things, limit the ability of the Company, subject to exceptions, to make distributions in excess of 90% of the Company’s taxable income, incur indebtedness (as defined in the Indenture) or purchase shares of the Company’s capital stock unless the Company has an asset coverage ratio (as defined in the Indenture) of at least 150% after giving effect to such transaction. The Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the notes to become or to be declared due and payable. As of June 30, 2023 and December 31, 2022, the Company was in compliance with the covenants included in the Indenture.

The 7.00% Senior Notes Due 2026

As previously reported by Terra BDC, on February 10, 2021, Terra BDC issued $34.8 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, for net proceeds of $33.7 million after deducting underwriting commissions of $1.1 million and on February 26, 2021, the underwriters exercised the option to purchase an additional $3.6 million of the notes for net proceeds of $3.5 million, after deducting underwriting commissions of $0.1 million (collectively the “7.00% Senior Notes Due 2026”).

Pursuant to the Merger Agreement, Terra LLC agreed to take all necessary action to assume the payment of the principal of and interest on all of the 7.00% Senior Notes Due 2026 outstanding as of the Effective Time and the performance of every covenant of the Indenture, dated February 10, 2021 (the “TIF6 Indenture”), between Terra BDC and the Trustee, as supplemented by the First Supplemental Indenture, dated February 10, 2021, by and between Terra BDC and the Trustee (the “First Supplemental Indenture”), to be performed or observed by Terra BDC, including, without limitation, the execution and delivery to the Trustee of a supplement to the TIF6 Indenture in form satisfactory to the Trustee.

On the Closing Date, Terra BDC, Terra LLC and the Trustee entered into a Second Supplemental Indenture pursuant to which Terra LLC assumed the payment of the 7.00% Senior Notes Due 2026 and the performance of every covenant of the TIF6 Indenture, as supplemented by the First Supplemental Indenture, to be performed or observed by Terra BDC.

The 7.00% Senior Notes Due 2026 will mature on March 31, 2026, unless earlier repurchased or redeemed. The 7.00% Senior Notes Due 2026 bear interest at a rate of 7.00% per annum, payable on March 30, June 30, September 30 and December 30 of each year. The 7.00% Senior Notes Due 2026 are Terra LLC’s direct unsecured obligations and rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by Terra LLC; effectively subordinated in right of payment to any of Terra LLC’s existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all existing and future indebtedness and other obligations of any of Terra LLC’s subsidiaries and financing vehicles. Terra LLC may redeem the 7.00% Senior Notes Due 2026 in whole or in part at any time

37

Notes to Unaudited Consolidated Financial Statements

on or after February 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest.

The TIF6 Indenture contains certain covenants that, among other things, limit the ability of Terra LLC, subject to exceptions, to incur indebtedness in violation of the 1940 Act, and to make distributions, incur indebtedness or repurchase shares of Terra LLC’s capital stock unless it satisfies asset coverage requirements set forth in the First Supplemental Indenture after giving effect to such transaction. The TIF6 Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the 7.00% Senior Notes Due 2026 to become or to be declared due and payable.

Summarized Information

The table below presents detailed information regarding the unsecured notes payable as of:

	June 30, 2023						December 31, 2022
	Principal Balance		Carrying Value		Fair Value		Principal Balance		Carrying Value		Fair Value
6.00% Senior Notes Due 2026 (1)	$	85,125,000	$	82,821,395	$	64,695,000	$	85,125,000	$	82,487,769	$	68,100,000
7.00% Senior Notes Due 2026 (2)	38,375,000		34,611,977		36,533,000		38,375,000		34,042,904		35,381,748
	$	123,500,000	$	117,433,372	$	101,228,000	$	123,500,000	$	116,530,673	$	103,481,748

_______________

(1)Carrying value is net of unamortized issue discount of $1.7 million and $1.9 million, and unamortized deferred financing costs of $0.6 million and $0.7 million as of June 30, 2023 and December 31, 2022, respectively.

(2)Carrying value is net of unamortized purchase discount of $3.8 million and $4.3 million as of June 30, 2023 and December 31, 2022, respectively.

Revolving Line of Credit

On March 12, 2021, Terra Mortgage Portfolio II, LLC, an indirect wholly-owned subsidiary of the Company, entered into a Business Loan and Security Agreement (the “Revolving Line of Credit”) with Western Alliance Bank (“WAB”) to provide for advances up to the lesser of $75.0 million or the amount determined by the borrowing base, which is based on the eligible assets pledged to the lender. Prior to March 31, 2023 borrowings under the Revolving Line of Credit bore interest at an annual rate of LIBOR + 3.25% with a combined floor of 4.0%. In connection with the transition of LIBOR, on March 31, 2023, the Revolving Line of Credit was amended and the interest rate was changed to Term SOFR + 3.35% with a combined floor of 6.0%. The Revolving Line of Credit was scheduled to mature on March 12, 2023. On January 4, 2022, the Company amended the Revolving Line of Credit to increase the maximum amount available to $125.0 million and extended the maturity date of the facility to March 12, 2024 with an annual 12-month extension available at the Company’s option, which are subject to certain conditions. On August 3, 2022, the Company further amended the Revolving Line of Credit to increase the borrowing sub-limit in New York City and to allow for loans acquired through participation agreements as eligible assets.

In connection with the Revolving Line of Credit, the Company entered into a limited guaranty (the “Guaranty”) in favor of WAB, pursuant to which the Company guarantees the payment of up to 25% of the amount outstanding under the Revolving Line of Credit. Under the Revolving Line of Credit and the Guaranty, the Company is required to maintain (i) a minimum total net worth of $250.0 million; (ii) a $3.5 million quarterly operating profit, as defined within the agreement; and (iii) a ratio of total debt to total net worth of no more than 2.50 to 1.00. As of June 30, 2023 and December 31, 2022, the Company was in compliance with these covenants.

The Revolving Line of Credit contains terms, conditions, covenants, and representations and warranties that are customary and typical for a transaction of this nature. The Revolving Line of Credit contains various affirmative and negative covenants, including maintenance of a debt to total net worth ratio and limitations on the incurrence of liens and indebtedness, loans, distributions, change of management and ownership, changes in the nature of business and transactions with affiliates.

The Revolving Line of Credit also includes customary events of default, including a cross-default provision applicable to debt obligations of Terra Mortgage Portfolio II, LLC or the Company. The occurrence of an event of default may result in termination of the Revolving Line of Credit and acceleration of amounts due under the Revolving Line of Credit.

38

Notes to Unaudited Consolidated Financial Statements

In connection with the closing of the Revolving Line of Credit, the Company also incurred financing fees of $0.6 million, to be amortized to interest expense over the life of the Revolving Line of Credit.

As of June 30, 2023 and December 31, 2022, borrowings under the Revolving Line of Credit were $105.4 million and $90.1 million, respectively, collateralized by $165.6 million and $177.4 million of eligible assets, respectively. For the six months ended June 30, 2023 and 2022, the Company received proceeds from the Revolving Line of Credit of $57.0 million and $41.2 million, respectively, and made repayments of $41.7 million and $30.9 million, respectively.

Repurchase Agreements

UBS Master Repurchase Agreement

On November 8, 2021, Terra Mortgage Capital III, LLC (the “Seller”), a special-purpose indirect wholly-owned subsidiary of the Company, entered into an Uncommitted Master Repurchase Agreement (the “UBS Master Repurchase Agreement”) with UBS AG ( the “Buyer”). The UBS Master Repurchase Agreement provides for advances of up to $195 million in the aggregate, which the Company expects to use to finance certain secured performing commercial real estate loans, including senior mortgage loans, where the underlying mortgaged properties consist of value-added assets with loan-to-value ratio between 65% and 80% that are typically yielding between 2.5% and 5.0%.

Advances under the UBS Master Repurchase Agreement accrue interest at a per annum pricing rate equal to the sum of (i) the 30-day LIBOR or Term SOFR if LIBOR is not available and (ii) the applicable spread, which ranges from 1.60% to 2.25%, and have a maturity date of November 7, 2024. The actual terms of financing for each asset will be determined at the time of financing in accordance with the UBS Master Repurchase Agreement. Subject to satisfaction of certain conditions, the Seller may extend the maturity date of the UBS Master Repurchase Agreement annually thereafter on mutually agreeable terms. In connection with the UBS Master Repurchase Agreement, the Company incurred deferred financing costs of $0.6 million, which are being amortized to interest expense over the term of the facility.

The UBS Master Repurchase Agreement contains margin call provisions that provide the Buyer with certain rights in the event of a decline in the credit of the underlying assets purchased under the UBS Master Repurchase Agreement. Upon the occurrence of a margin deficit event, the Buyer may require the Seller to make a payment to reduce the purchase price to eliminate any margin deficit.

In connection with the UBS Master Repurchase Agreement, the Company entered into a Guarantee Agreement in favor of the Buyer (the “UBS Guarantee Agreement”), pursuant to which the Company will guarantee the payment of up to 25% of the amount outstanding under the UBS Master Repurchase Agreement. The UBS Master Repurchase Agreement and the UBS Guarantee Agreement contain various representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the UBS Guarantee Agreement contains financial covenants, which require the Company to maintain: (i) cash liquidity of at least the greater of $5 million or 5% of the then-current outstanding amount under the UBS Master Repurchase Agreement; (ii) total liquidity of at least the greater of $15 million or 10% of the then-current outstanding amount under the UBS Master Repurchase Agreement (iii) tangible net worth at an amount equal to or greater than $215.7 million plus 75% of new capital contributions thereafter; (iv) an EBITDA to interest expense ratio of not less than 1.50 to 1.00; and (v) a total indebtedness to tangible net worth ratio of not more than 3.50 to 1.00. In March 2022, the Company amended the UBS Guarantee Agreement to reduce the EBITDA to interest expense ratio of not less than 1.25 to 1.00, and as of June 30, 2023 and December 31, 2022, the Company was in compliance with these covenants.

The following tables present detailed information with respect to each borrowing under the UBS Master Repurchase Agreement as of:

	June 30, 2023
	Collateral						Borrowings Under Master Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
NB Factory TIC 1, LLC	$	28,000,000	$	28,842,742	$	28,917,484	11/8/2021	$	18,970,000	Term SOFR+1.75%
Grandview’s Remington Place,    LLC	23,100,000		23,203,590		23,236,153		5/6/2022	18,480,000		Term SOFR + 1.965%
	$	51,100,000	$	52,046,332	$	52,153,637		$	37,450,000

39

Notes to Unaudited Consolidated Financial Statements

	December 31, 2022
	Collateral						Borrowings Under Master Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
NB Factory TIC 1, LLC	$	28,000,000	$	28,857,892	$	28,902,234	11/8/2021	$	18,970,000	LIBOR+1.74% (LIBOR floor of 0.1%)
Grandview’s Madison Place, LLC	17,000,000		17,105,928		17,105,928		3/7/2022	13,600,000		Term SOFR + 1.965%
Grandview’s Remington Place,    LLC	23,100,000		23,199,620		23,203,343		5/6/2022	18,480,000		Term SOFR + 1.965%
	$	68,100,000	$	69,163,440	$	69,211,505		$	51,050,000

For the six months ended June 30, 2023, the Company had no additional borrowings and made a repayment of $13.6 million under the UBS Master Repurchase Agreement. For the six months ended June 30, 2022, the Company borrowed $29.7 million and did not make any repayments under the UBS Master Repurchase Agreement.

Goldman Master Repurchase Agreement     

The Company entered into a credit agreement with Goldman Sachs Banks to provide for a term loan of up to $103.0 million. On February 18, 2022, Terra Mortgage Capital I, LLC (the “GS Seller”), a special-purpose indirect wholly-owned subsidiary of the Company, entered into an Uncommitted Master Repurchase and Securities Contract Agreement (the “Repurchase Agreement”) with Goldman Sachs Bank USA ( the “GS Buyer”). The Repurchase Agreement provides for advances of up to $200.0 million in the aggregate, which the Company expects to use to finance the originations of certain secured performing commercial real estate loans and the acquisitions of certain secured non-performing commercial real estate loans. The Repurchase Agreement replaced the term loan, at which time all mortgage assets under the term loan were assigned as purchased assets under the Repurchase Agreement.

Advances under the Repurchase Agreement accrue interest at a per annum pricing rate equal to the sum of (i) Term SOFR (subject to underlying loan floors on a case-by-case basis) and (ii) the applicable spread, which ranges from 1.75% to 3.00%, and have a maturity date of February 18, 2024. The actual terms of financing for each asset will be determined at the time of financing in accordance with the Repurchase Agreement. Subject to satisfaction of certain conditions, the GS Seller may extend the maturity date of the Repurchase Agreement for another 12-month term. In connection with the Repurchase Agreement, the Company incurred financing costs of $0.6 million, which are being amortized to interest expense over the term of the facility. Additionally, because the Repurchase Agreement was accounted for as a loan modification of the term loan, the remaining unamortized deferred financing fees of $1.7 million under the term loan were carried over to the Repurchase Agreement to be amortized over the life of the Repurchase Agreement.

The Repurchase Agreement contains margin call provisions that provide the GS Buyer with certain rights in the event of a decline in debt yield, loan-to-value ratio, and value of the underlying loans purchased under the Repurchase Agreement. Upon the occurrence of a margin deficit event, the GS Buyer may require the GS Seller to make a payment to reduce the purchase price to eliminate any margin deficit.

In connection with the Repurchase Agreement, the Company entered into a Guarantee Agreement in favor of the GS Buyer (the “Guarantee Agreement”), pursuant to which the Company will guarantee the obligations of the GS Seller under the Repurchase Agreement. Subject to certain exceptions, the maximum liability under the Repurchase Agreement will not exceed 25% of the then currently outstanding repurchase obligations for performing loans and 50% of the then currently outstanding repurchase obligations for non-performing loans under the Repurchase Agreement.

The Repurchase Agreement and the Guarantee Agreement contain various representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the Guarantee Agreement contains financial covenants, which require the Company to maintain: (i) cash liquidity of at least the greater of $5 million or 5% of the then-current outstanding amount under the Repurchase Agreement; (ii) total liquidity in an amount equal to or greater than the lesser of $15 million or 10% of the then-current outstanding amount under the Repurchase Agreement (iii) tangible net worth at an amount no less than 75% of that at closing; (iv) an EBITDA to adjusted interest expense ratio of not less than 1.50 to 1.00; and (v) a total indebtedness to tangible net worth ratio of not more than 3.00 to 1.00. As of June 30, 2023 and December 31, 2022, the Company was in compliance with these covenants.

40

Notes to Unaudited Consolidated Financial Statements

The following tables present detailed information with respect to each borrowing under the Repurchase Agreement as of:

	June 30, 2023
	Collateral						Borrowings Under Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
1389 Peachtree St, LP; 1401 Peachtree St, LP; and    1409 Peachtree St, LP	$	58,865,991	$	59,155,584	$	55,139,746	2/18/2022	$	42,888,134	Term SOFR + 2.465%
AGRE DCP Palm Springs, LLC	43,222,382		43,826,614		43,499,719		2/18/2022	28,094,548		Term SOFR + 1.315% (1.8% floor)
Patrick Henry Recovery Acquisition, LLC	18,000,000		18,043,198		17,923,436		2/18/2022	14,400,000		Term SOFR + 0.865% (1.5% floor)
	$	120,088,373	$	121,025,396	$	116,562,901		$	85,382,682

	December 31, 2022
	Collateral						Borrowings Under Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
330 Tryon DE LLC	$	22,800,000	$	22,902,215	$	22,687,235	2/18/2022	$	18,240,000	Term SOFR + 2.015% (0.01% floor)
1389 Peachtree St, LP; 1401 Peachtree St, LP; and    1409 Peachtree St, LP	57,184,178		57,453,482		56,844,322		2/18/2022	41,587,275		Term SOFR + 2.465%
AGRE DCP Palm Springs, LLC	43,222,382		43,758,804		43,062,933		2/18/2022	28,094,548		Term SOFR + 1.315% (1.8% floor)
Patrick Henry Recovery Acquisition, LLC	18,000,000		18,041,782		17,824,300		2/18/2022	14,400,000		Term SOFR + 0.865% (1.5% floor)
University Park Berkeley, LLC	26,342,468		26,536,122		26,472,938		2/18/2022	17,504,783		Term SOFR + 1.365% ( 1.50% floor)
	$	167,549,028	$	168,692,405	$	166,891,728		$	119,826,606

For the six months ended June 30, 2023 and 2022 the Company borrowed $1.3 million and $118.3 million, respectively, under the Repurchase Agreement and made repayments of $35.7 million and zero, respectively.

Term Loan

As previously reported by Terra BDC, on April 9, 2021, Terra BDC, as borrower, entered into a credit agreement (the “Credit Agreement”) with Eagle Point Credit Management LLC, as the administrative agent and collateral agent (“Eagle Point”), and certain funds and accounts managed by Eagle Point, as lenders (in such capacity, collectively, the “Lenders”). The Credit Agreement provides for (i) a delayed draw term loan of $25.0 million and (ii) additional incremental loans in a minimum amount of $1.0 million and multiples of $0.5 million in excess thereof, which may be approved by a Lender in its sole discretion (the “Term Loan”).

The scheduled maturity date of the Term Loan was April 9, 2025. The Term Loan bore interest on the outstanding principal amount thereof at a rate equal to 5.625% per annum; provided that if at any time Terra BDC was rated below investment grade, the interest rate would increase to 6.625% until the rating is no longer below investment grade. In connection with the entry into the Credit Agreement, Terra BDC also agreed to pay Eagle Point an upfront fee in an amount equal to 2.50% of the loan commitment amount on the initial borrowing date as described in the Credit Agreement. Terra BDC also paid, with respect to any unused portion of the Term Loan, a commitment fee of 0.75% per annum.

Terra BDC could prepay any loan, in whole or in part, together with all accrued but unpaid interest thereon, upon at least

30 but not more than 60 days’ prior notice to the Agent. If Terra BDC elected to make such prepayments prior to October 9, 2023, Terra BDC would also be required to pay a make whole premium, being the present value at such date of (1) the principal

amount being prepaid of such loan, plus (2) all remaining required interest payments due on the principal amount being prepaid of such loan through the maturity date (excluding accrued but unpaid interest to the date on which the make whole premium

41

Notes to Unaudited Consolidated Financial Statements

becomes owed), computed using a discount rate equal to the applicable U.S. Treasury rate (as set forth in the Credit Agreement) plus 50 basis points, over (B) the principal amount being prepaid of such loan; provided that the make whole premium may in no event be less than zero.

In connection with its entry into the Credit Agreement, Terra BDC also entered into a security agreement (the “Security Agreement”), by and among Terra BDC, as grantor, and Eagle Point, as administrative agent, for the benefit of the Lenders, their affiliates and Eagle Point as the secured parties thereunder. Pursuant to the Security Agreement, Terra BDC pledged substantially all of its then owned and thereafter acquired property as security for the obligations of Terra BDC under the Credit Agreement, subject to certain limitations and restrictions set forth in the Security Agreements.

On September 27, 2022, Terra BDC, Terra LLC, Eagle Point and the Lenders entered into a Consent Letter and Amendment (the “Credit Facility Amendment”) effective October 1, 2022. Pursuant to the Credit Facility Amendment (i) Eagle Point and the Lenders consented to the consummation of the BDC Merger and the assumption by Terra LLC of all of the obligations of Terra BDC under the Credit Agreement, (ii) and the Credit Agreement was amended to, among other things, change the scheduled maturity date to July 1, 2023, and remove the make whole premium on voluntary prepayments of the loans.

On June 30, 2023, the Company, Eagle Point and the Lenders entered into an amendment to the Credit Agreement, pursuant to which the Credit Agreement was amended to, among other things, (i) extend the scheduled maturity date to March 31, 2024, and (ii) increase the rate on which the loans bear interest from a fixed rate of 5.625% per annum to a floating rate based on SOFR plus 7.375% with a SOFR floor of 5.0%. In connection with the amendment, the Company paid Eagle Point a loan origination fee of $150,000, to be amortized to interest expense over the remaining term of the Term Loan. As of June 30, 2023 and December 31, 2022, the principal amount outstanding under the Term Loan was $15.0 million and $25.0 million, respectively.

The Credit Agreement contains customary representations, warranties, reporting requirements, borrowing conditions and affirmative, negative and financial covenants. As of June 30, 2023 and December 31, 2022 , Terra LLC was in compliance with these covenants.

Mortgage Loans Payable

Mortgage Loan Financing Activities

2023 — During the six months ended June 30, 2023, the Company entered into the following financing arrangements:

•A mortgage loan with total commitment of $37.0 million for the acquisition of three industrial buildings in March 2023. As of June 30, 2023, total amount funded was $32.4 million; and

• A mortgage loan of $40.3 million to finance the acquisition of five industrial buildings in May 2023.

The following table presents certain information about mortgage loans payable as of:

			June 30, 2023						December 31, 2022
Lender	Current Interest Rate	Maturity Date	Principal Amount		Carrying Value		Carrying Value of Collateral		Principal Amount		Carrying Value		Carrying Value of Collateral
Centennial    Bank (1)	Term SOFR + 3.85% (Term SOFR Floor of 2.23%)	May 31, 2023	$	27,603,118	$	27,869,606	$	27,603,118	$	29,252,308	$	29,488,326	$	40,581,847
TPG RE   Finance   24, LTD (2)	Term SOFR +3.5% (Term SOFR Floor of 3.75%	April 9, 2027	32,368,367		31,581,757		48,498,431		—		—		—
GSF Lender, LLC (3)	6.254%	June 6, 2028	40,250,000		39,235,822		83,205,033		—		—		—
			$	100,221,485	$	98,687,185	$	159,306,582	$	29,252,308	$	29,488,326	$	40,581,847

___________________

42

Notes to Unaudited Consolidated Financial Statements

(1)This loan is collateralized by a multi-tenant office building that the Company acquired through foreclosure. This loan is currently in maturity default. The Company has sought to convey its interest in the office building and ground lease in lieu of foreclosure.

(2)This loan is collateralized by three industrial buildings that the Company acquired in March 2023.

(3)This loan is collateralized by five industrial buildings that the Company acquired in May 2023.

Scheduled Debt Principal Payments

    Scheduled debt principal payments for each of the five calendar years following June 30, 2023 are as follows:

Years Ending December 31,	Total
2023 (July 1 through December 31)	$	42,603,118
2024	228,280,702
2025	—
2026	123,500,000
2027	32,368,368
Thereafter	40,250,000
	467,002,188
Unamortized deferred financing costs	(8,700,440)
Total	$	458,301,748

     At June 30, 2023 and December 31, 2022, the unamortized deferred debt issuance costs were $8.7 million and $8.6 million, respectively.

Obligations Under Participation Agreements

As discussed in Note 2, the Company follows the guidance in ASC 860 when accounting for loan participations. Such guidance requires the transferred interests meet certain criteria in order for the transaction to be recorded as a sale. Loan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. As of June 30, 2023 and December 31, 2022, obligations under participation agreements had a carrying value of approximately $13.8 million and $12.7 million, respectively, and the carrying value of the loans that are associated with these obligations under participation agreements was approximately $20.4 million and $18.7 million, respectively, (see “Participation Agreements” in Note 8). The weighted-average interest rate on the obligations under participation agreements was approximately 17.1% and 16.4% as of June 30, 2023 and December 31, 2022, respectively.

Note 10. Commitments and Contingencies

Unfunded Commitments on Loans Held for Investment

Certain of the Company’s loans contain provisions for future fundings, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. These fundings amounted to approximately $53.2 million and $47.3 million as of June 30, 2023 and December 31, 2022, respectively. The Company 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 credit facilities.

Unfunded Investment Commitment

As discussed in Note 5, on August 3, 2020, the Company entered into a subscription agreement with RESOF whereby the Company committed to fund up to $50.0 million to purchase limited partnership interests in RESOF. As of June 30, 2023 and December 31, 2022, the unfunded investment commitment was $37.4 million and $22.4 million, respectively.

Other

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

43

Notes to Unaudited Consolidated Financial Statements

contracts. The Manager has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.

From time to time, the Company and the Manager 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. Additionally, as described above under “Note 6. Real Estate Owned, Net—Real Estate Operating Revenue and Expenses,” as of June 30, 2023 and December 31, 2022, the Company 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. The Company 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. The Company believes this determination should be based on comparable sales, while the landlord insists that the rent under the ground lease itself is also relevant. The Company’s position has prevailed in all three of the prior arbitrations to reset the ground rent. Since future rent reset determinations under the ground lease cannot be known at this time, the Company did not include any potential future rent increases in calculating the present value of future rent payments. The Company intends vigorously to pursue the litigation. While the Company 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 the Company’s interest in the ground lease and the office building.

On July 7, 2023, Centennial Bank filed a complaint for breach of guaranty against the Company 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 the Company, 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 the Company. On July 24, 2023, the Company, through counsel appeared in the action. Although the action is in its initial stages, the Company is seeking a dismissal of the complaint at the pleading stage and, if not successful, is prepared to vigorously defend itself through trial. The Company believes the claim by Centennial Bank is without merit.

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 the Company 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.

See Note 8 for a discussion of the Company’s commitments to the Manager.

Note 11. Equity

Earnings Per Share

The following table presents earnings per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net (loss) income	$	(19,237,065)	$	1,292,434	$	(18,689,586)	$	534,547
Series A preferred stock dividend declared	—		(3,906)		(3,907)		(7,812)
Net (loss) income allocable to common stock	$	(19,237,065)	$	1,288,528	$	(18,693,493)	$	526,735
Weighted-average shares outstanding - basic and diluted	24,335,430		19,487,460		24,335,402		19,487,460
(Loss) income per share - basic and diluted	$	(0.79)	$	0.07	$	(0.77)	$	0.03

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Notes to Unaudited Consolidated Financial Statements

Preferred Stock Classes

Preferred Stock

    The Company’s charter gives it authority to issue 50,000,000 shares of preferred stock, $0.01 par value per share (“Preferred Stock”). The Board may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any series from time to time, into one or more classes or series of stock. As of June 30, 2023, there were no Preferred Stock issued or outstanding. As of December 31, 2022 there were 125 shares of Series A Preferred Stock (as defined below) issued and outstanding.

Series A Preferred Stock

    On November 30, 2016, the Board classified and designated 125 shares of Preferred Stock as a separate class of Preferred Stock to be known as the 12.5% Series A Redeemable Cumulative Preferred Stock, $1,000 liquidation value per share (“Series A Preferred Stock”). In December 2016, the Company sold 125 shares of the Series A Preferred Stock for $125,000. The Series A Preferred Stock paid dividends at an annual rate of 12.5% of the liquidation preference. These dividends were cumulative and payable semi-annually in arrears on June 30 and December 31 of each year.

    The Series A Preferred Stock, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, ranked senior to common stock. The Company, at its option, may redeem the shares, with written notice, at a redemption price of $1,000 per share, plus any accrued unpaid distribution through the date of the redemption. The Series A Preferred Stock carried a redemption premium of $50 per share if redeemed prior to January 1, 2019. The Series A Preferred Stock generally had no voting rights. However, the Series A Preferred Stockholders’ voting was required if (i) authorization or issuance of any securities senior to the Series A Preferred Stock; (ii) an amendment to the Company’s charter that has a material adverse effect on the rights and preference of the Series A Preferred Stock; and (iii) any reclassification of the Series A Preferred Stock.

In March 2023, the Series A Preferred Stock was fully redeemed at par for a total of $125,000 plus accrued dividends.

Common Stock

On October 1, 2022, in connection with the BDC Merger, the Company amended its charter to increase the shares authorized from 500,000,000 to 950,000,000, consisting of 450,000,000 shares of Class A Common Stock, $0.01 par value per share (“Class A Common Stock”), 450,000,000 shares of Class B Common Stock, and 50,000,000 shares of Preferred Stock. Concurrently, 4,847,910 shares of Class B Common Stock were issued to former Terra BDC stockholders and each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the BDC Merger was automatically changed into one issued and outstanding share of Class B Common Stock. As of June 30, 2023, Terra JV, LLC, former shareholders of Terra BDC and Terra Offshore Funds REIT, LLC held 70.0%, 19.9% and 10.1% of the issued and outstanding shares of the Class B Common Stock, respectively.

The Class B Common Stock rank equally with and have identical preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption as each other share of the Company’s common stock, except as set forth below with respect to conversion.

On the date that is 180 calendar days (or, if such date is not a business day, the next business day) after the date (the “First Conversion Date”) of initial listing of shares of Class A Common Stock for trading on a national securities exchange or such earlier date as approved by the Board, one-third of the issued and outstanding shares of Class B Common Stock will automatically and without any action on the part of the holder thereof convert into an equal number of shares of Class A Common Stock. On the date that is 365 calendar days (or, if such date is not a business day, the next business day) after the date of initial listing of shares of Class A Common Stock for trading on a national securities exchange or such earlier date following the First Conversion Date as approved by the Board (the “Second Conversion Date”), one-half of the issued and outstanding shares of Class B Common Stock will automatically and without any action on the part of the holder thereof convert into an equal number of shares of Class A Common Stock. On the date that is 545 calendar days (or, if such date is not a business day, the next business day) after the date of initial listing of shares of Class A Common Stock for trading on a national securities exchange or such earlier date following the Second Conversion Date as approved by the Board, all of the issued and outstanding shares of Class B Common Stock will automatically and without any action on the part of the holder thereof convert into an equal number of shares of Class A Common Stock.

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Notes to Unaudited Consolidated Financial Statements

Distributions

    The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with U.S. GAAP, to its stockholders each year to comply with the REIT provisions of the Internal Revenue Code. All distributions will be made at the discretion of the Board and will depend upon its taxable income, financial condition, maintenance of REIT status, applicable law, and other factors as the Board deems relevant.

For the three months ended June 30, 2023 and 2022, the Company made distributions to investors totaling $4.7 million and $3.8 million, respectively, of which $4.7 million and $2.8 million were returns of capital, respectively. For the six months ended June 30, 2023 and 2022, the Company made distributions to investors totaling $9.3 million and $7.7 million, respectively, of which $8.8 million and $5.7 million were returns of capital, respectively. Additionally, for the three and six months ended June 30, 2023 and 2022, the Company made distributions to preferred stockholders of none and $3,906, respectively, and $3,907 and $7,812, respectively.

Dividend Reinvestment Plan

On January 20, 2023, the Board adopted a distribution reinvestment plan (the “Plan”), pursuant to which the Company’s stockholders may elect to reinvest cash distributions payable by the Company in additional shares of Class A Common Stock and Class B Common Stock, at the price per share determined pursuant to the Plan. For the six months ended June 30, 2023, the Company issued 143 shares of Class B Common Stock for a total of $1,988 pursuant to the Plan.

Note 12. Subsequent Events

Management has evaluated subsequent events through the date the consolidated 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 consolidated financial statements.

Termination of WMC Merger Agreement

On June 28, 2023, the Company 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 the Company 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 the Company 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 the Company was paid a termination fee of $3.0 million.

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

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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 consolidated financial statements and related notes thereto and other financial information included elsewhere in this quarterly report on Form 10-Q. In this report, “we,” “us” and “our” refer to Terra Property Trust, Inc. (and, together with its consolidated subsidiaries, the “Company” or “Terra Property Trust”).

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 (the “Securities Act”), 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 stockholders in the future;

•our 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 our 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 REIT Advisors, LLC (“Terra REIT Advisors” or our “Manager”), Terra Income Advisors, LLC; Terra Capital Partners, LLC (“Terra Capital Partners”), our sponsor; Terra Secured Income Fund 5, LLC (“Terra Fund 5”); Terra JV, LLC (“Terra JV”); Terra Income Fund 6, Inc. (“Terra Fund 6” or “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 team and other personnel;

•liquidity transactions that may be available to us in the future, including a liquidation of our assets, a sale of our company, a listing of our shares of common stock on a national securities exchange, or an adoption of a share

47

repurchase plan or a strategic business combination, in each case, which may include the distribution of our common stock indirectly owned by certain of our affiliate funds (the “Terra Funds”) to the ultimate investors in the Terra Funds, 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 exemption exclusion or from registration under the Investment Company Act of 1940, as amended (the “1940 Act”), and to maintain our 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. Stockholders are advised to consult any additional disclosures that we may make directly to stockholders or through reports that we may file in the future with the Securities and Exchange Commission (the “SEC”), 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, which we collectively refer to as our targeted assets. From time to time, we may acquire real estate encumbering the senior loans through foreclosure, may invest in real estate related joint ventures and may directly acquire real estate properties. 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. Our investment objective is to provide attractive risk-adjusted returns to our stockholders, primarily through regular distributions. There can be no assurances that we will be successful in meeting our investment objective.

    As of June 30, 2023, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of 23 loans in nine states with an aggregate net principal balance of $528.2 million, a weighted average coupon rate of 12.7% and a weighted average remaining term to maturity of 0.7 years.

    Each of our loans was originated by Terra Capital Partners or its affiliates. Our portfolio is diversified based on location of the underlying properties, loan structure and property type. As of June 30, 2023, our portfolio included underlying properties located in 23 markets, across nine states and includes property types such as multifamily housing, student housing, commercial offices, medical offices, mixed-use and industrial properties. The profile of these properties ranges from stabilized and value-added properties to pre-development and construction. Our loans are structured across mezzanine debt, first mortgages, preferred equity investments and credit facilities.

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    We were incorporated under the Maryland General Corporation Law on December 31, 2015. Through December 31, 2015, our business was conducted through a series of predecessor private partnerships. At the beginning of 2016, we completed the merger of these private partnerships into a single entity as part of our plan to reorganize our business as a REIT for federal income tax purposes. Following the REIT formation transaction, Terra Fund 5 contributed the consolidated portfolio of net assets of certain Terra Funds to our company in exchange for all of the shares of our common stock. On March 2, 2020, we engaged in a series of transactions pursuant to which we issued an aggregate of 4,574,470.35 shares of common stock in exchange for the settlement of an aggregate of $49.8 million of participation interests in loans held by us, cash of $25.5 million and other working capital. Following the consummation of the BDC Merger (as defined below) and as of June 30, 2023, former Terra BDC stockholders owned approximately 19.9% of our common equity, Terra JV held 70.0% of the issued and outstanding shares of our common stock with the remainder of 10.1% held by Terra Offshore REIT; and Terra Fund 5 and Terra Fund 7 owned an 87.6% and 12.4% interest, respectively, in Terra JV.

We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2016. So long as we qualify as a REIT, we generally are not subject to U.S. federal income tax on our net taxable income to the extent that we annually distribute all of our net taxable income to our stockholders.

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 "Merger Agreement"), Terra BDC merged with and into Terra LLC, our wholly owned subsidiary, with Terra LLC continuing as the surviving entity of the merger (the "BDC Merger") and as our wholly owned subsidiary. 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 (the “SDAT”), 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 Terra BDC Common Stock held by us or any of our 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 our newly designated Class B Common Stock, par value $0.01 per share (“Class B Common Stock”) and (ii) cash, without interest, in lieu of any fractional shares of 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 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 Merger Agreement, approximately 4,847,910 shares of 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 our common equity.

Portfolio Summary

Net Loan Portfolio

The following tables provide a summary of our net loan portfolio as of:

	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
Carrying value	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

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	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
Carrying value	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.

(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, are subject to a LIBOR, SOFR, or Term SOFR floor, as applicable.

Real Estate Ownership

In addition to our net loan portfolio, as of June 30, 2023, we owned eight industrial buildings acquired in 2023 and a multi-tenant office building acquired pursuant to a foreclosure; and as of December 31, 2022, we 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.

Equity Investments

Additionally, as of June 30, 2023 and December 31, 2022, we 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. We also beneficially owned equity interests in three joint ventures that invest in real estate properties. In 2022, in connection with a mezzanine loan we originated, we entered into a residual profit sharing arrangement with the borrower. We accounted for this arrangement as an equity investment. In May 2023, we purchased the underlying assets and the $10.0 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 value of $32.6 million and $62.5 million, respectively.

Book Value Per Share

We calculate our book value per share by dividing our net equity by the number of outstanding shares of our common stock, unless otherwise determined by our Board. Our book value per share of Class B Stock Common Stock as of June 30, 2023 and December 31, 2022 was $11.88 and $13.23, respectively.

Portfolio Investment Activity

Net Loan Portfolio

For the three months ended June 30, 2023 and 2022, we 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,

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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, we 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, we purchased three industrial buildings in Texas for total capitalized costs of $48.8 million. In the second quarter of 2023, we 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, we obtained mortgage financing totaling $72.6 million.

Net Loan Portfolio Information

    The tables below set forth the types of loans in our loan portfolio, as well as the property type and geographic location of the properties securing these loans, on a net loan basis, which represents our proportionate share of the loans, based on our economic ownership of these loans as of:

	June 30, 2023						December 31, 2022
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
First mortgages	$	380,923,792	$	385,177,670	77.0	%	$	456,408,889	$	461,299,182	75.1	%
Preferred equity investments	123,242,640		123,957,220		24.8	%	121,231,434		122,132,177		19.9	%
Mezzanine loans	24,010,191		24,023,343		4.8	%	26,767,345		26,770,521		4.4	%
Credit facility	—		—		—	%	28,802,833		29,080,183		4.7	%
Allowance for loan losses	—		(33,128,796)		(6.6)	%	—		(25,471,890)		(4.1)	%
Total	$	528,176,623	$	500,029,437	100.0	%	$	633,210,501	$	613,810,173	100.0	%

	June 30, 2023						December 31, 2022
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Office	$	151,158,617	$	151,538,052	30.2	%	$	171,611,750	$	172,042,063	27.9	%
Multifamily	103,427,397		104,222,850		20.8	%	104,589,464		105,570,432		17.2	%
Industrial	64,340,667		64,865,942		13.0	%	147,796,164		148,891,742		24.3	%
Mixed-use	62,746,351		63,257,099		12.7	%	64,880,450		65,838,965		10.7	%
Infill land	51,031,209		52,122,303		10.4	%	48,860,291		49,565,437		8.1	%
Hotel - full/select service	43,222,382		43,826,614		8.8	%	43,222,382		43,758,804		7.1	%
Student housing	31,000,000		31,768,579		6.4	%	31,000,000		31,774,261		5.2	%
Infrastructure	21,250,000		21,556,794		4.3	%	21,250,000		21,840,359		3.6	%
Allowance for loan losses	—		(33,128,796)		(6.6)	%	—		(25,471,890)		(4.1)	%
Total	$	528,176,623	$	500,029,437	100.0	%	$	633,210,501	$	613,810,173	100.0	%

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	June 30, 2023						December 31, 2022
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	125,567,737	$	126,944,398	25.3	%	$	151,668,387	$	153,158,967	24.9	%
New York	88,336,078		88,336,079		17.7	%	91,845,479		91,877,084		14.9	%
New Jersey	77,371,876		78,691,851		15.7	%	62,228,622		62,958,482		10.3	%
Georgia	75,205,257		75,840,968		15.2	%	72,401,718		73,101,964		11.9	%
Washington	52,969,210		53,070,927		10.6	%	56,671,267		57,027,639		9.3	%
Utah	49,250,000		50,399,536		10.1	%	49,250,000		50,698,251		8.3	%
Arizona	31,000,000		31,296,394		6.3	%	31,000,000		31,276,468		5.1	%
North Carolina	21,476,465		21,578,080		4.3	%	43,520,028		44,041,162		7.2	%
Massachusetts	7,000,000		7,000,000		1.4	%	7,000,000		7,000,000		1.1	%
Texas	—		—		—	%	67,625,000		68,142,046		11.1	%
Allowance for loan losses	—		(33,128,796)		(6.6)	%	—		(25,471,890)		(4.1)	%
Total	$	528,176,623	$	500,029,437	100.0	%	$	633,210,501	$	613,810,173	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 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 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.

Credit Risk

    Credit risk represents the potential loss that we would incur if our borrowers failed to perform pursuant to the terms of their obligations to us. With respect to our loan portfolio, we seek to manage credit risk by limiting exposure to any one individual borrower and any one asset class.

    Additionally, our Manager employs an asset management approach and monitors the portfolio of investments through, at a minimum, quarterly financial review of property performance including net operating income, loan-to-value, debt service coverage ratio and the debt yield. Our Manager also requires certain borrowers to establish an interest 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 our loans depends 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, 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, we may not recover all of our investments.

    In addition, we are 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 our control. We seek to manage these risks through our Manager's underwriting and asset management processes.

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

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Concentration Risk

    We hold real estate-related loans. Thus, our 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 our capital.

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 our 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 our investments, prepayments on real estate-related loans to slow; and (v) to the extent we enter into interest rate swap agreements as part of our 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 our investments, prepayments on real estate-related loans to increase; and (v) to the extent we enter into interest rate swap agreements as part of our hedging strategy, the value of these agreements to decrease.

Prepayment Risk

    Prepayments can either positively or adversely affect the yields on our 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 we do 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, we 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 we may fail to recoup fully our cost of acquisition of certain loans.

Extension Risk

    Extension risk is the risk that our assets will be repaid at a slower rate than anticipated and generally increases when interest rates rise. In which case, to the extent we have financed the acquisition of an asset, we may have to finance our 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 our net interest spread, and thus our net interest income.

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 us to suffer losses.

Use of Leverage

    We deploy moderate amounts of leverage as part of our 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.

Market Risk

    Our loans are highly illiquid, and there is no assurance that we will achieve our investment objectives, including targeted returns. Due to the illiquidity of the loans, valuation of our loans may be difficult, as there generally will be no established markets for these loans.

53

Results of Operations

    The following table presents the comparative results of our operations:

	Three Months Ended June 30,						Six Months Ended June 30,
	2023		2022		Change		2023		2022		Change
Revenues
Interest income	$	15,878,453	$	10,274,051	$	5,604,402	$	31,494,260	$	19,156,202	$	12,338,058
Real estate operating revenue	2,803,934		2,991,321		(187,387)		4,136,903		5,970,775		(1,833,872)
Prepayment fee income	—		1,174,760		(1,174,760)		—		1,174,760		(1,174,760)
Other operating income	100,068		247,981		(147,913)		153,463		498,646		(345,183)
	18,782,455		14,688,113		4,094,342		35,784,626		26,800,383		8,984,243
Operating expenses
Operating expenses reimbursed to     Manager	2,120,029		2,140,635		(20,606)		4,297,033		4,069,198		227,835
Asset management fee	2,105,049		1,640,628		464,421		4,102,476		3,128,723		973,753
Asset servicing fee	496,374		395,718		100,656		966,899		745,047		221,852
Provision for credit losses	4,652,644		25,633		4,627,011		3,802,593		75,929		3,726,664
Real estate operating expenses	1,864,212		1,247,328		616,884		3,074,124		2,465,291		608,833
Depreciation and amortization	1,756,664		1,718,373		38,291		2,438,477		3,436,745		(998,268)
Impairment charge	11,765,540		—		11,765,540		11,765,540		1,604,989		10,160,551
Professional fees	787,427		1,011,354		(223,927)		1,767,322		1,753,872		13,450
Directors’ fees	83,750		36,247		47,503		180,214		72,499		107,715
Other	188,631		374,203		(185,572)		403,875		457,624		(53,749)
	25,820,320		8,590,119		17,230,201		32,798,553		17,809,917		14,988,636
Operating income	(7,037,865)		6,097,994		(13,135,859)		2,986,073		8,990,466		(6,004,393)
Other income and expenses			—
Interest expense from obligations    under participation agreements	(576,915)		(1,238,655)		661,740		(1,109,061)		(2,313,764)		1,204,703
Interest expense on repurchase     agreements payable	(2,946,797)		(1,665,283)		(1,281,514)		(6,003,303)		(2,421,109)		(3,582,194)
Interest expense on mortgage loans     payable	(1,640,972)		(520,829)		(1,120,143)		(2,387,100)		(1,039,446)		(1,347,654)
Interest expense on revolving line     of credit	(2,540,047)		(700,737)		(1,839,310)		(4,505,581)		(1,225,031)		(3,280,550)
Interest expense on term loan    payable	(355,468)		—		(355,468)		(707,031)		(164,969)		(542,062)
Interest expense on unsecured    notes payable	(2,405,267)		(1,432,877)		(972,390)		(4,799,573)		(2,863,060)		(1,936,513)
Interest expense on secured    borrowing	—		(556,855)		556,855		—		(1,109,640)		1,109,640
Unrealized gains (losses) on    investments, net	51,224		(34,950)		86,174		57,808		(133,994)		191,802
Loss on sale of real estate	—		(51,984)		51,984		—		(51,984)		51,984
(Loss) income from equity    investment in unconsolidated    investments	(1,759,934)		1,364,332		(3,124,266)		(2,196,794)		2,783,667		(4,980,461)
Realized (losses) gains on    investments, net	(25,024)		32,278		(57,302)		(25,024)		83,411		(108,435)
	(12,199,200)		(4,805,560)		(7,393,640)		(21,675,659)		(8,455,919)		(13,219,740)
Net (loss) income	$	(19,237,065)	$	1,292,434	$	(20,529,499)	$	(18,689,586)	$	534,547	$	(19,224,133)

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Net Loan Portfolio

    In assessing the performance of our loans, we believe it is appropriate to evaluate the loans on an economic basis, that is, gross loans net of obligations under participation agreements, term loan payable, revolving credit facility and repurchase agreement payable.

    The following table presents a reconciliation of our loan portfolio on a weighted average basis from gross to net:

	Three Months Ended June 30, 2023				Three Months Ended June 30, 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 agreement 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 agreement 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	%

	Six Months Ended June 30, 2023				Six Months Ended June 30, 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 agreement 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 agreement 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	%

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_______________

(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.

Interest Income

    For the three and six months ended June 30, 2023 as compared to the same periods in 2022, interest income increased by $5.6 million and $12.3 million, respectively, primarily due to an increase in contractual interest income as a result of an increase in the weighted average principal balance of gross loans due to new loans we originated in 2022 and loans we acquired in connection with the BDC Merger, as well as an increase in the weighted average coupon rate due to increases in the underlying index rates.

Real Estate Operating Revenue

For the three and six months ended June 30, 2023 as compared to the same periods in 2022, real estate operating revenue decreased by $0.2 million and $1.8 million, respectively, as a result of a decrease in rental income and lease termination income recognized in 2022 (there was no such lease termination income recognized in 2022), all of which were attributable to a lease termination in 2022.

Prepayment Fee Income

For the three and six months ended June 30, 2023, there was no early repayment of loans and we did not recognize any prepayment fee income. For both the three and six months ended June 30, 2022, we recognized prepayment fee income of $1.2 million on the early repayment of two loans.

Other Operating Income

For the three and six months ended June 30, 2023 as compared to the same periods in 2022, other operating income decreased by $0.1 million and $0.3 million, respectively, primarily as a result of a decrease in application fees income on deals under application.

Operating Expenses Reimbursed to Manager

Under the terms of a management agreement (the “Management Agreement”) with our Manager, we reimburse our Manager for operating expenses incurred in connection with services provided to us, including our allowable share of our Manager’s overhead, such as rent, employee costs, utilities and technology costs.

For the three and six months ended June 30, 2023 as compared to the same periods in 2022, operating expenses reimbursed to our Manager decreased by $0.02 million and increased by $0.2 million. The increase in the six-month period was primarily as a result of an increase in the allocation ratio resulting from an increase in total assets under management primarily due to loans acquired in connection with the BDC Merger.

Asset Management Fee

    Under the terms of the Management Agreement with our Manager, we paid our Manager a monthly asset management fee at an annual rate of 1% of the aggregate funds under management, which included the aggregate gross acquisition price, net of participation interest sold to affiliates, for each real estate-related investment and cash held by us.

    For the three and six months ended June 30, 2023 as compared to the same periods in 2022, asset management fees increased by $0.5 million and $1.0 million, respectively, primarily due to an increase in total assets under management primarily resulting from loans acquired in connection with the BDC Merger.

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Asset Servicing Fee

    Under the terms of the Management Agreement with our Manager, we paid our Manager a monthly servicing fee at an annual rate of 0.25% of the aggregate gross origination price or acquisition price for each real estate-related loan held by us.

    For the three and six months ended June 30, 2023 as compared to the same periods in 2022, asset servicing fees increased by $0.1 million and $0.2 million, respectively, primarily due to an increase in total assets under management primarily resulting from loans acquired in connection with the BDC Merger.

Provision for Credit Losses

    On January 1, 2023, we adopted the provisions of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses. Prior to the adoption of ASU 2016-13, we recorded an allowance for credit losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4”, plus (ii) 5% of the aggregate carrying amount of loans rated as a “5”, plus (iii) past due loan reserves, if any.

    For the three and six months ended June 30, 2023, we recorded a provision for credit losses of $4.7 million and $3.8 million, respectively, primarily due to a decline in the fair value of the collateral on a loan. For the three and six months ended June 30, 2022, we recorded provision for credit losses of $0.03 million and $0.1 million, respectively.

Depreciation and Amortization

For the three months ended June 30, 2023 as compared to the same period in 2022, depreciation and amortization increased by $0.04 million as compared to the same period in 2022. For the six months ended June 30, 2023 as compared to the same period in 2022, depreciation and amortization decreased by $1.0 million, primarily due to a decrease in unamortized intangible assets as a result of a lease termination notice received in November 2021, at which time we accelerated the amortization of lease intangibles through November 2022, with no corresponding accelerated amortization recognized in six months ended June 30, 2023.

Impairment Charge

For both the three and six months ended June 30, 2023, we recognized an impairment charge of $11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value. For the six months ended June 30, 2022, we recognized an impairment charge of $1.6 million, on 4.9 acres of the development land located in Pennsylvania in order to reduce the carrying value of the land to its estimated fair value, which is the estimated selling price less the cost of sale. The development land was sold in the second quarter of 2022. There was no impairment charge recorded for the three months ended June 30, 2022.

Professional Fees

    For the three months ended June 30, 2023, as compared to the same period in 2022, professional fees decreased by $0.2 million, primarily due to higher legal costs incurred in 2022 in connection with the ground lease litigation. For the six months ended June 30, 2023 as compared to the same period in 2022, professional fees remained substantially the same.

Directors’ Fees

For the three and six months ended June 30, 2023 as compared to the same periods in 2022, directors’ fees increased by $0.05 million and $0.1 million, respectively, as a result of an increase in the size of our Board due to the BDC Merger.

Other

For the three and six months ended June 30, 2023 as compared to the same periods in 2022, other expense decreased by $0.2 million and $0.1 million, respectively, as a result of a fee paid to a third-party in connection with the sale of a parcel of land in June 2022.

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Interest from Obligations under Participation Agreements

    For the three and six months ended June 30, 2023 as compared to the same periods in 2022, interest expense from obligations under participation agreements decreased by $0.7 million and $1.2 million, respectively, as a result of a decrease in the weighted average principal amount outstanding on obligations under participation agreements, primarily due to the release of obligations under participation agreements with Terra BDC in connection with the BDC Merger.

Interest Expense on Repurchase Agreements Payable

    On November 8, 2021, we entered into a master repurchase agreement that provides for advances of up to $195 million which we expect to use to finance certain secured performing commercial real estate loans, including senior mortgage loans. Additionally, on February 18, 2022, we entered into another master repurchase agreement that provides for advances of up to $200 million, which we expect to use to finance the originations of certain secured performing commercial real estate loans and the acquisitions of certain secured non-performing commercial real estate loans.

    For the three and six months ended June 30, 2023, as compared to the same periods in 2022, interest expense on repurchase agreement payable increased by $1.3 million and $3.6 million, respectively, as a result of an increase in the weighted average principal amount outstanding on repurchase agreements payable as well as an increase in the weighted average coupon rate.

Interest Expense on Mortgage Loans Payable

For the three and six months ended June 30, 2023, as compared to the same periods in 2022, interest expense on mortgage loan payable increased by $1.1 million and $1.3 million, respectively, as a result of an increase in the weighted average principal amount outstanding on mortgage loan payable, primarily due to financing obtained in connection with an acquisitions of real estate in 2023, as well as in increase in the index rate on the existing mortgage loan payable.

Interest Expense on Revolving Line of Credit

    On March 12, 2021, we entered into a Business Loan and Security Agreement (the “revolving line of credit”) to provide for advances up to the lesser of $75.0 million or the amount determined by the borrowing base, which is based on the eligible assets pledged to the lender. On January 4, 2022, we amended the revolving line of credit to increase the maximum amount available to $125.0 million.

    For the three and six months ended June 30, 2023, as compared to the same periods in 2022, interest expense on revolving line of credit increased by $1.8 million and $3.3 million, respectively, due to an increase in weighted average principal amount outstanding on the revolving line of credit as well as an increase in the index rate on the revolving line of credit.

Interest Expense on Term Loan Payable

On September 3, 2020, we entered into an indenture and credit agreement that provided for a floating rate loan of $103.0 million, $3.6 million of additional future advances, and up to $11.6 million of additional future discretionary advances, in connection with certain outstanding funding commitments under the mortgage assets owned by us and financed under the indenture and credit agreement. The loan bore interest at LIBOR plus 4.25% with a LIBOR floor of 1.0%. On February 18, 2022, we refinanced this loan with a new repurchase agreement. Additionally, in connection with the BDC Merger, we assumed a term loan of $25.0 million. The term loan bears interest at an annual rate of 5.625% and matures 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, we made a repayment of $10.0 million on the term loan. As of June 30, 2023, the term loan had an outstanding principal balance of $15.0 million.

For the three and six months ended June 30, 2023, as compared to the same periods in 2022, interest expense on term loan payable increased by $0.4 million and $0.5 million, respectively, as a result of interest expense recognized on the term loan that we acquired in connection with the BDC Merger on October 1, 2022, partially offset by the reversal of the previously accrued step-up interest of $0.4 million during the first quarter of 2022 in connection with the termination of the old term loan.

Interest Expense on Unsecured Notes Payable

In June 2021, we issued $85.1 million in aggregate principal amount of 6.00% notes due 2026. In connection with the BDC Merger, we assumed $38.4 million in aggregate principal amount of 7.00% notes due in 2026.

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For the three and six months ended June 30, 2023, as compared to the same periods in 2022, interest expense on unsecured notes payable increased by $1.0 million and $1.9 million, respectively, as a result of an increase in the weighted average principal amount outstanding due to the assumption of unsecured notes payable in connection with the BDC Merger.

Interest Expense on Secured Borrowing

In March 2020, we entered into a financing transaction where a third-party purchased an A-note position. However, the sale of the A-note position did not qualify for sale accounting treatment and therefore, the gross amount of the loan remained in the consolidated balance sheets. The portion that was sold was reflected as secured borrowing in the consolidated balance sheets, and the associated interest was reflected as interest expense on secured borrowing in the consolidated statements of operations. The secured borrowing was repaid in August 2022.

For the three and six months ended June 30, 2023, there was no interest expense on secured borrowing as the secured borrowing was repaid in August 2022. For the three and six months ended June 30, 2022, interest expense on secured borrowing was $0.6 million and $1.1 million, respectively.

Loss on Sale of Real Estate

In June 2022, we sold the 4.9 acres of adjacent land located in Pennsylvania for net proceeds of $8.6 million, and recognized a net loss on sale of $0.1 million for three and six months ended June 30, 2022, excluding impairment charges of $1.6 million recognized in March 2022 and $3.4 million recognized in December 2021.

(Loss) Income from Equity Investment in Unconsolidated Investments

In August 2020, we entered into a subscription agreement with RESOF, an affiliate managed by our Manager, whereby we committed to fund up to $50.0 million to purchase 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. RESOF may also opportunistically originate high-yield mortgages or loans in real estate special situations including rescue financings, bridge loans, restructurings and bankruptcies (including debtor-in-possession loans). As of June 30, 2023 and 2022, we owned 14.9% and 27.9% of the equity interest in RESOF, respectively.

We also owned beneficial equity interests in three joint ventures that invest in real estate properties. In 2022, in connection with a mezzanine loan we originated, we entered into a residual profit sharing arrangement with the borrower. We accounted for this arrangement as an equity investment. In May 2023, the mezzanine loan that was accounted for as an equity investment and five senior loans that were held for investment were settled and exchanged for five industrial buildings.

For the three and six months ended June 30, 2023, we recognized a loss from equity investment in unconsolidated investments of $1.8 million and $2.2 million, respectively, which consisted of equity loss from RESOF of $1.2 million and $0.9 million, respectively, and net equity loss from the joint ventures and the mezzanine loan of $0.6 million and $1.3 million, respectively. The equity loss from RESOF was a result of adjustments to equity income due to the dilution of our ownership interest in RESOF as new investors were admitted in 2022 and 2023. The equity loss from the joint ventures was result of depreciation and amortization and interest expense recognized by the joint ventures. For the three and six months ended June 30, 2022, we recognized income from equity investment in unconsolidated investments of $1.4 million and $2.8 million, which consisted of equity income from RESOF of $1.6 million and $2.9 million and equity loss from the joint ventures of $0.2 million and $0.1 million, respectively.

Net (Loss) Income

    For the three and six months ended June 30, 2023, net loss was $19.2 million and $18.7 million, respectively, compared to net income of $1.3 million and $0.5 million, respectively, for the same periods in 2022.

Financial Condition, Liquidity and Capital Resources

    Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, funding and maintaining our assets and operations, making distributions to our stockholders and other general business needs. We use significant cash to purchase our target assets, repay principal and interest on our borrowings, make distributions to our investors and fund our operations. Our primary sources of cash generally consist of payments of principal and interest we receive on our portfolio of investments, cash generated from our operating results and unused borrowing

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capacity under our financing sources. We deploy moderate amounts of leverage as part of our operating strategy and use a number of sources to finance our target assets, including our senior notes, term loan, repurchase agreement and revolving line of credit. We may use other sources to finance our target assets, including bank financing and arranged financing facilities with domestic or international financing providers. In addition, we may divide the loans we originate into senior and junior tranches and dispose of the more senior tranches as an additional means of providing financing to our business.

    We may also issue additional equity, equity-related and debt securities to fund our investment strategies. We may issue these securities to unaffiliated third parties or to vehicles advised by affiliates of Terra Capital Partners or third parties. As part of our capital raising transactions, we may grant to one or more of these vehicles certain control rights over our activities including rights to approve major decisions we take as part of our business. In order to qualify as a REIT, we must distribute to our stockholders, each calendar year, dividends equal to at least 90% of our REIT taxable income (including certain items of non-cash income), determined without regard to the deduction for dividends paid and excluding net capital gain. These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital for our business.

    We expect to fund approximately $35.4 million of the unfunded commitments to borrowers during the next twelve months. We expect to maintain sufficient liquidity to fund such commitments through matching these commitments with principal repayments on outstanding loans or draw downs on our credit facilities. Additionally, we 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. We have sought to convey our interest in the office building and ground lease in lieu of foreclosure. In connection with the BDC Merger, we 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%. As of June 30, 2023, the term loan had an outstanding principal balance of $15.0 million. We expect to either maintain sufficient liquidity to repay the facility or refinance the facility. Our line of credit with outstanding principal balance of $105.4 million matures on March 12, 2024 and our GS repurchase agreement with outstanding principal balance of $85.4 million matures on February 18, 2024 (see Summary of Financing below). We expect to extend the maturity of both facilities by another year.

Summary of Financing

The table below summarizes our 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

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Cash Flows Provided by Operating Activities

    For the six months ended June 30, 2023, as compared to the same period in 2022, cash flows provided by operating activities increased by $8.6 million, primarily due to an increase in net contractual interest income.

Cash Flows Used in Investing Activities

    For the six months ended June 30, 2023, cash flows used in investing activities were $6.8 million, primarily related to origination and purchase of loans of $63.8 million, purchase of real estate properties of $52.3 million, and purchase of debt securities of $21.1 million, partially offset by proceeds from repayments of loans of $99.0 million, proceeds from sale of debt securities of $20.0 million and return of capital on unconsolidated investments of $10.7 million.

    For the six months ended June 30, 2022, cash flows used in investing activities were $74.4 million, primarily related to origination and purchase of loans of $120.4 million and purchase of equity interests in unconsolidated investments of $20.9 million, partially offset by proceeds from repayments of loans of $56.6 million, proceeds from sale of real estate of $8.6 million

and proceeds from sale of marketable securities of $1.3 million.

Cash Flows Provided by Financing Activities

    For the six months ended June 30, 2023, cash flows provided by financing activities were $16.4 million, primarily due to proceeds from mortgage loan payable of $72.6 million, and borrowings under the revolving line of credit of $57.0 million, partially offset by repayments of borrowings under repurchase agreements of $49.3 million, repayments of borrowings under revolving line of credit of $41.7 million, repayments of borrowings under the term loan of $10.0 million, and distributions paid of $9.3 million.

    For the six months ended June 30, 2022, cash flows from financing activities were $60.7 million, primarily due to proceeds from borrowings under the repurchase agreements of $148.1 million and proceeds from obligations under participation agreements and secured borrowing of $20.2 million. These cash inflows were partially offset by repayments on borrowings under the term loan of $93.8 million, repayments of obligations under participation agreements of $15.0 million and distributions paid of $7.7 million. Additionally, for the six months ended June 30, 2022, we received proceeds from borrowings under the revolving line of credit of $41.2 million and made repayments on borrowings under the revolving line of credit of $30.9 million.

Distribution Reinvestment Plan

On January 20, 2023, our Board adopted a distribution reinvestment plan (the “Plan”), pursuant to which our stockholders may elect to reinvest cash distributions payable by us in additional shares of Class A Common Stock and Class B Common Stock, at the price per share determined pursuant to the Plan.

Critical Accounting Policies and Use of Estimates

    Our consolidated 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 consolidated 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 consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the consolidated 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 consolidated financial statements in addition to those discussed below.

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Current Expected Credit Losses Reserve

On January 1, 2023, we adopted the provisions of ASU 2016-13, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses (“CECL”). The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event under the previous “incurred loss” methodology.

We utilize information obtained from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. We utilize a loan loss model that is widely used among banks and commercial mortgage REITs and is marketed by a leading commercial mortgage-based security data analytics provider. It employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. We provide specific loan-level inputs which include loan-to-value and debt service coverage ratio metrics, as well as principal balances, property type, location, coupon rate, coupon rate type, original or remaining term, expected repayment dates and contractual future funding commitments. We select from a group of independent five-year macroeconomic forecasts included in the model that are updated regularly based on current economic trends. Based on the inputs, the loan loss model determines a loan loss rate through the generation of probability of defaults (PD) and loss given defaults (LGD) for each loan. The CECL reserve is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. These results require a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance for credit losses. Changes in such estimates can significantly affect the expected credit losses.

Management Agreement with Terra REIT Advisors

    We currently pay the following fees to Terra REIT Advisors pursuant to the Management Agreement:

    Origination and Extension Fee. An origination fee in the amount of 1.0% of the amount used to originate, acquire, fund 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, our Manager also receives an origination 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 us.

    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 us (inclusive of closing costs and expenses).

    Disposition Fee. A disposition fee in the amount of 1.0% of the gross sale price received by our company 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 we take ownership of a property as a result of a workout or foreclosure of a loan, we 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 we receive 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, our Manager 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 our Manager with respect to its evaluation and pursuit of such transactions.

    In addition to the fees described above, we reimburse our Manager for operating expenses incurred in connection with services provided to the operations of our company, including our allocable share of our Manager’s overhead, such as rent, employee costs, utilities, and technology costs.

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The following table presents a summary of fees paid and costs reimbursed to our Manager in connection with providing services to us:

	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 Manager	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 fee paid to the Manager 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 our Manager in connection with our equity investment in an 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.

Cost Sharing and Reimbursement Agreement with Terra LLC

We have entered into a cost sharing and reimbursement agreement with Terra LLC, effective October 1, 2022 pursuant to which Terra LLC will be responsible for its allocable share of our expenses, including fees paid by us to our Manager based on relative assets under management. These fees are eliminated in consolidation and therefore have no impact on our consolidated financial statements.

Participation Agreements

    We have further diversified our exposure to loans and borrowers by entering into participation agreements whereby we transferred a portion of certain of our loans on a pari passu basis to related parties, primarily other affiliated funds managed by our Manager or its affiliates, and to a lesser extent, unrelated parties. We have also sold a portion of a loan to a third party that did not qualify for sale accounting. In connection with the BDC Merger, the obligations under participation agreements with Terra BDC totaling $37.0 million were effectively extinguished.

    As of June 30, 2023, the principal balance of our participation obligation was $13.7 million, which was a participation obligation to a third party.

    The loans that are subject to participation agreements are held in our name, but each of the participant’s rights and obligations, including with respect to interest income and other income (e.g., exit fee, prepayment income) and related fees/expenses (e.g., disposition fees, asset management and asset servicing fees), are based upon their respective pro rata participation interest in such participated investments, as specified in the respective participation agreements. We do not have direct liability to a participant with respect to the underlying loan and the participants’ share of the investments is repayable only from the proceeds received from the related borrower/issuer of the investments and, therefore, the participants also are subject to credit risk (i.e., risk of default by the underlying borrower/issuer).

    Pursuant to the participation agreement with these entities, we receive and allocate the interest income and other related investment income to the participants based on their respective pro rata participation interest. The affiliated fund participant pays related expenses also based on their respective pro rata participation interest (i.e., asset management and asset servicing fees, disposition fees) directly to our Manager, as per the terms of each respective affiliate’s management agreement.

    Other than for U.S. federal income tax purposes, our loan participations do not qualify for sale treatment. As such, the investments remain on our combined consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. Similarly, interest earned on the entire loan balance is recorded within “Interest income” and the

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interest related to the participation interest is recorded within “Interest expense from obligations under participation agreements” in the consolidated statements of operations.

    For the three and six months ended June 30, 2023, the weighted average outstanding principal balance on obligations under participation agreements was approximately $13.5 million and $13.2 million, respectively, and for both periods, the weighted average interest rate was approximately 17.1% , compared to the weighted average outstanding principal balance on obligations under participation agreements and secured borrowing of approximately 85.5 million and $82.3 million, respectively, and the weighted average interest rate was approximately 10.5% and 10.5%, respectively. The secured borrowing was repaid in August 2022.

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, we 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, one of which is subject to a LIBOR floor. A decrease of 100 basis points in LIBOR would decrease our 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 our annual interest income, net of interest expense on participation agreements, by approximately $0.2 million. Additionally, we 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 our annual interest income by $4.9 million, and an increase of 100 basis points in SOFR or Term SOFR would increase our annual interest income by $5.0 million.

    Additionally, as of June 30, 2023, we 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 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 Term SOFR would decrease our annual interest expense by approximately $2.9 million, and an increase of 100 basis points in 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 our portfolio of LIBOR-indexed, floating-rate loans, or the cost of our 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 our portfolio, or the cost of our borrowings. In the event LIBOR is unavailable, our investment documents

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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 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.

Prepayment Risks

    Prepayments can either positively or adversely affect the yields on our 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 we do 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, we 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 we may fail to recoup fully our cost of acquisition of certain loans.

Extension Risk

    Extension risk is the risk that our assets will be repaid at a slower rate than anticipated and generally increases when interest rates rise. In which case, to the extent we have financed the acquisition of an asset, we may have to finance our 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 our net interest spread, and thus our net interest income.

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 us to suffer losses.

Credit Risk

    We are subject to varying degrees of credit risk in connection with holding a portfolio of our target assets. With respect to our loan portfolio, we seek to manage credit risk by limiting exposure to any one individual borrower and any one asset class.

    Additionally, our Manager employs an asset management approach and monitors the portfolio of investments through, at a minimum, quarterly financial review of property performance including net operating income, loan-to-value, debt service coverage ratio and the debt yield. Our Manager 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.

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 our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2023. Based on that evaluation, our chief executive officer and chief financial officer 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 the Company to disclose material information otherwise required to be set forth in our periodic reports.

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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 - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Additionally, as of June 30, 2023, we 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. We are 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. We believe this determination should be based on comparable sales, while the landlord insists that the rent under the ground lease itself is also relevant. Our position has prevailed in all three of the prior arbitrations to reset the ground rent. We intend vigorously to pursue the litigation. While we believe our 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 our interest in the ground lease and the office building.

On July 7, 2023, Centennial Bank filed a complaint for breach of guaranty against us 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 we, 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 us. On July 24, 2023, we, through counsel appeared in the action. Although the action is in its initial stages, we are seeking a dismissal of the complaint at the pleading stage and, if not successful, is prepared to vigorously defend itself through trial. We believe the claim by Centennial Bank is without merit.

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 the Company 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.

None.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

66

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	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 2.1 to the Registration Statement on Form 10 (File No. 000-56117) filed with the SEC on November 6, 2019).
2.2	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 2.2 to the Registration Statement on Form 10 (File No. 000-56117) filed with the SEC on November 6, 2019).
2.3	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).
2.4	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 Company's Current Report on Form 8-K filed with the SEC on May 5, 2022).
3.1	Amended and Restated Bylaws of Terra Property Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Amendment No.1 to Form 10 (File No. 000-56117) filed with the SEC on December 16, 2019).
3.2	Articles of Amendment and Restatement of Terra Property Trust, Inc. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Amendment No.1 to Form 10 (File No. 000-56117) filed with the SEC on December 16, 2019).
3.3	Articles of Supplementary of Terra Property Trust, Inc. Designating 12.5% Services A Redeemable Cumulative Preferred Stock (incorporated by reference to Exhibit 3.3 to the Registration Statement on Amendment No.1 to Form 10 (File No. 000-56117) filed with the SEC on December 16, 2019).
3.4	Articles of Amendment and Restatement of Terra Property Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-40496) filed with the SEC on October 3, 2022).
4.1	Indenture, dated June 10, 2021, by and between Terra Property Trust, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 8-A (File No. 001-40496) filed with the SEC on June 14, 2021).
4.2	First Supplemental Indenture, dated June 10, 2021, by and between Terra Property Trust, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form 8-A (File No. 001-40496) filed with the SEC on June 14, 2021).
4.3	Form of Global Note representing the notes (included in Exhibit 4.2).
4.4	Indenture, dated February 10, 2021, by and between Terra Income Fund 6, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 of Terra Income Fund 6, Inc.'s Current Report on Form 8-K filed with the SEC on February 10, 2021).
4.5	First Supplemental Indenture, dated February 10, 2021, by and between Terra Income Fund 6, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 of Terra Income Fund 6, Inc.’s Current Report on Form 8-K filed with the SEC on February 10, 2021).
4.6	Second Supplemental Indenture, dated October 1, 2022, by and among Terra Income Fund 6, Inc., Terra Merger Sub, LLC and U.S. Bank National Association, as trustee (incorporated by reference to exhibit 4.4 of Terra Income Fund 6, LLC’s Current Report on Form 8-K filed with the SEC on October 3, 2022).
4.7	Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K filed on March 13, 2023).
10.1*	Waiver and Amendment No. 2 to Credit Agreement, dated June 30, 2023, among Terra Income Fund 6, LLC, Eagle Point Credit Management, LLC, and the Lenders party thereto.

67

Exhibit No.	Description and Method of Filing
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	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline 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.

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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, thereunto duly authorized.

Date: August 11, 2023

TERRA PROPERTY TRUST, INC.
By:	/s/ Vikram S. Uppal
	Vikram S. Uppal
	Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Gregory M. Pinkus
	Gregory M. Pinkus
	Chief Financial Officer and Chief Operating Officer,
	(Principal Financial and Accounting Officer)

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EX-10.1

Exhibit 10.1

WAIVER AND AMENDMENT NO. 2 TO CREDIT AGREEMENT

This WAIVER AND AMENDMENT NO. 2 TO CREDIT AGREEMENT, dated as of June 30, 2023 (this “Agreement”), among Terra Income Fund 6, LLC, a Delaware limited liability company (formerly Terra Merger Sub, LLC, and successor by merger to Terra Income Fund 6, Inc.) (“Borrower”), the Lenders party hereto and Eagle Point Credit Management LLC, as the administrative agent and collateral agent for the Lenders (in such capacity, the “Agent”).

RECITALS:

WHEREAS, reference is made to that certain Credit Agreement, dated as of April 9, 2021, as amended by that certain letter amendment, dated as of September 27, 2022 (the “Existing Credit Agreement” and as amended by this Agreement and as may be amended, amended and restated, supplemented or otherwise modified from time to time hereafter, the “Credit Agreement”), among Borrower, the Lenders from time to time party thereto and the Agent;

WHEREAS, the Borrower has requested that the Lenders and the Agent (a) waive certain Events of Defaults existing pursuant to the Existing Credit Agreement and set forth on Exhibit A hereto (collectively, the “Specified Events of Default”) and (b) agree to amend the Existing Credit Agreement on the terms and conditions and to the extent set forth herein;

WHEREAS, the Lenders and Agent hereby agree to (a) waive the Specified Events of Default and (b) amend certain terms of the Existing Credit Agreement on the terms and conditions and to the extent set forth herein.

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:

1.Defined Terms. Unless otherwise specifically defined herein, each term used herein that is defined in the Credit Agreement (including as amended hereby) has the meaning assigned to such term in the Credit Agreement (including as amended hereby).

2.Amendments to the Existing Credit Agreement. Effective as of the Amendment No. 2 Effective Date, the Existing Credit Agreement is hereby amended as follows:

(a)The Existing Credit Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Credit Agreement attached as Exhibit B hereto.

3.Limited Waiver. As of the Amendment No. 2 Effective Date, Agent and each of the Lenders hereby waives the Specified Events of Default under the Credit Agreement. Nothing contained or implied in this Agreement shall be deemed to constitute a waiver of any Event of Default (other than the Specified Events of Default) or of any right, remedy or power of Agent or any Lender under the Existing Credit Agreement and the Credit Agreement (other than in respect of the Specified Events of Default), all of which, as against the Borrower, the Credit Parties or any other Person, are hereby expressly reserved by Agent and the Lenders.

4.Representations and Warranties. The Borrower represents and warrants to the Agent and each Lender that, as of the Amendment No. 2 Effective Date after giving effect to this Agreement:

(a)the representations and warranties of the Borrower set forth in Section 4 of the Credit Agreement and in the other Transaction Documents are true and correct, except such representations and warranties that are not qualified by reference to materiality or Material Adverse Effect are true and correct in all material respects, as though made on and as of the date hereof (except for any such representation

LEGAL_US_E # 171550170.3

and warranty that by its terms is made only as of an earlier date, which representation and warranty shall remain true and correct in all material respects as of such earlier date);

(b)the Borrower has taken all necessary limited liability company, corporate and other action to authorize the execution, delivery and performance of this Agreement and each of the other Transaction Documents to which it is a party;

(c)this Agreement is the legally valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject to Debtor Relief Laws and to general equity principles, and

(d)other than the Specified Events of Default, no event has occurred and is continuing, or would result from the transactions contemplated by this Agreement, that constitutes a breach of the Financial Covenant, a Default or an Event of Default.

5.Amendment No. 2 Effective Date Conditions. This Agreement shall become effective (including the amendments to the Existing Credit Agreement contemplated pursuant to Section 2) as of the first date when each of the following conditions is satisfied or waived (such date, the “Amendment No. 2 Effective Date”):

(a)the Agent shall have received counterparts of this Agreement executed and delivered by the Borrower, each Lender and Agent;

(b)each of the representations and warranties contained in Section 4 shall be true and correct in all material respects on and as of the Amendment No. 2 Effective Date;

(c)on or before 4:00 p.m. on June 30, 2023, each Lender (or the Agent on its behalf) shall have received from the Borrower, without duplication, its pro rata share of (i) a repayment of an aggregate $10,000,000 of outstanding principal amount of Loans, (ii) an interest payment for the Interest Period ended June 30, 2023, and (iii) a non-refundable consent fee equal to 1.00% of the aggregate principal amount of the outstanding Loans held by such Lender immediately after giving effect to this Agreement (i.e., $150,000);

(d)a secretary’s certificate (1) confirming there have been no changes to the certified copies of the Organization Documents (including any amendments or supplements thereto) of the Borrower attached to the secretary’s certificate delivered on September 27, 2022, (2) the resolutions of the sole member of the Borrower in substantially the same form delivered on September 27, 2022, authorizing and approving the execution, delivery and performance by the Borrower of this Agreement, and (3) confirming there have been no changes to the incumbency certification included in the secretary’s certificate delivered on September 27, 2022; and

(e)to the extent invoiced on or before the date hereof, Borrower shall have paid all outstanding fees and expenses of the Agent required to be paid pursuant to Section 9(e) of the Credit Agreement (including, for the avoidance of doubt, fees of external counsel).

6.Post-Closing Covenant. No later than 45 days after the Amendment No. 2 Effective Date (or such later date as may be agreed by the Agent in its sole discretion), the Borrower shall:

(a)deliver a Control Agreement with respect to each Deposit Account and Securities Account that is not subject to a Control Agreement as of the date hereof (unless (i) such Deposit Account or Securities Account constitutes an Excluded Account, (ii) is closed or (iii) the Borrower and the Agent mutually agree to exclude any

2

Deposit Account or Securities Account from the foregoing requirement), in each case in form and substance reasonably satisfactory to the Agent; and

(b)use commercially reasonable efforts to cause the Borrower’s depositary institution to use commercially reasonable efforts to make available to the Agent duplicate copies of all bank statements provided concurrently with the delivery thereof to the Borrower with respect to each such Deposit Account and Securities Account (other than Excluded Accounts).

In the event despite commercially reasonable efforts the Borrower is unable to comply with the foregoing covenant in Section 6(a) within such 45-day period, then (i) such failure shall not constitute an Event of Default but (ii) during the period after such 45th day that Borrower remains in non-compliance with Section 6(a), until such time as the Borrower delivers a Control Agreement with respect to each such Deposit Account or Securities Account (other than Excluded Accounts), the Applicable Rate shall be (A) for SOFR Loans, 8.375% and (B) for Base Rate Loans, 7.375%.

7.Reaffirmation of Obligations; Security Interests. The Borrower hereby (a) acknowledges and reaffirms its obligations owing to the Agent and each Lender under the Credit Agreement and each other Transaction Document to which it is a party, and (b) agrees that the Credit Agreement, the Security Agreement and each of the Transaction Documents to which it is a party is and shall remain in full force and effect and confirms that all Liens granted, conveyed or assigned to the Agent by the Borrower pursuant to any Transaction Document to which it is a party remain in full force and effect, are not released or reduced, and continue to secure full payment and performance of the Obligations. The Borrower hereby (i) further ratifies and reaffirms the validity and enforceability of all Liens and security interests heretofore granted, pursuant to and in connection with the Transaction Documents to the Agent, on behalf and for the benefit of the Lenders, as collateral security for the Obligations under the Transaction Documents (including, without limitation, after giving effect to this Agreement) in accordance with their respective terms, and (ii) acknowledges that all Liens and security interests, and all Collateral heretofore pledged as security for such Obligations, continue to be and remain collateral for such Obligations from and after the date hereof (including, without limitation, after giving effect to this Agreement).

8.Reference to and Effect on the Credit Agreement and the other Transaction Documents.

(a)Except to the extent expressly set forth in this Agreement, the execution, delivery and performance of this Agreement shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Agent or any Lender under the Credit Agreement or any of the other Transaction Documents;

(b)On and after the Amendment No. 2 Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Transaction Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended by this Agreement; and

(c)To the extent that any of the terms and conditions in any of the Transaction Documents shall contradict or be in conflict with any of the terms or conditions of the Credit Agreement after giving effect to this Agreement, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Credit Agreement as modified or amended hereby.

9.Amendment, Modification and Waiver. This Agreement may not be amended, modified or waived except as permitted by Section 9(b) of the Credit Agreement.

3

10.Headings. Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

11.GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS; AND WAIVER OF JURY TRIAL. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. THIS AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING JURISDICTION; SERVICE OF PROCESS AND WAIVER OF JURY TRIAL SET FORTH IN SECTIONS 9(t) and 9(u) OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

12.Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

13.Counterparts; Integration. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission of an Adobe portable document format file (also known as a “PDF” file) shall be effective as delivery of a manually executed counterpart hereof. The words “execution,” “execute”, “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act or any other similar state laws based on the Uniform Electronic Transactions Act. This Agreement and the other Transaction Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Borrower, the Agent, nor any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Transaction Documents.

14.Transaction Document; No Novation. On and after the Amendment No. 2 Effective Date, this Agreement shall constitute a “Transaction Document” for all purposes of the Credit Agreement and the other Transaction Documents. This Agreement shall not constitute a novation of the Existing Credit Agreement or any of the Transaction Documents.

[Signature Pages Follow]

4

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

TERRA INCOME FUND 6, LLC, as Borrower

By: /s/ Gregory M. Pinkus .

    Name: Gregory M. Pinkus

    Title: Chief Financial Officer

[Signature Page to Amendment No. 2 to Credit Agreement]

EAGLE POINT CREDIT MANAGEMENT LLC,as Agent

By: /s/ Taylor Pine .

    Name: Taylor Pine

    Title: Principal – Director of Operations

[Signature Page to Amendment No. 2 to Credit Agreement]

EAGLE POINT DIF DELAWARE I, LLC, as a Lender

By: Eagle Point Credit Management, LLC, its investment advisor

By: /s/ Taylor Pine .

    Name: Taylor Pine

    Title: Principal – Director of Operations

EP DIF CAYMAN I, LP, as a Lender

By: Eagle Point Credit Management, LLC, its investment advisor

By: /s/ Taylor Pine .

    Name: Taylor Pine

    Title: Principal – Director of Operations

WILTON REINSURANCE COMPANY, as a Lender

By: Eagle Point Credit Management, LLC, its investment advisor

By: /s/ Taylor Pine .

    Name: Taylor Pine

    Title: Principal – Director of Operations

WILCAC LIFE INSURANCE COMPANY, as a Lender

By: Eagle Point Credit Management, LLC, its investment advisor

By: /s/ Taylor Pine .

    Name: Taylor Pine

    Title: Principal – Director of Operations

[Signature Page to Amendment No. 2 to Credit Agreement]

BLUECROSS BLUESHIELD OF TENNESSEE INC., as a Lender

By: Eagle Point Credit Management, LLC, its investment advisor

By: /s/ Taylor Pine .

    Name: Taylor Pine

    Title: Principal – Director of Operations

PCT PARTNERS, LLC, as a Lender

By: Eagle Point Credit Management, LLC, its investment advisor

By: /s/ Taylor Pine .

    Name: Taylor Pine

    Title: Principal – Director of Operations

EXHIBIT A

Specified Events of Default

1.An Event of Default arising under Section 8(b) of the Existing Credit Agreement resulting from the failure of the Borrower to comply with Section 5(m)(ii) of the Existing Credit Agreement in respect of the Deposit Account maintained with Wells Fargo Bank, N.A. , which required the delivery of a Control Agreement in respect of any new Deposit Account or Securities Account established after the Closing Date.

2.Events of Default arising under Section 8(b) of the Existing Credit Agreement resulting from the failure to deliver a Control Agreement in respect of the Bank of America account referred to in clause (d) of the definition of “Excluded Accounts” after breaching the applicable thresholds set forth therein.

EXHIBIT B

Conformed Credit Agreement

Conformed Version

Consent and Amendment Letter dated as of September 27, 2022

Amendment No. 2 to Credit Agreement, dated as of June 30, 2023

CREDIT AGREEMENT

dated April 9, 2021

among

TERRA INCOME FUND 6, INC.LLC
(formerly Terra Merger Sub, LLC, and successor by merger to Terra Income Fund 6, Inc.),
as Borrower,

THE LENDERS PARTY HERETO,

        and    

EAGLE POINT CREDIT MANAGEMENT LLC,
as Agent

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TABLE OF CONTENTS

SECTION    HEADING    PAGE

SECTION 1.INTERPRETATION    1

SECTION 2.THE LOANS    2

SECTION 3.CONDITIONS PRECEDENT TO EFFECTIVENESS AND LOANS    12

SECTION 4.REPRESENTATIONS AND WARRANTIES    14

SECTION 5.AFFIRMATIVE COVENANTS    20

SECTION 6.NEGATIVE COVENANTS    25

SECTION 7.FINANCIAL COVENANT.    28

SECTION 8.EVENTS OF DEFAULT AND REMEDIES    28

SECTION 9.MISCELLANEOUS    31

SECTION 10.DEFINITIONS; CONSTRUCTION    39

SCHEDULES

SCHEDULE 1    –    LOAN COMMITMENTS
SCHEDULE 2    –    FORM OF VALUATION STATEMENT
SCHEDULE 4(W)    –    ACCOUNTS
SCHEDULE 6(A)    –    PERMITTED INDEBTEDNESS
SCHEDULE 6(B)    –    PERMITTED LIENS

EXHIBITS

EXHIBIT A-1    –    FORM OF U.S. TAX COMPLIANCE CERTIFICATE

EXHIBIT A-2    –    FORM OF U.S. TAX COMPLIANCE CERTIFICATE

EXHIBIT A-3    –    FORM OF U.S. TAX COMPLIANCE CERTIFICATE

EXHIBIT A-4    –    FORM OF U.S. TAX COMPLIANCE CERTIFICATE

EXHIBIT B    –    FORM OF COMPLIANCE CERTIFICATE

EXHIBIT C    –    FORM OF BORROWING NOTICE

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CREDIT AGREEMENT

This CREDIT AGREEMENT (this “Agreement”) is made as of April 9, 2021 (the “Closing Date”) among Terra Income Fund 6, LLC, a Delaware limited liability company (formerly Terra Merger Sub, LLC, and as successor by merger to Terra Income Fund 6, Inc., a Maryland corporation) (the “Borrower”), as borrower, certain funds and accounts managed by Eagle Point Credit Management LLC (“Eagle Point”), as lenders (in such capacity, collectively, the “Lenders”) and Eagle Point as the administrative agent and collateral agent for the Lenders (in such capacity, the “Agent”).

The Borrower has requested that the Lenders provide certain term loans, and the Lenders, acting through the Agent, are willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

SECTION 1.INTERPRETATION

Definitions. The terms defined in Section 10 and in the Exhibits and Appendices hereto will have the meanings therein specified for purposes of this Agreement.

Valuations and Calculations. All valuations or calculations herein or under any other Transaction Document shall be in Dollars. All financial computations required under this Agreement shall be made, and all financial information required under this Agreement shall be prepared, in accordance with Appropriate Accounting Principles.

References to Agreements, Laws and Persons. Unless otherwise expressly provided herein, (i) references to documents, agreements and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto permitted hereby; and (ii) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law and (iii) references to any Person include its successors and permitted assigns.

Other References. Unless otherwise specified, (i) the meanings of defined terms are equally applicable to the singular and plural forms of the defined terms, (ii) the words “herein”, “hereto”, “hereof” and “hereunder” and words of similar import when used in any Transaction Document shall refer to such Transaction Document as a whole and not to any particular provision thereof, (iii) Article, Section, Exhibit and Appendix references are to the Transaction Document in which such reference appears, (iv) the term “including” is by way of example and not limitation, and (v) Section headings are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Transaction Document. References to “knowledge,” “aware,” or “awareness” (or words of similar import) of Borrower means the actual knowledge of a Responsible Officer of Borrower.

(a)Rates. The Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to Base Rate, the Term SOFR Reference Rate or Term

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SOFR, or any component definition thereof or rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement) will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, Base Rate, the Term SOFR Reference Rate, Term SOFR or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Benchmark Replacement Conforming Changes. The Agent and its affiliates or other related entities may engage in transactions that affect the calculation of Base Rate, the Term SOFR Reference Rate, Term SOFR, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Agent may select information sources or services in its reasonable discretion to ascertain Base Rate, the Term SOFR Reference Rate, Term SOFR or any other Benchmark, or any component definition thereof or rates referred to in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

THE LOANS

Loans.

Subject to the terms and conditions set forth herein, each Lender, severally and not jointly, agrees to make to the Borrower, as Borrower may request, on each Borrowing Date, a delayed draw term loan (each such loan, a “Loan”), in an amount up to the unfunded amount of such Lender’s applicable Loan Commitment; provided that no Lender shall have an obligation to make a Loan in excess of such Lender’s Loan Commitment. Each Lender’s Loan Commitment shall automatically be reduced immediately upon and in the principal amount of each Loan made hereunder. If there exists any unfunded Loan Commitments on the Commitment Termination Date, then on such date each Lender shall make, and the Borrower shall accept, a Loan equal to the amount of such Lender’s remaining unfunded Loan Commitment such that after giving effect to the making of such Loans, the aggregate principal amount of Loans made by the Lenders shall be equal to the amount of the Loan Commitments. Each Lender’s Loan Commitment shall terminate immediately and without further action on the Commitment Termination Date after giving effect to the funding, if any, of such Lender’s Loan on such date.

The Borrower unconditionally promises to repay to the Lenders on the Maturity Date (or such earlier date if the Loan Commitments shall be terminated in whole pursuant to this Agreement) the aggregate principal amount of Loans outstanding on such date, together with all accrued but unpaid interest thereon, all fees (including, without limitation, the Unused Commitment Fees, if any) and other Obligations payable hereunder.

LEGAL_US_E # 171549701.1171549701.5

Any principal amounts repaid in respect of any Loan, in whole or in part, may not be reborrowed.

Borrowings. The Borrower may request that the Lenders make a Loan by delivering to the Agent an executed irrevocable notice substantially in the form attached hereto as Exhibit C (each, a “Borrowing Notice”) not later than 2:00 p.m. (New York time) at least six (6) Business Days prior to the date of the requested Borrowing Date unless such notice period is waived by the Agent in its sole discretion. The aggregate amount of each borrowing of a Loan by Borrower shall be in an aggregate amount of at least $1,000,000 in the case of the initial borrowing and $500,000 in the case of each subsequent borrowing and an integral multiple of $100,000in excess of such amount (or, if less, the remaining unfunded Loan Commitments). Each Borrowing Notice delivered pursuant to this Section 2(b) must specify the requested Borrowing Date and amount of requested borrowing; provided that the Lenders shall not be obligated to fund a Loan more than twice each month unless such restriction is waived by the Agent in its sole discretion. If any such Borrowing Notice is not delivered by the time referred to above, then it shall be deemed to have been given on the next Business Day.

Optional Prepayments of Loans. The Borrower may voluntarily prepay any Loan, in whole or in part, together with all accrued but unpaid interest thereon, by irrevocable written notice to the Agent not later than 2:00 p.m. (New York time) at least thirty (30) days (but not more than sixty (60) days) prior to the proposed date of prepayment. Any such prepayment of a Loan shall be in a principal amount of at least $500,000 and an integral multiple of $100,000 in excess of such amount (or, if less, the entire principal amount thereof then outstanding). Prepayments in whole pursuant to this Section 2(c) shall not, in and of themselves, constitute a termination of this Agreement by the Borrower.

Mandatory Prepayments.

If, at any time, the Asset Coverage Ratio as stated on the most recent Valuation Statement delivered to Agent in accordance with Section 5(b)(ii) is less than 200%, the Borrower shall, within ten (10) Business Days following the date such Valuation Statement is required to be delivered, repay the outstanding Loans until the Asset Coverage Ratio after such payments exceeds 200%.

The Borrower will give written notice to the Agent at least ten (10) days prior to the occurrence of a Change of Control, which notice shall (A) state the expected effective date of such Change of Control and (B) contain an offer to repay the Loans and all other Obligations hereunder in full as of the effective date of such Change of Control. Notwithstanding the foregoing, any notice of a Change of Control may state that the offer to repay the Loans in accordance with this Section 2(d)(ii) is conditioned upon the effectiveness of the Change of Control, in which case such notice may be revoked by the Borrower (by notice to the Agent on or prior to the effective date of such Change of Control) if such condition is not satisfied. Within five (5) days following the receipt of such notice, the Agent, on behalf of the Lenders, shall notify the Borrower in writing whether the Lenders accept the offer of repayment of the Loans as set forth herein and provide the Borrower with the Agent’s calculation of the repayment amount due under

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this Section 2(d)(ii) in an amount equal to the sum of (x) the product of (1) 100%, times (2) the principal amount of the outstanding Loans, plus (y) all accrued but unpaid interest on the principal amount of the outstanding Loans, which calculations shall be conclusive absent manifest error. In the event the Lenders accept the Borrower’s offer to repay the Loans in accordance with this Section 2(d)(ii), the Borrower shall so repay the Loans and all other Obligations in full in accordance with the Agent’s calculations on the effective date of such Change of Control. In the event the Lenders reject the Borrower’s offer to repay the Loans in accordance with Section 2(d)(ii), the Loans and all other Obligations shall remain outstanding and the Transaction Documents shall remain in full force and effect. Each Lender’s determination to accept or reject the Borrower’s offer to repay the Loans as set forth herein shall be made in such Lender’s sole discretion.

Incremental Loan Commitments. Borrower may, by written notice to Agent (each, an “Incremental Loan Request”), request one or more increases in the Loan Commitment (each, an “Incremental Loan Commitment” and the loans thereunder, each an “Incremental Loan”) at any time; provided that no commitment of any Lender shall be increased without the consent of such Lender in such Lender’s sole discretion and no Lender shall be required to participate in any Incremental Loan. Each Incremental Loan Request shall set forth (x) the amount of the Incremental Loan Commitment being requested (which shall be in a minimum amount of $1,000,000 and multiples of $500,000 in excess thereof) and (y) the date on which such Incremental Loan is requested to become effective (which, unless otherwise agreed by Agent and the Lenders providing such Incremental Loan, shall not be less than six (6) days nor more than sixty (60) days after the date of any Incremental Loan Request (the “Incremental Effective Date”)). Upon delivery of the applicable Incremental Loan Request to Agent, such Incremental Loan Commitment shall be offered to all Lenders pro rata according to the respective outstanding principal amounts of the Loans and Loan Commitments held by each Lender (or in such other proportion as may be agreed by the Lenders and the Agent). The Agent shall have up to ten (10) Business Days to deliver a response regarding the amount of the requested Incremental Loan that the Lenders will provide.  If the existing Lenders fail to provide the full amount of the requested Incremental Loan, the Borrower may offer any portion of the requested Incremental Loan that is not provided by the existing Lenders to new lenders which may join this Agreement, with all terms and conditions to such Incremental Loans remaining unchanged with the possible exception of any mutually agreed amendments to the interest rate and fees to be applicable to such Incremental Loans.

Conditions. Notwithstanding anything in this Agreement to the contrary, no Incremental Loan shall become effective under this Section 2(e) unless, after giving effect to such Incremental Loan:

no Default or Event of Default shall exist or result from the incurrence of such Incremental Loan;

after giving effect to the incurrence of any Incremental Loan, the Borrower is in pro forma compliance with the Financial Covenant;

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all representations and warranties contained in the Transaction Documents shall be true and correct in all material respects (without duplication of any materiality qualifier therein) both before and after giving effect to such Incremental Loan (except to the extent any representation or warranty relates to an earlier date in which case such representation or warranty shall be true and correct in all material respects as of such earlier date); and

Agent shall have received a certificate duly executed by an officer of the Borrower, certifying as to the foregoing.

Required Amendments. The Agent, Lenders and Borrower agree that, upon the effectiveness of any Incremental Loan Commitment, this Agreement shall be amended to the extent necessary to reflect the existence of such Incremental Loan Commitment. From and after each Incremental Effective Date, the Incremental Loans and Incremental Loan Commitments established pursuant to this Section 2(e) shall (A) constitute Loans and Loan Commitments under, and shall be entitled to all the benefits afforded by, this Agreement and the other Transaction Documents and (B) without limiting the foregoing, benefit equally and ratably from the security interests created by the applicable Transaction Documents. The Borrower shall take any actions reasonably required by the Agent and the Lenders to ensure and/or demonstrate that the Liens and security interests granted by the applicable Transaction Documents continue to be perfected under the UCC or otherwise after giving effect to the establishment of any such Incremental Loans and Incremental Loan Commitments.

Lender’s Obligations Several. All Loans shall be made by the Lenders proportionately to their respective applicable Loan Commitments, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make the Loans hereunder.

Accrual and Payment of Interest and Fees.

Each SOFR Loan shall bear interest on the outstanding principal amount thereof foron each day of each Interest Period at a rate per annum equal to the Term SOFR or the Benchmark Replacement for such Interest Period plus the Applicable Rate and (y) each Base Rate Loan shall bear interest on the outstanding principal amount thereof on each day at a rate per annum equal to 5.625%; provided that for each day that (A) the Borrower fails to cause to be maintained a Loan Rating as required pursuant to Section 5(o) or (B) the Loan Rating is below Investment Grade, each Loan shall bear interest at a rate per annum equal to 6.625%the Base Rate plus the Applicable Rate. All accrued and unpaid interest on the Loans shall be due and payable on the last day of the applicable Interest Period and at such other times as may be specified herein.

On the initial Borrowing Date, the Borrower agrees to pay to the Lenders, as compensation for providing the Loan Commitments, a fee in an amount equal to 2.50% of the Loan Commitments (i.e., $625,000), which fee shall take the form of original issue discount and be net funded from the proceeds of the Loans funded on the initial

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Borrowing Date. Such fee will be in all respects fully earned, due and payable on the initial Borrowing Date and non-refundable and non-creditable thereafter.

The Borrower agrees to pay to the Lenders, as compensation for providing the Loan Commitments, the Unused Commitment Fee, which fee shall accrue at all times from and after the Closing Date until the Commitment Termination Date, including at any time during which one or more of the conditions in Section 3(b) is not met. Any accrued and unpaid Unused Commitment Fee shall be due and payable on each Payment Date.

Upon the occurrence and during the continuation of a Specified Event of Default, the principal amount of the outstanding Loans and, to the extent permitted by Applicable Law, any past due interest payments on the Loans, any unpaid prepayment premium and any fees or other amounts owed hereunder, in each case whether at stated maturity, by notice of prepayment, by acceleration or otherwise, shall (unless waived in writing by the Lenders) bear interest (including, without limitation, interest, as provided in this Agreement, accruing after the filing of a petition initiating any insolvency proceedings, whether or not such interest accrues or is recoverable against the Borrower after the filing of such petition for purposes of the Bankruptcy Code or is an allowed claim in such proceeding) at the Default Rate. Interest payable at the Default Rate in accordance with this Section 2(g)(iv) shall be payable by the Borrower (x) in the case of any Event of Default other than an Event of Default pursuant to Section 8(h), upon written demand from the Agent to the Borrower and (y) in the case of an Event of Default pursuant to Section 8(h), automatically and without further notice or action by any party. For the avoidance of doubt, payment or acceptance of the Default Rate is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of the Agent or any Lender.

Evidence of Indebtedness. Agent shall maintain, as agent for the Lenders, at Agent’s principal office, a register for the recordation of the names and addresses of each Lender and the Loans owed to each Lender by the Borrower (the “Register”). The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. Agent shall record in the Register the interest and the outstanding balance of the Loans, and each repayment or prepayment in respect of the principal amount of and interest and other amounts with respect to the Loans, and any such recordation shall be conclusive and binding on the Borrower and each Lender, absent manifest error; provided that the failure to make any such recordation, or any error in such recordation, shall not affect the principal outstanding amount of the Loans, or the Borrower’s Obligations in respect thereto. No transfer of the Loans and/or any interests therein shall be effective until such transfer is recorded in the Register. The Borrower hereby designates the entity serving as Agent to serve as the Borrower’s agent solely for purposes of maintaining the Register as provided in this Section 2(h).

Computation of Interest and Fees. All computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid.

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Payments Generally. Except as otherwise expressly provided herein, all payments hereunder (including, but not limited to, payments made pursuant to Sections 2(d) and (g)) shall be in Dollars and the Borrower shall make each payment hereunder not later than 4:00 p.m. (New York time) on the date specified herein (i) to each Lender’s account in accordance with the most recent payment instructions provided by such Lender to the Borrower in writing from time to time in accordance with such Lender’s pro rata share of the Loans (which pro rata share shall be provided by the Agent in writing from time to time) or (ii) if directed by the Agent in writing, to the Agent in accordance with the payment instructions provided by the Agent for distribution to the Agent. All payments received after 4:00 p.m. (New York time) shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next succeeding Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. If at any time insufficient funds are received by and available to the Lenders to pay fully all amounts of principal, interest, fees and other amounts then due hereunder, such funds shall be applied, first, to pay interest, fees and other amounts then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest, fees and other amounts then due to such parties and second, to reduce the outstanding Loans ratably among the parties entitled thereto.

No Set-off or Withholding. All payments by or on behalf of the Borrower to the Lenders (including for purposes of this Section 2(k), any assignee, successor, or participant or an economic arrangement that is similar to a participation) hereunder shall be made to the Lenders in full without condition or reduction for any counterclaim, defense, recoupment or setoff.

Taxes

Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower under any Transaction Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding upon the basis of the information and documentation to be delivered pursuant to subsection (vi) below and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. For purposes of this Section, the term “Applicable Law” includes FATCA.

Payment of Other Taxes by the Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.

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Indemnification by the Borrower. The Borrower shall indemnify each Recipient, within 20 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

Indemnification by the Lenders. Each Lender shall severally indemnify the Agent, within 20 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), and (ii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent in connection with any Transaction Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Transaction Document or otherwise payable by the Agent to such Lender from any other source against any amount due to the Agent under this paragraph.

Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section, the Borrower shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment (if any), a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.

Status of Lenders.

Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Transaction Document shall deliver to the Borrower and the Agent, at the time or times reasonably requested by the Borrower or the Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, each Lender, if reasonably requested by the Borrower or the Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Agent as will enable the Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in

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Section 2(l)(vi)(B)(1), (2) and (4) below) shall not be required if in such Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,

any Lender that is a U.S. Person shall deliver to the Borrower and the Agent on or prior to the date on which the Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed copies of IRS Form W-9 certifying that the Lender is exempt from U.S. federal backup withholding tax;

any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), whichever of the following is applicable:

A.    in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Transaction Document, executed copies of IRS Form W-8BEN or W-8BEN-E (as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Transaction Document, IRS Form W-8BEN or W-8BEN-E (as applicable)establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

B.    executed copies of IRS Form W-8ECI;

C.    in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit A-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code

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(a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E (as applicable); or

D.    to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E (as applicable), a U.S. Tax Compliance Certificate substantially in the form of Exhibit A-2 or Exhibit A-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit A-4 on behalf of each such direct and indirect partner;

any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit the Borrower or the Agent to determine the withholding or deduction required to be made; and

if a payment made to the Lender under any Transaction Document would be subject to U.S. federal withholding Tax imposed by FATCA if the Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), the Lender shall deliver to the Borrower and the Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the Borrower and the Agent to comply with their obligations under FATCA and to determine that the Lender has complied with the Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (4), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

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Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 2(l) expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Agent in writing of its legal inability to do so.

Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section  (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (vii) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (vii), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

Survival. Each party’s obligations under this Section shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, any Lender, the termination of the Loan Commitments and the repayment, satisfaction or discharge of all obligations under any Transaction Document.

Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

the Unused Commitment Fee payable pursuant to Section 2(g)(iii) shall cease to accrue on the unused Loan Commitment of such Defaulting Lender;

the Loan Commitments of such Defaulting Lender shall not be included in determining whether the Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 9(b)); and

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any payment of principal, interest, fees or other amounts received by the Defaulting Lender or the Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 8 or otherwise) shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; third, if so determined by the Agent and the Borrower, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made at a time when the conditions set forth in Section 3(b) were satisfied or waived, such payment shall be applied solely to pay the Loans of all applicable non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

In the event that the Agent and the Borrower agree that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the provisions of this Section 2(m) shall cease to apply to such Lender.

Sharing of Payments. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:

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if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

the provisions of this paragraph shall not be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant.

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(o)Benchmark Replacement Setting.

(i)Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Transaction Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Transaction Document so long as the Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders. If the Benchmark Replacement is Daily Simple SOFR, all interest payments will be payable on a quarterly basis.

(ii)Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document.

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(iii)Notices; Standards for Decisions and Determinations. The Agent will promptly notify the Borrower and the Lenders of (x) the implementation of any Benchmark Replacement and (y) the effectiveness of any Benchmark Replacement Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. Agent will notify the Borrower of (a) the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2(o)(iv) and (b) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2(o) including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion (provided that the Agent shall administer Benchmark Replacement, Benchmark Replacement Adjustment and Benchmark Replacement Conforming Changes in accordance with Agent’s customary practice for similar loans) and without consent from any other party to this Agreement or any other Transaction Document, except, in each case, as expressly required pursuant to this Section 2(o).

(iv)Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Transaction Document, at any time when the Term SOFR Reference Rate is not the Benchmark (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (other than Term SOFR Reference Rate) and either (A) any Available Tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any Available Tenor for such Benchmark is not or will not be representative, then the Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) of this Section 2(o) either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

(v)Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, (x) the Borrower may revoke any request for a borrowing of, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans and (y) any outstanding affected SOFR Loans will be deemed to have been converted to Base Rate Loans at the end of the applicable Interest Period unless prior to the end of such applicable Interest Period the Benchmark Replacement has replaced the then-current Benchmark for all

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purposes hereunder. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate.

CONDITIONS PRECEDENT TO EFFECTIVENESS AND LOANS

Conditions Precedent to Effectiveness. This Agreement shall become effective upon satisfaction (or waiver by the Agent) of the following conditions precedent:

The Agent shall have received each of the following documents, duly executed, each (unless otherwise specified below) dated the Closing Date and in form and substance satisfactory to the Agent:

duly executed counterpart of this Agreement;

duly executed Security Documents and all documents required to be delivered thereunder on the Closing Date, including UCC-1 financing statements;

certified copies of (1) the Organization Documents (including any amendments or supplements thereto) of the Borrower, (2) the resolutions of the board of directors (or similar governing body) of the Borrower authorizing and approving the execution, delivery and performance by the Borrower of this Agreement, the Security Agreement, and the other Transaction Documents and the Loans hereunder, and otherwise satisfactory to the Agent, and (3) documents evidencing all other necessary company action, governmental approvals and third-party consents, if any, with respect to this Agreement, the Security Agreement, and any other Transaction Document;

a certificate of the Borrower certifying the names and true signatures of the Responsible Officers of the Borrower authorized to sign this Agreement, the Security Agreement, any other Transaction Document, or any other document to be delivered hereunder or thereunder;

certificate evidencing the good standing of the Borrower in its jurisdiction of formation dated a date not earlier than twenty (20) days prior to the Closing Date as to the good standing of the Borrower;

the results of tax, judgment and Lien searches on the Borrower, obtained by and satisfactory to the Agent, and dated as of a recent date;

the initial rating and confirmation letter as set forth in Section 5(o), which shall be reasonably acceptable to the Agent;

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an opinion letter of Alston & Bird LLP, primary transaction counsel to the Borrower and Venable LLP, Maryland counsel to the Borrower, in each case, in form and substance satisfactory to the Agent;

a true and correct written copy of the Valuation Methodology in effect on the Closing Date; and

such other assurances, certificates, documents, consents, or opinions as the Agent reasonably may request in writing.

The Borrower shall have paid all fees and expenses required to be paid by it on the Closing Date in accordance with Section 9(e).

The Custody Account shall have been established by the Borrower and the Control Agreement shall have been executed with respect thereto.

The Agent shall have completed its due diligence review with respect to the Borrower and the Investment Adviser and is satisfied, in its sole and absolute discretion, with the result of its due diligence review, including its due diligence review of the Borrower’s Investment Policies and Restrictions. The Lenders shall have received all documentation and other information that the Lenders have reasonably requested in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.

To the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Borrower shall deliver a Beneficial Ownership Certification to the Agent at least five days prior to the Closing Date.

Conditions Precedent to All Loans. The obligation of the Lenders to make any Loan is subject to satisfaction (or waiver by the Agent) of the following conditions precedent:

The representations and warranties contained in Section 4 or any other Transaction Document or any document furnished at any time under or in connection herewith or therewith shall be true and correct in all material respects on and as of the date of such Loan immediately prior to and after giving effect to such Loan (except (x) to the extent any representation or warranty relates to an earlier date in which case such representation or warranty shall be true and correct in all material respects as of such earlier date and (y) any representation or warranty which is subject to any materiality qualifier shall be true and correct in all respects).

Immediately before and immediately after giving effect to such proposed Loan, no Default or Event of Default shall exist or would occur.

After giving effect to the incurrence of the proposed Loan, the Borrower shall be in pro forma compliance with the Financial Covenant.

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The Agent shall have received a Valuation Statement dated as of a date not more than 48 hours preceding such Borrowing Date.

The Collateral Requirement has been satisfied.

The absence of any action, suit, investigation or proceeding pending or, to the knowledge of the Borrower, threatened in writing in any court or before any arbitrator or Governmental Authority that would reasonably be expected to result in a Material Adverse Effect.

The Agent shall have received a duly executed certificate of a Responsible Officer of the Borrower certifying that the conditions specified in Section 3(a) and Section 3(b), as applicable, have been satisfied on and as of the date of the making of a Loan.

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Agent and the Lenders as of the Closing Date and as of each Borrowing Date (both immediately before and immediately after giving effect thereto) that:

Existence, Qualification and Power. The Borrower (i) is duly incorporated, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign company in each other jurisdiction in which the conduct of its business requires it to so qualify or be licensed and where, in each case, failure to so qualify and be in good standing would reasonably be expected to result in a Material Adverse Effect, (iii) has all requisite power and authority to own or lease and operate its properties and to carry on its business as now conducted and to execute, deliver and perform its obligations under each Transaction Document, (iv) has all requisite governmental licenses, authorizations, consents and approvals to own or lease and operate its properties and to carry on its business as now conducted, except where the failure to have such licenses, authorizations, consents and approvals would not reasonably be expected to have a Material Adverse Effect and (v) has all requisite governmental licenses, authorizations, consents and approvals to execute, deliver and perform its obligations under each Transaction Document.

Authorization; No Contravention. The execution, delivery and performance by the Borrower of each Transaction Document to which it is a party (when delivered) and the grant of the security interest contemplated hereby and thereby with respect to the Collateral are within its corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene the Borrower’s Organization Documents, (ii) contravene any material contractual restriction binding on it or require any consent under any material agreement or instrument to which it is a party or by which any of its properties or assets is bound, except as would not reasonably be expected to result in a Material Adverse Effect, (iii) result in or require the creation or imposition of any Liens upon any property or assets of the Borrower other than Liens in favor of the Agent pursuant to the Transaction Documents, or (iv) violate any Applicable Law (including the Securities Act of 1933, the Exchange Act and the Investment Company Act and

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the regulations thereunder) or writ, judgment, injunction, determination or award. The Borrower is in compliance in all material respects with its Organization Documents.

Governmental Authorizations; Other Consents. Except for any filings contemplated by the Security Agreement, no order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption or waiver by, any Governmental Authority or any other third party (except as have been obtained or made and are in full force and effect), is required to authorize, or is required in connection with, (i) the execution, delivery and performance by the Borrower of any Transaction Document to which it is a party or (ii) the legality, validity, binding effect or enforceability of any Transaction Document.

Compliance with Laws and Other Agreements.

The Borrower is in material compliance with the requirements of Applicable Law (including, for the avoidance of doubt, the Investment Company Act, the Securities Act of 1933 and the Exchange Act) and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which such requirement of Applicable Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted.

The borrowing of the Loans, the application of the proceeds and repayment thereof by the Borrower and the consummation of the transactions contemplated by the Transaction Documents are not prohibited by the provisions of the Investment Company Act, as well as all rules, regulations and orders issued by the SEC thereunder.

Binding Effect. This Agreement and the other Transaction Documents are legal, valid and binding obligations of the Borrower, duly executed and enforceable against the Borrower in all respects, subject to Debtor Relief Laws and general equity principles.

No Default. No Default has occurred and is continuing.

Financial Statements; No Material Adverse Effect.

The Borrower’s audited financial statements for the fiscal year ended December 31, 2020 were prepared in accordance with Appropriate Accounting Principles consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and fairly present in all material respects the financial condition of the Borrower as of the date thereof and the results of operations and cash flows for the period covered thereby in accordance with Appropriate Accounting Principles consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.

Since the later of (i) December 31, 2020 and (ii) the most recently ended fiscal year for which annual reports have been prepared for Borrower and delivered to the Agent under Section 5(b)(i), no event or condition has resulted in, or would be reasonably

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expected to cause, either individually or in the aggregate, a Material Adverse Effect, and no Regulatory Event has occurred and is continuing.

Absence of Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or against any of its properties or revenues that (i) are reasonably likely to result in a Material Adverse Effect or (ii) challenge the legality, validity or enforceability of this Agreement, the Security Agreement or any other Transaction Document.

Margin Regulations. The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying Margin Stock, or extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of any Loan hereunder will be used to buy or carry any Margin Stock.

Investment Company Act. As of the Closing Date, theThe Borrower is a closed-end management not an “investment company that has elected to be regulated as a BDC” as defined in, or subject to regulation under, the Investment Company Act. None of the Lenders nor the Agent is an “affiliated person”, “promoter” or “principal underwriter” of the Borrower within the meaning of the Investment Company Act. As of the Closing Date, the Borrower’s investment activities are managed by the Investment Advisor.of 1940.

Ownership of Property. The Borrower has good and marketable title to the Collateral, free and clear of Liens other than as are created under the Security Agreement and Permitted Liens. The Borrower has not made any currently effective registrations, filings or recordations in any jurisdiction evidencing a security interest in any of the Collateral including, but not limited to, the filing of a register of mortgages, charges and other encumbrances or filings of UCC-1 financing statements other than with respect to Permitted Liens.

Taxes. The Borrower has filed all U.S. federal income tax returns and all other material tax returns which are required to be filed by it in all jurisdictions except to the extent not delinquent (after giving effect to any extension granted by the applicable tax authority) and has paid all federal and all other material taxes, assessments, claims, governmental charges or levies imposed on it or its properties, except to the extent not yet due and payable or for which the amount or validity of which are currently being contested in good faith by appropriate proceedings, or as otherwise permitted herein. The Borrower has not entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of the Borrower and is not aware of any circumstances that would cause the taxable years or other taxable periods of the Borrower not to be subject to the normally applicable statute of limitations.

Solvency. (i) The present fair market value of the Borrower’s assets taken as a whole exceeds the total amount of the Borrower’s liabilities taken as a whole (including, without limitation, contingent liabilities); (ii) the Borrower has capital and assets, which taken as a whole, are sufficient to carry on its businesses; (iii) the Borrower has not engaged and will not engage in a business or a transaction for which its remaining assets are unreasonably small in

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relation to such business or transaction; and (iv) the Borrower does not intend to incur and believes that it will not incur debts beyond its ability to pay as they become due. The Borrower will not be rendered insolvent by the execution, delivery and performance of the Transaction Documents or by the consummation of the transactions contemplated under this Agreement.

No Sovereignty. The Borrower has no right of immunity on the grounds of sovereignty or otherwise from jurisdiction of any court or from setoff or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under Applicable Law of any jurisdiction.

Full Recourse. The Loans are made with full recourse to the Borrower and constitute direct, unconditional, unsubordinated, senior secured Indebtedness of the Borrower subject to Permitted Liens.

Disclosure. All information contained in any Transaction Document or any other documents, certificates or written statements provided by or on behalf of the Borrower to the Agent or the Lenders in connection with the negotiation, execution and delivery of this Agreement and the other Transaction Documents or the transactions contemplated hereby and thereby including, but not limited to, any financial statements of the Borrower provided to the Agent or the Lenders (other than any projections or forward looking statements, pro forma financial information, information of a general economic or general industry nature and all third party information and reports), when taken as a whole, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not materially misleading in light of the time and circumstances under which such statements were made. All written financial projections with respect to the Borrower that have been prepared by or on behalf of the Borrower and that have been made available to the Agent by or on behalf of the Borrower in connection with this Agreement have been prepared in good faith based on assumptions believed by the Borrower to be reasonable at the time of delivery thereof, it being recognized by the Agent and the Lenders that such projections are as to future events and are not to be viewed as facts, the projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and any of its Affiliates, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by such projections may differ from such projections and such differences may be material.

Licenses; Approvals. All licenses, permits, approvals, concessions or other authorizations material to the conduct of the business of the Borrower have been duly obtained and are in full force and effect, except where the failure of which would not reasonably be expected to have a Material Adverse Effect.

Environmental Matters. Except with respect to any matters that, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, the Borrower (a) has not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (b) knows of no basis for any permit, license or other approval required under any Environmental Law to be revoked, canceled, limited, terminated, modified, appealed or otherwise challenged, (c) has not

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or could reasonably not be expected to become subject to any Environmental Liability, (d) has not received written notice of any claim, complaint, proceeding, investigation or inquiry with respect to any Environmental Liability (and no such claim, complaint, proceeding, investigation or inquiry is pending or, to the knowledge of the Borrower, is threatened in writing) and (e) knows of no facts, events or circumstances that could give rise to any basis for any Environmental Liability of the Borrower.

Investment Policies and Restrictions. Since the date of the Borrower’s most recent annual Form 10-K filing, there have been no changes in the Investment Policies and Restrictions. To date, the Borrower’s investments have been in compliance with the Investment Policies and Restrictions in all material respects at all times.

ERISA.

(i)As of the date hereof, the Borrower has no liability under or with respect to any Plan, Pension Plan or Multiemployer Plan. There are no pending or, to the knowledge of the Borrower, threatened in writing claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that, either individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.

(ii)No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that, either individually or in the aggregate, could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan that, either individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.

(iii)The Borrower is not and is not acting on behalf of (A) an “employee benefit plan” as defined in Section 3(3) of the ERISA, that is subject to Title I of ERISA, (B) a “plan” as defined in and subject to Section 4975 of the Code, (C) any entity deemed to hold “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise), or (D) any entity that is subject to state statutes regulating investments of, and fiduciary obligations with respect to, governmental plans (as such term is defined in Section 3(32) of ERISA), that would be violated by the transactions contemplated by this Agreement.

(iv)The Borrower acknowledges and agrees that neither the Lenders nor the Agent nor any representatives of the Lenders or the Agent has acted or shall act as a “fiduciary” within the meaning of ERISA with respect to the assets of the Borrower (including in connection with the retention or exercise of its rights under any Transaction Document) and neither the Lenders nor the Agent nor any representative of the Lenders or the Agent has or will have rendered, or has any authority to render, any advice with respect to any investments of the Borrower.

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Anti-Corruption Laws, Anti-Terrorism Laws and Sanctions. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower and its directors, officers and employees with Anti-Corruption Laws, Anti-Terrorism Laws and applicable Sanctions, and to the Borrower’s knowledge, each of the Borrower’s officers, employees, directors agents and affiliates are in compliance with Anti-Corruption Laws, Anti-Terrorism Laws and applicable Sanctions and are not engaged in any activity that would reasonably be expected to result in the Borrower being designated as a Sanctioned Person. Neither the Borrower nor its respective directors, officers, employees, agent or affiliates is a Sanctioned Person. No Loan, use of proceeds or other transaction contemplated by this Agreement or the other Transaction Documents will violate any Anti-Corruption Law, Anti-Terrorism Law or applicable Sanctions.

No Subsidiaries. The Borrower does not have any Subsidiaries.

Accounts. Schedule 4(w) sets forth each Custody Account, Deposit Account, Securities Account and Commodities Account of the Borrower. Except for Excluded Accounts, each Custody Account, Deposit Account, Commodity Account and Securities Account of the Borrower is subject to a Control Agreement.

Insurance. Each insurance policy required to be maintained by Section 5(p) is in full force and effect and all premiums in respect thereof that are due and payable have been paid.

(y) REIT Status. The Borrower has been organized and has operated in conformity with the requirements for qualification and taxation as a REIT under the Code and all applicable Treasury Regulations promulgated thereunder for each of its taxable years beginning with its taxable year ended December 31, 2018.

AFFIRMATIVE COVENANTS

So long as a Lender shall have any Loan Commitment hereunder, or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied:

Existence. Except as otherwise permitted by Section 6(c), the Borrower shall (x) preserve and maintain its corporate existence and (y) do all things necessary to preserve, renew and keep in full force and the rights, licenses, permits, privileges and franchises necessary for the conduct of its business, in each case, except in connection with a transaction not prohibited by this Agreement and the other Transaction Documents; provided that the Borrower shall not be required to preserve any such right, license, permit, privilege or franchise if the Borrower determines that the preservation thereof is no longer desirable in the conduct of its business, and that the loss thereof is not disadvantageous in any material respect to the Borrower or to the Lenders.

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Reporting Requirements. The Borrower will furnish to the Agent or cause to be furnished to the Agent:

as soon as available, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Borrower, a balance sheet of the Borrower as at the end of such fiscal year, and the related statements of income or operations and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with Appropriate Accounting Principles, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Agent (it being understood and agreed that KPMG LLP is reasonably acceptable to the Agent), which report and opinion shall be prepared in accordance with Appropriate Accounting Principles and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit (provided that such report may contain a “going concern” statement solely as a result of an impending maturity within 12 months of any Loans);

as soon as available and in any event within forty-five (45) days following the end of each fiscal quarter (beginning with fiscal quarter ending March 31, 2021), (x) a Valuation Statement as of the last day of the fiscal quarter most recently ended and (y) a Compliance Certificate duly executed by a Responsible Officer of the Borrower that (A) states that no Default or Event of Default is continuing as of the date of delivery of such Compliance Certificate or, if a Default or Event of Default is continuing, states the nature thereof and the action that the Borrower proposes to take with respect thereto and (B) if applicable, supplements Schedule 4(W) with respect to any new accounts of the Borrower or any other modification to Schedule 4(W) delivered on the Closing Date or any other subsequent supplements with respect thereto;

within five (5) Business Days after a Responsible Officer of the Borrower obtains actual knowledge of the occurrence of (x) a breach of the Financial Covenant or Event of Default or (y) a missed cash payment or forbearance involving one or more of the Borrower's material Investment Assets (it being understood and agreed that one or more Investment Assets that individually or collectively exceeds 15% of the Borrower's investment portfolio shall be deemed material);

within five (5) Business Days after any request by the Agent, copies of any detailed final audit reports, management letters or recommendations submitted to the Borrower by independent accountants in connection with the accounts or books of the Borrower;

promptly after filing thereof with the SEC or the delivery thereof to the shareholders of the Borrower, copies of all annual, quarterly and other periodic reports to shareholders, registration statements and prospectuses (including any amendments or supplements thereto), non-routine proxy statements, financial statements and other materials of a financial or otherwise material nature so delivered; provided that the

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reports required to be delivered pursuant to this clause (v) shall be deemed to have been delivered if such information shall be available on the website of the SEC;

within five (5) Business Days of receipt by the Borrower or the Investment Advisor of any notice or communication from the Custodian that includes a notice of demand, notice of default or notice of exercise of set-off rights), copies of all such notices and communications; and

within five (5) Business Days after written request therefor, (x) such other business and financial information respecting the condition or operations, financial or otherwise, of the Borrower as the Agent may from time to time reasonably request (subject to any applicable obligations of confidentiality) and (y) information and documentation requested by the Agent, or any Lender through the Agent, as reasonably required for the Agent or such Lender to comply with applicable “know your customer” requirements under the USA PATRIOT Act or other applicable anti-money laundering laws.

Documents required to be delivered pursuant to this Section 5(b) may be delivered electronically to the Agent and if so delivered, shall be deemed to have been delivered on the date (A) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet; or (B) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which the Agent has access (whether a commercial, third-party website or whether sponsored by the Agent).

Valuation Methodology.

The Borrower shall comply in all material respects with the Valuation Methodology.

Unless the Agent reasonably consents to a replacement valuation agent, the Investment Adviser shall at all times use the valuation agent that is in place on the Closing Date.

Use of Proceeds. The Borrower shall use the proceeds of the Loans to fund new investments and for general corporate purposes of the Borrower. Without limiting the foregoing, Borrower will not, directly or indirectly, use any part of such proceeds for any purpose which would violate any provision of its registration statement or any Applicable Law.

Payment of Obligations. The Borrower shall pay and discharge as the same shall become due and payable: (i) all federal and other material taxes, assessments, claims and governmental charges or levies imposed upon it or upon its property; provided, however, that the Borrower shall not be required to pay or discharge any such tax, assessment, claim, charge or levy so long as and to the extent that (x) the same is being diligently contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, (y) the same is the subject of an extension granted by the applicable tax authority or (z) such taxes, assessments, claims, charges and levies do not at any time exceed $500,000 in the aggregate for the Borrower

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for which the Borrower may be or become liable or to which any of its properties may be or become subject; (ii) all lawful claims which, if unpaid, would become a Lien on its property (other than Permitted Liens); and (iii) all other obligations, liabilities and Indebtedness (other than lawful claims, obligations, liabilities and Indebtedness below the Threshold Amount), as and when due and payable.

Lender Meetings. The Borrower shall at any reasonable time during normal business hours and upon reasonable prior written notice, from time to time permit the Lenders, the Agent or any agent or representative thereof to (i) visit the properties and offices of the Borrower and discuss the affairs, finances, assets and accounts of the Borrower with any of the officers, directors or other representatives of the Borrower and (ii) discuss the affairs, finances, assets and accounts of the Borrower with the Borrower’s independent certified public accountants (provided that the Agent and the Lenders shall give the Borrower reasonable prior written notice and the opportunity to participate in any discussions with Borrower’s independent accountants or any other non-employees), and to examine and make copies of and abstracts from their records and books of account, all at the expense of the Borrower; provided, however, that (1) unless an Event of Default is in existence, the Borrower shall have no obligation to pay for meetings conducted under this paragraph in excess of once per calendar year and the cost of which does not exceed $5,000, and (2) during the existence of an Event of Default, the Lenders, the Agent or any agent or representative thereof may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice. In addition, upon request of the Agent or the Lenders, the Borrower will conduct a meeting (which may be held telephonically or by videoconference) with the Agent and the Lenders at a time and place to be reasonably agreed to discuss the most recently reported financial results and the financial condition of the Borrower and any other matters reasonably requested to be discussed by the Agent or the Lenders, at which meeting there shall be present a responsible financial officer and such other officers of the Borrower as may be reasonably requested to attend by the Agent or the Lenders.

Collateral Requirement. The Borrower shall take such actions as are necessary or as the Agent shall reasonably request from time to time to comply with the Collateral Requirement (subject to any exception or exclusion expressly set forth herein or in any Security Document), and shall promptly notify the Agent upon having knowledge that the Lien of the Agent pursuant to the Security Documents has been materially impaired.

Keeping of Books. The Borrower shall keep proper books of record and account as are necessary to prepare financial statements in accordance in all material respects with Appropriate Accounting Principles.

Compliance with Investment Company Act. For so long as theThe Borrower is regulated as a BDCshall not become an “investment company” as defined in, or subject to regulation under, the Investment Company Act, the Borrower shall comply with (i) Section 18 of the Investment Company Act, as made applicable to BDCs pursuant to Section 61 of the Investment Company Act and (ii) all other requirements of the Investment Company Act applicable to BDCs, unless with respect to clause (ii), the failure to comply therewith would not reasonably be expected to result in a Material Adverse Event. The Borrower will give the Agent twenty (20)

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days prior written notice before changing its election to be regulated as a BDC under the Investment Company Act.of 1940.

Compliance with Other Laws. The Borrower shall comply (i) with the requirements of all other Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (A) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (B) the failure to comply therewith would not reasonably be expected to result in a Material Adverse Effect, and (ii) in all material respects with all Anti-Corruption Laws, Anti-Terrorism Laws and applicable Sanctions.

Compliance with Investment Policies and Restrictions and Advisory Agreement.

The Borrower shall comply with the Investment Policies and Restrictions in all material respects at all times.

The Borrower shall (and shall cause the Investment Adviser to) comply with the Advisory Agreement in all material respects.

Material Agreements. The Borrower shall comply with the terms of each provision of any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement or instrument to which the Borrower is a party or by which the Borrower or any of its properties or assets is bound in which the failure to comply would reasonably be expected to result in a Material Adverse Effect.

Accounts.

The Borrower shall maintain all its Investment Assets in the Custody Account or such other account that is subject to a Control Agreement and (A) upon delivery by the Agent to the Custodian or other depositary institution of a “Notice of Exclusive Control” or similar notice (as may be required by the applicable Control Agreement), cease all trading and other activities with respect to the Custody Account or such other account that is subject to a Control Agreement, and (B) ensure delivery by the Custodian or other depositary institution of a means (website access, daily reports) of allowing the Agent to monitor, on a real-time basis, all cash movements and other activities occurring in the Custody Account.

After the Closing Date, the Borrower shall not, directly or indirectly, establish any new Custody Account, Deposit Account, Commodity Account or Securities Account unless such new account either (A) concurrently becomes subject to a Control Agreement or (B) is an Excluded Account.

Further Assurances; Additional Subsidiaries.

The Borrower agrees that upon the request of the Agent, it shall execute and/or deliver any additional agreements, documents and instruments, and take such further

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actions as the Agent may reasonably deem necessary (i) to assure the Agent and/or the Lenders have a first priority perfected lien on the Collateral and (ii) to carry out the provisions and purposes of the Transaction Documents, in each case subject to any exception or exclusion expressly set forth herein (including, for the avoidance of doubt, with respect to Permitted Liens) or in any Security Document. Such agreements, documents or instruments or actions shall be reasonably satisfactory, in form and substance, to the Agent.

If any Subsidiary is formed or acquired by the Borrower, the Borrower will take or cause to be taken the following actions as soon as possible but in any case not later than 10 days (or such later date as the Agent may permit in its reasonable discretion) after the date on which such Subsidiary is created or acquired: (x) cause such Subsidiary to (A) execute and deliver to the Agent a joinder agreement and thereby become a “Borrower” hereunder, (B) execute and deliver to the Agent a counterpart to the Security Agreement and thereby become a party thereto as a “Grantor” thereunder and grant to the Agent a first priority Lien on all “Collateral” of such Subsidiary thereunder, (C) take such other action as shall be reasonably necessary to create and perfect valid and enforceable first priority Liens in favor of the Agent on all or substantially all of the assets of such Subsidiary consistent with the provisions of this Agreement and the other Transaction Documents and (D) deliver proof of corporate action, incumbency of officers and other documents and opinions as is substantially consistent with those delivered by the Borrower pursuant to Section 3(a) as of the Closing Date and (y) execute and deliver to the Agent such Control Agreement, such pledge agreements or such addenda or amendments to the Security Agreement and take such other actions (including delivering the certificates representing such shares of stock or other equity interests to the Agent) as shall be reasonably necessary to create and perfect valid and enforceable first priority Liens in favor of the Agent on all of the issued and outstanding stock or other equity interests of Subsidiary, all of the foregoing to be in form and substance reasonably satisfactory to the Agent.

Rating Confirmation. The Borrower shall, at its sole cost and expense, cause to be maintained at all times during the term of this Agreement the Loan Rating. The Borrower shall provide the NRSRO with any information as to the Loans as may be reasonably requested by the NRSRO in connection with such Loan Rating. The Borrower further shall provide evidence of the Loan Rating from the NRSRO, which evidence shall be in a form that may be provided to the Securities Valuation Office of the National Association of Insurance Commissioners, to the Agent at least annually.

Insurance. The Borrower shall maintain insurance, with financially sound and reputable insurance companies, as may be required by law and such other insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses.

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1REIT Status. At all times prior to the calendar year in respect of which a REIT Status Termination Date occurs: (i) the Borrower will take all commercially reasonable action that will cause it to continue to qualify as a REIT, (ii) the Borrower will maintain adequate records so as to comply with all record-keeping requirements relating to its qualification as a REIT as required by the Code and applicable Treasury Regulations promulgated thereunder and will properly prepare and timely file with the Internal Revenue Service all returns and reports required thereby to qualify as a REIT each year, (iii) the Borrower will request from its shareholders all information required by the Code and applicable Treasury Regulations promulgated thereunder; and (iv) the Borrower will deliver to the Agent, within ten (10) days of filing, certified true and complete copies of any documents filed with the Internal Revenue Service or other Governmental Authority confirming the continued qualification and taxation of the Borrower as a REIT. The Borrower will give the Agent twenty (20) days prior written notice of a REIT Status Termination Date andPass-Through Tax Status. The Borrower will at all times during the term of this Agreement maintain a pass-through tax status.

NEGATIVE COVENANTS

So long as a Lender shall have any Loan Commitment hereunder, or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied:

Indebtedness. The Borrower shall not create, incur, assume or suffer to exist any Indebtedness other than Permitted Indebtedness. Notwithstanding the foregoing, on and after the Amendment No. 2 Effective Date, the Borrower shall not, directly or indirectly, create, incur or assume any Indebtedness other than any Permitted Refinancing.

Liens. The Borrower shall not create, incur, assume or suffer to exist any Lien upon any of its assets, including the Collateral, except Permitted Liens. For the avoidance of doubt, any assets of the Borrower shall constitute Collateral and shall be pledged in favor of the Agent subject to Permitted Liens.

Mergers, Etc. The Borrower shall not merge or consolidate with or into another Person, or convey, transfer, lease or otherwise dispose of, whether in one transaction or in a series of transactions, all or substantially all of its property and assets (whether now owned or hereafter acquired), except that in the case of any such transaction involving the Borrower, the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease all or substantially all of the assets of the Borrower as an entirety, as the case may be, shall be a solvent corporation or limited liability company organized and existing under the laws of the United States or any state thereof (including the District of Columbia), and, if the Borrower is not such corporation or limited liability company, (i) such corporation or limited liability company shall have executed and delivered to the Agent its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the other Transaction Documents and (ii) such corporation or limited liability company shall have caused to be delivered to the Agent an opinion of nationally recognized independent counsel, or other independent counsel reasonably satisfactory to the

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Required Lenders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof.

Line of Business. The Borrower shall not engage to a material extent in any business other than as described in its Organization Documents and the most recently filed Form 10-K.

No Amendment of Investment Policies and Restrictions, Valuation Methodology, Organization Documents. The Borrower shall not agree to or otherwise permit to occur (without prior notice to, and the prior written consent of, the Agent or the Lenders, which consent shall not be unreasonably withheld in any respect to proposed amendment referenced in the succeeding clause (i) if such amendment is not materially adverse to the Agent or the Lenders) any amendment, supplement or other modification of any of the terms or provisions of its Investment Policies and Restrictions, Valuation Methodology or Organization Documents, in each case (i) relating to valuation of assets or (ii) that (A) would reasonably be expected to adversely affect the rights and remedies of the Lenders or the Agent under any Transaction Document in any material respect, (B) would reasonably be expected to result in a Material Adverse Effect, or (C) otherwise fails to comply with the terms of this Agreement or any other Transaction Document.

Distributions, Equity Repurchases and Redemptions.The Borrower will not declare or make any dividend payment or other distribution of assets, property, Cash, rights, obligations or securities on account of any Borrower Equity Interests if immediately before and after giving effect thereto, a breach of the Financial Covenant or any other Event of Default has occurred and is continuing or would be caused thereby; provided that, notwithstanding the foregoing, the Borrower shall be permitted to declare or make a dividend payment or other distribution comprised of shares of the Borrower’s common stock and/or the minimum amount of cash necessary for Parent to maintain the Borrower’sREIT status as a REIT (subject in all cases to Section 6(g) of this Agreement). In addition, the Borrower will not purchase, redeem, retire, or otherwise acquire for value any Borrower Equity Interests, whether now or hereafter outstanding, if immediately before and after giving effect thereto, a breach of the Financial Covenant or any other Event of Default has occurred and is continuing or would be caused thereby.

Dividend Declarations. The Borrower will not declare any dividend or distribution that (i) would be paid or scheduled to be paid more than three (3) months from the date of such declaration or (ii) exceeds the Borrower’s reasonably estimated taxable income for the relevant taxable period. Notwithstanding the foregoing, clause (ii) of this Section 6(g) shall not limit any dividend, payment or distribution necessary to maintain the Borrower’sParent’s REIT status, to avoid income tax and to avoid excise tax pursuant to Section 4981 of the Code.

Prepayments on Permitted Indebtedness. The Borrower shall not make regularly scheduled interest payments in respect of any Permitted Indebtedness, if immediately before and after giving effect to such payment, a breach of the Financial Covenant, Default or Event of Default would exist. The Borrower shall not prepay, redeem, repurchase, purchase, defease or otherwise make any prepayments of principal on any Permitted Indebtedness prior to its scheduled maturity (as in effect on the Closing Date to the extent such Permitted Indebtedness exists on the Closing Date), except that the Borrower may consummate a Permitted Refinancing

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of any Permitted Indebtedness. Notwithstanding the foregoing, this Section 6(h) shall not apply to the Loans.

Custodian. The Borrower shall not enter into any other custody agreement or equivalent arrangement relating to the Collateral with any Person other than the Custodian without the prior written consent of the Agent.

Investments. The Borrower shall not purchase, hold or acquire any Investment, except in accordance with the Investment Policies and Restrictions.

Use of Proceeds.

The Borrower shall not use the proceeds of any Loan, whether directly or indirectly, and whether immediately, incidentally or ultimately, in a way that would violate Regulation T, Regulation U or Regulation X.

The Borrower will not request any Loan, and the Borrower shall not use, and shall procure that the directors, officers, employees and agents of the Borrower shall not use, the proceeds of any Loan (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or Anti-Terrorism Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country in violation of Sanctions, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

Restrictive Agreements. The Borrower shall not, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon the ability of the Borrower to create, incur or permit to exist any Lien under the Transaction Documents upon any of its property other than (i) restrictions or conditions imposed by Law or this Agreement or the other Transaction Documents, (ii) customary restrictions contained in leases, licenses and other contracts restricting the assignment thereof not subject to a waiver and (iii) any restrictions pursuant to any document, agreement or instrument governing or relating to any Underlying Instrument, Permitted Lien or the Participations.

Transactions with Affiliates. The Borrower shall not enter into any transaction, including, without limitation, any purchase, sale, transfer, lease or exchange of property or the rendering of any service, with any Affiliate; provided, the foregoing restriction shall not apply to (i) any transaction that is permitted under any exemptive rule or exemptive relief order granted to the Borrower pursuant to the Investment Company Act, or any applicable no-action letter guidance provided by the SEC,[reserved] and (ii) any other transaction that (A) is not in violation of the Investment Company Act[reserved], (B) is in the ordinary course of the Borrower’s business, and (C) is on fair and reasonable terms substantially as favorable to the Borrower as would be obtainable by the Borrower at the time in a comparable arm’s length transaction with a Person other than an Affiliate.

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Instructions to Obligors. The Borrower shall not make any change, or permit the Investment Adviser to make any change, in its instructions to administrative or payment agents or any Obligors regarding payments to be made with respect to the Collateral to the Custody Account, unless the Agent has given prior written consent to such change or such change would not be adverse to the Agent or the Lenders in any material respect.

Accounting. The Borrower shall not change its (i) accounting policies or financial reporting practices except as required or permitted by Appropriate Accounting Principles or (ii) fiscal year, in each case unless agreed to by the Agent in writing.

FINANCIAL COVENANT.

Minimum Asset Coverage Ratio. The Borrower shall not permit the Asset Coverage Ratio to be less than 200% as of the last day of any fiscal quarter, beginning with the fiscal quarter ending March 31, 2021 (the “Financial Covenant”). The calculations performed by the Investment Adviser for purposes of determining the Borrower’s compliance with the Financial Covenant shall comply with the Valuation Methodology. Notwithstanding the foregoing, in the event that the Agent believes in good faith that (x) the Investment Adviser’s calculation of Total Assets is not representative of fair value and (y) as a result, the Borrower may be in breach of the Financial Covenant, the Agent may engage, at Borrower’s sole cost and expense, Houlihan Lokey Financial Advisors, Inc. (or another third party valuation adviser acceptable to the Agent) (such advisor, the “Valuation Adviser”) to value the Collateral for purposes of conducting the calculations of the Financial Covenant; provided, that if the Valuation Adviser determines a range of potential values (rather than a specific mark) for an asset, then the value assigned to such asset shall be the mid-point of the range. In the event the calculations by the Valuation Adviser result in the Borrower’s breach of the Financial Covenant, the Valuation Adviser shall continue to value the Collateral for purposes of such calculations until the Asset Coverage Ratio exceeds 215%. The Borrower agrees to cooperate with the Valuation Adviser, including promptly providing the Valuation Adviser with such information and materials as it may reasonably request in connection with its valuation of the Collateral.

EVENTS OF DEFAULT AND REMEDIES

If any of the following events (each, an “Event of Default”) shall occur:

Payment Default. The Borrower shall fail to pay (i) any of the outstanding principal of any Loan when due; (ii) any accrued interest on any Loan within three (3) Business Days after the due date; (iii) fees owing pursuant to Section 2(g)) within five (5) Business Days after the due date or (iv) other amounts or fees owing pursuant to the Transaction Documents within thirty (30) days following the Borrower’s receipt of a reasonably detailed invoice therefor;

Specific Covenants. The Borrower shall fail to perform or observe any term, covenant, or agreement contained in (i) Section 5(a), (b)(i), (b)(ii), (b)(v), (d), (m) or Section 6 and such failure remains uncured for a period of at least fifteen (15) days; provided that the Agent, in its sole discretion, may extend the foregoing grace period based on a satisfactory plan being

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submitted by the Borrower to cure such failure; and (ii) Section 7 and the Borrower has failed to cure the breach of such Financial Covenant in accordance with Section 2(d)(i);

Failure to Pay Custodian. The Borrower shall fail to pay to the Custodian any fees, expenses or charges, payable by the Borrower under the Custody Agreement and such failure entitles the Custodian to seek repayment of such fees, expenses or charges from the Custody Account;

Default under Transaction Documents. The Borrower shall fail to perform or observe any term, covenant or agreement contained in this Agreement or any other Transaction Document (in each case, not otherwise specified in Subsections (a), (b) and (c)above) to which such Person is a party, to be performed or observed by the Borrower and such failure remains unremedied for thirty (30) days after the earlier of (i) receipt by Borrower of written notice from the Agent of such default and (ii) any Responsible Officer of the Borrower obtaining actual knowledge of such default, provided that the Agent, in its sole discretion, may extend the foregoing grace period based on a satisfactory plan being submitted by the Borrower to cure such failure;

Representations and Warranties. Any representation, warranty or certification made or deemed made by or on behalf of the Borrower herein or in any other Transaction Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder shall be incorrect or misleading in any material respect when made or deemed made (except for any representation or warranty that is qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects); provided that the failure of any representation, warranty or certification to be true when made or deemed made will not constitute an Event of Default hereunder or under any other Transaction Document if (i) such failure is capable of being cured, (ii) such failure is cured within thirty (30) days after the Borrower has knowledge thereof and (iii) such failure has not had and would not be reasonably be expected to have during such 30-day period a Material Adverse Effect;

Invalidity of Transaction Documents. Any provision of any Transaction Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or the payment in full in cash of all the Obligations, ceases to be in full force and effect; or the Borrower, the Custodian, any Governmental Authority or any investor in the Borrower or any Affiliate of the Borrower contests in any manner the validity or enforceability of any provision of any Transaction Document; or the Borrower denies that it has any or further liability or obligation under any Transaction Document, or purports to revoke, terminate or rescind any provision of any Transaction Document;

Cross-Default. The Borrower (i) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise and after giving effect to any applicable notice requirement, grace period or waiver) in respect of any Indebtedness (other than Indebtedness hereunder) and the aggregate outstanding principal amount for or in respect of such Indebtedness exceeds the Threshold Amount, or (ii) fails to observe or perform any other agreement or condition relating to any Indebtedness in excess of the Threshold Amount or contained in any instrument or agreement evidencing, securing or

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relating thereto, the effect of which is to cause, or to permit the counterparty, holder or holders, or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such Persons) to cause, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise) after giving effect to any applicable notice requirement, grace period or waiver;

Inability to Pay Debts; Attachment; Insolvency Proceedings, Etc. (i) The Borrower becomes unable or admits in writing its inability or fails generally to pay its debts as they become due; (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of the Borrower and is not released, vacated or fully bonded within sixty (60) days after its issue or levy; (iii) the Borrower institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors, or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; (iv) any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of the Borrower and the appointment continues undischarged or unstayed for sixty (60) days; (v) any proceeding under any Debtor Relief Law relating to the Borrower or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) days, or an order for relief is entered in any such proceeding; or (vi) the Borrower shall take any action to authorize any of the actions set forth above in this Section 8(h);

Judgments. There is entered against the Borrower one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) and such judgment or order shall continue unsatisfied or unstayed for thirty (30) days;

ERISA. One or more ERISA Events shall have occurred that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect;

[Intentionally Reserved.]

Lien Defects. The Collateral Requirement shall cease to be satisfied, as determined by the Agent in its sole discretion acting in good faith, or the Lenders and/or the Agent shall cease to have a first priority perfected lien on the Collateral (subject to Permitted Liens);

then, and during the occurrence of such event, the Agent may upon written notice to the Borrower (i) declare the Loans, all accrued interest thereon, all fees and all other accrued amounts payable under this Agreement and the other Transaction Documents to be forthwith due and payable, whereupon the Loans, all such interest and fees and all such other amounts hereunder and under the Transaction Documents shall become forthwith due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower and (ii) declare the obligation of the Lenders to make any Loan to be terminated, whereupon the same shall forthwith terminate; provided, however, that upon the occurrence of any event in Section 8(h), (x) the Loans, all accrued interest and all accrued other

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amounts payable, including fees, under this Agreement and under the other Transaction Documents shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower and (y) the obligation of the Lenders to make Loans shall automatically be terminated.

In addition to the foregoing, upon the occurrence and during the continuance of an Event of Default, the Agent may, at its option, (A) deliver the requisite notice in accordance with the Control Agreement with respect to the Custody Account to provide the Agent with exclusive control, (B) instruct the Custodian to transfer the whole or any part of the Collateral with a Market Value not in excess of the Obligations then outstanding into the name of the Agent or the name of its nominee, (C) notify the Obligors on any Collateral to make payment directly to the Agent or its nominee of any amounts due thereon, (D) take control or grant its nominee the right to take control of any proceeds of the Collateral, (E) liquidate any or all of the Collateral and/or (F) withdraw and/or sell any or all of the Collateral and apply any such Collateral as well as the proceeds of any such Collateral to all unpaid Obligations in such order as the Agent determines in its sole discretion, and exercise any other rights and remedies under any Transaction Document, at law or in equity. The Borrower will be responsible for any decrease in the value of the Collateral occurring prior to liquidation.

MISCELLANEOUS

Effectiveness. This Agreement shall become effective on the Closing Date.

Amendments, waivers, etc. No amendment or waiver of any provision of this Agreement or any other Transaction Document, and no consent to any departure by the Borrower therefrom, shall be effective unless in writing executed by the Borrower and the Required Lenders, and acknowledged by the Agent, or by the Borrower and the Agent with the consent of the Required Lenders, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such amendment, waiver or consent shall:

extend or increase any Loan Commitment of any Lender without the written consent of such Lender (it being understood that a waiver of any condition precedent set forth in Section 3 or the waiver of any Default shall not constitute an extension or increase of any Loan Commitment of any Lender);

reduce the principal of, or rate of interest specified herein on, any Loan, or any fees or other amounts payable hereunder or under any other Transaction Document, without the written consent of each Lender directly and adversely affected thereby (provided that only the consent of the Required Lenders shall be necessary (x) to amend the definition of “Default Rate” or to waive the obligation of the Borrower to pay interest at the Default Rate or (y) to amend the Financial Covenant, even if the effect of such amendment would be to reduce the rate of interest on any Loan or other Obligation or to reduce any fee payable hereunder);

postpone any date scheduled for any payment of principal of, or interest on, any Loan, or any fees or other amounts payable hereunder or under any other Transaction

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Document, or reduce the amount of, waive or excuse any such payment, without the written consent of each Lender directly and adversely affected thereby;

change Section 2(j) or Section 2(n) in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly and adversely affected thereby;

waive any condition set forth in Section 3(a) without the written consent of each Lender; or

change any provision of this Section or the percentage in the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;

provided, further, that no such amendment, waiver or consent shall amend, modify or otherwise affect the rights or duties hereunder or under any other Transaction Document of the Agent, unless in writing executed by the Agent, in each case in addition to the Borrower and the Lenders required above.

In addition, notwithstanding anything in this Section to the contrary, if the Agent and the Borrower shall have jointly identified an obvious error or any error or omission of a technical nature, in each case, in any provision of the Transaction Documents, then the Agent and the Borrower shall be permitted to amend such provision, and, in each case, such amendment shall become effective without any further action or consent of any other party to any Transaction Document if the same is not objected to in writing by the Required Lenders to the Agent within ten (10) Business Days following receipt of notice thereof.

Notices and Other Communications.

Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission and electronic mail) and delivered to such numbers or addresses set forth on the relevant signature blocks hereto or as given from each party to the other in writing from time to time; provided that electronic mail may be used only to distribute routine communications, such as financial statements and other information as provided in Section 5(b). All notices and other communications shall be deemed to be effective upon receipt. The Lenders and the Agent shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.

The Borrower hereby acknowledges that certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information

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with respect to the Borrower or its securities, and who may be engaged in investment and other market-related activities with respect to the Borrower’s securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the materials and information provided by or on behalf of the Borrower hereunder and under the other Transaction Documents (collectively, “Borrower Materials”) that may be distributed to the Public Lenders and that (i) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC,” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Agent and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of U.S. federal and state securities Laws.

No Waiver; Cumulative Remedies. No failure by the Lenders or the Agent to exercise, and no delay by the Lenders or the Agent in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Expenses. The Borrower agrees to pay or reimburse the Lenders and the Agent for (i) all actual, reasonable and documented (in summary form) fees, costs and out-of-pocket expenses incurred in connection with the development, preparation, negotiation, execution and delivery of this Agreement and other Transaction Documents executed and delivered on or prior to the Closing Date (including background checks and other due diligence), whether or not the transactions contemplated hereby or thereby are consummated, including, without limitation, the reasonable fees and disbursements of counsel to Lenders and the Agent, (ii) all actual, reasonable and documented (in summary form) costs and expenses of the Agent incurred in connection with any amendment, waiver, consent or other modification of the provisions hereof and the other Transaction Documents (whether or not such transactions are consummated), and (iii) after the occurrence and during the continuance of an Event of Default, all actual, reasonable and documented (in summary form) costs and expenses of Agent and the Lenders incurred in connection with the enforcement or preservation of any rights of Agent and the Lenders under this Agreement with respect to Borrower and the other Transaction Documents; provided that the Borrower’s obligations under this clause (iii) with respect to legal costs and expenses shall be limited to the reasonable fees and disbursements of one counsel to the Agent and the Lenders (including all such reasonable costs and out-of-pocket expenses incurred during any “workout” or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law). All such amounts shall be payable (x) with respect to clause (i), on the Closing Date and (y) otherwise, within thirty (30) days after written demand therefor together with a reasonably detailed invoice.

Indemnification. The Borrower shall indemnify and hold harmless the Lenders, the Agent, their respective Affiliates and their respective directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the “Indemnitees”) from and against any and all

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liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including all actual, reasonable and documented (in summary form) legal fees and expenses of one law firm plus any local counsel deemed appropriate by such law firm) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower of any kind or nature, which may at any time be imposed on, incurred by or asserted against any such Indemnitee in connection with (i) the execution, delivery and performance by the parties thereto of their respective obligations under this Agreement or any other Transaction Document and the transactions contemplated hereby or thereby, and the consummation and administration of the transactions contemplated hereby and thereby (other than with respect to legal fees and disbursements incurred on or prior to the date hereof), or (ii) any actual or prospective claim, litigation, investigation or proceeding brought or threatened in writing whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower, and regardless of whether such Indemnitee is designated a party thereto, relating to or arising out of this Agreement or any other Transaction Document or the transactions contemplated hereby and thereby, a Lender’s or the Agent’s activities in connection herewith or therewith or any actual or proposed use of proceeds of Loans hereunder; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of any Indemnitee. No Indemnitee or other party hereto shall have any liability for any special, indirect, consequential or punitive damages relating to this Agreement or any other Transaction Document or arising out of its activities in connection herewith or therewith (whether before or after the date hereof).

Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to any Lender, or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred.

Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lenders and the Agent, (ii) the Agent may not assign or otherwise transfer any of its rights or obligations hereunder except to any Affiliates of any Lender or of the Agent or any Person sponsored, administered, managed or financed by any Lender or the Agent or any Affiliate thereof, and (iii) no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (A) to the Agent, another Lender, any Affiliate of any Lender, the Agent or any Person sponsored, administered, financed or managed by any Lender, the Agent or any Affiliate thereof or any other Person (other than a natural person) approved by the Agent and, unless a Specified Event of Default has occurred and

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is continuing at the time of such assignment, the Borrower (each such approval not to be unreasonably withheld or delayed), (B) by way of participation in all or a portion of such Lender’s rights and/or obligations hereunder (including all or a portion of its Loan Commitment and/or the Loans), or (C) by way of pledge or assignment of a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender (and any other attempted assignment or transfer by any party hereto shall be null and void). The Borrower agrees that each such assignee or participant will be entitled to the benefits of Sections 9(f), (l) and (v) to the same extent as if it were a Lender.

Delegation of Duties. The Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Transaction Document by or through any one or more sub-agents appointed by the Agent. The Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The indemnification provisions of Section 9(f) will apply to any such sub-agent. The Agent will not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that the Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.

No Third Party Beneficiary. Nothing in this Agreement or any other Transaction Document, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto or thereto, their respective successors and assigns permitted hereby or thereby, and, to the extent expressly contemplated hereby or thereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

Increased Cost. The Borrower shall reimburse or compensate each Lender, upon written demand, for all costs incurred, losses suffered or payments made by such Lender which are applied or reasonably allocated by such Lender to the transactions contemplated herein (all as determined by such Lender in its reasonable discretion) by reason of any and all future reserve, deposit, capital adequacy or similar requirements against (or against any class of or change in or in the amount of) assets, liabilities or commitments of, or extensions of credit by, such Lender or Change in Law or in the interpretation or application thereof after the date hereof; and compliance by such Lender with any directive, or requirements from any regulatory authority, whether or not having the force of law (including any Tax or increased Tax of any kind whatsoever with respect to this Agreement or any Loan hereunder or any change in the basis or rate of taxation of payments to the Lender in respect thereof); provided that such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if such designation or assignment (i) would eliminate or reduce any such amounts and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender (and the Borrower hereby agrees to pay all reasonable costs and expenses incurred by such Lender in connection with any such designation or assignment).

Confidentiality. Each Lender and the Agent agrees to maintain the confidentiality of all information received from or an behalf of the Borrower relating to the Borrower or its business (“Borrower Confidential Information”), and the Borrower agrees to maintain the confidentiality of each of the Transaction Documents and all other information received from the Lenders or the

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Agent, including all reports prepared by the Agent or the Lenders (“Lender Confidential Information” and, together with Borrower Confidential Information, “Confidential Information”) except that the Borrower may disclose Lender Confidential Information and the Lenders or the Agent may disclose Borrower Confidential Information (i) to its and its respective Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (collectively, “Representatives”) (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature thereof and instructed to keep the content thereof confidential and that such party shall be responsible for any breach or failure to comply with this Section 9(l)(i) (or any instruction hereunder) by its Representatives); (ii) to the extent requested by any regulatory or self-regulatory authority or required by Applicable Laws, or in the case of the Borrower, as determined in good faith or on the advice of counsel to be necessary for compliance with Applicable Laws, or by any subpoena or similar legal process or, with respect to a Lender, by any rating agency then rating the commercial paper notes issued by or on behalf of the Lender or other debt obligations of the Lender or its Affiliates; (iii) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (iv) in the case of the Lenders or the Agent, subject to an agreement containing provisions substantially similar to those of this Section 9(l), to any actual or prospective permitted assignee or participant in such Lender’s rights or obligations under this Agreement or any credit insurance (or credit re-insurance) provider of such Lender; (v) with the consent of the Borrower with respect to the disclosure of Borrower Confidential Information, and with the consent of the Lenders and the Agent with respect to the disclosure of Lender Confidential Information; or (vi) to the extent such Confidential Information (A) is available to the disclosing Person on a nonconfidential basis prior to disclosure by the other Person, (B) becomes publicly available other than as a result of a breach of this Section 9(l), (C) becomes available to the disclosing Person on a nonconfidential basis from a source other than the other Person or (D) is developed by the receiving Person without reliance on Confidential Information. It is understood and agreed that regulators having jurisdiction over the Agent or the Lenders shall have unrestricted access to all books, records, files and other materials in the Agent’s or the Lenders’ possession, including any Borrower Confidential Information, and disclosure of any Borrower Confidential Information to such persons solely for purposes of supervision or examination may occur without written notice to or authorization from the Borrower.

Set-off. In addition to any rights and remedies of the Lenders provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender is authorized at any time and from time to time, without prior notice to the Borrower, any such notice being waived by the Borrower to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, indebtedness or other obligation at any time owing by, the Lender to or for the credit or the account of the Borrower against any and all Obligations owing to the Lender hereunder or under any other Transaction Document, now or hereafter existing, irrespective of whether or not the Lender shall have made demand under this Agreement or any other Transaction Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit, indebtedness or obligation. Each Lender agrees promptly to notify the Borrower after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

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Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Transaction Document, the interest paid or agreed to be paid under the Transaction Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (the “Maximum Rate”). If the Lenders shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged or received by the Lenders exceeds the Maximum Rate, the Lenders may, to the extent permitted by Applicable Law, (i) characterize any payment that is not principal as an expense, fee or premium rather than interest, (ii) exclude voluntary prepayments and the effects thereof and (iii) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

Counterparts; Integration. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any signature delivered by a party by facsimile or electronic transmission (including email transmission of a PDF image) shall be deemed to be an original signature hereto. This Agreement, together with the other Transaction Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

Survival. Notwithstanding any provision to the contrary, (i) all representations and warranties made hereunder and in any other Transaction Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof and (ii) the provisions of Sections 9(f), 9(l), 9(m), 9(v) and 9(y) shall survive any termination of this Agreement.

Severability. If any provision of this Agreement or the other Transaction Documents is held to be illegal, invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Transaction Documents shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Governing Law. THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT (EXCEPT, AS TO ANY OTHER TRANSACTION DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

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Jurisdiction. Each party hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind whatsoever, whether in law or equity, or whether in contract or tort or otherwise, against any other party hereto or any of their respective Related Parties in any way relating to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees that any such action, litigation or proceeding may be brought in any such New York State court or, to the fullest extent permitted by Applicable Law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing herein or in any other Transaction Document shall affect any right that the Agent or the Lenders may otherwise have to bring any action or proceeding relating to this Agreement or any other Transaction Document against the Borrower or its properties in the courts of any other jurisdiction. Each party hereto irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to such other party hereto at its address set forth beneath its signature hereto. Each party hereto irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.

WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OR RELATED TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY.

Judgment Currency. If, under any Applicable Law and whether pursuant to a judgment being made or registered against the Borrower or for any other reason, any payment under or in connection with this Agreement, is made or satisfied in a currency (the “Other Currency”) other than Dollars then, to the extent that the payment (when converted into Dollars at the rate of exchange on the date of payment or, if it is not practicable for the party entitled thereto (the “Payee”) to purchase Dollars with the Other Currency on the date of payment, at the rate of exchange as soon thereafter as it is practicable for it to do so) actually received by the Payee falls short of the amount due under the terms of this Agreement, the Borrower shall, to the extent permitted by law, as a separate and independent obligation, indemnify and hold harmless the Payee against the amount of such short-fall. For the purpose of this Section 9(u), “rate of exchange” means the rate at which the Payee is able on the relevant date to purchase Dollars with the Other Currency and shall take into account any premium and other costs of exchange.

Appointment as Agent; Limitation of Liability. Each Lender irrevocably appoints the Agent as its administrative agent and collateral agent under this Agreement and the other Transaction Documents and authorizes the Agent or any Affiliate of the Agent to take such

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actions on its behalf and to exercise such powers as are delegated to the Agent by the terms of the Transaction Documents, together with such actions and powers as are reasonably incidental thereto. The Agent shall not have any duties or obligations except those expressly set forth in the Transaction Documents.

Conflicts Disclosure; Waiver and Exculpation. The Borrower hereby acknowledges that the Lenders, the Agent and their respective Affiliates may accept deposits from, make loans or otherwise extend credit to, and generally engage in any kind of commercial, trading or investment banking business with (including the provision of brokerage, asset management and advisory services to) any issuer of an Investment Asset or their respective Affiliates or any other Person having obligations relating to the Borrower or any Investment Asset, and may act with respect to such business in the same manner as if this Agreement or the Loans did not exist (including in a way that may be directly or indirectly adverse to the interests of the Borrower). The Borrower hereby waives any claim in respect of any such potential or actual conflict, and agrees that it will not seek to hold the Lenders, the Agent or their respective Affiliates liable for any losses or obligations of the Borrower that may result with respect to such business.

USA PATRIOT Act. Each Lender and the Agent (for itself and not on behalf of the Lenders) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify, and record information that identifies the Borrower which information includes the name of the Borrower and other information that will allow the Lenders or the Agent, as applicable, to identify the Borrower in accordance with the USA PATRIOT Act, and the Borrower agrees to provide such information from time to time to the Lenders and the Agent, as applicable.

Acknowledgements. The Borrower hereby acknowledges that (i) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Transaction Documents; (ii) none of the Agent nor the Lenders has any fiduciary or advisory relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Transaction Documents, and the relationship between the Borrower, on the one hand, and the Agent and Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (iii) no joint venture is created hereby or by the other Transaction Documents or otherwise exists by virtue of the transactions contemplated hereby between the Lenders or Agent and the Borrower.

OID Legend. THE LOANS MAY BE ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY OF THE LOANS MAY BE OBTAINED BY WRITING TO THE BORROWER AT ITS ADDRESS SET FORTH ON THE SIGNATURE PAGE HERETO.

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DEFINITIONS; CONSTRUCTION

Except as otherwise set forth in the Exhibits or Appendices hereto, the following terms, as used herein, have the following meanings:

“Advisers Act” means the Investment Advisers Act of 1940, as amended from time to time, together with all rules and regulations promulgated from time to time thereunder.

“Advisory Agreement” means the Investment Advisory and Administrative Services Agreement, dated as of April 30, 2019, between Investment Advisor and the Borrower.

“Affiliate” means, (i) when used with reference to the Borrower, has the meaning ascribed to the term “Affiliated Person” in the Investment Company Act and the rules and regulations thereunder and (ii) when used with reference to any other Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote 10% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent. In any event, the Investment Adviser and its Affiliates shall be deemed Affiliates of the Borrower.

“Anti-Corruption Laws” means all Laws applicable to the Borrower or any of its Affiliates from time to time concerning or relating to bribery or corruption, including the Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§ 78dd-1, et seq.).

“Anti-Terrorism Laws” means all Laws of any jurisdiction applicable to the Borrower or any of its Affiliates from time to time related to money laundering or financing terrorism including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56) (the “USA PATRIOT Act”), The Currency and Foreign Transactions Reporting Act (31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959) (also known as the “Bank Secrecy Act”, the Trading With the Enemy Act (50 U.S.C. § 1 et seq.) and Executive Order 13224 (effective September 24, 2001).

“Applicable Law” means, for any Person, all existing and future laws, rules, regulations (including proposed, temporary and final income tax regulations), statutes, treaties, codes, ordinances, permits, certificates, orders, licenses of and interpretations by any Governmental Authority applicable to such Person and applicable judgments, decrees, injunctions, writs, awards or orders of any court, arbitrator or other administrative, judicial, or quasi-judicial tribunal or agency of competent jurisdiction.

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“Applicable Rate” means with respect to Loans, per annum in cash, for SOFR Loans, 7.375%, and for Base Rate Loans, 6.375%; provided that for each day that (A) the Borrower fails to cause to be maintained a Loan Rating as required pursuant to Section 5(o) or (B) the Loan Rating is below Investment Grade, the Applicable Rate shall be (i) for SOFR Loans, 8.375% and (ii) for Base Rate Loans, 7.375%.

“Appropriate Accounting Principles” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

“Asset Coverage Ratio” means, with respect to the Borrower on any date, the ratio, expressed as a percentage, of (a) Total Assets less all liabilities (including liabilities associated with the Participations) and Indebtedness of the Borrower not represented by Senior Securities to (b) the aggregate amount of Senior Securities of the Borrower.

“BDC” means a “business development company” as defined under Section 2(a)(48) of the Investment Company Act.

“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark or payment period for interest calculated with reference to such Benchmark, as applicable, that is or may be used for determining the length of an Interest Period pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2(o).

“Base Rate” means for any day a fluctuating rate of interest per annum equal to the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) the Prime Rate and (c) Term SOFR for a one-month tenor in effect on such day plus 1.00%; and if the Base Rate shall be less than 6.00%, such rate shall be deemed 6.00% for purposes of this Agreement. For purposes of this definition, the “Prime Rate” shall mean, for any day, the rate of interest in effect for such day that is identified and normally published by The Wall Street Journal as the “Prime Rate” (or, if more than one rate is published as the Prime Rate, then the highest of such rates), with any change in the Prime Rate to become effective as of the date the rate of interest which is so identified as the “Prime Rate” is different from that published on the preceding Business Day. If the Wall Street Journal no longer reports the Prime Rate, or if the Prime Rate no longer exists, or the Agent determines in good faith that the rate so reported no longer accurately reflects an accurate determination of the prevailing Prime Rate, then the Agent may select another generally available and recognizable source to use as the basis for the Prime Rate.

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

“Base Rate Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.

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“Benchmark”means, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2(o).

“Benchmark Replacement”means, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Agent for the applicable Benchmark Replacement Date:

(1)the sum of: (a) Daily Simple SOFR and (b) the related Benchmark Replacement Adjustment;

(2)the sum of: (a) the alternate benchmark rate that has been selected by the Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment.

If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for purposes of this Agreement and the other Transaction Documents.

“Benchmark Replacement Adjustment”with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Agent in consultation with the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.

“Benchmark Replacement Conforming Changes” means, with respect to either the use or administration of Term SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods and other technical, administrative or operational matters) that the Agent decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if

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the Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).

“Benchmark Replacement Date”means the earliest to occur of the following events with respect to the then-current Benchmark:

(1)in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof);

(2)in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which all Available Tenors of such Benchmark (or the published component used in the calculation thereof) has been or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) have been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

For the avoidance of doubt, if such Benchmark is a term rate, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:

(1)a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof);

(2)a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New

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York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof); or

(3)a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.

For the avoidance of doubt, if such Benchmark is a term rate, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with Section 2(o) and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with Section 2(o).

“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Borrower Equity Interests” means, with respect to the Borrower, shares of capital stock of (or other ownership or profit interests in) the Borrower, all of the warrants, options or other rights for the purchase or acquisition from the Borrower of shares of capital stock of (or other ownership or profit interests in) the Borrower, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) the Borrower or warrants, rights or options for the purchase or acquisition from the Borrower of such

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shares (or such other interests), and all of the other ownership or profit interests in the Borrower (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“Borrower Materials” has the meaning specified in Section 9(c)(ii).

“Borrowing Date” means any date, on or prior to the Commitment Termination Date, on which the Borrower borrows a Loan hereunder.

“Borrowing Notice” has the meaning specified in Section 2(b).

“Business Day” means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the State of New York.

“Cash” means all cash denominated in Dollars (or any other currency acceptable to Agent in its sole discretion).

“Cash Equivalents” means:

securities issued by, or directly and fully guaranteed or insured by, the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof), maturing not more than one year from the date of acquisition;

certificates of deposit, dollar time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500,000,000 and a rating at the time of acquisition thereof of “P-2” or better from Moody’s or “A-2” or better from S&P;

repurchase obligations for underlying securities of the types described in clauses (a) and (b) above entered into with any financial institution meeting the qualifications specified in clause (b) above;

commercial paper issued by a corporation (other than an Affiliate of the Borrower) rated at least “P-1” or higher from Moody’s or “A-1” or higher from S&P, and in each case maturing within one year after the date of acquisition;

securities issued and fully guaranteed by any state, commonwealth or territory of the United States, or by any political subdivision or taxing authority thereof, rated at least “A2” by Moody’s or at least “A” by S&P and in each case having maturities of not more than one year from the date of acquisition; and

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shares of money market funds that comply with Rule 2a-7 under the Investment Company Act.

“Change in Law” means (a) the adoption of any Law after the date of this Agreement, (b) any change in any Law or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by the Agent or the Lenders with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that, notwithstanding anything herein to the contrary, (x) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, and (y) the Dodd-Frank Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.

“Change of Control” means (a) the direct or indirect sale, transfer, conveyance or other disposition (in each case, other than by way of merger or consolidation permitted under this Agreement) in one or a series of related transactions, of all or substantially all of the property or assets of the Borrower, (b) the consummation of any transaction the result of which is that any entity (other than a Permitted Holder) becomes the beneficial owner, directly or indirectly, of more than 50% of the outstanding voting stock of the Borrower, (c) the Investment Adviser or other external management company of the Borrower ceases to be Terra Investment Advisors, LLC or an Affiliate thereof or a replacement reasonably acceptable to the Agent or (d) the approval by the board of directors (or similar governing body) of the Borrower or the Borrower’s shareholders of any plan or proposal relating to the liquidation or dissolution of the Borrower. Notwithstanding the foregoing, the consummation of the recapitalization transaction described in the Borrower’s 8-K filed with the SEC on January 29, 2021 will not result and will not be deemed to result in a “Change of Control”.

“Closing Date” has the meaning specified in the introduction to this Agreement.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Collateral” means any and all “Collateral,” as defined in any Security Document.

“Collateral Requirement” means the requirement that:

(a)all documents and instruments necessary or reasonably requested by the Agent to be filed, registered or recorded to create the Liens intended to be created by the Security Documents and perfect or record such Liens to the extent, and with the priority, required by the Security Agreement, shall have been filed, registered or recorded or delivered to the Agent for filing, registration or recording;

(b)the Borrower shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Security Documents to

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which it is a party, the performance of its obligations thereunder and the granting of the Liens granted by it thereunder; and

(c)the Borrower shall have taken all other action expressly required by it under the Security Documents to perfect, register and/or record the Liens granted by it thereunder.

“Collections” means all cash collections and other cash proceeds from any source, including, without limitation, (a) all scheduled payments of principal and principal prepayments and all guaranty payments and proceeds of any liquidations, sales, dispositions or securitizations, in each case, attributable to the principal of any Investment Asset, (b) all scheduled payments of interest and payments of interest relating to principal prepayments, all guaranty payments attributable to interest and proceeds of any liquidations, sales, dispositions or securitizations attributable to interest on such Investment Asset, (c) all amendment fees, late fees, waiver fees, prepayment fees (including call premiums, to the extent such call premiums are in excess of par), (d) all Recoveries, (e) all insurance proceeds, (f) all proceeds of any sale or disposition with respect to such Investment Asset, (g) the proceeds of any subscriptions and capital raises, and (h) all cash proceeds or other funds received by the Borrower with respect to any underlying collateral (including from any guarantors).

“Commitment Termination Date” means the date that is the one (1) year anniversary of the Closing Date.

“Compliance Certificate” means a certificate substantially in the form of Exhibit B.

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Control Agreement” means a control agreement, in form and substance reasonably satisfactory to the Agent, which grants the Agent “control” as defined in the UCC in effect in the applicable jurisdiction over any deposit account or securities account maintained by the Borrower, in each case, among the Agent, the Borrower and the Custodian or other applicable depositary institution.

“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

“Custodian” means (a) U.S. Bank National Association, or its designee or nominee, acting in its capacity as custodian or (b) any successor custodian reasonably acceptable to the Agent.

“Custody Account” has the meaning given such term in the Security Agreement.

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“Custody Agreement” means that certain Custody Agreement dated as of June 1, 2015, between the Borrower and the Custodian.

“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which will include a lookback) being established by the Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple SOFR” for syndicated business loans; provided, that if the Agent decides that any such convention is not administratively feasible for the Agent, then the Agent may establish another convention in its reasonable discretion; providedfurther that if Daily Simply SOFR is less than the Floor, then Daily Simple SOFR shall be deemed to be the Floor for purposes of this Agreement.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, if applicable, and all other liquidation, winding up, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Default Rate” means, at any time, an interest rate equal to the interest(a) with respect to any Obligation for which a rate is specified, a rate per annum equal to two percent (2.00%) in excess of the rate otherwise applicable to any Loan at such time plus 2% per annum.thereto and (b) with respect to any Obligation for which a rate is not specified or available, a rate per annum equal to the Base Rate plus the Applicable Rate for Loans that are Base Rate Loans plus two percent (2.00%), in each case, to the fullest extent permitted by Applicable Law.

“Defaulting Lender” means, at any time, any Lender that (a) has failed for three (3) or more Business Days after a Borrowing Date to fund its portion of a Loan required pursuant to the terms of this Agreement (other than failures to fund as a result of a bona fide dispute as to whether the conditions to borrowing were satisfied on the relevant Borrowing Date), (b) has notified the Borrower or the Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Agent or the Borrower, to confirm in writing to the Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided, that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Agent and the Borrower) or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal

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regulatory authority acting in such a capacity; provided, that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgment or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) shall be conclusive and binding absent manifest error.

“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law on July 21, 2010, as amended.

“Dollar” and “$” mean lawful money of the United States.

“Environmental Laws” means any and all federal, state, local, and foreign statutes, Laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions, including all common law, relating to pollution or the protection of health, safety or the environment or the release of any materials into the environment, including those related to Hazardous Materials, air emissions, discharges to waste or public systems and health and safety matters.

“Environmental Liability” means any liability or obligation, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), directly or indirectly, resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment, disposal or permitting or arranging for the disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ERISA Event” means any one or more of the following: (a) any reportable event, as defined in Section 4043 of ERISA, with respect to a Pension Plan, as to which notice has not been waived under applicable PBGC regulations; (b) the termination of any Pension Plan under Section 4041(c) of ERISA; (c) the institution of proceedings by the PBGC under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (d) the failure to make a required contribution to any Pension Plan that would result in the imposition of a lien or other encumbrance or the provision of security under Section 430 of the

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Code or Section 303 or 4068 of ERISA, or the arising of such a lien or encumbrance; the failure to satisfy the minimum funding standard under Section 412 of the Code or Section 302 of ERISA, whether or not waived; or a determination that any Pension Plan is, or is expected to be, considered an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; (e) the complete or partial withdrawal of the Borrower, Subsidiary or ERISA Affiliate from a Multiemployer Plan which results in the imposition of Withdrawal Liability (as defined in Title IV of ERISA); (f) the insolvency under Title IV of ERISA of any Multiemployer Plan; (g) a determination that any Multiemployer Plan is in endangered or critical status under Section 432 of the Code or Section 305 of ERISA; or (h) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or the cessation of operations by the Borrower or any ERISA Affiliate that would be treated as a withdrawal from a Pension Plan under Section 4062(d) of ERISA.

“Event of Default” has the meaning specified in Section 8.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Accounts” means, collectively, (a) accounts established exclusively for payroll, payroll taxes and other employee wage and benefit payments,and (b) withholding and trust accounts, (c) the Raymond James account of Borrower set forth on Schedule 4(w) delivered on the Closing Date; provided that on and at all times after the initial Borrowing Date to occur after the Closing Date, to the extent the aggregate balance in such account exceeds $2,500,000 at any time, the Borrower shall use commercially reasonable efforts to cause within five (5) Business Days any Securities, Cash or Cash Equivalents in excess of such amount (or such greater amount as determined by the Borrower) to be transferred to an account subject to a Control Agreement, (d) the Bank of America account set forth on Schedule 4(w) delivered on the Closing Date, provided that on and at all times after the initial Borrowing Date to occur after the Closing Date, (i) to the extent the aggregate balance in such account exceeds $1,000,000 at any time, the Borrower shall use commercially reasonable efforts to cause within five (5) Business Days any Cash or Cash Equivalents in excess of such amount (or such greater amount as determined by the Borrower) to be transferred to an account subject to a Control Agreement or invested in accordance with the Investment Policies and Restrictions and (ii) the Borrower shall not permit Collections in an aggregate amount in excess of $5,000,000 to be deposited into such account at any time, and (e) the Israel Discount Bank Accounts set forth on Schedule 4(w) delivered on the Closing Date, provided that on and at all times after the initial Borrowing Date to occur after the Closing Date, the aggregate balance in the accounts referred to in this clause (e) shall not exceed $5,000,000 at any time..

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on

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amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Loan Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Loan Commitment or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2(l), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2(l)(vi) and (d) any U.S. federal withholding Taxes imposed under FATCA.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future Treasury Regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

“Federal Funds Effective Rate” means for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Effective Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall be the average rate charged to the Agent on such day on such transactions as determined by the Agent.

“Financial Covenant” has the meaning specified in Section 7(a).

“Floor” means a rate of interest equal to 5.00%.

“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof or any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guarantee” means, as to any Person, (i) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness, Contractual Obligations or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (A) to purchase or pay (or advance or supply funds for the

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purchase or payment of) such Indebtedness, Contractual Obligations or other obligation, (B) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness, Contractual Obligations or other obligation of the payment or performance of such Indebtedness, Contractual Obligations or other obligation, (C) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness, Contractual Obligations or other obligation, or (D) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness, Contractual Obligations or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (ii) any Lien on any assets of such Person securing any Indebtedness, Contractual Obligations or other obligation of any other Person, whether or not such Indebtedness, Contractual Obligations or other obligation is assumed by such Person. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes, and other substances or wastes of any nature regulated under or with respect to which liability or standards of conduct are imposed pursuant to any Environmental Law.

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with Appropriate Accounting Principles: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements, repurchase agreements or other similar instruments, (b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments, (c) obligations of such Person under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, credit derivative transaction or similar agreement or arrangement, (d) all obligations of such Person to pay the deferred purchase price of property or services (other than (x) trade accounts payable in the ordinary course of business to the extent not past due for more than 90 days after the date on which such trade account payable was due and (y) obligations to the Custodian for purposes of clearing and settling purchases and sales of securities to the extent not past due more than five Business Days after such purchase or sale), (e) all indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse, (f) all capital leases and synthetic lease obligations, (g) all commitments of such Person to make an investment in another Person or to purchase, redeem, retire, defease or otherwise make any payment in respect of any equity interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or

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involuntary liquidation preference plus accrued and unpaid dividends, (h) all obligations of such Person to post margin or collateral (however characterized) under any prime brokerage, securities account, options or similar agreements, (i) all obligations of such Person under reverse repurchase agreements or like arrangements, (j) any other obligation of such Person that would constitute Senior Securities and (k) all Guarantees of such Person in respect of any of the foregoing. For all purposes hereof, the Indebtedness of any Person shall include such Person’s pro rata share of the Indebtedness of any partnership or joint venturer in which such Person is a general partner or a joint venture that is several and not joint, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any capital lease or synthetic lease obligation as of any date shall be deemed to be the amount of attributable indebtedness in respect thereof in accordance with Appropriate Accounting Principles as of such date. Notwithstanding the foregoing, “Indebtedness” shall not include (I) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase price of an asset or Investment to satisfy unperformed obligations of the seller of such asset or Investment unless such obligations would be required to be set forth on a balance sheet in accordance with Appropriate Accounting Principles and (II) the Participations.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Transaction Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Indemnitee” has the meaning specified in Section 9(f).

“Interest Period” means as to each Loan (a) initially, the period commencing on the date such Loan is disbursed and ending on the next succeeding Payment Date and (b) thereafter, each period commencing on the last day of the preceding Interest Period and ending on the next succeeding Payment Date; provided that any Interest Period that would otherwise end after the Maturity Date shall end on the Maturity Date.

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit.

“Investment Adviser” means Terra Income Advisors, LLC or an Affiliate thereof, in its capacity as advisor to the Borrower.

“Investment Asset” means a security, loan or other financial instrument in the Borrower’s investment portfolio.

“Investment Company Act” means the U.S. Investment Company Act of 1940, as amended from time to time, together with all rules and regulations promulgated from time to time thereunder.

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“Investment Grade” means a rating of BBB- or higher from Egan-Jones Ratings Company or its equivalent from another NRSRO.

“Investment Policies and Restrictions” means, with respect to the Borrower, the provisions dealing with investment objectives, investment policies, and investment restrictions, as set forth in the Organization Documents and the Prospectus, as may be supplemented, amended or otherwise modified as authorized by the board of directors (or similar governing body) of the Borrower and as permitted under this Agreement.

“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing). For the avoidance of doubt, in the case of Investments that are loans or other debt obligations, customary restrictions on assignments or transfers thereof on customary and market based terms pursuant to the underlying documentation relating to such Investment shall not be deemed to be a “Lien”.

“Loan” means any loan extended pursuant to Section 2(a) and the Incremental Loan (if any).

“Loan Commitment” means the commitment of a Lender to make or otherwise fund any Loan and “Loan Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Loan Commitment, if any, is set forth on Schedule 1. The aggregate principal amount of the Loan Commitments as of the Closing Date is $25,000,000.

“Loan Rating” means a credit rating with respect to the Loans from a NRSRO.

“Margin Stock” means margin stock within the meaning of Regulations T, U and X.

“Market Value” means with respect to any Investment Asset on any day, the value determined in good faith by the Borrower based on the Valuation Methodology.

“Material Adverse Effect” means, other than as the result of changes in the Market Value of the Borrower’s assets or liabilities, taken as a whole (a) a material adverse change in, or a material adverse effect upon, the properties, assets, business, operations, or financial condition of the Borrower taken as a whole; (b) a material impairment of the ability of the Borrower to perform its payment obligations under this Agreement; (c) a material impairment of the rights or

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remedies of the Agent (including in its capacity as the collateral agent under any Security Document) or the Lenders under the Transaction Documents taken as a whole; or (d) a material adverse effect upon the Collateral taken as a whole or upon the legality, validity, binding effect or enforceability against the Borrower of the Transaction Documents to which it is a party taken as a whole.

“Maturity Date” means the earlier of (a) the Scheduled Maturity Date and (b) the date that the Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“NRSRO” means a nationally recognized statistical ratingsrating organization so designated by the U.S. Securities and Exchange Commission, whose status has been confirmed by the Securities Valuation Office of the National Association of Insurance Commissioners.

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under any Transaction Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower or any Affiliate thereof of any proceeding under any Debtor Relief Law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“Obligor” means, collectively, each Person obligated to make payments under an Underlying Instrument, including any guarantor thereof.

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, statutory trust or other form of business entity, the partnership, joint venture, statutory certificate of trust or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or

LEGAL_US_E # 171549701.1171549701.5

perfected a security interest under, engaged in any other transaction pursuant to or enforced any Transaction Document, or sold or assigned an interest in any Loan or Transaction Document).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Transaction Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.

“Parent” means Terra Property Trust, Inc., a Maryland corporation.

“Participation” means any participation or similar arrangement pursuant to which the Borrower transfers an economic interest in a portion of an investment it has originated to the Borrower’s Affiliates or non-Affiliates (which, for the avoidance of doubt, is described as “Obligations Under Participation Agreements” in the statements of assets and liabilities on the Borrower’s Form 10-K for the fiscal year ended December 31, 2020).

“Payment Date” means the last day of each March, June, September and Decembercalendar month of each calendar year or if such day is not a Business Day, the next succeeding Business Day.

“Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

“Periodic Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.

“Permitted Indebtedness” means (a) Indebtedness under this Agreement (including Incremental Loans (if any), (b) Preferred Equity Securities, (c) Indebtedness agreed to in writing between the Borrower and the Agent, (d) the Unsecured Notes, (e) Subordinated Indebtedness, and (f) other Indebtedness existing on the Closing Date listed on Schedule 6(A) and (g) Permitted Refinancing.

“Permitted Holder” means Western Asset Mortgage Capital Corporation, a Delaware corporation, or any of its Subsidiaries.

“Permitted Lien” means (a) Liens held by the Custodian under the Custody Agreement at the priority level permitted by the applicable Control Agreement, (b) Liens created under the Security Documents, (c) Liens imposed by Law for taxes that are not yet due or are being contested in good faith by appropriate proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in conformity with Appropriate Accounting Principles have been set aside for the payment thereof,

LEGAL_US_E # 171549701.1171549701.5

(d) Liens securing judgments for the payment of money to the extent such judgments do not constitute an Event of Default under Section 8(i), (e) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmens’, storage, landlord, and repairmen’s Liens and other similar Liens arising in the ordinary course of business and securing obligations (other than Indebtedness for borrowed money) not yet due or that are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Borrower in accordance with Appropriate Accounting Principles, (f) Liens existing on the Closing Date and listed on Schedule 6(B), and (g) Liens assumed by the Borrower in connection with the transfer to the Borrower of any assets or other property as a result of or in connection with the exercise of its rights and remedies pursuant to any Underlying Instrument or in connection with any “workout” or other arrangement related thereto.

“Permitted Refinancing” means Indebtedness constituting a refinancing or extension of Permitted Indebtedness that (a) has a maturity at least six (6) months after the Scheduled Maturity Date, and (b) is not secured by any property or any Lien other than those securing such Permitted Indebtedness.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by the Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

“Preferred Equity Securities” means securities that (a) are unsecured and subordinated in right of payment to the Obligations, (b) do not mature and have no ability to be optionally redeemed by the holder thereof prior to the date that is six (6) months after the Scheduled Maturity Date and (c) do not receive any payments or distributions so long as a breach of the Financial Covenant, Default or Event of Default exists and is continuing.

“Prospectus” means the registration statement of the Borrower dated as of February 3, 2021 filed with the SEC pursuant to Rule 424(b)(1) promulgated under the Securities Act of 1933.

“Public Lender” has the meaning specified in Section 9(c)(ii).

“Qualified Investment Adviser” means an “investment adviser”as defined in the Investment Company Act.

“Recipient” means (a) the Agent or (b) any Lender, as applicable.

“Recoveries” means, as of the time any underlying collateral with respect to any defaulted Investment Asset is sold, discarded or abandoned or otherwise determined to be fully liquidated by the servicer, the proceeds from the sale of the underlying collateral, the proceeds of any related insurance policy, any other recoveries with respect to such Investment Asset, as applicable, the underlying collateral, and amounts representing late fees and penalties, net of any

LEGAL_US_E # 171549701.1171549701.5

amounts received that are required under such Investment Asset, as applicable, to be refunded to the related Obligor.

“Regulation T” means Regulation T issued by the Board (12 C.F.R. Part 220).

“Regulation U” means Regulation U issued by the Board (12 C.F.R. Part 221).

“Regulation X” means Regulation X issued by the Board (12 C.F.R. Part 224).

“Regulatory Event” means (a) any adverse determination made by the SEC or any other Governmental Authority for a material violation or material breach of Law (including, without limitation, the Investment Company Act) by the Borrower or the Investment Adviser (with respect to its management of the Borrower) or (b) any investigation made by the SEC or any other Governmental Authority for a violation or breach of Law (including, without limitation, the Investment Company Act) by the Borrower or the Investment Adviser that would reasonably be expected to have a Material Adverse Effect or (c) the revocation, suspension or termination of any license, permit or approval held by the Borrower or the Investment Adviser that, in the reasonable judgment of the Agent, is necessary for the conduct of business or management of the Borrower.

“REIT” means a Person satisfying the conditions and limitations set forth in Section 856(b) and 856(c) of the Code which are necessary to qualify such Person for treatment as a real estate investment trust under Sections 856-860 of the Code.

“REIT Status Termination Date” means the first date (if any) on which the Borrower determines that it will not qualify as a REIT under the Code and the applicable Treasury Regulations, which determination may be either because (i) of an affirmative decision or action taken by the Borrower or (ii) the Borrower otherwise fails to operate in conformity with the requirements for qualification and taxation as a REIT for the applicable calendar year.

“Related Parties” with respect to any Person, means such Person’s Affiliates and the directors, officers, employees, partners, agents, trustees, administrators, managers, advisors and representatives of it and its Affiliates.

“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.

“Required Lenders” means, at any time, the Lenders having Loans representing more than 50% of the aggregate Total Outstandings at such time; provided, that, if at any time there are two or more unaffiliated Lenders, Required Lenders shall mean two or more such unaffiliated Lenders having Total Outstandings representing more than 50% of the Total Outstandings of all Lenders.

LEGAL_US_E # 171549701.1171549701.5

“Responsible Officer” of a Person means its chief executive officer, chief financial officer, chief investment officer (whether or not the Person performing such duties is so designated) and each other “executive officer” or any authorized designee thereof.

“Sanctioned Country” means, at any time, a country or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Cuba, Iran, North Korea and Syria).

“Sanctioned Person” means, at any time, a Person that is a designated target of any Sanctions or otherwise a subject of any Sanctions, including as a result of being (a) listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state, (b) operating or organized under the laws of or a citizen or resident of a Sanctioned Country or (c) owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom.

“Scheduled Maturity Date” means July 1March 31, 20232024, or if such day is not a Business Day, the immediately preceding Business Day.

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of its functions.

“Securities Act of 1933” means the Securities Act of 1933, as amended from time to time, together with all rules and regulations promulgated from time to time thereunder.

“Security Agreement” means the Security Agreement dated as of the date hereof between the Borrower and the Agent.

“Security Documents” means (a) the Security Agreement, (b) each Control Agreement, (c) the Custody Agreement and (d) any additional pledges, security agreements or mortgages required to be delivered pursuant to the Transaction Documents and any instruments of assignment or other instruments or agreements executed pursuant to the foregoing.

“Senior Security” shall have the meaning set forth in the first sentence of Section 18(g) of the Investment Company Act; provided that, for the purposes of this Agreement, the obligations under the Participations shall not constitute Senior Securities.

“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.

LEGAL_US_E # 171549701.1171549701.5

“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).

“SOFR Loan” means a Loan that bears interest at a rate based on Term SOFR, other than pursuant to clause (c) of the definition of “Base Rate”.

“Specified Event of Default” means an Event of Default arising under Section 8(a), (b) (solely with respect to a breach of Section 5(b)(i) or (b)(ii) or Section 7), or (h).

“Subordinated Indebtedness” means any Indebtedness that (a) is unsecured, (b) matures at least six (6) months after the Scheduled Maturity Date and (c) is contractually subordinated to the Obligations pursuant to a subordination agreement in form and substance satisfactory to the Agent in its reasonable discretion.

“Subsidiary” of a Person means any other Person (a) of which a majority of the shares of securities or other equity interests are at the time beneficially owned by such Person and (b) the management of which is controlled, directly or indirectly, by such Person or an Affiliate of such Person. For purposes of this defined term, “control” means the power to exercise a controlling influence over the management or policies of a company, and “controlling” and “controlled” shall have correlative meanings. Notwithstanding anything herein to the contrary, the term “Subsidiary” shall not include any Person that constitutes an Investment held by the Borrower in the ordinary course of business and that is not, under Appropriate Accounting Principles, consolidated on the financial statements of the Borrower.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Term SOFR” means,

(a)for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a one-month tenor on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and

(b)for any calculation with respect to a Base Rate Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR

LEGAL_US_E # 171549701.1171549701.5

Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Base Rate Term SOFR Determination Day;

provided, further, that if Term SOFR determined as provided above (including pursuant to the proviso under clause (a) or clause (b) above) shall ever be less than the Floor, then Term SOFR shall be deemed to be the Floor.

“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Agent in its reasonable discretion).

“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.

“Threshold Amount” means $2,500,000.

“Total Assets” means, without duplication, the “value of the total assets” (within the meaning of the first sentence of Section 18(h) of the Investment Company Act) of the Borrower determined based on the Valuation Methodology.

“Total Outstandings” means, at any date, the aggregate outstanding principal amount of the Loans on such date after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date.

“Transaction Documents” means this Agreement and the Security Documents.

“Treasury Rate” means a rate per annum (computed on the basis of actual days elapsed over a year of 365 days (or 366 as the case may be)) equal to the rate on the date of prepayment, that is the yield expressed as a rate listed in The Wall Street Journal for United States Treasury securities with a maturity closest to the amount of days from the date of repayment through the thirty (30) month anniversary of the Closing Date.

“Treasury Regulations” means the regulations (including temporary regulations) promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code.

“U.S.” or “United States” means the United States of America.

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“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning given to such term in Section 2(l)(vi)(B)(2)(C).

“UCC” means the Uniform Commercial Code as in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding any related Benchmark Replacement Adjustment.

“Underlying Instrument” means the loan agreement, credit agreement, indenture or other agreement pursuant to which an Investment Asset has been issued or created, each other agreement that governs the terms of or secures the obligations represented by such Investment Asset or of which the holders of such Investment Asset are the beneficiaries, and each assignment agreement, intercreditor agreement or other agreement governing the rights and obligations of Borrower with respect thereto.

“Unsecured Notes” means, collectively, (a) the 7.00% notes due 2026 issued pursuant to the First Supplemental Indenture, dated February 10, 2021, by and between Borrower and U.S. Bank National Association, as trustee, and (b) additional unsecured unsubordinated notes issued by the Borrower from time to time so long as such notes mature at least six (6) months after the Scheduled Maturity Date.

“Unused Amount” means with respect to each day prior to the Commitment Termination Date, the excess if any of the daily difference between (a) the Loan Commitment and (b) the aggregate principal amount of outstanding Loans.

“Unused Commitment Fee” means with respect to each Interest Period, the product of (a) 0.75% multiplied by (b) the Unused Amount multiplied by (c) the actual number of days during such Interest Period divided by (d) 360.

“USA PATRIOT Act” has the meaning given to such term in the definition of Anti-Terrorism Laws.

“Valuation Adviser” has the meaning specified in Section 7.

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“Valuation Methodology” means the established policies and procedures adopted by the board of directors (or similar governing body) of the Borrower to value the Borrower’s portfolio assets, including Investment Assets, in accordance with the Investment Company Act and the rules and regulations thereunder, which is described in the Prospectus and in effect on the Closing Date, as the same may be modified from time to time by the board of directors (or similar governing body) of the Borrower in its sole discretion.

“Valuation Statement” means a statement prepared by the Borrower and delivered in electronic format as a spreadsheet, in substantially the form attached hereto as Schedule 2.

“Withholding Agent” means the Borrower or the Agent, as the context may require.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

LEGAL_US_E # 171549701.1171549701.5

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 Property Trust, Inc.;

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)

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 Property Trust, Inc.;

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)

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 Property Trust, Inc. (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, and I, Gregory M. Pinkus, Chief Financial Officer, 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)

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
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-40496
Entity Registrant Name	Terra Property Trust, Inc.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	81-0963486
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(b) Security	6.00% Notes due 2026
Trading Symbol	TPTA
Security Exchange Name	NYSE
Title of 12(g) Security	Class B Common Stock, $0.01 par value per share
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		24,335,575
Entity Central Index Key	0001674356
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Assets
Cash and cash equivalents	$ 51,808,573	$ 28,567,825
Restricted cash	3,201,935	4,633,204
Cash held in escrow by lender	3,086,398	3,268,563
Total, net of allowance for credit losses	513,818,507	626,490,767
Equity investment in unconsolidated investments	32,608,994	62,498,340
Real estate owned, net (Note 6)
Land, building and building improvements, net	162,063,697	46,660,226
Lease intangible assets, net	14,069,928	2,568,461
Operating lease right-of-use asset	27,370,242	27,378,786
Deal deposit	0	4,241,892
Interest receivable	3,889,641	4,100,501
Other assets	7,784,490	2,928,327
Total assets	819,702,405	813,336,892
Liabilities:
Term loan payable	14,850,000	25,000,000
Unsecured notes payable, net of debt issuance cost	117,433,372	116,530,673
Repurchase agreements payable, net of deferred financing fees	122,070,840	169,304,710
Obligations under participation agreements (Note 8 )	13,789,070	12,680,594
Mortgage loans payable, net of deferred financing fees and other	98,687,185	29,488,326
Revolving line of credit payable, net of deferred financing fees	105,260,351	89,807,448
Interest reserve and other deposits held on investments	3,201,935	4,633,204
Operating lease liability	27,370,242	27,378,786
Lease intangible liabilities, net (Note 6)	16,827,043	8,646,840
Interest payable	1,746,183	1,058,001
Accounts payable and accrued expenses	3,816,487	1,452,236
Unearned income	757,580	378,018
Total liabilities	530,557,452	491,454,718
Commitments and contingencies (Note 10)
Equity:
Additional paid-in capital	444,451,801	444,449,813
Accumulated deficit	(155,550,202)	(122,935,993)
Total equity	289,144,953	321,882,174
Total liabilities and equity	819,702,405	813,336,892
Preferred Stock
Equity:
Preferred stock	0	0
12.5% Series A Cumulative Non-Voting Preferred Stock
Equity:
Preferred stock	0	125,000
Class A Common Stock
Equity:
Common stock	0	0
Class B Common Stock
Equity:
Common stock	243,354	243,354
Related Party
Liabilities:
Other liabilities	3,431,790	3,935,997
Nonrelated Party
Liabilities:
Other liabilities	1,315,374	1,159,885
Loans Held For Investment
Assets
Total, net of allowance for credit losses	475,173,171	584,417,939
Loans Held For Investment Acquired Through Participation
Assets
Total, net of allowance for credit losses	38,645,336	42,072,828
Loans Held For Investment Acquired Through Participation | Related Party
Assets
Total, net of allowance for credit losses	$ 38,645,336	$ 42,072,828

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Consolidated Balance Sheets (Parentheticals) - USD ($)	3 Months Ended		6 Months Ended	12 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2023	Dec. 31, 2022	Oct. 01, 2022	Mar. 02, 2020
Loans held for investment, net of allowance for credit losses	$ 33,128,796		$ 33,128,796	$ 25,471,890
Preferred stock, par value (in usd per share)	$ 0.01		$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	50,000,000		50,000,000	50,000,000
Common stock, shares authorized (in shares)					950,000,000
Common stock, shares, issued (in shares)						4,574,470.35
Loans Held For Investment
Loans held for investment, net of allowance for credit losses	$ 32,992,709		$ 32,992,709	$ 25,471,890
Loans Held For Investment Acquired Through Participation
Loans held for investment, net of allowance for credit losses	$ 136,087		$ 136,087	$ 0
Preferred Stock
Preferred stock, par value (in usd per share)	$ 0.01		$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	50,000,000		50,000,000	50,000,000
Preferred stock, issued (in shares)	0		0	0
12.5% Series A Cumulative Non-Voting Preferred Stock
Preferred stock, authorized (in shares)	125		125	125
Preferred stock, issued (in shares)	0		0	125
Preferred stock outstanding (in shares)	0		0	125
Preferred stock, dividend rate, percentage	12.50%	12.50%	12.50%	12.50%
Class A Common Stock
Common stock, par or stated value per share (in usd per share)	$ 0.01		$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	450,000,000		450,000,000	450,000,000	450,000,000
Common stock, shares, issued (in shares)	0		0	0
Class B Common Stock
Common stock, par or stated value per share (in usd per share)	$ 0.01		$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	450,000,000		450,000,000	450,000,000	450,000,000
Common stock, shares, issued (in shares)	24,335,513		24,335,513	24,335,370
Common stock, shares, outstanding (in shares)	24,335,513		24,335,513	24,335,370

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Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues
Interest income	$ 15,878,453	$ 10,274,051	$ 31,494,260	$ 19,156,202
Real estate operating revenue	2,803,934	2,991,321	4,136,903	5,970,775
Prepayment fee income	0	1,174,760	0	1,174,760
Other operating income	100,068	247,981	153,463	498,646
Total revenues	18,782,455	14,688,113	35,784,626	26,800,383
Operating expenses
Operating expenses reimbursed to Manager	2,120,029	2,140,635	4,297,033	4,069,198
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
Provision for credit losses	4,652,644	25,633	3,802,593	75,929
Real estate operating expenses	1,864,212	1,247,328	3,074,124	2,465,291
Depreciation and amortization	1,756,664	1,718,373	2,438,477	3,436,745
Impairment charge	11,765,540	0	11,765,540	1,604,989
Professional fees	787,427	1,011,354	1,767,322	1,753,872
Directors’ fees	83,750	36,247	180,214	72,499
Other	188,631	374,203	403,875	457,624
Operating expenses	25,820,320	8,590,119	32,798,553	17,809,917
Operating (loss) income	(7,037,865)	6,097,994	2,986,073	8,990,466
Other income and expenses
Interest expense from obligations under participation agreements	(576,915)	(1,238,655)	(1,109,061)	(2,313,764)
Interest expense on repurchase agreements payable	(2,946,797)	(1,665,283)	(6,003,303)	(2,421,109)
Interest expense on mortgage loans payable	(1,640,972)	(520,829)	(2,387,100)	(1,039,446)
Interest expense on revolving line of credit	(2,540,047)	(700,737)	(4,505,581)	(1,225,031)
Interest expense on term loan payable	(355,468)	0	(707,031)	(164,969)
Interest expense on unsecured notes payable	(2,405,267)	(1,432,877)	(4,799,573)	(2,863,060)
Interest expense on secured borrowing	0	(556,855)	0	(1,109,640)
Unrealized (losses) gains	51,224	(34,950)	57,808	(133,994)
Loss on sale of real estate	0	(51,984)	0	(51,984)
(Loss) income from equity investment in unconsolidated investments	(1,759,934)	1,364,332	(2,196,794)	2,783,667
Realized (losses) gains on investments, net	(25,024)	32,278	(25,024)	83,411
Total other income and expense	(12,199,200)	(4,805,560)	(21,675,659)	(8,455,919)
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest, Total	(19,237,065)	1,292,434	(18,689,586)	534,547
Series A preferred stock dividend declared	0	(3,906)	(3,907)	(7,812)
Net (loss) income allocable to common stock	$ (19,237,065)	$ 1,288,528	$ (18,693,493)	$ 526,735
(Loss) income per share — basic (in usd per share)	$ (0.79)	$ 0.07	$ (0.77)	$ 0.03
(Loss) income per share — diluted (in usd per share)	$ (0.79)	$ 0.07	$ (0.77)	$ 0.03
Weighted-average shares — basic (in shares)	24,335,430	19,487,460	24,335,402	19,487,460
Weighted-average shares — diluted (in shares)	24,335,430	19,487,460	24,335,402	19,487,460
Distributions declared per common share (in usd per share)	$ 0.19	$ 0.19	$ 0.38	$ 0.39

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Consolidated Statements of Changes in Equity - USD ($)	Total	Cumulative Effect, Period of Adoption, Adjustment	12.5% Series A Cumulative Non-Voting Preferred Stock	Class B Common Stock	Preferred Stock Preferred Stock	Preferred Stock 12.5% Series A Cumulative Non-Voting Preferred Stock	Common Stock	Common Stock Class A Common Stock	Common Stock Class B Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment
Beginning balance at Dec. 31, 2021	$ 273,843,578				$ 0	$ 125,000	$ 194,875			$ 373,443,672	$ (99,919,969)
Preferred stock, beginning balance (in shares) at Dec. 31, 2021						125
Common stock, beginning balance (in shares) at Dec. 31, 2021							19,487,460
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Distributions declared on common shares	(3,893,595)										(3,893,595)
Distributions declared on preferred shares	(3,906)										(3,906)
Net (loss) income	(757,887)										(757,887)
Ending balance at Mar. 31, 2022	269,188,190				0	$ 125,000	$ 194,875			373,443,672	(104,575,357)
Preferred stock, ending balance (in shares) at Mar. 31, 2022						125
Common stock, ending balance (in shares) at Mar. 31, 2022							19,487,460
Beginning balance at Dec. 31, 2021	273,843,578				0	$ 125,000	$ 194,875			373,443,672	(99,919,969)
Preferred stock, beginning balance (in shares) at Dec. 31, 2021						125
Common stock, beginning balance (in shares) at Dec. 31, 2021							19,487,460
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Distributions declared on common shares	(7,700,000)
Distributions declared on preferred shares	(7,812)
Net (loss) income	534,547
Ending balance at Jun. 30, 2022	$ 266,696,150				0	$ 125,000	$ 194,875			373,443,672	(107,067,397)
Preferred stock, ending balance (in shares) at Jun. 30, 2022						125
Common stock, ending balance (in shares) at Jun. 30, 2022							19,487,460
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2016-13
Beginning balance at Dec. 31, 2021	$ 273,843,578				0	$ 125,000	$ 194,875			373,443,672	(99,919,969)
Preferred stock, beginning balance (in shares) at Dec. 31, 2021						125
Common stock, beginning balance (in shares) at Dec. 31, 2021							19,487,460
Ending balance at Dec. 31, 2022	321,882,174	$ (4,619,723)			0	$ 125,000		$ 0	$ 243,354	444,449,813	(122,935,993)	$ (4,619,723)
Preferred stock, ending balance (in shares) at Dec. 31, 2022			125			125
Common stock, ending balance (in shares) at Dec. 31, 2022				24,335,370				0	24,335,370
Beginning balance at Mar. 31, 2022	269,188,190				0	$ 125,000	$ 194,875			373,443,672	(104,575,357)
Preferred stock, beginning balance (in shares) at Mar. 31, 2022						125
Common stock, beginning balance (in shares) at Mar. 31, 2022							19,487,460
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Distributions declared on common shares	(3,780,568)										(3,780,568)
Distributions declared on preferred shares	(3,906)										(3,906)
Net (loss) income	1,292,434										1,292,434
Ending balance at Jun. 30, 2022	266,696,150				0	$ 125,000	$ 194,875			373,443,672	(107,067,397)
Preferred stock, ending balance (in shares) at Jun. 30, 2022						125
Common stock, ending balance (in shares) at Jun. 30, 2022							19,487,460
Beginning balance at Dec. 31, 2022	321,882,174	(4,619,723)			0	$ 125,000		$ 0	$ 243,354	444,449,813	(122,935,993)	(4,619,723)
Preferred stock, beginning balance (in shares) at Dec. 31, 2022			125			125
Common stock, beginning balance (in shares) at Dec. 31, 2022				24,335,370				0	24,335,370
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued from reinvestment of shareholder distributions (in shares)									34
Shares issued from reinvestment of shareholder distributions	478									478
Redemption of Series A Preferred Stock (in shares)						(125)
Redemption of Series A Preferred Stock	(125,000)					$ (125,000)
Distributions declared on common shares	(4,650,492)										(4,650,492)
Distributions declared on preferred shares	(3,907)										(3,907)
Net (loss) income	547,479										547,479
Ending balance at Mar. 31, 2023	313,031,009				0	$ 0		$ 0	$ 243,354	444,450,291	(131,662,636)
Preferred stock, ending balance (in shares) at Mar. 31, 2023						0
Common stock, ending balance (in shares) at Mar. 31, 2023								0	24,335,404
Beginning balance at Dec. 31, 2022	$ 321,882,174	$ (4,619,723)			0	$ 125,000		$ 0	$ 243,354	444,449,813	(122,935,993)	$ (4,619,723)
Preferred stock, beginning balance (in shares) at Dec. 31, 2022			125			125
Common stock, beginning balance (in shares) at Dec. 31, 2022				24,335,370				0	24,335,370
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued from reinvestment of shareholder distributions (in shares)	143
Shares issued from reinvestment of shareholder distributions	$ 1,988
Distributions declared on common shares	(9,300,000)
Distributions declared on preferred shares	(3,907)
Net (loss) income	(18,689,586)
Ending balance at Jun. 30, 2023	289,144,953				0	$ 0		$ 0	$ 243,354	444,451,801	(155,550,202)
Preferred stock, ending balance (in shares) at Jun. 30, 2023			0			0
Common stock, ending balance (in shares) at Jun. 30, 2023				24,335,513				0	24,335,513
Beginning balance at Mar. 31, 2023	313,031,009				0	$ 0		$ 0	$ 243,354	444,450,291	(131,662,636)
Preferred stock, beginning balance (in shares) at Mar. 31, 2023						0
Common stock, beginning balance (in shares) at Mar. 31, 2023								0	24,335,404
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued from reinvestment of shareholder distributions (in shares)									109
Shares issued from reinvestment of shareholder distributions	1,510									1,510
Distributions declared on common shares	(4,650,501)										(4,650,501)
Distributions declared on preferred shares	0
Net (loss) income	(19,237,065)										(19,237,065)
Ending balance at Jun. 30, 2023	$ 289,144,953				$ 0	$ 0		$ 0	$ 243,354	$ 444,451,801	$ (155,550,202)
Preferred stock, ending balance (in shares) at Jun. 30, 2023			0			0
Common stock, ending balance (in shares) at Jun. 30, 2023				24,335,513				0	24,335,513

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Consolidated Statements of Changes in Equity (Parentheticals) - $ / shares	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Distributions declared per common share (in usd per share)	$ 0.19	$ 0.19	$ 0.19	$ 0.20	$ 0.38	$ 0.39
12.5% Series A Cumulative Non-Voting Preferred Stock
Preferred stock, dividend rate, percentage	12.50%	12.50%			12.50%		12.50%

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Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net (loss) income	$ (18,689,586)	$ 534,547
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	2,438,477	3,436,745
Provision for credit losses	3,802,593	75,929
Impairment charge	11,765,540	1,604,989
Amortization of net purchase premiums on loans	823,785	122,783
Straight-line rent adjustments	22,197	719,036
Amortization of deferred financing costs	1,143,668	1,135,225
Amortization of discount on unsecured notes payable	815,300	228,281
Amortization of above- and below-market rent intangibles	(609,983)	(492,749)
Amortization and accretion of investment-related fees, net	(475,043)	(467,910)
Amortization of above-market rent ground lease	(65,174)	(65,175)
Realized loss (gain) on investments, net	25,024	(83,411)
Unrealized (gains) losses on investments, net	(57,808)	133,994
Loss on sale of real estate	0	51,984
Distributions received from equity investment in unconsolidated investments	5,087,025	225,280
Loss (income) from equity investment in unconsolidated investments	4,001,731	(1,991,014)
Changes in operating assets and liabilities:
Deal deposits	4,241,892	0
Interest receivable	(245,790)	(710,459)
Due from related party	(255,142)	2,605,639
Other assets	(3,232,943)	(1,383,519)
Due to Manager	(439,232)	281,058
Unearned income	379,562	160,042
Interest payable	688,182	(509,427)
Accounts payable and accrued expenses	1,451,483	(16,274)
Other liabilities	(609,921)	(2,223,662)
Net cash provided by operating activities	12,005,837	3,371,932
Cash flows from investing activities:
Origination and purchase of loans	(63,775,372)	(120,420,961)
Proceeds from repayments of loans	98,977,506	56,610,198
Purchase of real estate properties	(52,313,739)	0
Purchase of held-for-maturity securities	(20,025,024)	0
Proceeds from redemption of held-for-maturity securities	20,000,000	0
Purchase of marketable securities	(1,051,754)	0
Proceeds from sale of marketable securities	0	1,259,417
Return of capital on equity interests in unconsolidated investments	10,650,947	0
Cash acquired in purchase of real estate	712,608	0
Purchase of equity interests in unconsolidated investments	0	(20,915,067)
Proceeds from sale of real estate	0	8,585,500
Distributions in excess equity income	0	497,920
Net cash used in investing activities	(6,824,828)	(74,382,993)
Cash flows from financing activities:
Proceeds from borrowings under repurchase agreements	1,300,858	148,089,549
Proceeds from borrowings under revolving line of credit	57,032,155	41,169,295
Proceeds from mortgage loan payable	72,618,367	0
Proceeds from obligations under participation agreements	1,093,862	16,522,472
Repayments of borrowings under repurchase agreements	(49,344,783)	0
Repayments of obligations under participation agreements	0	(15,000,000)
Repayments of borrowings under revolving line of credit	(41,720,000)	(30,920,124)
Distributions paid	(9,302,911)	(7,681,975)
Repayment of borrowings under the term loan	(10,000,000)	(93,763,471)
Proceeds from secured borrowing	0	3,629,034
Repayment of mortgage principal	(1,649,191)	(413,065)
Change in interest reserve and other deposits held on investments	(1,431,269)	10,041
Payment of financing costs	(2,025,783)	(975,947)
Redemption of Series A Preferred Stock	(125,000)	0
Net cash provided by financing activities	16,446,305	60,665,809
Net increase (decrease) in cash, cash equivalents and restricted cash	21,627,314	(10,345,252)
Cash, cash equivalents and restricted cash at beginning of period	36,469,592	51,098,647
Cash, cash equivalents and restricted cash at end of period (Note 2)	58,096,906	40,753,395
Supplemental Disclosure of Cash Flows Information:
Cash paid for interest	16,864,499	10,482,040
Supplemental non-cash information:
Reinvestment of stockholder distributions	$ 1,988	$ 0

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Consolidated Statements of Cash Flows - Supplemental Non-Cash Investing Activities (Parenthetical)	1 Months Ended
	May 31, 2023 USD ($) loan building
Industrial Buildings
Number of industrial buildings | building	5
Cash payment for industrial buildings	$ 3,500,000
Number of senior loans | loan	5
Total Consideration
Cash and cash equivalents	$ 3,515,466
Total, net of allowance for credit losses	68,737,877
Equity investment in unconsolidated investments	10,149,642
Interest receivable	456,650
Other assets	429,326
Total assets	83,288,961
Net Assets Acquired
Cash and cash equivalents	712,608
Other assets	33,802
In-please lease	8,403,667
Below-market rent	(4,770,870)
Accounts payable and accrued expenses	(912,771)
Net assets acquired	83,288,961
Industrial Buildings | Land
Net Assets Acquired
Land, building and building improvements, net	14,457,149
Industrial Buildings | Building and building improvements
Net Assets Acquired
Land, building and building improvements, net	$ 65,365,376

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Business

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business

Business

    Terra Property Trust, Inc. (and, together with its consolidated subsidiaries, the “Company” or “Terra Property Trust”) was incorporated under the Maryland General Corporation Law on December 31, 2015. Terra Property Trust is 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. 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.

    On January 1, 2016, Terra Secured Income Fund 5, LLC (“Terra Fund 5”), the Company’s then parent, contributed its consolidated portfolio of net assets to the Company pursuant to a contribution agreement in exchange for shares of the Company’s common stock. Upon receipt of the contribution of the consolidated portfolio of net assets from Terra Fund 5, the Company commenced its operations on January 1, 2016. On March 2, 2020, the Company engaged in a series of transactions pursuant to which the Company 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 held by the Company, cash of $25.5 million and other working capital.

    The Company has elected to be taxed, and to qualify annually thereafter, as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), commencing with the taxable year ended December 31, 2016. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. The Company also operates its business in a manner that permits it to maintain its exemption from registration as an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”).

    The Company’s investment activities are externally managed by Terra REIT Advisors, LLC (“Terra REIT Advisors” or the “Manager”), a subsidiary of the Company’s sponsor, Terra Capital Partners, LLC (“Terra Capital Partners”), pursuant to a management agreement (the “Management Agreement”), under the oversight of the Company’s board of directors (the “Board”) (Note 8). 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 by individuals who were contracted by the Company or by the Manager to work on behalf of the Company pursuant to the terms of the Management Agreement.

On October 1, 2022, pursuant to that certain Agreement and Plan of Merger, dated as of May 2, 2022 (the “Merger Agreement”), Terra Income Fund 6, Inc. (“Terra BDC”), merged with and into Terra Income Fund 6, LLC (“Terra LLC”), a wholly owned subsidiary of the Company, with Terra LLC continuing as the surviving entity of the merger (the “BDC Merger”) and as a wholly owned subsidiary of the Company (Note 3).

As of June 30, 2023, Terra JV, LLC (“Terra JV”), former shareholders of Terra BDC and Terra Offshore Funds REIT, LLC (“Terra Offshore REIT”) held 70.0%, 19.9% and 10.1% of the issued and outstanding shares of the Company’s common stock, respectively.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Principles of Consolidation

    The consolidated financial statements include all of the Company’s accounts and those of its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation.

The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (“VIE”) or voting interest model. The Company is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. If the Company determines it does not hold a variable

interest in a VIE, it then applies the voting interest model. Under the voting interest model, the Company consolidates an entity when it holds a majority voting interest in an entity.

The Company accounts for investments in which it has significant influence but not a controlling financial interest using the equity method of accounting (see Note 5).

VIE Model

An entity is considered to be a VIE if any of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the holders of the equity investment at risk, as a group, lack either the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the entity or the obligation to absorb the entity’s expected losses or right to receive the entity’s expected residual returns, or (c) the voting rights of some equity investors are disproportionate to their obligation to absorb losses of the entity, their rights to receive returns from an entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights.

Under the VIE model, limited partnerships are considered VIEs unless a limited partner holds substantive kick-out or participating rights over a general partner. The Company consolidates entities that are VIEs when the Company determines it is the primary beneficiary. Generally, the primary beneficiary of a VIE is a reporting entity that has (a) the power to direct the activities that most significantly affect the VIE’s economic performance, and (b) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

Loans Held for Investment

    The Company originates, acquires, and structures, or acquires through participations, real estate-related loans generally to be held to maturity (collectively the “loans”). Loans held for investment are carried at the principal amount outstanding, adjusted for the accretion of discounts on investments and exit fees, and the amortization of premiums on investments and origination fees. The Company’s preferred equity investments, which are economically similar to mezzanine loans and subordinate to any loans but senior to common equity, are accounted for as loans held for investment. Loans are carried at amortized cost less allowance for credit losses.

Current Expected Credit Losses Reserve

Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, became effective for the Company on January 1, 2023. ASC 326 mandates the use of a current expected credit loss (“CECL”) model for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” credit model previously required under United States generally accepted accounting principles (“U.S. GAAP”). The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event under the previous “incurred loss” methodology. The CECL model applies to the Company’s loan portfolio and the held-to-maturity debt securities which are carried at amortized cost, including future funding commitments for which the Company does not have the unconditional right to cancel. Amortized cost is defined as the principal amount outstanding, adjusted for the accretion of purchase discounts and disposition fees, and amortization of purchase premiums and origination fees, and includes accrued interest receivable related to these loans and securities. As permitted by ASC 326, the Company elected not to measure an allowance for credit losses on accrued interest receivable (which is presented separately on the consolidated balance sheet), but rather write off in a timely manner by reversing interest income that would likely be uncollectible. The Company’s adoption of the CECL model resulted in a $4.6 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to accumulated deficit as of January 1, 2023. Subsequent to the adoption of the CECL model, any increase or decrease to the CECL reserve is recorded in earnings on the consolidated statements of operations.

The Company utilizes information obtained from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. The Company does not have a meaningful history of realized credit losses on its loan portfolio so it has subscribed to a third-party database service to provide the Company with industry losses for its loans. The Company utilizes a loan loss model that is widely used among banks and commercial mortgage REITs and is marketed by a leading commercial mortgage-based security data analytics provider. It employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. The Company provides specific loan-level inputs which include loan-to-value and debt service coverage ratio metrics, as well as principal balances, property type, location, coupon rate, coupon rate type, original or remaining term, expected repayment dates and contractual future funding

commitments. The Company selects from a group of independent five-year macroeconomic forecasts included in the model that are updated regularly based on current economic trends. Because the Company’s loan portfolio is comprised of a small number of loans, the Company measures the CECL reserve based on an evaluation of each loan as its own segregated asset. Based on the inputs, the loan loss model determines a loan loss rate through the generation of probability of defaults (PD) and loss given defaults (LGD) for each loan. The CECL reserve is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. These results require a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance for credit losses. Changes in such estimates can significantly affect the expected credit losses.

The calculation of the estimate of expected credit loss considers historical experience and current conditions for each loan and reasonable and supportable forecasts about the future. The reasonable and supportable forecast period is determined based on the Company’s assessment of the most likely scenario of assumptions and plausible outcomes for the U.S. economy, current portfolio composition, level of historical loss forecast estimates, material changes in growth and credit strategy and other factors that may affect its loss experience. The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed.

Beyond the Company’s reasonable and supportable forecast period, the Company generally reverts to historical loss information, pooled by asset type and investment structure, over the remaining loan period, taken from a period that most accurately reflects the expectation of conditions expected to exist during the period of reversion. The Company may adjust historical loss information for differences in risk that may not reflect the characteristics of its current portfolio, including but not limited to, loan-to-value and debt service coverage ratios, among other relevant factors. The method of reversion selected represents the best estimate of the collectability of the investments and is reevaluated each reporting period. The Company generally expects to use an average historical loss for reversion, utilizing an immediate or straight-line method for the remaining life of the loans.

The Company also performs a qualitative assessment beyond model estimates and applies qualitative adjustments as necessary. The Company’s qualitative analysis includes a review of data that may directly impact its estimates including internal and external information about the loan or property including current market conditions, asset specific conditions, property operations or borrower/sponsor details (i.e., refinance, sale, bankruptcy) which allows the Company to determine the amount of the expected loss more accurately and reasonably for these investments. The Company also evaluates the contractual life of its loans to determine if changes are needed for contractual extension options, renewals, modifications, and prepayments.

During the loan review process, if the Company determines that it is not able to collect all amounts due for both principal and interest according to the contractual terms of a loan, the Company considers that loan non-performing. For all non-performing loans, such as those in default, collateral-dependent or modified loans, including historical troubled debt restructurings, the Company removes these loans from the industry loss rate approach described above and analyzes them separately. The credit loss reserve for these loans is calculated as any excess of the amortized cost of the loan over (i) the present value of expected future cash flows discounted at the appropriate discount rate or (ii) the fair value of collateral, if repayment is expected solely from the collateral.

Some of the Company’s loans include commitments to fund incremental proceeds to the borrowers over the life of the loan and these unfunded commitments are also subject to the CECL model because the Company does not have an unconditional right to cancel such commitments. The CECL reserve related to unfunded commitments is recorded as a component of other liabilities on the Company’s consolidated balance sheets. This CECL reserve is estimated using the same method outlined above for the Company’s outstanding loan balances, and increases or decreases in the CECL reserve relating to unfunded commitments are also recorded in earnings on the consolidated statements of operations.

    As discussed below in Recent Accounting Pronouncements, the Company adopted the provisions of Accounting Standards Update (“ASU”) 2022-02 Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) concurrently with the adoption of CECL on January 1, 2023, prospectively.

Equity Investment in Unconsolidated Investments

The Company accounts for its equity interests in unconsolidated investments under the equity method of accounting, i.e., at cost, increased or decreased by its share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting.

The Company evaluates its equity investment unconsolidated investments on a periodic basis to determine if there are any indicators that the value of its equity investments may be impaired and whether or not that impairment is other-than-temporary. To the extent an impairment has occurred and is determined to be other-than-temporary, the Company measures the charge as the excess of the carrying value of its investment over its estimated fair value, which is determined by calculating its share of the estimated fair market value of the underlying net assets based on the terms of the applicable partnership or joint venture agreements.

Marketable Securities

    The Company from time to time invests in short term debt and equity securities. These securities are classified as available-for-sale and are carried at fair value. Changes in the fair value of equity securities are recognized in earnings. Changes in the fair value of debt securities are reported in other comprehensive income until a gain or loss on the securities is realized.

Held-to-Maturity Debt Securities

The Company classifies debt securities for which it has both the positive intent and ability to hold until maturity of the security as held-to-maturity debt securities. These securities are recorded at amortized cost with changes in amortized cost recognized in earnings until realized. Held-to-maturity debt securities are subject to the CECL reserve described above.

Real Estate Owned, Net

    Real estate acquired is recorded at its estimated fair value at acquisition and is shown net of accumulated depreciation and impairment charges.

    Acquisition of properties generally are accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs, are accumulated and then allocated to individual assets and liabilities acquired based upon their relative fair value. The Company allocates the purchase price of its real estate acquisitions to land, building, tenant improvements, acquired in-place leases, intangibles for the value of any above or below market leases at fair value and to any other identified intangible assets or liabilities. The Company amortizes the value allocated to in-place leases over the remaining lease term, which is reported in depreciation and amortization expense on its consolidated statements of operations. The value allocated to above or below market leases are amortized over the remaining lease term as an adjustment to rental income.

    Real estate assets are depreciated using the straight-line method over their estimated useful lives: buildings and improvements - not to exceed 40 years, and tenant improvements - shorter of the lease term or life of the asset. Ordinary repairs and maintenance which are not reimbursed by the tenants are expensed as incurred. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their estimated useful life.

    Management reviews the Company’s real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate assets. If impaired, the real estate asset will be written down to its estimated fair value.

Leases

    The Company determines if an arrangement is a lease at inception. Operating leases in which the Company is the lessee are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. 

    ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s lease typically does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made in advance and excludes lease incentives if there were any. The Company’s lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.

Revenue Recognition

    Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

    Interest Income: Interest income is accrued based upon the outstanding principal amount and contractual terms of the loans and preferred equity investments that the Company expects to collect, and it is accrued and recorded on a daily basis. Discounts and premiums on investments purchased are accreted or amortized over the expected life of the respective loan using the effective yield method, and are included in interest income in the consolidated statements of operations. Loan origination fees and exit fees, net of portions attributable to obligations under participation agreements, are capitalized and amortized or accreted to interest income over the life of the investment using the effective yield method. Outstanding interest receivable is assessed for recoverability. The Company generally reverses the accrued and unpaid interest against interest income and no longer accrues for the interest when, in the opinion of the Manager, recovery of income and principal becomes doubtful. Interest is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.

    The Company holds loans in its portfolio that contain paid-in-kind (“PIK”) interest provisions. The PIK interest, which represents contractually deferred interest that is added to the principal balance that is due at maturity, is recorded on the accrual basis.

    Real Estate Operating Revenues: Real estate operating revenue is derived from leasing of space to various types of tenants. The leases are for fixed terms of varying length and generally provide for annual rent increases and expense reimbursements to be paid in monthly installments. Lease revenue, or rental income from leases, is recognized on a straight-line basis over the term of the respective leases. Additionally, the Company recorded above- and below-market lease intangibles, which are included in real estate owned, net, in connection with the acquisition of the real estate properties. These intangible assets and liabilities are amortized to lease revenue over the remaining contractual lease term.

    Other Revenues: Prepayment fee income is recognized as prepayments occur. All other income is recognized when earned.

Cash, Cash Equivalents and Restricted Cash

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.

    Restricted cash represents cash held as additional collateral by the Company on behalf of the borrowers related to the investments in loans or preferred equity instruments for the purpose of such borrowers making interest and property-related operating payments. Restricted cash is not available for general corporate purposes. The related liability is recorded in “Interest reserve and other deposits held on investments” on the consolidated balance sheets.

    Cash held in escrow by lender represents amounts funded to an escrow account for debt services and tenant improvements. Cash held in escrow is restricted and is not available for general corporate purposes.

    The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its consolidated statements of cash flows as of:

	June 30,
	2023		2022
Cash and cash equivalents	$	51,808,573	$	28,978,788
Restricted cash	3,201,935		7,421,852
Cash held in escrow by lender	3,086,398		4,352,755
Total cash, cash equivalents and restricted cash shown in the consolidated    statements of cash flows	$	58,096,906	$	40,753,395

 Participation Interests

Loan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. For the investments for which participation has been granted, the interest earned on the entire loan balance is recorded within “Interest income” and the interest related to the participation interest is recorded within “Interest expense from obligations under participation agreements” in the consolidated statements of operations. Interest expense from obligations under participation agreement is reversed when recovery of interest income on the related loan becomes doubtful. See “Obligations under Participation Agreements” in Note 9 for additional information.

Term Loan

    The Company previously financed certain of its senior loans through borrowings under an indenture and credit agreement. The Company accounted for the borrowings as a term loan, which was carried at the contractual amount (cost), net of unamortized deferred financing fees. On February 18, 2022, the Company refinanced the Term Loan (as defined below) with a new repurchase agreement. See “Goldman Master Purchase Agreement” in Note 9 for additional information. In connection with the BDC Merger, the Company assumed a $25.0 million term loan. In June 2023, the Company made a repayment of $10.0 million on the Term Loan. The Company classified this Term Loan as term loan payable on the consolidated balance sheets.

Repurchase Agreements

The Company finances certain of its senior loans held for investment through repurchase transactions under master repurchase agreements. The Company accounts for the repurchase transactions as secured borrowing transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees. See “Repurchase Agreements” in Note 9 for additional information.

Fair Value Measurements

    U.S. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The Company has not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, obligations under participation agreements, secured borrowing, unsecured notes, mortgage loan payable, term loan payable, repurchase agreement payment and revolving line of credit. Such financial instruments are carried at cost, less impairment, where applicable. Marketable securities are financial instruments that are reported at fair value.

Deferred Financing Costs

    Deferred financing costs represent fees and expenses incurred in connection with obtaining financing for investments. These costs are presented in the consolidated balance sheets as a direct deduction of the debt liability to which the costs pertain. These costs are amortized using the effective interest method and are included in interest expense on the applicable borrowings in the consolidated statements of operations over the life of the borrowings.

Income Taxes

    The Company has elected to be taxed as a REIT under the Internal Revenue Code commencing with the taxable year ended December 31, 2016. In order to qualify as a REIT, the Company is required, among other things, to distribute dividends equal to at least 90% of its REIT net taxable income to the stockholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. Any gains from the sale of foreclosed properties within two years are subject to U.S. federal and state income taxes at regular corporate rates. As of June 30, 2023, the Company has satisfied all the requirements for a REIT.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of Accounting Standards Codification (“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 consolidated 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 major tax jurisdiction is federal. The Company’s 2019-2022 federal tax returns remain subject to examination by the Internal Revenue Service.

Earnings Per Share

    The Company has a simple equity capital structure with only common stock outstanding as of June 30, 2023 and common stock and preferred stock outstanding as of December 31, 2022. As a result, earnings per share, as presented, represent both basic and dilutive per-share amounts for the periods presented in the consolidated financial statements. Income per basic share of common stock is calculated by dividing net income allocable to common stock by the weighted-average number of shares of common stock issued and outstanding during such period.

Use of Estimates

    The preparation of consolidated 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 consolidated 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.

Segment Information

    The Company’s primary business is originating, acquiring and structuring real estate-related loans related to high quality commercial real estate. From time to time, the Company may acquire real estate encumbering the senior loans through foreclosure, may invest in real estate related joint ventures and may directly acquire real estate properties. The Company operates in a single segment focused on mezzanine loans, other loans and preferred equity investments, and to a lesser extent, owning and managing real estate.

Recent Accounting Pronouncements

    In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. In April 2019, the FASB issued additional amendments to clarify the scope of ASU 2016-13 and address issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. In May 2019, the FASB issued ASU 2019-05 — Targeted Transition Relief, which provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. In October 2019, the FASB decided that for smaller reporting companies, ASU 2016-13 and related amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company meets the definition of a smaller reporting company under the regulation of the Securities and Exchange Commission. The Company adopted this ASU and related amendments on January 1, 2023. The adoption of ASU 2016-13 resulted in an incremental reserve of approximately $4.6 million, which included a reserve on future loan funding commitments. The Company recorded the cumulative effect of initially applying this guidance as an adjustment to Accumulated deficit using the modified retrospective method of adoption.

    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 has subsequently been 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, the Company’s investment documents provide for a substitute index, on a basis generally consistent with market practice, intended to put the Company 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 consolidated financial statements and disclosures.In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates troubled debt restructuring guidance for organizations that adopted the amendments in ASU 2016-13 while providing for additional disclosures for loan modifications. ASU 2022-02 also amends the vintage disclosure guidance for public business entities. The Company adopted the provisions of ASU 2022-02 concurrently with the adoption of ASU 2016-03. The adoption of ASU 2022-02 did not have any material impact on the Company’s financial condition and results of operations.

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BDC Merger

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

BDC Merger

BDC Merger

BDC Merger

On October 1, 2022 (the “Closing Date”), pursuant to the Merger Agreement, Terra BDC merged with and into Terra LLC, with Terra LLC surviving as a wholly owned subsidiary of the Company. 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 (the “SDAT”), 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 the Company or any wholly owned subsidiary of the Company 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 the newly designated Class B Common Stock, par value $0.01 per share (“Class B Common Stock”) and (ii) cash, without interest, in lieu of any fractional shares of 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 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 Merger Agreement, approximately 4,847,910 shares of 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 the Company.

The Company and Terra BDC prepared their respective financial statements in accordance with generally accepted accounting principles in the United States. The BDC Merger is accounted for using the acquisition method of accounting, with the Company being treated as the accounting acquirer. In identifying the Company as the acquiring entity for accounting purposes, the Company and Terra BDC took into account a number of factors, including the relative size of the merging companies, which entity issues additional shares in conjunction with the BDC Merger, the relative voting interests of the respective stockholders after consummation of the BDC Merger, and the composition of the Board and senior management of the combined company after consummation of the BDC Merger.

The Company, as the acquirer, accounted for the BDC Merger as an asset acquisition and all direct acquisition-related costs are capitalized to the total cost of the assets acquired and liabilities assumed. Pursuant to Accounting Standard Codification Topic 805, Business Combination, total cost is allocated to the assets acquired and liabilities assumed on a relative fair value basis.

The following table summarizes the total consideration and the fair values of assets acquired and liabilities assumed in the BDC Merger:

Total Consideration
Fair value of Terra Property Trust shares of common stock issued	$	71,054,620
Cash paid for fractional shares	12,920
Transaction costs	2,283,785
	$	73,351,325
Assets Acquired and Liabilities Assumed at Fair Value
Cash and cash equivalents	$	24,321,951
Restricted cash	260,614
Loans held for investment	77,562,528
Loans held for investment acquired through participation	36,793,313
Interest receivable	1,367,044
Other assets	55,465
Term loan payable	(25,000,000)
Unsecured notes payable	(33,770,000)
Obligations under participation agreements	(6,114,979)
Interest reserve and other deposits held on investments	(260,614)
Due to manager	(682,541)
Interest payable	(53,186)
Accounts payable and accrued expenses	(740,824)
Other liabilities	(387,446)
Net assets acquired	$	73,351,325

The fair value of the 4,847,910 shares of the Class B Common Stock was determined based on the Company’s net asset value per share of $14.66 as of October 1, 2022.

Net Gain on Extinguishment of Obligations Under Participation Agreements

As discussed in Note 8, in the normal course of business, the Company may enter into participation agreements with related parties, primarily other affiliated funds managed by the Manager, and to a lesser extent, unrelated parties. As a result of the BDC Merger, the obligations under participation agreements with Terra BDC totaling $37.0 million were effectively extinguished and the Company recognized a net gain of $3.4 million, representing the difference between the carrying value of the Company’s obligations under participation agreements and the fair value of Terra BDC’s investments acquired through participation agreements.

Appointment of Directors

As of the Effective Time and in accordance with the Merger Agreement, the size of the Board was increased by three members and each of Spencer Goldenberg, Adrienne Everett and Gaurav Misra (each a “Terra BDC Designee”, and collectively, the “Terra BDC Designees”) were elected to the Board to fill the vacancies created by such increase, with each Terra BDC Designee to serve until the Company’s next annual meeting of stockholders and until his or her successor is duly elected and qualifies. Each of the other members of the Board immediately prior to the Effective Time continued as members following the Effective Time.

Voting Support Agreement

On the Closing Date, the Company, Terra JV and Terra Offshore REIT entered into a Voting Support Agreement (the “2022 Voting Agreement”). Pursuant to the 2022 Voting Agreement, effective as of the Closing Date, Terra JV and Terra

Offshore REIT have agreed to, at any meeting of the Company’s stockholders called for the purpose of electing directors (or by any consent in writing or by electronic transmission in lieu of any such meeting), cast all votes entitled to be cast by each of them in favor of the election of the Terra BDC Designees until the earlier of (i) the first anniversary of the Closing Date, (ii) the TPT Class B Common Stock Distributions (as defined in the 2022 Voting Agreement) or (iii) an amendment and restatement of the amended and restated management agreement between the Company and Terra REIT Advisors approved by the Company’s Board, including the Terra BDC Designees.

Indemnification Agreements

The Company has entered into customary indemnification agreements with each member of the Board (including each Terra BDC Designee). These agreements, among other things, require the Company to indemnify each director to the maximum extent permitted by Maryland law, including indemnification of expenses such as attorney’s fees, judgments, fines and settlement amounts incurred in any action or proceeding, including any action or proceeding by or in right of the Company, arising out of his or her service as a director.

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Loans Held for Investment

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Loans Held for Investment

Loans Held for Investment

The Company elected the practical expedient under ASC 326 to exclude accrued interest from amortized cost. As of June 30, 2023 and December 31, 2022, accrued interest receivable of $3.9 million and $4.1 million, respectively, is included in interest receivable on the consolidated balance sheets, and is excluded from the amortized cost of loans held for investment.

Portfolio Summary

The following table provides a summary of the Company’s loan portfolio as of:

	June 30, 2023									December 31, 2022
	Fixed Rate			Floating Rate (1)(2)(3)			Total			Fixed Rate			Floating Rate (1)(2)(3)			Total
Number of loans	5			18			23			8			23			31
Principal balance	$	52,940,319		$	488,915,124		$	541,855,443		$	90,990,183		$	554,805,276		$	645,795,459
Carrying value	$	53,069,799		$	460,748,708		$	513,818,507		$	92,274,998		$	534,215,769		$	626,490,767
Fair value	$	52,504,064		$	464,990,667		$	517,494,731		$	90,729,098		$	532,416,656		$	623,145,754
Weighted-average coupon rate	13.22		%	12.77		%	12.82		%	13.82		%	11.23		%	11.59		%
Weighted-average remaining  term (years)	1.47			0.59			0.69			1.35			1.10			1.14

_______________

(1)These loans pay a coupon rate of LIBOR, Secured Overnight Financing Rate (“SOFR”), or forward-looking term rate based on SOFR (“Term SOFR”), as applicable, 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.

(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 (Note 9).

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

Lending Activities

The following tables present the activities of the Company’s loan portfolio:

	Loans Held for Investment		Loans Held for Investment through Participation Interests		Total
Balance, January 1, 2023	$	584,417,939	$	42,072,828	$	626,490,767
Cumulative effect of credit loss accounting standard effective    January 1, 2023 (Note 2)	(4,123,143)		(126,909)		(4,250,052)
New loans made	63,775,372		—		63,775,372
Principal repayments received	(95,695,298)		(3,282,208)		(98,977,506)
Net amortization of premiums on loans	(823,785)		—		(823,785)
Settlement of loans in exchange for real estate properties (Note 6)	(68,737,877)		—		(68,737,877)
Accrual, payment and accretion of investment-related fees and other,    net	(242,361)		(9,197)		(251,558)
Provision for credit losses	(3,397,676)		(9,178)		(3,406,854)
Balance, June 30, 2023	$	475,173,171	$	38,645,336	$	513,818,507

	Loans Held for Investment		Loans Held for Investment through Participation Interests		Total
Balance, January 1, 2022	$	457,329,582	$	12,343,732	$	469,673,314
New loans made	119,461,668		959,293		120,420,961
Principal repayments received	(56,610,198)		—		(56,610,198)
Net amortization of premiums on loans	(122,783)		—		(122,783)
Accrual, payment and accretion of investment-related fees and other,    net	537,682		19,355		557,037
Provision for credit losses	(75,929)		—		(75,929)
Balance, June 30, 2022	$	520,520,022	$	13,322,380	$	533,842,402

Portfolio Information

    The tables below detail the types of loans in the Company’s loan portfolio, as well as the property type and geographic location of the properties securing these loans as of:

	June 30, 2023						December 31, 2022
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
First mortgages	$	380,923,792	$	385,177,670	75.0	%	$	456,408,889	$	461,299,182	73.7	%
Preferred equity investments	123,242,640		123,957,220		24.1	%	121,231,434		122,132,177		19.5	%
Mezzanine loans	37,689,011		37,812,413		7.3	%	39,352,303		39,451,115		6.3	%
Credit facility	—		—		—	%	28,802,833		29,080,183		4.6	%
Allowance for credit losses	—		(33,128,796)		(6.4)	%	—		(25,471,890)		(4.1)	%
Total	$	541,855,443	$	513,818,507	100.0	%	$	645,795,459	$	626,490,767	100.0	%

	June 30, 2023						December 31, 2022
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Office	$	164,837,437	$	165,327,122	32.2	%	$	184,196,708	$	184,722,657	29.4	%
Multifamily	103,427,397		104,222,850		20.3	%	104,589,464		105,570,432		16.9	%
Industrial	64,340,667		64,865,942		12.6	%	147,796,164		148,891,742		23.8	%
Mixed-use	62,746,351		63,257,099		12.3	%	64,880,450		65,838,965		10.5	%
Infill land	51,031,209		52,122,303		10.1	%	48,860,291		49,565,437		7.9	%
Hotel - full/select service	43,222,382		43,826,614		8.5	%	43,222,382		43,758,804		7.0	%
Student housing	31,000,000		31,768,579		6.2	%	31,000,000		31,774,261		5.1	%
Infrastructure	21,250,000		21,556,794		4.2	%	21,250,000		21,840,359		3.5	%
Allowance for credit losses	—		(33,128,796)		(6.4)	%	—		(25,471,890)		(4.1)	%
Total	$	541,855,443	$	513,818,507	100.0	%	$	645,795,459	$	626,490,767	100.0	%

	June 30, 2023						December 31, 2022
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	139,246,557	$	140,733,468	27.3	%	$	164,253,345	$	165,839,561	26.5	%
New York	88,336,078		88,336,079		17.2	%	91,845,479		91,877,084		14.7	%
New Jersey	77,371,876		78,691,851		15.3	%	62,228,622		62,958,482		10.0	%
Georgia	75,205,257		75,840,968		14.8	%	72,401,718		73,101,964		11.7	%
Washington	52,969,210		53,070,927		10.3	%	56,671,267		57,027,639		9.1	%
Utah	49,250,000		50,399,536		9.8	%	49,250,000		50,698,251		8.1	%
Arizona	31,000,000		31,296,394		6.1	%	31,000,000		31,276,468		5.0	%
North Carolina	21,476,465		21,578,080		4.2	%	43,520,028		44,041,162		7.0	%
Massachusetts	7,000,000		7,000,000		1.4	%	7,000,000		7,000,000		1.1	%
Texas	—		—		—	%	67,625,000		68,142,046		10.9	%
Allowance for credit losses	—		(33,128,796)		(6.4)	%	—		(25,471,890)		(4.1)	%
Total	$	541,855,443	$	513,818,507	100.0	%	$	645,795,459	$	626,490,767	100.0	%

Current Expected Credit Losses Reserve

As described in Note 2, on January 1, 2023, the Company adopted the provisions of ASU 2016-13, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses. The adoption of ASU 2016-13 resulted in a $4.6 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to accumulated deficits as of January 1, 2023.

The following table presents the activity in allowance for credit loss for funded loans:

	Six Months Ended June 30,
	2023		2022
Allowance for credit losses, beginning of period	$	25,471,890	$	13,658,481
Cumulative effect of credit loss accounting standard effective    January 1, 2023 (Note 2)	4,250,052		—
Provision for credit losses (1)	3,406,854		75,929
Charge-offs	—		—
Recoveries	—		—
Allowance for credit losses, end of period	$	33,128,796	$	13,734,410

_______________

(1)Prior to the adoption of the CECL model on January 1, 2023, the Company recorded an allowance for credit losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4”, plus (ii) 5% of the aggregate carrying amount of loans rated as a “5”, plus (iii) non-performing loan reserves, if any.

Certain of the Company’s loans contain provisions for future fundings, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. These unfunded commitments amounted to approximately $53.2 million and $47.3 million as of June 30, 2023 and December 31, 2022, respectively. The following table presents the activity in the liability for credit losses on unfunded commitments:

	Six Months Ended June 30, 2023
Liability for credit losses on unfunded commitments, beginning of period	$	—
Cumulative effect of credit loss accounting standard effective January 1, 2023 (Note 2)	369,671
Provision for credit losses	395,739
Liability for credit losses on unfunded commitments, end of period	$	765,410

The liability for credit losses on unfunded commitments is included in other liabilities on the consolidated balance sheets.

Accrued Interest Receivable

The Company elected not to measure a CECL reserve on accrued interest receivable due to the Company’s policy of writing off uncollectible accrued interest receivable balances in a timely matter. If the Company determines it has uncollectible accrued interest receivable, it generally would reverse the accrued and unpaid interest against interest income and no longer accrues for interest. For the three and six months ended June 30, 2023 and 2022, the Company did not reverse any interest income accrual because all accrued interest income were deemed collectible. As of June 30, 2023 and 2022, the Company had three and two loans that were in default, and suspended interest income accrual of $3.7 million and $1.2 million for the three months ended June 30, 2023 and 2022, respectively, because recovery of such income was doubtful. For the six months ended June 30, 2023 and 2022, the Company suspended interest income accrual of $7.2 million and $2.3 million on three and two loans, respectively, because recovery of such income was doubtful. As of June 30, 2023 and December 31, 2022, there was no outstanding interest receivable on these loans.

Non-Performing Loans

As discussed in Note 2, for loans that are considered non-performing, the Company removes them from the industry loss rate approach and analyzes them separately. As of June 30, 2023 and December 31, 2022, the Company had four non-performing loans with total carrying value of $89.7 million and $89.9 million, respectively. The allowance for credit losses for these non-performing loans were $25.5 million as of both June 30, 2023 and December 31, 2022.

Loan Risk Rating

The Company assesses the risk factors of each loan and assigns each loan a risk rating between 1 and 5, which is an average of the numerical ratings in the following categories: (i) sponsor capability and financial condition; (ii) loan and collateral performance relative to underwriting; (iii) quality and stability of collateral cash flows and/or reserve balances; and (iv) loan to value. Based on a 5-point scale, the Company’s loans are rated “1” through “5”, from less risk to greater risk, as follows:

Risk Rating	Description
1	Very low risk
2	Low risk
3	Moderate/average risk
4	Higher risk
5	Highest risk

    The following table presents the amortized cost of the Company’s loan portfolio by year of origination and loan risk rating as of June 30, 2023:

 

	June 30, 2023
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2023		2022		2021		2020		2019		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	2	25,043,198		4.6	%	—		—		—		—		18,043,198		7,000,000
3	15	392,865,778		71.8	%	6,120,513		133,191,835		119,894,853		27,750,542		102,982,198		2,925,837
4	2	39,337,304		7.2	%	—		39,337,304		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	4	89,701,023		16.4	%	—		—		—		—		1,364,944		88,336,079
	23	546,947,303		100.0	%	$	6,120,513	$	172,529,139	$	119,894,853	$	27,750,542	$	122,390,340	$	98,261,916
Allowance for credit losses		(33,128,796)
Total, net of allowance for credit losses		$	513,818,507

The following table presents the principal balance and the amortized cost of the Company’s loans based on the loan risk rating as of December 31, 2022:

	December 31, 2022
Loan Risk Rating	Number of Loans	Principal Balance		Amortized Cost		% of Total
1	—	$	—	$	—	—	%
2	2	25,000,000		25,041,782		3.8	%
3	25	530,867,244		536,992,660		82.4	%
4	—	—		—		—	%
5	—	—		—		—	%
Non-performing (1)	4	89,928,215		89,928,215		13.8	%
	31	$	645,795,459	651,962,657		100.0	%
Allowance for credit losses				(25,471,890)
Total, net of allowance for credit losses				$	626,490,767

_______________

(1)Because these loans have an event of default, they were removed from the pool of loans on which a general allowance was calculated and were evaluated for collectability individually. As of December 31, 2022, the specific allowance for credit losses on these loans were $25.5 million, as a result of a decline in the fair value of the respective collateral.

Troubled Debt Restructuring

As of December 31, 2022, there was one investment that qualified as troubled debt restructuring.

In December 2022, the borrower of a $40.1 million senior loan experienced financial difficulty and offered to repay the loan for $38.7 million. The remaining $1.4 million was converted to subordinated equity that accrues dividends at 8.0% and the Company is entitled to receive waterfall profit upon a sale. The Company does not anticipate a full recovery of the equity position and does not expect to receive any additional income. As a result, the remaining $1.4 million is reflected as a loan receivable and it is fully reserved for as of June 30, 2023 and December 31, 2022. The Company classified this loan modification as a TDR as it met all the conditions to be considered a TDR pursuant to ASC 310-40.

The following table summarizes the recorded investment of TDR as of the date of restructuring:

Number of loans modified	1
Pre-modified recorded carrying value	$	40,072,138
Post-modified recorded carrying value (1)	$	1,364,944

_______________

(1) As of June 30, 2023 and December 31, 2022, the principal balance of this loan was the same as the carrying value. The Company recorded an allowance for credit losses of $1.4 million to fully reserve for the unpaid principal balance. There was no income from this investment from the date of modification on December 28, 2022 through June 30, 2023.

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Equity Investment in Unconsolidated Investments

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Equity Investment in Unconsolidated Investments

Equity Investment in Unconsolidated Investments

The Company owns interests in a limited partnership and three joint ventures. The Company accounts for its interests in these investments under the equity method of accounting (Note 2). The Company classifies distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities.

Equity Investment in a Limited Partnership

On August 3, 2020, the Company entered into a subscription agreement with Mavik Real Estate Special Opportunities Fund, LP (“RESOF”) whereby the Company 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. RESOF may also opportunistically originate high-yield mortgages or loans in real estate special situations including rescue financings, bridge loans, restructurings and bankruptcies (including debtor-in-possession loans). The general partner of RESOF is Mavik Real Estate Special Opportunities Fund GP, LLC, which is a subsidiary of the Company’s sponsor, Terra Capital Partners. As of June 30, 2023 and December 31, 2022, the unfunded commitment was $37.4 million and $22.4 million, respectively.

The Company evaluated its equity interest in RESOF and determined it does not have a controlling financial interest and is not the primary beneficiary. Accordingly, the equity interest in RESOF is accounted for as an equity method investment. As of June 30, 2023 and December 31, 2022, the Company owned 14.9% and 27.9% of the equity interest in RESOF, respectively. As of June 30, 2023 and December 31, 2022, the carrying value of the Company’s investment in RESOF was $18.1 million and $36.8 million, respectively. For the three and six months ended June 30, 2023, the Company recorded equity loss from RESOF of $1.2 million and $0.9 million, respectively, as a result of adjustments made to equity income due to the dilution in the Company’s ownership interest in RESOF as new investors were admitted in 2022 and 2023. For the three and six months ended June 30, 2023, the Company received distributions from RESOF of $0.9 million and $4.7 million, respectively. For the three and six months ended June 30, 2022, the Company recorded equity income from RESOF of $1.6 million and $2.9 million, respectively, and received no distributions from RESOF.

In connection with the equity investment in RESOF, the Company paid origination fees to the Manager totaling $0.5 million, to be amortized to equity income on a straight-line basis over the life of RESOF.

The following tables present summarized financial information of the Company’s equity investment in RESOF. Amounts provided are the total amounts attributable to the investment and do not represent the Company’s proportionate share:

	As of
	June 30, 2023		December 31, 2022
Investments at fair value (cost of $166,181,966 and $176,035,290, respectively)	$	167,673,063	$	178,283,703
Other assets	33,566,430		23,918,841
Total assets	201,239,493		202,202,544
Revolving line of credit, net of financing costs	27,648,565		14,795,985
Obligations under participation agreement (proceeds of $38,444,357 and     $41,726,565, respectively)	38,764,750		41,962,861
Other liabilities	16,193,681		17,120,804
Total liabilities	82,606,996		73,879,650
Partners’ capital	$	118,632,497	$	128,322,894

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total investment income	$	8,264,132	$	5,891,371	$	16,375,911	$	10,736,035
Total expenses	3,827,584		1,761,814		6,994,379		3,055,130
Net investment income	4,436,548		4,129,557		9,381,532		7,680,905
Unrealized (depreciation) appreciation on investments	(288,031)		1,493,140		(883,942)		1,562,191
Provision for income tax	(138,944)		—		(138,944)		—
Net increase in partners’ capital resulting from operations	$	4,009,573	$	5,622,697	$	8,358,646	$	9,243,096

Equity Investment in Joint Ventures

As of June 30, 2023 and December 31, 2022, the Company beneficially owned equity interests in three joint ventures that invest in real estate properties. The Company evaluated its equity interests in the joint ventures and determined it does not have a controlling financial interest and is not the primary beneficiary. Accordingly, the equity interests in the joint ventures are accounted for as equity method investments. In September 2022, the Company sold a 53% effective interest in two joint ventures and 59% effective interest in another joint venture for a total of $33.7 million and recognized a gain on sale of $0.8 million.

In December 2022, the Company originated a $10.0 million mezzanine loan to a borrower to finance the acquisition of a real estate portfolio. In connection with this mezzanine loan, the Company entered into a residual profit sharing agreement with the borrower where the borrower would pay the Company an additional amount of 35.0% of remaining net cash flow from the sale of the real estate portfolio. The Company accounted for this arrangement using the equity method of accounting. In May 2023, the Company purchased the underlying asset (Note 8) and the $10.0 million mezzanine loan was settled in connection with the purchase.

The following table presents a summary of the Company’s equity investment in unconsolidated investments as of:

		June 30, 2023			December 31, 2022
Entity	Co-owner (1)	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
LEL Arlington JV LLC (1)	Affiliate/Third party	27.2%	$	6,689,133	27.2%	$	7,271,603
LEL NW 49th JV LLC (1)	Affiliate/Third party	27.2%	1,546,725		27.2%	1,521,556
TCG Corinthian FL Portfolio     JV LLV (1)(2)	Affiliate/Third Party	30.6%	6,236,696		30.6%	6,896,816
SF-Dallas Industrial, LLC (3)	N/A	N/A	—		N/A	10,013,691
			$	14,472,554		$	25,703,666

_______________

(1)The Company sold a portion of the interest in this investment to an affiliate in September 2022.

(2)This investment was purchased from a third party in March 2022.

(3)This investment that meets the definition of an equity investment was entered into in December 2022. As discussed above, this investment was settled in May 2023.

The following tables present estimated combined summarized financial information of the Company’s equity investment in the joint ventures. Amounts provided are the total amounts attributable to the joint ventures and do not represent the Company’s proportionate share:

	As of
	June 30, 2023		December 31, 2022
Net investments in real estate	$	191,629,757	$	192,616,298
Other assets	12,413,292		12,817,388
Total assets	204,043,049		205,433,686
Mortgage loan payable	148,454,820		147,740,645
Other liabilities	5,010,555		3,104,624
Total liabilities	153,465,375		150,845,269
Members’ capital	$	50,577,674	$	54,588,417

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	4,243,689	$	3,681,032	$	8,168,268	$	6,131,470
Operating expenses	(2,181,707)		(2,206,984)		(4,324,974)		(3,023,665)
Depreciation and amortization expense	(1,728,214)		(1,065,066)		(3,693,251)		(1,755,897)
Interest expense	(2,595,844)		(1,744,226)		(5,155,798)		(2,829,787)
Unrealized (losses) gains	(423,481)		1,170,866		(1,249,982)		1,406,377
Net (loss) income	$	(2,685,557)	$	(164,378)	$	(6,255,737)	$	(71,502)

For the three and six months ended June 30, 2023, the Company recorded net equity loss from the joint ventures and the mezzanine loan of $0.6 million and $1.3 million, respectively, and did not receive any distributions from the joint ventures. For the three and six months ended June 30, 2022, the Company recorded equity income from the joint ventures of $0.2 million and $0.1 million, respectively, and received distributions from the joint venture of $0.4 million and $0.7 million, respectively. In connection with these investments, the Company paid origination fee to the Manager totaling $0.5 million, to be amortized to equity income over the life of the respective joint venture.

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Real Estate Owned, Net

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Real Estate Owned, Net

Real Estate Owned, Net

Real Estate Activities

2023 — During the three and six months ended June 30, 2023, the Company recorded an impairment charge of $11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value.

Additionally, during the six months ended June 30, 2023, the Company entered into the following investments:

Property Location	Number of Properties	Date of Acquisition	Property Type	Total Capitalized Costs
Texas, United States	3	3/24/2023	Industrial	$	48,798,273
Texas, United States	5	5/25/2023	Industrial	83,288,961
				$	132,087,234

These acquisitions were deemed to be real estate asset acquisitions, and therefore total transaction costs were capitalized to the cost basis of the assets. The following table presents an allocation of the total capitalized costs:

Total Capitalized Costs:
Cash and cash equivalents	$	52,313,739
Loans held for investment	68,737,877
Equity investment in unconsolidated investment	10,149,642
Interest receivable	456,650
Other assets	429,326
	$	132,087,234
Net Assets Acquired
Cash and cash equivalents	$	712,608
Other assets	33,802
Land	23,785,004
Buildings and Improvements	104,613,728
Intangible assets and liabilities:
In-place lease (weighted-average expected life of 3.95 years)	12,719,000
Below-market rent (weighted-average expected life of 3.98 years)	(8,864,137)
Accounts payable and accrued expenses	(912,771)
	$	132,087,234

2022 — In June 2022, the Company sold the 4.9 acres of land it owned in Pennsylvania for net proceeds of $8.6 million, and recognized a net loss on sale of $0.1 million excluding impairment charges of $1.6 million and $3.4 million recognized in March 2022 and December 2021, respectively.

Real Estate Owned, Net

    Real estate owned is comprised of eight industrial buildings located in Texas and a multi-tenant office building located in California, with lease intangible assets and liabilities. The following table presents the components of real estate owned, net as of:

	June 30, 2023						December 31, 2022
	Cost		Accumulated Depreciation/Amortization		Net		Cost		Accumulated Depreciation/Amortization		Net
Real estate:
Land	$	23,785,004	$	—	$	23,785,004	$	—	$	—	$	—
Building and building    improvements	144,574,158		(6,786,818)		137,787,340		51,725,969		(5,711,468)		46,014,501
Tenant improvements	1,854,640		(1,363,287)		491,353		1,854,640		(1,224,648)		629,992
Furniture and fixtures	236,000		(236,000)		—		236,000		(220,267)		15,733
Total real estate	170,449,802		(8,386,105)		162,063,697		53,816,609		(7,156,383)		46,660,226
Lease intangible assets:
In-place lease	27,701,537		(13,701,834)		13,999,703		14,982,538		(12,493,079)		2,489,459
Above-market rent	156,542		(86,317)		70,225		156,542		(77,540)		79,002
Total intangible assets	27,858,079		(13,788,151)		14,069,928		15,139,080		(12,570,619)		2,568,461
Lease intangible liabilities:
Below-market rent	(11,619,059)		3,047,407		(8,571,652)		(2,754,922)		2,428,647		(326,275)
Above-market ground lease	(8,896,270)		640,879		(8,255,391)		(8,896,270)		575,705		(8,320,565)
Total intangible liabilities	(20,515,329)		3,688,286		(16,827,043)		(11,651,192)		3,004,352		(8,646,840)
Total real estate	$	177,792,552	$	(18,485,970)	$	159,306,582	$	57,304,497	$	(16,722,650)	$	40,581,847

Real Estate Operating Revenues and Expenses

    The following table presents the components of real estate operating revenues and expenses that are included in the consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Real estate operating revenues:
Lease revenue	$	2,283,272	$	1,744,262	$	3,368,731	$	3,498,823
Other operating income	520,662		1,247,059		768,172		2,471,952
Total	$	2,803,934	$	2,991,321	$	4,136,903	$	5,970,775
Real estate operating expenses:
Utilities	$	69,919	$	56,171	$	106,333	$	101,505
Real estate taxes	537,681		344,727		892,361		691,159
Repairs and maintenances	256,187		169,817		463,552		327,233
Management fees	86,880		70,219		126,298		138,087
Lease expense, including amortization of above-market ground lease	487,163		487,163		974,326		974,326
Other operating expenses	426,382		119,231		511,254		232,981
Total	$	1,864,212	$	1,247,328	$	3,074,124	$	2,465,291

Leases

    As of June 30, 2023, the Company owned eight industrial buildings that were leased to ten tenants and a multi-tenant office building that was leased to three tenants. As of December 31, 2022, the Company owned a multi-tenant office building that was leased to three tenants. In addition, the office building is subject to a ground lease whereby the Company is the lessee (or a

tenant) to the ground lease. The ground lease had a remaining lease term of 63.3 years as of June 30, 2023, and 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. The Company 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. The Company believes this determination should be based on comparable sales, while the landlord insists that the rent under the ground lease itself is also relevant. The Company’s position has prevailed in all three of the prior arbitrations to reset the ground rent. Since future rent reset determinations under the ground lease cannot be known at this time, the Company did not include any potential future rent increases in calculating the present value of future rent payments. The Company intends vigorously to pursue the litigation. While the Company 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 the Company’s interest in the ground lease and the office building.

Scheduled Future Minimum Rent Income 

    Scheduled future minimum rents, exclusive of renewals and expenses paid by tenants, under non-cancelable operating leases at June 30, 2023 are as follows: 

Years Ending December 31,	Total
2023 (July 1 through December 31)	$	4,650,111
2024	9,456,610
2025	4,940,447
2026	4,600,139
2027	3,162,610
Thereafter	5,821,613
Total	$	32,631,530

Scheduled Annual Net Amortization of Intangibles 

    Based on the intangible assets and liabilities recorded at June 30, 2023, scheduled annual net amortization of intangibles for each of the next five calendar years and thereafter is as follows:

Years Ending December 31,	Net Decrease in Real Estate Operating Revenue (1)		Increase in Depreciation and Amortization (1)		Decrease in Rent Expense (1)		Total
2023 (July 1 through December 31)	$	(1,567,274)	$	2,757,572	$	(65,174)	$	1,125,124
2024	(3,104,584)		5,467,389		(130,348)		2,232,457
2025	(1,549,275)		2,192,061		(130,348)		512,438
2026	(1,158,163)		1,780,528		(130,348)		492,017
2027	(444,207)		835,888		(130,348)		261,333
Thereafter	(677,924)		966,265		(7,668,825)		(7,380,484)
Total	$	(8,501,427)	$	13,999,703	$	(8,255,391)	$	(2,757,115)

_______________

(1)Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to lease revenues; amortization of in-place lease intangibles is included in depreciation and amortization; and amortization of above-market ground lease is recorded as a reduction to rent expense.

Supplemental Ground Lease Disclosures

    Supplemental balance sheet information related to the ground lease was as follows as of:    

	June 30, 2023			December 31, 2022
Operating lease
Operating lease right-of-use asset	$	27,370,242		$	27,378,786
Operating lease liability	$	27,370,242		$	27,378,786
Weighted average remaining lease term — operating lease (years)	63.3			63.8
Weighted average discount rate — operating lease	7.6		%	7.6		%

    The component of lease expense for the ground lease was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	519,750	$	519,750	$	1,039,500	$	1,039,500

Supplemental non-cash information related to the ground lease was as follows:

	Six Months Ended June 30,
	2023		2022
Amounts included in the measurement of lease liability:
Operating cash flows from an operating lease	$	1,039,500	$	1,039,500
Right-of-use asset obtained in exchange for lease obligations:
Operating lease	$	1,039,500	$	1,039,500

    Maturities of operating lease liability as of June 30, 2023 was as follows:

Years Ending December 31,	Operating Lease
2023 (July 1 through December 31)	$	1,039,500
2024	2,079,000
2025	2,079,000
2026	2,079,000
2027	2,079,000
Thereafter	122,227,875
Total lease payments	131,583,375
Less: Imputed interest	(104,213,133)
Total	$	27,370,242

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Fair Value Measurements

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

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 are 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.

As of June 30, 2023 and December 31, 2022, the Company had not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, held-to-maturity debt securities, obligations under participation agreements, term loan payable, repurchase agreement payable, mortgage loan payable and revolving line of credit. Such financial instruments are carried at cost, less impairment or less net deferred costs, where applicable. Marketable securities and derivatives are financial instruments that are reported at fair value.

Financial Instruments Carried at Fair Value on a Recurring Basis

    From time to time, the Company may invest in short-term debt and equity securities which are classified as available-for-sale securities, which are presented at fair value and included in Other assets in the consolidated balance sheet. Changes in the fair value of equity securities are recognized in earnings. Changes in the fair value of debt securities are reported in other comprehensive income until the securities are realized.

As discussed in Note 9, in March 2023, the Company entered into a loan agreement with a lender to provide financing for the acquisition of real estate properties (Note 6). In connection with the financing, the Company purchased an interest rate cap for $258,500 to effectively cap the related index rate at 5.0%. The interest rate cap met all the criteria of a derivative under ASC 815, but it did not meet the criteria under ASC 815-20-25 to qualify for hedging accounting. As such, the interest rate cap is reported at fair value and is included in other assets in the consolidated balance sheet, and the change in the fair value of the interest rate cap is reported in income.

The following tables present fair value measurements of marketable securities and derivatives, by major class according to the fair value hierarchy as of:

	June 30, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	5,041,526	$	—	$	—	$	5,041,526
Marketable securities - debt securities (2)	1,203,973		—		—		1,203,973
Derivative - interest rate cap (2)	—		—		281,028		281,028
Total	$	6,245,499	$	—	$	281,028	$	6,526,527

_______________

(1) Amount is included in cash and cash equivalents on the consolidated balance sheets.

(2) Amount is included in other assets on the consolidated balance sheets.

	December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable Securities:
Debt securities	$	147,960	$	—	$	—	$	147,960
Total	$	147,960	$	—	$	—	$	147,960

    

The following table presents the activities of the marketable securities and derivatives:

	Six Months Ended June 30,
	2023				2022
	Marketable Securities		Derivatives		Marketable Securities
Beginning balance	$	147,960	$	—	$	1,310,000
Purchases	1,051,754		258,500		—
Proceeds from sale	—		—		(1,259,417)
Amortization of interest rate cap	—		(31,021)		—
Reclassification of net realized gains on marketable securities    into earnings	—		—		83,411
Unrealized (losses) gains on marketable securities and derivatives	4,259		53,549		(133,994)
Ending balance	$	1,203,973	$	281,028	$	—

Financial Instruments Not Carried at Fair Value

In the first quarter of 2023, the Company purchased $20.0 million of corporate bonds with a coupon rate of 6.125% with a maturity date of May 15, 2023. The Company classified these bonds as held-to-maturity debt securities, as it had the intent and ability to hold these securities until maturity. These securities were recorded at amortized cost and were fully redeemed at par on May 15, 2023.

The following table presents the carrying value and estimated fair value of the Company’s financial instruments that are not carried at fair value on the consolidated balance sheets as of:

		June 30, 2023						December 31, 2022
	Level	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Loans:
Loans held for investment	3	$	503,411,086	$	508,301,967	$	478,729,965	$	604,068,894	$	609,889,829	$	581,182,892
Loans held for investment    acquired through    participation	3	38,444,357		38,645,336		38,764,766		41,726,565		42,072,828		41,962,862
Allowance for loan losses		—		(33,128,796)		—		—		(25,471,890)		—
Total loans		$	541,855,443	$	513,818,507	$	517,494,731	$	645,795,459	$	626,490,767	$	623,145,754
Liabilities:
Term loan payable	3	$	15,000,000	$	14,850,000	$	15,000,000	$	25,000,000	$	25,000,000	$	25,000,000
Unsecured notes payable	1	123,500,000		117,433,372		101,228,000		123,500,000		116,530,673		103,481,748
Repurchase agreement    payable	3	122,832,682		122,070,840		122,832,682		170,876,606		169,304,710		170,876,606
Obligations under participation    agreements	3	13,678,820		13,789,070		13,789,071		12,584,958		12,680,594		12,680,595
Mortgage loan payable	3	100,221,485		98,687,185		100,487,973		29,252,308		29,488,326		29,394,870
Revolving line of credit    payable	3	105,448,019		105,260,351		105,448,019		90,135,865		89,807,448		90,135,865
Total liabilities		$	480,681,006	$	472,090,818	$	458,785,745	$	451,349,737	$	442,811,751	$	431,569,684

    The Company estimated that its other financial assets and liabilities, not included in the tables above, had fair values that approximated their carrying values at both June 30, 2023 and December 31, 2022 due to their short-term nature.

Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges)

The Company periodically assesses whether there are any indicators that the value of its real estate investments may be impaired or that their carrying value may not be recoverable (Note 2).

The following tables present information about assets for which the Company recorded an impairment charge and that were measured at fair value on a non-recurring basis:

	Three Months Ended June 30,
	2023				2022
	Fair Value		Impairment Charges		Fair Value		Impairment Charges
Impairment Charges
Real estate and intangibles	$	27,603,118	$	11,765,540	$	—	$	—
			$	11,765,540			$	—

	Six Months Ended June 30,
	2023				2022
	Fair Value		Impairment Charges		Fair Value		Impairment Charges
Impairment Charges
Real estate and intangibles	$	27,603,118	$	11,765,540	$	8,395,011	$	1,604,989
			$	11,765,540			$	1,604,989

Impairment charges, and their related triggering events and fair value measurements, recognized during the three and six months ended June 30, 2023 and 2022 were as follows:

Real Estate and Intangibles

The impairment charges described below are reflected within Impairment charges in the consolidated statements of operations.

During the three and six months ended June 30, 2023, the Company recorded an impairment charge of $11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value. The fair value measurement was determined by estimating discounted cash flows using two significant unobservable inputs, which were the cash flow discount rate (8.50%) and terminal capitalization rate (7.50%).

For the six months June 30, 2022, the Company recorded an impairment charge of $1.6 million on the 4.9 acres of land located in Pennsylvania to reduce the carrying value of the land to its estimated fair value, which was based on the selling price in the purchase and sale agreement. The land was sold in June 2022. There was no impairment charge recorded for the three months ended June 30, 2022.

Valuation Process for Fair Value Measurement

    The fair value of the Company’s investment in equity securities, held-to-maturity debt securities and its unsecured notes payable is determined based on quoted prices in an active market and is classified as Level 1 of the fair value hierarchy.

    Market quotations are not readily available for the Company’s real estate-related loan investments, all of which are included in Level 3 of the fair value hierarchy, and therefore these investments are valued utilizing a yield approach, i.e. a discounted cash flow methodology to arrive at an estimate of the fair value of each respective investment in the portfolio using an estimated market yield. In following this methodology, investments are evaluated individually, and management takes into account, in determining the risk-adjusted discount rate for each of the Company’s investments, 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, net operating income and 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); 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 and replacement costs; and the anticipated duration of each real estate-related loan investment.

The Manager designates a valuation committee to oversee the entire valuation process of the Company’s Level 3 loans. 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 the Company 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, industry accepted third-party valuation models and discount rates or other methods the valuation committee deems to be appropriate. Because there is no readily available market for these investments, the fair values of these investments are approved in good faith by the Company’s board of directors (which is made up exclusively of independent directors).

    The fair values of the Company’s mortgage loan payable, secured borrowing, term loan payable and revolving line of credit are determined by discounting the contractual cash flows at the interest rate the Company estimates such arrangements would bear if executed in the current market.

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 loans 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 at June 30, 2023		Primary Valuation Technique	Unobservable Inputs	June 30, 2023
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	478,729,965	Discounted cash flow	Discount rate	8.79	%	17.14	%	12.21	%
Loans held for investment acquired through    participation, net	38,764,766		Discounted cash flow	Discount rate	15.30	%	17.84	%	17.35	%
Total Level 3 Assets	$	517,494,731
Liabilities:
Repurchase agreement payable	122,832,682		Discounted cash flow	Discount rate	6.01	%	7.61	%	6.97	%
Obligations under participation agreements	13,789,071		Discounted cash flow	Discount rate	17.14	%	17.14	%	17.14	%
Mortgage loan payable	100,487,973		Discounted cash flow	Discount rate	6.25	%	8.99	%	7.78	%
Term loan payable	15,000,000		Discounted cash flow	Discount rate	12.48	%	12.48	%	12.48	%
Revolving line of credit	105,448,019		Discounted cash flow	Discount rate	8.49	%	8.49	%	8.49	%
Total Level 3 Liabilities	$	357,557,745

	Fair Value at December 31, 2022		Primary Valuation Technique	Unobservable Inputs	December 31, 2022
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	581,182,892	Discounted cash flow	Discount rate	8.71	%	19.36	%	11.46	%
Loans held for investment acquired through    participation, net	41,962,862		Discounted cash flow	Discount rate	15.25	%	17.06	%	16.67	%
Total Level 3 Assets	$	623,145,754
Liabilities:
Repurchase agreement payable	170,876,606		Discounted cash flow	Discount rate	5.22	%	6.17	%	6.82	%
Obligations under participation agreements	12,680,595		Discounted cash flow	Discount rate	16.36	%	16.36	%	16.36	%
Mortgage loan payable	29,394,870		Discounted cash flow	Discount rate	8.24	%	8.24	%	8.24	%
Term loan payable	25,000,000		Discounted cash flow	Discount rate	5.63	%	5.63	%	5.63	%
Revolving line of credit	90,135,865		Discounted cash flow	Discount rate	7.64	%	7.64	%	7.64	%
Total Level 3 Liabilities	$	328,087,936

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Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Management Agreement

The Company entered into the Management Agreement with the Manager whereby the Manager is responsible for its day-to-day operations. The Management Agreement runs co-terminus with the amended and restated operating agreement for Terra Fund 5, which is scheduled to terminate on December 31, 2023 unless Terra Fund 5 is dissolved earlier. The following table presents a summary of fees paid and costs reimbursed to the Manager in connection with providing services to the Company that are included on the consolidated statements of operations:

	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 Manager	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 fee paid to the Manager 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 fee paid to the Manager in connection with the Company’s equity investment in an unconsolidated investment. This origination fee was 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.

Origination and Extension Fee Expense

Pursuant to the Management Agreement, the Manager or its affiliates receives an origination fee in the amount of 1% of the amount used to originate, fund, acquire or structure real estate-related investments, including any third-party expenses related to such loans. In the event that the term of any real estate-related loan held by the Company is extended, the Manager also receives an extension fee equal to the lesser of (i) 1% of the principal amount of the loan being extended or (ii) the amount of fee paid to the Company by the borrower in connection with such extension.

Asset Management Fee

Under the terms of the Management Agreement, the Manager or its affiliates provides the Company with certain investment management services in return for a management fee. The Company pays a monthly asset management fee at an annual rate of 1% of the aggregate funds under management, which includes the loan origination price or aggregate gross acquisition price, as defined in the Management Agreement, for each real estate related loan and cash held by the Company.

Asset Servicing Fee

The Manager or its affiliates receives from the Company a monthly servicing fee at an annual rate of 0.25% of the aggregate gross origination price or acquisition price, as defined in the Management Agreement, for each real estate-related loan held by the Company.

Transaction Breakup Fee

    In the event that the Company 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, the Manager 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 the Manager with respect to its evaluation and pursuit of such transactions. As of June 30, 2023 and December 31, 2022, the Company had not received any breakup fees.

Operating Expenses

The Company reimburses the Manager for operating expenses incurred in connection with services provided to the operations of the Company, including the Company’s allocable share of the Manager’s overhead, such as rent, employee costs, utilities, and technology costs.

Disposition Fee

Pursuant to the Management Agreement, the Manager or its affiliates receives a disposition fee in the amount of 1% of the gross sale price received by the Company from the disposition of any real estate-related loan, or any portion of, or interest in, any real estate-related loan. The disposition fee is paid concurrently with the closing of any such disposition of all or any portion of any real estate-related loan or any interest therein, which is the lesser of (i) 1% of the principal amount of the loan or debt-related loan prior to such transaction or (ii) the amount of the fee paid by the borrower in connection with such transaction. If the Company takes ownership of a property as a result of a workout or foreclosure of a loan, the Company will pay a disposition fee upon the sale of such property equal to 1% of the sales price.

Cost Sharing and Reimbursement Agreement

The Company and Terra LLC have entered into a cost sharing and reimbursement agreement effective October 1, 2022, pursuant to which Terra LLC is responsible for its allocable share of the Company’s expenses, including fees paid by the Company to the Manager based on relative assets under management. These fees are eliminated in consolidation and therefore have no impact on the Company’s consolidated financial statements.

Distributions Paid

For the three months ended June 30, 2023 and 2022, the Company made distributions to investors totaling $4.7 million and $3.8 million, respectively, of which $4.7 million and $2.8 million were returns of capital, respectively. For the six months ended June 30, 2023 and 2022, the Company made distributions to investors totaling $9.3 million and $7.7 million, respectively, of which $8.8 million and $5.7 million were returns of capital, respectively (Note 11).

Due to Manager

    As of June 30, 2023 and December 31, 2022, approximately $3.4 million and $3.9 million, respectively, was due to the Manager, as reflected on the consolidated balance sheets, primarily related to the present value of the disposition fees on individual loans due to the Manager.

Mavik Real Estate Special Opportunities Fund, LP

On August 3, 2020, the Company entered into a subscription agreement with RESOF whereby the Company committed to fund up to $50.0 million to purchase limited partnership interests in RESOF. For more information on this investment, please see Note 5.

Participation Agreements

In the normal course of business, the Company may enter into participation agreements with related parties, primarily other affiliated funds managed by the Manager, and to a lesser extent, unrelated parties (the “Participants”). The purpose of the participation agreements is to allow the Company and an affiliate to originate a specified loan when, individually, the Company does not have the liquidity to do so or to achieve a certain level of portfolio diversification. The Company may transfer portions of its investments to other Participants or it may be a Participant to a loan held by another entity.

ASC 860, Transfers and Servicing (“ASC 860”), establishes accounting and reporting standards for transfers of financial assets. ASC 860-10 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The Company has determined that the participation agreements it enters into are accounted for as secured borrowings under ASC 860 (See “Participation interests” in Note 2 and “Obligations under Participation Agreements and Secured Borrowing” in (Note 9).

Participation Interests Purchased by the Company

From time to time, the Company may purchase investments from affiliates pursuant to participation agreements. In accordance with the terms of each participation agreement, each Participant’s rights and obligations, as well as the proceeds received from the related borrower/issuer of the loan, are based upon their respective pro rata participation interest in the loan.

The table below lists the participation interests purchased by the Company pursuant to participation agreements as of:

	June 30, 2023
	Participating Interests	Principal Balance		Carrying Value
Mesa AZ Industrial Owner, LLC (1)	38.27%	$	31,000,000	$	31,296,394
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,485,029
Allowance for credit losses		—		(136,087)
		$	38,444,357	$	38,645,336

	December 31, 2022
	Participating Interests	Principal Balance		Carrying Value
Havemeyer TSM LLC (1)(2)	23.00%	$	3,282,208	$	3,313,813
Mesa AZ Industrial Owner, LLC (1)	38.27%	31,000,000		31,276,468
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,482,547
		$	41,726,565	$	42,072,828

________________

(1)The loan is held in the name of Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party REIT managed by the Manager.

(2)This loan was repaid in February 2023.

Transfers of Participation Interest by the Company

    The following tables summarize the loans that were subject to participation agreements with affiliated entities and third-parties as of:

					Transfers Treated as Obligations Under Participation Agreements as of June 30, 2023
	Principal Balance		Carrying Value		% Transferred		Principal Balance		Carrying Value
610 Walnut Investors LLC (1)	$	20,244,654	$	20,401,547	67.57	%	$	13,678,820	$	13,789,070
	$	20,244,654	$	20,401,547			$	13,678,820	$	13,789,070

					Transfers Treated as Obligations Under Participation Agreements as of December 31, 2022
	Principal Balance		Carrying Value		% Transferred		Principal Balance		Carrying Value
610 Walnut Investors LLC (1)	$	18,625,738	$	18,738,386	67.57	%	$	12,584,958	$	12,680,594
	$	18,625,738	$	18,738,386			$	12,584,958	$	12,680,594

________________

(1)Participant was a third party.

These investments are held in the name of the Company, but each of the Participant’s rights and obligations, including interest income and other income (e.g., exit fee, prepayment income) and related fees/expenses (e.g., disposition fees, asset management and asset servicing fees), are based upon their respective pro rata participation interest in such participated investments, as specified in the respective participation agreement. The Participants’ share of the investments is repayable only

from the proceeds received from the related borrower/issuer of the investments and, therefore, the Participants also are subject to credit risk (i.e., risk of default by the underlying borrower/issuer). Pursuant to the participation agreements with these entities, the Company receives and allocates the interest income and other related investment income to the Participants based on their respective pro rata participation interest. The Participants pay any expenses, including any fees to the Manager, only on their respective pro rata participation interest, subject to the terms of the respective governing fee arrangements.

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Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

Debt

Unsecured Notes Payable

The 6.00% Senior Notes Due 2026

On June 10, 2021, the Company issued $78.5 million in aggregate principal amount of its 6.00% notes due 2026 (the “initial note”), for net proceeds of $76.0 million after deducting underwriting commissions of $2.5 million, but before offering expenses payable by the Company. On June 25, 2021, the underwriters partially exercised their option to purchase an additional $6.6 million of the notes for net proceeds of $6.4 million (the “additional notes” and, together with the initial notes, the “6.00% Senior Notes Due 2026”), after deducting underwriting commissions of $0.2 million, but before offering expenses payable by us, which closed on June 29, 2021. Interest on the 6.00% Senior Notes Due 2026 is paid quarterly in arrears every March 30, June 30, September 30 and December 30, at a fixed rate of 6.00% per year, beginning September 30, 2021. The 6.00% Senior Notes Due 2026 mature on June 30, 2026, unless redeemed earlier by the Company, and may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after June 10, 2023.

In connection with the issuance of the 6.00% Senior Notes Due 2026, the Company entered into (i) an Indenture, dated June 10, 2021 (the “Base Indenture”), by and between the Company and U.S. Bank National Association, as trustee (the “Trustee”), and (ii) the First Supplemental Indenture thereto, dated June 10, 2021 (the “Supplemental Indenture” and, collectively with the Base Indenture, the “Indenture”), by and between the Company and the Trustee. The Indenture contains certain covenants that, among other things, limit the ability of the Company, subject to exceptions, to make distributions in excess of 90% of the Company’s taxable income, incur indebtedness (as defined in the Indenture) or purchase shares of the Company’s capital stock unless the Company has an asset coverage ratio (as defined in the Indenture) of at least 150% after giving effect to such transaction. The Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the notes to become or to be declared due and payable. As of June 30, 2023 and December 31, 2022, the Company was in compliance with the covenants included in the Indenture.

The 7.00% Senior Notes Due 2026

As previously reported by Terra BDC, on February 10, 2021, Terra BDC issued $34.8 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, for net proceeds of $33.7 million after deducting underwriting commissions of $1.1 million and on February 26, 2021, the underwriters exercised the option to purchase an additional $3.6 million of the notes for net proceeds of $3.5 million, after deducting underwriting commissions of $0.1 million (collectively the “7.00% Senior Notes Due 2026”).

Pursuant to the Merger Agreement, Terra LLC agreed to take all necessary action to assume the payment of the principal of and interest on all of the 7.00% Senior Notes Due 2026 outstanding as of the Effective Time and the performance of every covenant of the Indenture, dated February 10, 2021 (the “TIF6 Indenture”), between Terra BDC and the Trustee, as supplemented by the First Supplemental Indenture, dated February 10, 2021, by and between Terra BDC and the Trustee (the “First Supplemental Indenture”), to be performed or observed by Terra BDC, including, without limitation, the execution and delivery to the Trustee of a supplement to the TIF6 Indenture in form satisfactory to the Trustee.

On the Closing Date, Terra BDC, Terra LLC and the Trustee entered into a Second Supplemental Indenture pursuant to which Terra LLC assumed the payment of the 7.00% Senior Notes Due 2026 and the performance of every covenant of the TIF6 Indenture, as supplemented by the First Supplemental Indenture, to be performed or observed by Terra BDC.

The 7.00% Senior Notes Due 2026 will mature on March 31, 2026, unless earlier repurchased or redeemed. The 7.00% Senior Notes Due 2026 bear interest at a rate of 7.00% per annum, payable on March 30, June 30, September 30 and December 30 of each year. The 7.00% Senior Notes Due 2026 are Terra LLC’s direct unsecured obligations and rank pari passu with all outstanding and future unsecured unsubordinated indebtedness issued by Terra LLC; effectively subordinated in right of payment to any of Terra LLC’s existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all existing and future indebtedness and other obligations of any of Terra LLC’s subsidiaries and financing vehicles. Terra LLC may redeem the 7.00% Senior Notes Due 2026 in whole or in part at any time

on or after February 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest.

The TIF6 Indenture contains certain covenants that, among other things, limit the ability of Terra LLC, subject to exceptions, to incur indebtedness in violation of the 1940 Act, and to make distributions, incur indebtedness or repurchase shares of Terra LLC’s capital stock unless it satisfies asset coverage requirements set forth in the First Supplemental Indenture after giving effect to such transaction. The TIF6 Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the 7.00% Senior Notes Due 2026 to become or to be declared due and payable.

Summarized Information

The table below presents detailed information regarding the unsecured notes payable as of:

	June 30, 2023						December 31, 2022
	Principal Balance		Carrying Value		Fair Value		Principal Balance		Carrying Value		Fair Value
6.00% Senior Notes Due 2026 (1)	$	85,125,000	$	82,821,395	$	64,695,000	$	85,125,000	$	82,487,769	$	68,100,000
7.00% Senior Notes Due 2026 (2)	38,375,000		34,611,977		36,533,000		38,375,000		34,042,904		35,381,748
	$	123,500,000	$	117,433,372	$	101,228,000	$	123,500,000	$	116,530,673	$	103,481,748

_______________

(1)Carrying value is net of unamortized issue discount of $1.7 million and $1.9 million, and unamortized deferred financing costs of $0.6 million and $0.7 million as of June 30, 2023 and December 31, 2022, respectively.

(2)Carrying value is net of unamortized purchase discount of $3.8 million and $4.3 million as of June 30, 2023 and December 31, 2022, respectively.

Revolving Line of Credit

On March 12, 2021, Terra Mortgage Portfolio II, LLC, an indirect wholly-owned subsidiary of the Company, entered into a Business Loan and Security Agreement (the “Revolving Line of Credit”) with Western Alliance Bank (“WAB”) to provide for advances up to the lesser of $75.0 million or the amount determined by the borrowing base, which is based on the eligible assets pledged to the lender. Prior to March 31, 2023 borrowings under the Revolving Line of Credit bore interest at an annual rate of LIBOR + 3.25% with a combined floor of 4.0%. In connection with the transition of LIBOR, on March 31, 2023, the Revolving Line of Credit was amended and the interest rate was changed to Term SOFR + 3.35% with a combined floor of 6.0%. The Revolving Line of Credit was scheduled to mature on March 12, 2023. On January 4, 2022, the Company amended the Revolving Line of Credit to increase the maximum amount available to $125.0 million and extended the maturity date of the facility to March 12, 2024 with an annual 12-month extension available at the Company’s option, which are subject to certain conditions. On August 3, 2022, the Company further amended the Revolving Line of Credit to increase the borrowing sub-limit in New York City and to allow for loans acquired through participation agreements as eligible assets.

In connection with the Revolving Line of Credit, the Company entered into a limited guaranty (the “Guaranty”) in favor of WAB, pursuant to which the Company guarantees the payment of up to 25% of the amount outstanding under the Revolving Line of Credit. Under the Revolving Line of Credit and the Guaranty, the Company is required to maintain (i) a minimum total net worth of $250.0 million; (ii) a $3.5 million quarterly operating profit, as defined within the agreement; and (iii) a ratio of total debt to total net worth of no more than 2.50 to 1.00. As of June 30, 2023 and December 31, 2022, the Company was in compliance with these covenants.

The Revolving Line of Credit contains terms, conditions, covenants, and representations and warranties that are customary and typical for a transaction of this nature. The Revolving Line of Credit contains various affirmative and negative covenants, including maintenance of a debt to total net worth ratio and limitations on the incurrence of liens and indebtedness, loans, distributions, change of management and ownership, changes in the nature of business and transactions with affiliates.

The Revolving Line of Credit also includes customary events of default, including a cross-default provision applicable to debt obligations of Terra Mortgage Portfolio II, LLC or the Company. The occurrence of an event of default may result in termination of the Revolving Line of Credit and acceleration of amounts due under the Revolving Line of Credit.

In connection with the closing of the Revolving Line of Credit, the Company also incurred financing fees of $0.6 million, to be amortized to interest expense over the life of the Revolving Line of Credit.

As of June 30, 2023 and December 31, 2022, borrowings under the Revolving Line of Credit were $105.4 million and $90.1 million, respectively, collateralized by $165.6 million and $177.4 million of eligible assets, respectively. For the six months ended June 30, 2023 and 2022, the Company received proceeds from the Revolving Line of Credit of $57.0 million and $41.2 million, respectively, and made repayments of $41.7 million and $30.9 million, respectively.

Repurchase Agreements

UBS Master Repurchase Agreement

On November 8, 2021, Terra Mortgage Capital III, LLC (the “Seller”), a special-purpose indirect wholly-owned subsidiary of the Company, entered into an Uncommitted Master Repurchase Agreement (the “UBS Master Repurchase Agreement”) with UBS AG ( the “Buyer”). The UBS Master Repurchase Agreement provides for advances of up to $195 million in the aggregate, which the Company expects to use to finance certain secured performing commercial real estate loans, including senior mortgage loans, where the underlying mortgaged properties consist of value-added assets with loan-to-value ratio between 65% and 80% that are typically yielding between 2.5% and 5.0%.

Advances under the UBS Master Repurchase Agreement accrue interest at a per annum pricing rate equal to the sum of (i) the 30-day LIBOR or Term SOFR if LIBOR is not available and (ii) the applicable spread, which ranges from 1.60% to 2.25%, and have a maturity date of November 7, 2024. The actual terms of financing for each asset will be determined at the time of financing in accordance with the UBS Master Repurchase Agreement. Subject to satisfaction of certain conditions, the Seller may extend the maturity date of the UBS Master Repurchase Agreement annually thereafter on mutually agreeable terms. In connection with the UBS Master Repurchase Agreement, the Company incurred deferred financing costs of $0.6 million, which are being amortized to interest expense over the term of the facility.

The UBS Master Repurchase Agreement contains margin call provisions that provide the Buyer with certain rights in the event of a decline in the credit of the underlying assets purchased under the UBS Master Repurchase Agreement. Upon the occurrence of a margin deficit event, the Buyer may require the Seller to make a payment to reduce the purchase price to eliminate any margin deficit.

In connection with the UBS Master Repurchase Agreement, the Company entered into a Guarantee Agreement in favor of the Buyer (the “UBS Guarantee Agreement”), pursuant to which the Company will guarantee the payment of up to 25% of the amount outstanding under the UBS Master Repurchase Agreement. The UBS Master Repurchase Agreement and the UBS Guarantee Agreement contain various representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the UBS Guarantee Agreement contains financial covenants, which require the Company to maintain: (i) cash liquidity of at least the greater of $5 million or 5% of the then-current outstanding amount under the UBS Master Repurchase Agreement; (ii) total liquidity of at least the greater of $15 million or 10% of the then-current outstanding amount under the UBS Master Repurchase Agreement (iii) tangible net worth at an amount equal to or greater than $215.7 million plus 75% of new capital contributions thereafter; (iv) an EBITDA to interest expense ratio of not less than 1.50 to 1.00; and (v) a total indebtedness to tangible net worth ratio of not more than 3.50 to 1.00. In March 2022, the Company amended the UBS Guarantee Agreement to reduce the EBITDA to interest expense ratio of not less than 1.25 to 1.00, and as of June 30, 2023 and December 31, 2022, the Company was in compliance with these covenants.

The following tables present detailed information with respect to each borrowing under the UBS Master Repurchase Agreement as of:

	June 30, 2023
	Collateral						Borrowings Under Master Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
NB Factory TIC 1, LLC	$	28,000,000	$	28,842,742	$	28,917,484	11/8/2021	$	18,970,000	Term SOFR+1.75%
Grandview’s Remington Place,    LLC	23,100,000		23,203,590		23,236,153		5/6/2022	18,480,000		Term SOFR + 1.965%
	$	51,100,000	$	52,046,332	$	52,153,637		$	37,450,000

	December 31, 2022
	Collateral						Borrowings Under Master Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
NB Factory TIC 1, LLC	$	28,000,000	$	28,857,892	$	28,902,234	11/8/2021	$	18,970,000	LIBOR+1.74% (LIBOR floor of 0.1%)
Grandview’s Madison Place, LLC	17,000,000		17,105,928		17,105,928		3/7/2022	13,600,000		Term SOFR + 1.965%
Grandview’s Remington Place,    LLC	23,100,000		23,199,620		23,203,343		5/6/2022	18,480,000		Term SOFR + 1.965%
	$	68,100,000	$	69,163,440	$	69,211,505		$	51,050,000

For the six months ended June 30, 2023, the Company had no additional borrowings and made a repayment of $13.6 million under the UBS Master Repurchase Agreement. For the six months ended June 30, 2022, the Company borrowed $29.7 million and did not make any repayments under the UBS Master Repurchase Agreement.

Goldman Master Repurchase Agreement     

The Company entered into a credit agreement with Goldman Sachs Banks to provide for a term loan of up to $103.0 million. On February 18, 2022, Terra Mortgage Capital I, LLC (the “GS Seller”), a special-purpose indirect wholly-owned subsidiary of the Company, entered into an Uncommitted Master Repurchase and Securities Contract Agreement (the “Repurchase Agreement”) with Goldman Sachs Bank USA ( the “GS Buyer”). The Repurchase Agreement provides for advances of up to $200.0 million in the aggregate, which the Company expects to use to finance the originations of certain secured performing commercial real estate loans and the acquisitions of certain secured non-performing commercial real estate loans. The Repurchase Agreement replaced the term loan, at which time all mortgage assets under the term loan were assigned as purchased assets under the Repurchase Agreement.

Advances under the Repurchase Agreement accrue interest at a per annum pricing rate equal to the sum of (i) Term SOFR (subject to underlying loan floors on a case-by-case basis) and (ii) the applicable spread, which ranges from 1.75% to 3.00%, and have a maturity date of February 18, 2024. The actual terms of financing for each asset will be determined at the time of financing in accordance with the Repurchase Agreement. Subject to satisfaction of certain conditions, the GS Seller may extend the maturity date of the Repurchase Agreement for another 12-month term. In connection with the Repurchase Agreement, the Company incurred financing costs of $0.6 million, which are being amortized to interest expense over the term of the facility. Additionally, because the Repurchase Agreement was accounted for as a loan modification of the term loan, the remaining unamortized deferred financing fees of $1.7 million under the term loan were carried over to the Repurchase Agreement to be amortized over the life of the Repurchase Agreement.

The Repurchase Agreement contains margin call provisions that provide the GS Buyer with certain rights in the event of a decline in debt yield, loan-to-value ratio, and value of the underlying loans purchased under the Repurchase Agreement. Upon the occurrence of a margin deficit event, the GS Buyer may require the GS Seller to make a payment to reduce the purchase price to eliminate any margin deficit.

In connection with the Repurchase Agreement, the Company entered into a Guarantee Agreement in favor of the GS Buyer (the “Guarantee Agreement”), pursuant to which the Company will guarantee the obligations of the GS Seller under the Repurchase Agreement. Subject to certain exceptions, the maximum liability under the Repurchase Agreement will not exceed 25% of the then currently outstanding repurchase obligations for performing loans and 50% of the then currently outstanding repurchase obligations for non-performing loans under the Repurchase Agreement.

The Repurchase Agreement and the Guarantee Agreement contain various representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the Guarantee Agreement contains financial covenants, which require the Company to maintain: (i) cash liquidity of at least the greater of $5 million or 5% of the then-current outstanding amount under the Repurchase Agreement; (ii) total liquidity in an amount equal to or greater than the lesser of $15 million or 10% of the then-current outstanding amount under the Repurchase Agreement (iii) tangible net worth at an amount no less than 75% of that at closing; (iv) an EBITDA to adjusted interest expense ratio of not less than 1.50 to 1.00; and (v) a total indebtedness to tangible net worth ratio of not more than 3.00 to 1.00. As of June 30, 2023 and December 31, 2022, the Company was in compliance with these covenants.

The following tables present detailed information with respect to each borrowing under the Repurchase Agreement as of:

	June 30, 2023
	Collateral						Borrowings Under Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
1389 Peachtree St, LP; 1401 Peachtree St, LP; and    1409 Peachtree St, LP	$	58,865,991	$	59,155,584	$	55,139,746	2/18/2022	$	42,888,134	Term SOFR + 2.465%
AGRE DCP Palm Springs, LLC	43,222,382		43,826,614		43,499,719		2/18/2022	28,094,548		Term SOFR + 1.315% (1.8% floor)
Patrick Henry Recovery Acquisition, LLC	18,000,000		18,043,198		17,923,436		2/18/2022	14,400,000		Term SOFR + 0.865% (1.5% floor)
	$	120,088,373	$	121,025,396	$	116,562,901		$	85,382,682

	December 31, 2022
	Collateral						Borrowings Under Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
330 Tryon DE LLC	$	22,800,000	$	22,902,215	$	22,687,235	2/18/2022	$	18,240,000	Term SOFR + 2.015% (0.01% floor)
1389 Peachtree St, LP; 1401 Peachtree St, LP; and    1409 Peachtree St, LP	57,184,178		57,453,482		56,844,322		2/18/2022	41,587,275		Term SOFR + 2.465%
AGRE DCP Palm Springs, LLC	43,222,382		43,758,804		43,062,933		2/18/2022	28,094,548		Term SOFR + 1.315% (1.8% floor)
Patrick Henry Recovery Acquisition, LLC	18,000,000		18,041,782		17,824,300		2/18/2022	14,400,000		Term SOFR + 0.865% (1.5% floor)
University Park Berkeley, LLC	26,342,468		26,536,122		26,472,938		2/18/2022	17,504,783		Term SOFR + 1.365% ( 1.50% floor)
	$	167,549,028	$	168,692,405	$	166,891,728		$	119,826,606

For the six months ended June 30, 2023 and 2022 the Company borrowed $1.3 million and $118.3 million, respectively, under the Repurchase Agreement and made repayments of $35.7 million and zero, respectively.

Term Loan

As previously reported by Terra BDC, on April 9, 2021, Terra BDC, as borrower, entered into a credit agreement (the “Credit Agreement”) with Eagle Point Credit Management LLC, as the administrative agent and collateral agent (“Eagle Point”), and certain funds and accounts managed by Eagle Point, as lenders (in such capacity, collectively, the “Lenders”). The Credit Agreement provides for (i) a delayed draw term loan of $25.0 million and (ii) additional incremental loans in a minimum amount of $1.0 million and multiples of $0.5 million in excess thereof, which may be approved by a Lender in its sole discretion (the “Term Loan”).

The scheduled maturity date of the Term Loan was April 9, 2025. The Term Loan bore interest on the outstanding principal amount thereof at a rate equal to 5.625% per annum; provided that if at any time Terra BDC was rated below investment grade, the interest rate would increase to 6.625% until the rating is no longer below investment grade. In connection with the entry into the Credit Agreement, Terra BDC also agreed to pay Eagle Point an upfront fee in an amount equal to 2.50% of the loan commitment amount on the initial borrowing date as described in the Credit Agreement. Terra BDC also paid, with respect to any unused portion of the Term Loan, a commitment fee of 0.75% per annum.

Terra BDC could prepay any loan, in whole or in part, together with all accrued but unpaid interest thereon, upon at least

30 but not more than 60 days’ prior notice to the Agent. If Terra BDC elected to make such prepayments prior to October 9, 2023, Terra BDC would also be required to pay a make whole premium, being the present value at such date of (1) the principal

amount being prepaid of such loan, plus (2) all remaining required interest payments due on the principal amount being prepaid of such loan through the maturity date (excluding accrued but unpaid interest to the date on which the make whole premium

becomes owed), computed using a discount rate equal to the applicable U.S. Treasury rate (as set forth in the Credit Agreement) plus 50 basis points, over (B) the principal amount being prepaid of such loan; provided that the make whole premium may in no event be less than zero.

In connection with its entry into the Credit Agreement, Terra BDC also entered into a security agreement (the “Security Agreement”), by and among Terra BDC, as grantor, and Eagle Point, as administrative agent, for the benefit of the Lenders, their affiliates and Eagle Point as the secured parties thereunder. Pursuant to the Security Agreement, Terra BDC pledged substantially all of its then owned and thereafter acquired property as security for the obligations of Terra BDC under the Credit Agreement, subject to certain limitations and restrictions set forth in the Security Agreements.

On September 27, 2022, Terra BDC, Terra LLC, Eagle Point and the Lenders entered into a Consent Letter and Amendment (the “Credit Facility Amendment”) effective October 1, 2022. Pursuant to the Credit Facility Amendment (i) Eagle Point and the Lenders consented to the consummation of the BDC Merger and the assumption by Terra LLC of all of the obligations of Terra BDC under the Credit Agreement, (ii) and the Credit Agreement was amended to, among other things, change the scheduled maturity date to July 1, 2023, and remove the make whole premium on voluntary prepayments of the loans.

On June 30, 2023, the Company, Eagle Point and the Lenders entered into an amendment to the Credit Agreement, pursuant to which the Credit Agreement was amended to, among other things, (i) extend the scheduled maturity date to March 31, 2024, and (ii) increase the rate on which the loans bear interest from a fixed rate of 5.625% per annum to a floating rate based on SOFR plus 7.375% with a SOFR floor of 5.0%. In connection with the amendment, the Company paid Eagle Point a loan origination fee of $150,000, to be amortized to interest expense over the remaining term of the Term Loan. As of June 30, 2023 and December 31, 2022, the principal amount outstanding under the Term Loan was $15.0 million and $25.0 million, respectively.

The Credit Agreement contains customary representations, warranties, reporting requirements, borrowing conditions and affirmative, negative and financial covenants. As of June 30, 2023 and December 31, 2022 , Terra LLC was in compliance with these covenants.

Mortgage Loans Payable

Mortgage Loan Financing Activities

2023 — During the six months ended June 30, 2023, the Company entered into the following financing arrangements:

•A mortgage loan with total commitment of $37.0 million for the acquisition of three industrial buildings in March 2023. As of June 30, 2023, total amount funded was $32.4 million; and

• A mortgage loan of $40.3 million to finance the acquisition of five industrial buildings in May 2023.

The following table presents certain information about mortgage loans payable as of:

			June 30, 2023						December 31, 2022
Lender	Current Interest Rate	Maturity Date	Principal Amount		Carrying Value		Carrying Value of Collateral		Principal Amount		Carrying Value		Carrying Value of Collateral
Centennial    Bank (1)	Term SOFR + 3.85% (Term SOFR Floor of 2.23%)	May 31, 2023	$	27,603,118	$	27,869,606	$	27,603,118	$	29,252,308	$	29,488,326	$	40,581,847
TPG RE   Finance   24, LTD (2)	Term SOFR +3.5% (Term SOFR Floor of 3.75%	April 9, 2027	32,368,367		31,581,757		48,498,431		—		—		—
GSF Lender, LLC (3)	6.254%	June 6, 2028	40,250,000		39,235,822		83,205,033		—		—		—
			$	100,221,485	$	98,687,185	$	159,306,582	$	29,252,308	$	29,488,326	$	40,581,847

___________________

(1)This loan is collateralized by a multi-tenant office building that the Company acquired through foreclosure. This loan is currently in maturity default. The Company has sought to convey its interest in the office building and ground lease in lieu of foreclosure.

(2)This loan is collateralized by three industrial buildings that the Company acquired in March 2023.

(3)This loan is collateralized by five industrial buildings that the Company acquired in May 2023.

Scheduled Debt Principal Payments

    Scheduled debt principal payments for each of the five calendar years following June 30, 2023 are as follows:

Years Ending December 31,	Total
2023 (July 1 through December 31)	$	42,603,118
2024	228,280,702
2025	—
2026	123,500,000
2027	32,368,368
Thereafter	40,250,000
	467,002,188
Unamortized deferred financing costs	(8,700,440)
Total	$	458,301,748

     At June 30, 2023 and December 31, 2022, the unamortized deferred debt issuance costs were $8.7 million and $8.6 million, respectively.

Obligations Under Participation Agreements

As discussed in Note 2, the Company follows the guidance in ASC 860 when accounting for loan participations. Such guidance requires the transferred interests meet certain criteria in order for the transaction to be recorded as a sale. Loan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. As of June 30, 2023 and December 31, 2022, obligations under participation agreements had a carrying value of approximately $13.8 million and $12.7 million, respectively, and the carrying value of the loans that are associated with these obligations under participation agreements was approximately $20.4 million and $18.7 million, respectively, (see “Participation Agreements” in Note 8). The weighted-average interest rate on the obligations under participation agreements was approximately 17.1% and 16.4% as of June 30, 2023 and December 31, 2022, respectively.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Unfunded Commitments on Loans Held for Investment

Certain of the Company’s loans contain provisions for future fundings, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. These fundings amounted to approximately $53.2 million and $47.3 million as of June 30, 2023 and December 31, 2022, respectively. The Company 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 credit facilities.

Unfunded Investment Commitment

As discussed in Note 5, on August 3, 2020, the Company entered into a subscription agreement with RESOF whereby the Company committed to fund up to $50.0 million to purchase limited partnership interests in RESOF. As of June 30, 2023 and December 31, 2022, the unfunded investment commitment was $37.4 million and $22.4 million, respectively.

Other

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.

From time to time, the Company and the Manager 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. Additionally, as described above under “Note 6. Real Estate Owned, Net—Real Estate Operating Revenue and Expenses,” as of June 30, 2023 and December 31, 2022, the Company 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. The Company 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. The Company believes this determination should be based on comparable sales, while the landlord insists that the rent under the ground lease itself is also relevant. The Company’s position has prevailed in all three of the prior arbitrations to reset the ground rent. Since future rent reset determinations under the ground lease cannot be known at this time, the Company did not include any potential future rent increases in calculating the present value of future rent payments. The Company intends vigorously to pursue the litigation. While the Company 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 the Company’s interest in the ground lease and the office building.

On July 7, 2023, Centennial Bank filed a complaint for breach of guaranty against the Company 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 the Company, 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 the Company. On July 24, 2023, the Company, through counsel appeared in the action. Although the action is in its initial stages, the Company is seeking a dismissal of the complaint at the pleading stage and, if not successful, is prepared to vigorously defend itself through trial. The Company believes the claim by Centennial Bank is without merit.

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 the Company 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.

See Note 8 for a discussion of the Company’s commitments to the Manager.

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Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Equity

Equity

Earnings Per Share

The following table presents earnings per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net (loss) income	$	(19,237,065)	$	1,292,434	$	(18,689,586)	$	534,547
Series A preferred stock dividend declared	—		(3,906)		(3,907)		(7,812)
Net (loss) income allocable to common stock	$	(19,237,065)	$	1,288,528	$	(18,693,493)	$	526,735
Weighted-average shares outstanding - basic and diluted	24,335,430		19,487,460		24,335,402		19,487,460
(Loss) income per share - basic and diluted	$	(0.79)	$	0.07	$	(0.77)	$	0.03

Preferred Stock Classes

Preferred Stock

    The Company’s charter gives it authority to issue 50,000,000 shares of preferred stock, $0.01 par value per share (“Preferred Stock”). The Board may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any series from time to time, into one or more classes or series of stock. As of June 30, 2023, there were no Preferred Stock issued or outstanding. As of December 31, 2022 there were 125 shares of Series A Preferred Stock (as defined below) issued and outstanding.

Series A Preferred Stock

    On November 30, 2016, the Board classified and designated 125 shares of Preferred Stock as a separate class of Preferred Stock to be known as the 12.5% Series A Redeemable Cumulative Preferred Stock, $1,000 liquidation value per share (“Series A Preferred Stock”). In December 2016, the Company sold 125 shares of the Series A Preferred Stock for $125,000. The Series A Preferred Stock paid dividends at an annual rate of 12.5% of the liquidation preference. These dividends were cumulative and payable semi-annually in arrears on June 30 and December 31 of each year.

    The Series A Preferred Stock, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, ranked senior to common stock. The Company, at its option, may redeem the shares, with written notice, at a redemption price of $1,000 per share, plus any accrued unpaid distribution through the date of the redemption. The Series A Preferred Stock carried a redemption premium of $50 per share if redeemed prior to January 1, 2019. The Series A Preferred Stock generally had no voting rights. However, the Series A Preferred Stockholders’ voting was required if (i) authorization or issuance of any securities senior to the Series A Preferred Stock; (ii) an amendment to the Company’s charter that has a material adverse effect on the rights and preference of the Series A Preferred Stock; and (iii) any reclassification of the Series A Preferred Stock.

In March 2023, the Series A Preferred Stock was fully redeemed at par for a total of $125,000 plus accrued dividends.

Common Stock

On October 1, 2022, in connection with the BDC Merger, the Company amended its charter to increase the shares authorized from 500,000,000 to 950,000,000, consisting of 450,000,000 shares of Class A Common Stock, $0.01 par value per share (“Class A Common Stock”), 450,000,000 shares of Class B Common Stock, and 50,000,000 shares of Preferred Stock. Concurrently, 4,847,910 shares of Class B Common Stock were issued to former Terra BDC stockholders and each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the BDC Merger was automatically changed into one issued and outstanding share of Class B Common Stock. As of June 30, 2023, Terra JV, LLC, former shareholders of Terra BDC and Terra Offshore Funds REIT, LLC held 70.0%, 19.9% and 10.1% of the issued and outstanding shares of the Class B Common Stock, respectively.

The Class B Common Stock rank equally with and have identical preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption as each other share of the Company’s common stock, except as set forth below with respect to conversion.

On the date that is 180 calendar days (or, if such date is not a business day, the next business day) after the date (the “First Conversion Date”) of initial listing of shares of Class A Common Stock for trading on a national securities exchange or such earlier date as approved by the Board, one-third of the issued and outstanding shares of Class B Common Stock will automatically and without any action on the part of the holder thereof convert into an equal number of shares of Class A Common Stock. On the date that is 365 calendar days (or, if such date is not a business day, the next business day) after the date of initial listing of shares of Class A Common Stock for trading on a national securities exchange or such earlier date following the First Conversion Date as approved by the Board (the “Second Conversion Date”), one-half of the issued and outstanding shares of Class B Common Stock will automatically and without any action on the part of the holder thereof convert into an equal number of shares of Class A Common Stock. On the date that is 545 calendar days (or, if such date is not a business day, the next business day) after the date of initial listing of shares of Class A Common Stock for trading on a national securities exchange or such earlier date following the Second Conversion Date as approved by the Board, all of the issued and outstanding shares of Class B Common Stock will automatically and without any action on the part of the holder thereof convert into an equal number of shares of Class A Common Stock.

Distributions

    The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with U.S. GAAP, to its stockholders each year to comply with the REIT provisions of the Internal Revenue Code. All distributions will be made at the discretion of the Board and will depend upon its taxable income, financial condition, maintenance of REIT status, applicable law, and other factors as the Board deems relevant.

For the three months ended June 30, 2023 and 2022, the Company made distributions to investors totaling $4.7 million and $3.8 million, respectively, of which $4.7 million and $2.8 million were returns of capital, respectively. For the six months ended June 30, 2023 and 2022, the Company made distributions to investors totaling $9.3 million and $7.7 million, respectively, of which $8.8 million and $5.7 million were returns of capital, respectively. Additionally, for the three and six months ended June 30, 2023 and 2022, the Company made distributions to preferred stockholders of none and $3,906, respectively, and $3,907 and $7,812, respectively.

Dividend Reinvestment Plan

On January 20, 2023, the Board adopted a distribution reinvestment plan (the “Plan”), pursuant to which the Company’s stockholders may elect to reinvest cash distributions payable by the Company in additional shares of Class A Common Stock and Class B Common Stock, at the price per share determined pursuant to the Plan. For the six months ended June 30, 2023, the Company issued 143 shares of Class B Common Stock for a total of $1,988 pursuant to the Plan.

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Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Management has evaluated subsequent events through the date the consolidated 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 consolidated financial statements.

Termination of WMC Merger Agreement

On June 28, 2023, the Company 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 the Company 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 the Company 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 the Company was paid a termination fee of $3.0 million.

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

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

    The consolidated financial statements include all of the Company’s accounts and those of its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period presentation.

The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (“VIE”) or voting interest model. The Company is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. If the Company determines it does not hold a variable

interest in a VIE, it then applies the voting interest model. Under the voting interest model, the Company consolidates an entity when it holds a majority voting interest in an entity.

The Company accounts for investments in which it has significant influence but not a controlling financial interest using the equity method of accounting (see Note 5).

VIE Model

An entity is considered to be a VIE if any of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the holders of the equity investment at risk, as a group, lack either the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the entity or the obligation to absorb the entity’s expected losses or right to receive the entity’s expected residual returns, or (c) the voting rights of some equity investors are disproportionate to their obligation to absorb losses of the entity, their rights to receive returns from an entity, or both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately few voting rights.

Under the VIE model, limited partnerships are considered VIEs unless a limited partner holds substantive kick-out or participating rights over a general partner. The Company consolidates entities that are VIEs when the Company determines it is the primary beneficiary. Generally, the primary beneficiary of a VIE is a reporting entity that has (a) the power to direct the activities that most significantly affect the VIE’s economic performance, and (b) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

Loans Held for Investment

Loans Held for Investment

    The Company originates, acquires, and structures, or acquires through participations, real estate-related loans generally to be held to maturity (collectively the “loans”). Loans held for investment are carried at the principal amount outstanding, adjusted for the accretion of discounts on investments and exit fees, and the amortization of premiums on investments and origination fees. The Company’s preferred equity investments, which are economically similar to mezzanine loans and subordinate to any loans but senior to common equity, are accounted for as loans held for investment. Loans are carried at amortized cost less allowance for credit losses.

Current Expected Credit Losses Reserve

Current Expected Credit Losses Reserve

Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, became effective for the Company on January 1, 2023. ASC 326 mandates the use of a current expected credit loss (“CECL”) model for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” credit model previously required under United States generally accepted accounting principles (“U.S. GAAP”). The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to only estimating credit losses upon the occurrence of a discrete loss event under the previous “incurred loss” methodology. The CECL model applies to the Company’s loan portfolio and the held-to-maturity debt securities which are carried at amortized cost, including future funding commitments for which the Company does not have the unconditional right to cancel. Amortized cost is defined as the principal amount outstanding, adjusted for the accretion of purchase discounts and disposition fees, and amortization of purchase premiums and origination fees, and includes accrued interest receivable related to these loans and securities. As permitted by ASC 326, the Company elected not to measure an allowance for credit losses on accrued interest receivable (which is presented separately on the consolidated balance sheet), but rather write off in a timely manner by reversing interest income that would likely be uncollectible. The Company’s adoption of the CECL model resulted in a $4.6 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to accumulated deficit as of January 1, 2023. Subsequent to the adoption of the CECL model, any increase or decrease to the CECL reserve is recorded in earnings on the consolidated statements of operations.

The Company utilizes information obtained from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. The Company does not have a meaningful history of realized credit losses on its loan portfolio so it has subscribed to a third-party database service to provide the Company with industry losses for its loans. The Company utilizes a loan loss model that is widely used among banks and commercial mortgage REITs and is marketed by a leading commercial mortgage-based security data analytics provider. It employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. The Company provides specific loan-level inputs which include loan-to-value and debt service coverage ratio metrics, as well as principal balances, property type, location, coupon rate, coupon rate type, original or remaining term, expected repayment dates and contractual future funding

commitments. The Company selects from a group of independent five-year macroeconomic forecasts included in the model that are updated regularly based on current economic trends. Because the Company’s loan portfolio is comprised of a small number of loans, the Company measures the CECL reserve based on an evaluation of each loan as its own segregated asset. Based on the inputs, the loan loss model determines a loan loss rate through the generation of probability of defaults (PD) and loss given defaults (LGD) for each loan. The CECL reserve is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. These results require a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance for credit losses. Changes in such estimates can significantly affect the expected credit losses.

The calculation of the estimate of expected credit loss considers historical experience and current conditions for each loan and reasonable and supportable forecasts about the future. The reasonable and supportable forecast period is determined based on the Company’s assessment of the most likely scenario of assumptions and plausible outcomes for the U.S. economy, current portfolio composition, level of historical loss forecast estimates, material changes in growth and credit strategy and other factors that may affect its loss experience. The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed.

Beyond the Company’s reasonable and supportable forecast period, the Company generally reverts to historical loss information, pooled by asset type and investment structure, over the remaining loan period, taken from a period that most accurately reflects the expectation of conditions expected to exist during the period of reversion. The Company may adjust historical loss information for differences in risk that may not reflect the characteristics of its current portfolio, including but not limited to, loan-to-value and debt service coverage ratios, among other relevant factors. The method of reversion selected represents the best estimate of the collectability of the investments and is reevaluated each reporting period. The Company generally expects to use an average historical loss for reversion, utilizing an immediate or straight-line method for the remaining life of the loans.

The Company also performs a qualitative assessment beyond model estimates and applies qualitative adjustments as necessary. The Company’s qualitative analysis includes a review of data that may directly impact its estimates including internal and external information about the loan or property including current market conditions, asset specific conditions, property operations or borrower/sponsor details (i.e., refinance, sale, bankruptcy) which allows the Company to determine the amount of the expected loss more accurately and reasonably for these investments. The Company also evaluates the contractual life of its loans to determine if changes are needed for contractual extension options, renewals, modifications, and prepayments.

During the loan review process, if the Company determines that it is not able to collect all amounts due for both principal and interest according to the contractual terms of a loan, the Company considers that loan non-performing. For all non-performing loans, such as those in default, collateral-dependent or modified loans, including historical troubled debt restructurings, the Company removes these loans from the industry loss rate approach described above and analyzes them separately. The credit loss reserve for these loans is calculated as any excess of the amortized cost of the loan over (i) the present value of expected future cash flows discounted at the appropriate discount rate or (ii) the fair value of collateral, if repayment is expected solely from the collateral.

Some of the Company’s loans include commitments to fund incremental proceeds to the borrowers over the life of the loan and these unfunded commitments are also subject to the CECL model because the Company does not have an unconditional right to cancel such commitments. The CECL reserve related to unfunded commitments is recorded as a component of other liabilities on the Company’s consolidated balance sheets. This CECL reserve is estimated using the same method outlined above for the Company’s outstanding loan balances, and increases or decreases in the CECL reserve relating to unfunded commitments are also recorded in earnings on the consolidated statements of operations.

    As discussed below in Recent Accounting Pronouncements, the Company adopted the provisions of Accounting Standards Update (“ASU”) 2022-02 Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) concurrently with the adoption of CECL on January 1, 2023, prospectively

Equity Investment in Unconsolidated Investments

Equity Investment in Unconsolidated Investments

The Company accounts for its equity interests in unconsolidated investments under the equity method of accounting, i.e., at cost, increased or decreased by its share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting.

The Company evaluates its equity investment unconsolidated investments on a periodic basis to determine if there are any indicators that the value of its equity investments may be impaired and whether or not that impairment is other-than-temporary. To the extent an impairment has occurred and is determined to be other-than-temporary, the Company measures the charge as the excess of the carrying value of its investment over its estimated fair value, which is determined by calculating its share of the estimated fair market value of the underlying net assets based on the terms of the applicable partnership or joint venture agreements.

Marketable Securities and Held-to-Maturity Debt Securities

Marketable Securities

    The Company from time to time invests in short term debt and equity securities. These securities are classified as available-for-sale and are carried at fair value. Changes in the fair value of equity securities are recognized in earnings. Changes in the fair value of debt securities are reported in other comprehensive income until a gain or loss on the securities is realized.

Held-to-Maturity Debt Securities

The Company classifies debt securities for which it has both the positive intent and ability to hold until maturity of the security as held-to-maturity debt securities. These securities are recorded at amortized cost with changes in amortized cost recognized in earnings until realized. Held-to-maturity debt securities are subject to the CECL reserve described above.

Real Estate Owned, Net

Real Estate Owned, Net

    Real estate acquired is recorded at its estimated fair value at acquisition and is shown net of accumulated depreciation and impairment charges.

    Acquisition of properties generally are accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs, are accumulated and then allocated to individual assets and liabilities acquired based upon their relative fair value. The Company allocates the purchase price of its real estate acquisitions to land, building, tenant improvements, acquired in-place leases, intangibles for the value of any above or below market leases at fair value and to any other identified intangible assets or liabilities. The Company amortizes the value allocated to in-place leases over the remaining lease term, which is reported in depreciation and amortization expense on its consolidated statements of operations. The value allocated to above or below market leases are amortized over the remaining lease term as an adjustment to rental income.

    Real estate assets are depreciated using the straight-line method over their estimated useful lives: buildings and improvements - not to exceed 40 years, and tenant improvements - shorter of the lease term or life of the asset. Ordinary repairs and maintenance which are not reimbursed by the tenants are expensed as incurred. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their estimated useful life.

    Management reviews the Company’s real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate assets. If impaired, the real estate asset will be written down to its estimated fair value.

Leases

Leases

    The Company determines if an arrangement is a lease at inception. Operating leases in which the Company is the lessee are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. 

    ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s lease typically does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made in advance and excludes lease incentives if there were any. The Company’s lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.

Revenue Recognition

Revenue Recognition

    Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

    Interest Income: Interest income is accrued based upon the outstanding principal amount and contractual terms of the loans and preferred equity investments that the Company expects to collect, and it is accrued and recorded on a daily basis. Discounts and premiums on investments purchased are accreted or amortized over the expected life of the respective loan using the effective yield method, and are included in interest income in the consolidated statements of operations. Loan origination fees and exit fees, net of portions attributable to obligations under participation agreements, are capitalized and amortized or accreted to interest income over the life of the investment using the effective yield method. Outstanding interest receivable is assessed for recoverability. The Company generally reverses the accrued and unpaid interest against interest income and no longer accrues for the interest when, in the opinion of the Manager, recovery of income and principal becomes doubtful. Interest is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.

    The Company holds loans in its portfolio that contain paid-in-kind (“PIK”) interest provisions. The PIK interest, which represents contractually deferred interest that is added to the principal balance that is due at maturity, is recorded on the accrual basis.

    Real Estate Operating Revenues: Real estate operating revenue is derived from leasing of space to various types of tenants. The leases are for fixed terms of varying length and generally provide for annual rent increases and expense reimbursements to be paid in monthly installments. Lease revenue, or rental income from leases, is recognized on a straight-line basis over the term of the respective leases. Additionally, the Company recorded above- and below-market lease intangibles, which are included in real estate owned, net, in connection with the acquisition of the real estate properties. These intangible assets and liabilities are amortized to lease revenue over the remaining contractual lease term.

    Other Revenues: Prepayment fee income is recognized as prepayments occur. All other income is recognized when earned.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

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.

    Restricted cash represents cash held as additional collateral by the Company on behalf of the borrowers related to the investments in loans or preferred equity instruments for the purpose of such borrowers making interest and property-related operating payments. Restricted cash is not available for general corporate purposes. The related liability is recorded in “Interest reserve and other deposits held on investments” on the consolidated balance sheets.

    Cash held in escrow by lender represents amounts funded to an escrow account for debt services and tenant improvements. Cash held in escrow is restricted and is not available for general corporate purposes.

Participation Interests

Participation InterestsLoan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. For the investments for which participation has been granted, the interest earned on the entire loan balance is recorded within “Interest income” and the interest related to the participation interest is recorded within “Interest expense from obligations under participation agreements” in the consolidated statements of operations. Interest expense from obligations under participation agreement is reversed when recovery of interest income on the related loan becomes doubtful. See “Obligations under Participation Agreements” in Note 9 for additional information.

Term Loan

Term Loan     The Company previously financed certain of its senior loans through borrowings under an indenture and credit agreement. The Company accounted for the borrowings as a term loan, which was carried at the contractual amount (cost), net of unamortized deferred financing fees. On February 18, 2022, the Company refinanced the Term Loan (as defined below) with a new repurchase agreement. See “Goldman Master Purchase Agreement” in Note 9 for additional information.

Repurchase Agreements

Repurchase AgreementsThe Company finances certain of its senior loans held for investment through repurchase transactions under master repurchase agreements. The Company accounts for the repurchase transactions as secured borrowing transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees. See “Repurchase Agreements” in Note 9 for additional information.

Fair Value Measurements

Fair Value Measurements

    U.S. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The Company has not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, obligations under participation agreements, secured borrowing, unsecured notes, mortgage loan payable, term loan payable, repurchase agreement payment and revolving line of credit. Such financial instruments are carried at cost, less impairment, where applicable. Marketable securities are financial instruments that are reported at fair value.

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 are 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.

As of June 30, 2023 and December 31, 2022, the Company had not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, held-to-maturity debt securities, obligations under participation agreements, term loan payable, repurchase agreement payable, mortgage loan payable and revolving line of credit. Such financial instruments are carried at cost, less impairment or less net deferred costs, where applicable. Marketable securities and derivatives are financial instruments that are reported at fair value.

Deferred Financing Costs

Deferred Financing Costs    Deferred financing costs represent fees and expenses incurred in connection with obtaining financing for investments. These costs are presented in the consolidated balance sheets as a direct deduction of the debt liability to which the costs pertain. These costs are amortized using the effective interest method and are included in interest expense on the applicable borrowings in the consolidated statements of operations over the life of the borrowings.

Income Taxes

Income Taxes

    The Company has elected to be taxed as a REIT under the Internal Revenue Code commencing with the taxable year ended December 31, 2016. In order to qualify as a REIT, the Company is required, among other things, to distribute dividends equal to at least 90% of its REIT net taxable income to the stockholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. Any gains from the sale of foreclosed properties within two years are subject to U.S. federal and state income taxes at regular corporate rates. As of June 30, 2023, the Company has satisfied all the requirements for a REIT.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of Accounting Standards Codification (“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 consolidated 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 major tax jurisdiction is federal. The Company’s 2019-2022 federal tax returns remain subject to examination by the Internal Revenue Service.

Earnings Per Share

Earnings Per Share

    The Company has a simple equity capital structure with only common stock outstanding as of June 30, 2023 and common stock and preferred stock outstanding as of December 31, 2022. As a result, earnings per share, as presented, represent both basic and dilutive per-share amounts for the periods presented in the consolidated financial statements. Income per basic share of common stock is calculated by dividing net income allocable to common stock by the weighted-average number of shares of common stock issued and outstanding during such period.

Use of Estimates

Use of Estimates

    The preparation of consolidated 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 consolidated 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.

Segment Information

Segment Information    The Company’s primary business is originating, acquiring and structuring real estate-related loans related to high quality commercial real estate. From time to time, the Company may acquire real estate encumbering the senior loans through foreclosure, may invest in real estate related joint ventures and may directly acquire real estate properties. The Company operates in a single segment focused on mezzanine loans, other loans and preferred equity investments, and to a lesser extent, owning and managing real estate.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

    In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. In April 2019, the FASB issued additional amendments to clarify the scope of ASU 2016-13 and address issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. In May 2019, the FASB issued ASU 2019-05 — Targeted Transition Relief, which provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. In October 2019, the FASB decided that for smaller reporting companies, ASU 2016-13 and related amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company meets the definition of a smaller reporting company under the regulation of the Securities and Exchange Commission. The Company adopted this ASU and related amendments on January 1, 2023. The adoption of ASU 2016-13 resulted in an incremental reserve of approximately $4.6 million, which included a reserve on future loan funding commitments. The Company recorded the cumulative effect of initially applying this guidance as an adjustment to Accumulated deficit using the modified retrospective method of adoption.

    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 has subsequently been 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, the Company’s investment documents provide for a substitute index, on a basis generally consistent with market practice, intended to put the Company 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 consolidated financial statements and disclosures.In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates troubled debt restructuring guidance for organizations that adopted the amendments in ASU 2016-13 while providing for additional disclosures for loan modifications. ASU 2022-02 also amends the vintage disclosure guidance for public business entities. The Company adopted the provisions of ASU 2022-02 concurrently with the adoption of ASU 2016-03. The adoption of ASU 2022-02 did not have any material impact on the Company’s financial condition and results of operations.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its consolidated statements of cash flows as of:

	June 30,
	2023		2022
Cash and cash equivalents	$	51,808,573	$	28,978,788
Restricted cash	3,201,935		7,421,852
Cash held in escrow by lender	3,086,398		4,352,755
Total cash, cash equivalents and restricted cash shown in the consolidated    statements of cash flows	$	58,096,906	$	40,753,395

Schedule of Restrictions on Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its consolidated statements of cash flows as of:

	June 30,
	2023		2022
Cash and cash equivalents	$	51,808,573	$	28,978,788
Restricted cash	3,201,935		7,421,852
Cash held in escrow by lender	3,086,398		4,352,755
Total cash, cash equivalents and restricted cash shown in the consolidated    statements of cash flows	$	58,096,906	$	40,753,395

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BDC Merger (Tables)

6 Months Ended

Jun. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the total consideration and the fair values of assets acquired and liabilities assumed in the BDC Merger:

Total Consideration
Fair value of Terra Property Trust shares of common stock issued	$	71,054,620
Cash paid for fractional shares	12,920
Transaction costs	2,283,785
	$	73,351,325
Assets Acquired and Liabilities Assumed at Fair Value
Cash and cash equivalents	$	24,321,951
Restricted cash	260,614
Loans held for investment	77,562,528
Loans held for investment acquired through participation	36,793,313
Interest receivable	1,367,044
Other assets	55,465
Term loan payable	(25,000,000)
Unsecured notes payable	(33,770,000)
Obligations under participation agreements	(6,114,979)
Interest reserve and other deposits held on investments	(260,614)
Due to manager	(682,541)
Interest payable	(53,186)
Accounts payable and accrued expenses	(740,824)
Other liabilities	(387,446)
Net assets acquired	$	73,351,325

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Loans Held for Investment (Tables)

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Schedule of Company's Loan Portfolio

The following table provides a summary of the Company’s loan portfolio as of:

	June 30, 2023									December 31, 2022
	Fixed Rate			Floating Rate (1)(2)(3)			Total			Fixed Rate			Floating Rate (1)(2)(3)			Total
Number of loans	5			18			23			8			23			31
Principal balance	$	52,940,319		$	488,915,124		$	541,855,443		$	90,990,183		$	554,805,276		$	645,795,459
Carrying value	$	53,069,799		$	460,748,708		$	513,818,507		$	92,274,998		$	534,215,769		$	626,490,767
Fair value	$	52,504,064		$	464,990,667		$	517,494,731		$	90,729,098		$	532,416,656		$	623,145,754
Weighted-average coupon rate	13.22		%	12.77		%	12.82		%	13.82		%	11.23		%	11.59		%
Weighted-average remaining  term (years)	1.47			0.59			0.69			1.35			1.10			1.14

_______________

(1)These loans pay a coupon rate of LIBOR, Secured Overnight Financing Rate (“SOFR”), or forward-looking term rate based on SOFR (“Term SOFR”), as applicable, 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.

(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 (Note 9).

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

Schedule of Lending Activities

The following tables present the activities of the Company’s loan portfolio:

	Loans Held for Investment		Loans Held for Investment through Participation Interests		Total
Balance, January 1, 2023	$	584,417,939	$	42,072,828	$	626,490,767
Cumulative effect of credit loss accounting standard effective    January 1, 2023 (Note 2)	(4,123,143)		(126,909)		(4,250,052)
New loans made	63,775,372		—		63,775,372
Principal repayments received	(95,695,298)		(3,282,208)		(98,977,506)
Net amortization of premiums on loans	(823,785)		—		(823,785)
Settlement of loans in exchange for real estate properties (Note 6)	(68,737,877)		—		(68,737,877)
Accrual, payment and accretion of investment-related fees and other,    net	(242,361)		(9,197)		(251,558)
Provision for credit losses	(3,397,676)		(9,178)		(3,406,854)
Balance, June 30, 2023	$	475,173,171	$	38,645,336	$	513,818,507

	Loans Held for Investment		Loans Held for Investment through Participation Interests		Total
Balance, January 1, 2022	$	457,329,582	$	12,343,732	$	469,673,314
New loans made	119,461,668		959,293		120,420,961
Principal repayments received	(56,610,198)		—		(56,610,198)
Net amortization of premiums on loans	(122,783)		—		(122,783)
Accrual, payment and accretion of investment-related fees and other,    net	537,682		19,355		557,037
Provision for credit losses	(75,929)		—		(75,929)
Balance, June 30, 2022	$	520,520,022	$	13,322,380	$	533,842,402

Schedule of Accounts, Loans and Financing Receivable

The tables below detail the types of loans in the Company’s loan portfolio, as well as the property type and geographic location of the properties securing these loans as of:

	June 30, 2023						December 31, 2022
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
First mortgages	$	380,923,792	$	385,177,670	75.0	%	$	456,408,889	$	461,299,182	73.7	%
Preferred equity investments	123,242,640		123,957,220		24.1	%	121,231,434		122,132,177		19.5	%
Mezzanine loans	37,689,011		37,812,413		7.3	%	39,352,303		39,451,115		6.3	%
Credit facility	—		—		—	%	28,802,833		29,080,183		4.6	%
Allowance for credit losses	—		(33,128,796)		(6.4)	%	—		(25,471,890)		(4.1)	%
Total	$	541,855,443	$	513,818,507	100.0	%	$	645,795,459	$	626,490,767	100.0	%

	June 30, 2023						December 31, 2022
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Office	$	164,837,437	$	165,327,122	32.2	%	$	184,196,708	$	184,722,657	29.4	%
Multifamily	103,427,397		104,222,850		20.3	%	104,589,464		105,570,432		16.9	%
Industrial	64,340,667		64,865,942		12.6	%	147,796,164		148,891,742		23.8	%
Mixed-use	62,746,351		63,257,099		12.3	%	64,880,450		65,838,965		10.5	%
Infill land	51,031,209		52,122,303		10.1	%	48,860,291		49,565,437		7.9	%
Hotel - full/select service	43,222,382		43,826,614		8.5	%	43,222,382		43,758,804		7.0	%
Student housing	31,000,000		31,768,579		6.2	%	31,000,000		31,774,261		5.1	%
Infrastructure	21,250,000		21,556,794		4.2	%	21,250,000		21,840,359		3.5	%
Allowance for credit losses	—		(33,128,796)		(6.4)	%	—		(25,471,890)		(4.1)	%
Total	$	541,855,443	$	513,818,507	100.0	%	$	645,795,459	$	626,490,767	100.0	%

	June 30, 2023						December 31, 2022
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	139,246,557	$	140,733,468	27.3	%	$	164,253,345	$	165,839,561	26.5	%
New York	88,336,078		88,336,079		17.2	%	91,845,479		91,877,084		14.7	%
New Jersey	77,371,876		78,691,851		15.3	%	62,228,622		62,958,482		10.0	%
Georgia	75,205,257		75,840,968		14.8	%	72,401,718		73,101,964		11.7	%
Washington	52,969,210		53,070,927		10.3	%	56,671,267		57,027,639		9.1	%
Utah	49,250,000		50,399,536		9.8	%	49,250,000		50,698,251		8.1	%
Arizona	31,000,000		31,296,394		6.1	%	31,000,000		31,276,468		5.0	%
North Carolina	21,476,465		21,578,080		4.2	%	43,520,028		44,041,162		7.0	%
Massachusetts	7,000,000		7,000,000		1.4	%	7,000,000		7,000,000		1.1	%
Texas	—		—		—	%	67,625,000		68,142,046		10.9	%
Allowance for credit losses	—		(33,128,796)		(6.4)	%	—		(25,471,890)		(4.1)	%
Total	$	541,855,443	$	513,818,507	100.0	%	$	645,795,459	$	626,490,767	100.0	%

The following table presents the amortized cost of the Company’s loan portfolio by year of origination and loan risk rating as of June 30, 2023:

 

	June 30, 2023
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2023		2022		2021		2020		2019		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	2	25,043,198		4.6	%	—		—		—		—		18,043,198		7,000,000
3	15	392,865,778		71.8	%	6,120,513		133,191,835		119,894,853		27,750,542		102,982,198		2,925,837
4	2	39,337,304		7.2	%	—		39,337,304		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	4	89,701,023		16.4	%	—		—		—		—		1,364,944		88,336,079
	23	546,947,303		100.0	%	$	6,120,513	$	172,529,139	$	119,894,853	$	27,750,542	$	122,390,340	$	98,261,916
Allowance for credit losses		(33,128,796)
Total, net of allowance for credit losses		$	513,818,507

The following table presents the principal balance and the amortized cost of the Company’s loans based on the loan risk rating as of December 31, 2022:

	December 31, 2022
Loan Risk Rating	Number of Loans	Principal Balance		Amortized Cost		% of Total
1	—	$	—	$	—	—	%
2	2	25,000,000		25,041,782		3.8	%
3	25	530,867,244		536,992,660		82.4	%
4	—	—		—		—	%
5	—	—		—		—	%
Non-performing (1)	4	89,928,215		89,928,215		13.8	%
	31	$	645,795,459	651,962,657		100.0	%
Allowance for credit losses				(25,471,890)
Total, net of allowance for credit losses				$	626,490,767

_______________

(1)Because these loans have an event of default, they were removed from the pool of loans on which a general allowance was calculated and were evaluated for collectability individually. As of December 31, 2022, the specific allowance for credit losses on these loans were $25.5 million, as a result of a decline in the fair value of the respective collateral.

Schedule of Allowance for Loan Losses

The following table presents the activity in allowance for credit loss for funded loans:

	Six Months Ended June 30,
	2023		2022
Allowance for credit losses, beginning of period	$	25,471,890	$	13,658,481
Cumulative effect of credit loss accounting standard effective    January 1, 2023 (Note 2)	4,250,052		—
Provision for credit losses (1)	3,406,854		75,929
Charge-offs	—		—
Recoveries	—		—
Allowance for credit losses, end of period	$	33,128,796	$	13,734,410

_______________

(1)Prior to the adoption of the CECL model on January 1, 2023, the Company recorded an allowance for credit losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4”, plus (ii) 5% of the aggregate carrying amount of loans rated as a “5”, plus (iii) non-performing loan reserves, if any.

The following table presents the activity in the liability for credit losses on unfunded commitments:

	Six Months Ended June 30, 2023
Liability for credit losses on unfunded commitments, beginning of period	$	—
Cumulative effect of credit loss accounting standard effective January 1, 2023 (Note 2)	369,671
Provision for credit losses	395,739
Liability for credit losses on unfunded commitments, end of period	$	765,410

Schedule of Financing Receivable Credit Quality Indicators

The Company assesses the risk factors of each loan and assigns each loan a risk rating between 1 and 5, which is an average of the numerical ratings in the following categories: (i) sponsor capability and financial condition; (ii) loan and collateral performance relative to underwriting; (iii) quality and stability of collateral cash flows and/or reserve balances; and (iv) loan to value. Based on a 5-point scale, the Company’s loans are rated “1” through “5”, from less risk to greater risk, as follows:

Risk Rating	Description
1	Very low risk
2	Low risk
3	Moderate/average risk
4	Higher risk
5	Highest risk

Schedule of Recorded Investment of TDR

The following table summarizes the recorded investment of TDR as of the date of restructuring:

Number of loans modified	1
Pre-modified recorded carrying value	$	40,072,138
Post-modified recorded carrying value (1)	$	1,364,944

_______________

(1) As of June 30, 2023 and December 31, 2022, the principal balance of this loan was the same as the carrying value. The Company recorded an allowance for credit losses of $1.4 million to fully reserve for the unpaid principal balance. There was no income from this investment from the date of modification on December 28, 2022 through June 30, 2023.

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Equity Investment in Unconsolidated Investments (Tables)

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Method Investments

The following tables present summarized financial information of the Company’s equity investment in RESOF. Amounts provided are the total amounts attributable to the investment and do not represent the Company’s proportionate share:

	As of
	June 30, 2023		December 31, 2022
Investments at fair value (cost of $166,181,966 and $176,035,290, respectively)	$	167,673,063	$	178,283,703
Other assets	33,566,430		23,918,841
Total assets	201,239,493		202,202,544
Revolving line of credit, net of financing costs	27,648,565		14,795,985
Obligations under participation agreement (proceeds of $38,444,357 and     $41,726,565, respectively)	38,764,750		41,962,861
Other liabilities	16,193,681		17,120,804
Total liabilities	82,606,996		73,879,650
Partners’ capital	$	118,632,497	$	128,322,894

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total investment income	$	8,264,132	$	5,891,371	$	16,375,911	$	10,736,035
Total expenses	3,827,584		1,761,814		6,994,379		3,055,130
Net investment income	4,436,548		4,129,557		9,381,532		7,680,905
Unrealized (depreciation) appreciation on investments	(288,031)		1,493,140		(883,942)		1,562,191
Provision for income tax	(138,944)		—		(138,944)		—
Net increase in partners’ capital resulting from operations	$	4,009,573	$	5,622,697	$	8,358,646	$	9,243,096

The following tables present estimated combined summarized financial information of the Company’s equity investment in the joint ventures. Amounts provided are the total amounts attributable to the joint ventures and do not represent the Company’s proportionate share:

	As of
	June 30, 2023		December 31, 2022
Net investments in real estate	$	191,629,757	$	192,616,298
Other assets	12,413,292		12,817,388
Total assets	204,043,049		205,433,686
Mortgage loan payable	148,454,820		147,740,645
Other liabilities	5,010,555		3,104,624
Total liabilities	153,465,375		150,845,269
Members’ capital	$	50,577,674	$	54,588,417

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	4,243,689	$	3,681,032	$	8,168,268	$	6,131,470
Operating expenses	(2,181,707)		(2,206,984)		(4,324,974)		(3,023,665)
Depreciation and amortization expense	(1,728,214)		(1,065,066)		(3,693,251)		(1,755,897)
Interest expense	(2,595,844)		(1,744,226)		(5,155,798)		(2,829,787)
Unrealized (losses) gains	(423,481)		1,170,866		(1,249,982)		1,406,377
Net (loss) income	$	(2,685,557)	$	(164,378)	$	(6,255,737)	$	(71,502)

Schedule of Joint Venture Ownership Interests

The following table presents a summary of the Company’s equity investment in unconsolidated investments as of:

		June 30, 2023			December 31, 2022
Entity	Co-owner (1)	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
LEL Arlington JV LLC (1)	Affiliate/Third party	27.2%	$	6,689,133	27.2%	$	7,271,603
LEL NW 49th JV LLC (1)	Affiliate/Third party	27.2%	1,546,725		27.2%	1,521,556
TCG Corinthian FL Portfolio     JV LLV (1)(2)	Affiliate/Third Party	30.6%	6,236,696		30.6%	6,896,816
SF-Dallas Industrial, LLC (3)	N/A	N/A	—		N/A	10,013,691
			$	14,472,554		$	25,703,666

_______________

(1)The Company sold a portion of the interest in this investment to an affiliate in September 2022.

(2)This investment was purchased from a third party in March 2022.

(3)This investment that meets the definition of an equity investment was entered into in December 2022. As discussed above, this investment was settled in May 2023.

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Real Estate Owned, Net (Tables)

6 Months Ended

Jun. 30, 2023

Real Estate [Abstract]

Schedule of Real Estate Owned, Net

Additionally, during the six months ended June 30, 2023, the Company entered into the following investments:

Property Location	Number of Properties	Date of Acquisition	Property Type	Total Capitalized Costs
Texas, United States	3	3/24/2023	Industrial	$	48,798,273
Texas, United States	5	5/25/2023	Industrial	83,288,961
				$	132,087,234

The following table presents an allocation of the total capitalized costs:

Total Capitalized Costs:
Cash and cash equivalents	$	52,313,739
Loans held for investment	68,737,877
Equity investment in unconsolidated investment	10,149,642
Interest receivable	456,650
Other assets	429,326
	$	132,087,234
Net Assets Acquired
Cash and cash equivalents	$	712,608
Other assets	33,802
Land	23,785,004
Buildings and Improvements	104,613,728
Intangible assets and liabilities:
In-place lease (weighted-average expected life of 3.95 years)	12,719,000
Below-market rent (weighted-average expected life of 3.98 years)	(8,864,137)
Accounts payable and accrued expenses	(912,771)
	$	132,087,234

The following table presents the components of real estate owned, net as of:

	June 30, 2023						December 31, 2022
	Cost		Accumulated Depreciation/Amortization		Net		Cost		Accumulated Depreciation/Amortization		Net
Real estate:
Land	$	23,785,004	$	—	$	23,785,004	$	—	$	—	$	—
Building and building    improvements	144,574,158		(6,786,818)		137,787,340		51,725,969		(5,711,468)		46,014,501
Tenant improvements	1,854,640		(1,363,287)		491,353		1,854,640		(1,224,648)		629,992
Furniture and fixtures	236,000		(236,000)		—		236,000		(220,267)		15,733
Total real estate	170,449,802		(8,386,105)		162,063,697		53,816,609		(7,156,383)		46,660,226
Lease intangible assets:
In-place lease	27,701,537		(13,701,834)		13,999,703		14,982,538		(12,493,079)		2,489,459
Above-market rent	156,542		(86,317)		70,225		156,542		(77,540)		79,002
Total intangible assets	27,858,079		(13,788,151)		14,069,928		15,139,080		(12,570,619)		2,568,461
Lease intangible liabilities:
Below-market rent	(11,619,059)		3,047,407		(8,571,652)		(2,754,922)		2,428,647		(326,275)
Above-market ground lease	(8,896,270)		640,879		(8,255,391)		(8,896,270)		575,705		(8,320,565)
Total intangible liabilities	(20,515,329)		3,688,286		(16,827,043)		(11,651,192)		3,004,352		(8,646,840)
Total real estate	$	177,792,552	$	(18,485,970)	$	159,306,582	$	57,304,497	$	(16,722,650)	$	40,581,847

Real Estate Operating Revenues and Expenses

    The following table presents the components of real estate operating revenues and expenses that are included in the consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Real estate operating revenues:
Lease revenue	$	2,283,272	$	1,744,262	$	3,368,731	$	3,498,823
Other operating income	520,662		1,247,059		768,172		2,471,952
Total	$	2,803,934	$	2,991,321	$	4,136,903	$	5,970,775
Real estate operating expenses:
Utilities	$	69,919	$	56,171	$	106,333	$	101,505
Real estate taxes	537,681		344,727		892,361		691,159
Repairs and maintenances	256,187		169,817		463,552		327,233
Management fees	86,880		70,219		126,298		138,087
Lease expense, including amortization of above-market ground lease	487,163		487,163		974,326		974,326
Other operating expenses	426,382		119,231		511,254		232,981
Total	$	1,864,212	$	1,247,328	$	3,074,124	$	2,465,291

Scheduled of Future Minimum Rent Income

Scheduled future minimum rents, exclusive of renewals and expenses paid by tenants, under non-cancelable operating leases at June 30, 2023 are as follows: 

Years Ending December 31,	Total
2023 (July 1 through December 31)	$	4,650,111
2024	9,456,610
2025	4,940,447
2026	4,600,139
2027	3,162,610
Thereafter	5,821,613
Total	$	32,631,530

Scheduled of Annual Net Amortization of Intangibles

Based on the intangible assets and liabilities recorded at June 30, 2023, scheduled annual net amortization of intangibles for each of the next five calendar years and thereafter is as follows:

Years Ending December 31,	Net Decrease in Real Estate Operating Revenue (1)		Increase in Depreciation and Amortization (1)		Decrease in Rent Expense (1)		Total
2023 (July 1 through December 31)	$	(1,567,274)	$	2,757,572	$	(65,174)	$	1,125,124
2024	(3,104,584)		5,467,389		(130,348)		2,232,457
2025	(1,549,275)		2,192,061		(130,348)		512,438
2026	(1,158,163)		1,780,528		(130,348)		492,017
2027	(444,207)		835,888		(130,348)		261,333
Thereafter	(677,924)		966,265		(7,668,825)		(7,380,484)
Total	$	(8,501,427)	$	13,999,703	$	(8,255,391)	$	(2,757,115)

_______________

(1)Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to lease revenues; amortization of in-place lease intangibles is included in depreciation and amortization; and amortization of above-market ground lease is recorded as a reduction to rent expense.

Schedule of Ground Lease Disclosures

Supplemental balance sheet information related to the ground lease was as follows as of:    

	June 30, 2023			December 31, 2022
Operating lease
Operating lease right-of-use asset	$	27,370,242		$	27,378,786
Operating lease liability	$	27,370,242		$	27,378,786
Weighted average remaining lease term — operating lease (years)	63.3			63.8
Weighted average discount rate — operating lease	7.6		%	7.6		%

Schedule of Lease Expense

The component of lease expense for the ground lease was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	519,750	$	519,750	$	1,039,500	$	1,039,500

Schedule of Non-cash Information

Supplemental non-cash information related to the ground lease was as follows:

	Six Months Ended June 30,
	2023		2022
Amounts included in the measurement of lease liability:
Operating cash flows from an operating lease	$	1,039,500	$	1,039,500
Right-of-use asset obtained in exchange for lease obligations:
Operating lease	$	1,039,500	$	1,039,500

Schedule of Maturities of Operating Lease Liabilities

Maturities of operating lease liability as of June 30, 2023 was as follows:

Years Ending December 31,	Operating Lease
2023 (July 1 through December 31)	$	1,039,500
2024	2,079,000
2025	2,079,000
2026	2,079,000
2027	2,079,000
Thereafter	122,227,875
Total lease payments	131,583,375
Less: Imputed interest	(104,213,133)
Total	$	27,370,242

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements of Marketable Securities, by Major Class

The following tables present fair value measurements of marketable securities and derivatives, by major class according to the fair value hierarchy as of:

	June 30, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	5,041,526	$	—	$	—	$	5,041,526
Marketable securities - debt securities (2)	1,203,973		—		—		1,203,973
Derivative - interest rate cap (2)	—		—		281,028		281,028
Total	$	6,245,499	$	—	$	281,028	$	6,526,527

_______________

(1) Amount is included in cash and cash equivalents on the consolidated balance sheets.

(2) Amount is included in other assets on the consolidated balance sheets.

	December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable Securities:
Debt securities	$	147,960	$	—	$	—	$	147,960
Total	$	147,960	$	—	$	—	$	147,960

Schedule of Activities of the Marketable Securities

The following table presents the activities of the marketable securities and derivatives:

	Six Months Ended June 30,
	2023				2022
	Marketable Securities		Derivatives		Marketable Securities
Beginning balance	$	147,960	$	—	$	1,310,000
Purchases	1,051,754		258,500		—
Proceeds from sale	—		—		(1,259,417)
Amortization of interest rate cap	—		(31,021)		—
Reclassification of net realized gains on marketable securities    into earnings	—		—		83,411
Unrealized (losses) gains on marketable securities and derivatives	4,259		53,549		(133,994)
Ending balance	$	1,203,973	$	281,028	$	—

Schedule of Fair Value Measurements, Nonrecurring

The following table presents the carrying value and estimated fair value of the Company’s financial instruments that are not carried at fair value on the consolidated balance sheets as of:

		June 30, 2023						December 31, 2022
	Level	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Loans:
Loans held for investment	3	$	503,411,086	$	508,301,967	$	478,729,965	$	604,068,894	$	609,889,829	$	581,182,892
Loans held for investment    acquired through    participation	3	38,444,357		38,645,336		38,764,766		41,726,565		42,072,828		41,962,862
Allowance for loan losses		—		(33,128,796)		—		—		(25,471,890)		—
Total loans		$	541,855,443	$	513,818,507	$	517,494,731	$	645,795,459	$	626,490,767	$	623,145,754
Liabilities:
Term loan payable	3	$	15,000,000	$	14,850,000	$	15,000,000	$	25,000,000	$	25,000,000	$	25,000,000
Unsecured notes payable	1	123,500,000		117,433,372		101,228,000		123,500,000		116,530,673		103,481,748
Repurchase agreement    payable	3	122,832,682		122,070,840		122,832,682		170,876,606		169,304,710		170,876,606
Obligations under participation    agreements	3	13,678,820		13,789,070		13,789,071		12,584,958		12,680,594		12,680,595
Mortgage loan payable	3	100,221,485		98,687,185		100,487,973		29,252,308		29,488,326		29,394,870
Revolving line of credit    payable	3	105,448,019		105,260,351		105,448,019		90,135,865		89,807,448		90,135,865
Total liabilities		$	480,681,006	$	472,090,818	$	458,785,745	$	451,349,737	$	442,811,751	$	431,569,684

Schedule of Fair Value, Assets Measured on Nonrecurring Basis and Assets Impairment Charges

The following tables present information about assets for which the Company recorded an impairment charge and that were measured at fair value on a non-recurring basis:

	Three Months Ended June 30,
	2023				2022
	Fair Value		Impairment Charges		Fair Value		Impairment Charges
Impairment Charges
Real estate and intangibles	$	27,603,118	$	11,765,540	$	—	$	—
			$	11,765,540			$	—

	Six Months Ended June 30,
	2023				2022
	Fair Value		Impairment Charges		Fair Value		Impairment Charges
Impairment Charges
Real estate and intangibles	$	27,603,118	$	11,765,540	$	8,395,011	$	1,604,989
			$	11,765,540			$	1,604,989

Schedule of Fair Value Measurement Inputs and Valuation Techniques

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 loans 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 at June 30, 2023		Primary Valuation Technique	Unobservable Inputs	June 30, 2023
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	478,729,965	Discounted cash flow	Discount rate	8.79	%	17.14	%	12.21	%
Loans held for investment acquired through    participation, net	38,764,766		Discounted cash flow	Discount rate	15.30	%	17.84	%	17.35	%
Total Level 3 Assets	$	517,494,731
Liabilities:
Repurchase agreement payable	122,832,682		Discounted cash flow	Discount rate	6.01	%	7.61	%	6.97	%
Obligations under participation agreements	13,789,071		Discounted cash flow	Discount rate	17.14	%	17.14	%	17.14	%
Mortgage loan payable	100,487,973		Discounted cash flow	Discount rate	6.25	%	8.99	%	7.78	%
Term loan payable	15,000,000		Discounted cash flow	Discount rate	12.48	%	12.48	%	12.48	%
Revolving line of credit	105,448,019		Discounted cash flow	Discount rate	8.49	%	8.49	%	8.49	%
Total Level 3 Liabilities	$	357,557,745

	Fair Value at December 31, 2022		Primary Valuation Technique	Unobservable Inputs	December 31, 2022
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	581,182,892	Discounted cash flow	Discount rate	8.71	%	19.36	%	11.46	%
Loans held for investment acquired through    participation, net	41,962,862		Discounted cash flow	Discount rate	15.25	%	17.06	%	16.67	%
Total Level 3 Assets	$	623,145,754
Liabilities:
Repurchase agreement payable	170,876,606		Discounted cash flow	Discount rate	5.22	%	6.17	%	6.82	%
Obligations under participation agreements	12,680,595		Discounted cash flow	Discount rate	16.36	%	16.36	%	16.36	%
Mortgage loan payable	29,394,870		Discounted cash flow	Discount rate	8.24	%	8.24	%	8.24	%
Term loan payable	25,000,000		Discounted cash flow	Discount rate	5.63	%	5.63	%	5.63	%
Revolving line of credit	90,135,865		Discounted cash flow	Discount rate	7.64	%	7.64	%	7.64	%
Total Level 3 Liabilities	$	328,087,936

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The following table presents a summary of fees paid and costs reimbursed to the Manager in connection with providing services to the Company that are included on the consolidated statements of operations:

	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 Manager	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 fee paid to the Manager 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 fee paid to the Manager in connection with the Company’s equity investment in an unconsolidated investment. This origination fee was 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.

The table below lists the participation interests purchased by the Company pursuant to participation agreements as of:

	June 30, 2023
	Participating Interests	Principal Balance		Carrying Value
Mesa AZ Industrial Owner, LLC (1)	38.27%	$	31,000,000	$	31,296,394
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,485,029
Allowance for credit losses		—		(136,087)
		$	38,444,357	$	38,645,336

	December 31, 2022
	Participating Interests	Principal Balance		Carrying Value
Havemeyer TSM LLC (1)(2)	23.00%	$	3,282,208	$	3,313,813
Mesa AZ Industrial Owner, LLC (1)	38.27%	31,000,000		31,276,468
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,482,547
		$	41,726,565	$	42,072,828

________________

(1)The loan is held in the name of Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party REIT managed by the Manager.

(2)This loan was repaid in February 2023.

The following tables summarize the loans that were subject to participation agreements with affiliated entities and third-parties as of:

					Transfers Treated as Obligations Under Participation Agreements as of June 30, 2023
	Principal Balance		Carrying Value		% Transferred		Principal Balance		Carrying Value
610 Walnut Investors LLC (1)	$	20,244,654	$	20,401,547	67.57	%	$	13,678,820	$	13,789,070
	$	20,244,654	$	20,401,547			$	13,678,820	$	13,789,070

					Transfers Treated as Obligations Under Participation Agreements as of December 31, 2022
	Principal Balance		Carrying Value		% Transferred		Principal Balance		Carrying Value
610 Walnut Investors LLC (1)	$	18,625,738	$	18,738,386	67.57	%	$	12,584,958	$	12,680,594
	$	18,625,738	$	18,738,386			$	12,584,958	$	12,680,594

________________

(1)Participant was a third party.

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Debt (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Unsecured Notes Payable

The table below presents detailed information regarding the unsecured notes payable as of:

	June 30, 2023						December 31, 2022
	Principal Balance		Carrying Value		Fair Value		Principal Balance		Carrying Value		Fair Value
6.00% Senior Notes Due 2026 (1)	$	85,125,000	$	82,821,395	$	64,695,000	$	85,125,000	$	82,487,769	$	68,100,000
7.00% Senior Notes Due 2026 (2)	38,375,000		34,611,977		36,533,000		38,375,000		34,042,904		35,381,748
	$	123,500,000	$	117,433,372	$	101,228,000	$	123,500,000	$	116,530,673	$	103,481,748

_______________

(1)Carrying value is net of unamortized issue discount of $1.7 million and $1.9 million, and unamortized deferred financing costs of $0.6 million and $0.7 million as of June 30, 2023 and December 31, 2022, respectively.

(2)Carrying value is net of unamortized purchase discount of $3.8 million and $4.3 million as of June 30, 2023 and December 31, 2022, respectively.

Schedule of Debt

The following tables present detailed information with respect to each borrowing under the UBS Master Repurchase Agreement as of:

	June 30, 2023
	Collateral						Borrowings Under Master Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
NB Factory TIC 1, LLC	$	28,000,000	$	28,842,742	$	28,917,484	11/8/2021	$	18,970,000	Term SOFR+1.75%
Grandview’s Remington Place,    LLC	23,100,000		23,203,590		23,236,153		5/6/2022	18,480,000		Term SOFR + 1.965%
	$	51,100,000	$	52,046,332	$	52,153,637		$	37,450,000

	December 31, 2022
	Collateral						Borrowings Under Master Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
NB Factory TIC 1, LLC	$	28,000,000	$	28,857,892	$	28,902,234	11/8/2021	$	18,970,000	LIBOR+1.74% (LIBOR floor of 0.1%)
Grandview’s Madison Place, LLC	17,000,000		17,105,928		17,105,928		3/7/2022	13,600,000		Term SOFR + 1.965%
Grandview’s Remington Place,    LLC	23,100,000		23,199,620		23,203,343		5/6/2022	18,480,000		Term SOFR + 1.965%
	$	68,100,000	$	69,163,440	$	69,211,505		$	51,050,000

The following tables present detailed information with respect to each borrowing under the Repurchase Agreement as of:

	June 30, 2023
	Collateral						Borrowings Under Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
1389 Peachtree St, LP; 1401 Peachtree St, LP; and    1409 Peachtree St, LP	$	58,865,991	$	59,155,584	$	55,139,746	2/18/2022	$	42,888,134	Term SOFR + 2.465%
AGRE DCP Palm Springs, LLC	43,222,382		43,826,614		43,499,719		2/18/2022	28,094,548		Term SOFR + 1.315% (1.8% floor)
Patrick Henry Recovery Acquisition, LLC	18,000,000		18,043,198		17,923,436		2/18/2022	14,400,000		Term SOFR + 0.865% (1.5% floor)
	$	120,088,373	$	121,025,396	$	116,562,901		$	85,382,682

	December 31, 2022
	Collateral						Borrowings Under Repurchase Agreement
	Principal Amount		Carrying Value		Fair Value		Borrowing Date	Principal Amount		Interest Rate
330 Tryon DE LLC	$	22,800,000	$	22,902,215	$	22,687,235	2/18/2022	$	18,240,000	Term SOFR + 2.015% (0.01% floor)
1389 Peachtree St, LP; 1401 Peachtree St, LP; and    1409 Peachtree St, LP	57,184,178		57,453,482		56,844,322		2/18/2022	41,587,275		Term SOFR + 2.465%
AGRE DCP Palm Springs, LLC	43,222,382		43,758,804		43,062,933		2/18/2022	28,094,548		Term SOFR + 1.315% (1.8% floor)
Patrick Henry Recovery Acquisition, LLC	18,000,000		18,041,782		17,824,300		2/18/2022	14,400,000		Term SOFR + 0.865% (1.5% floor)
University Park Berkeley, LLC	26,342,468		26,536,122		26,472,938		2/18/2022	17,504,783		Term SOFR + 1.365% ( 1.50% floor)
	$	167,549,028	$	168,692,405	$	166,891,728		$	119,826,606

The following table presents certain information about mortgage loans payable as of:

			June 30, 2023						December 31, 2022
Lender	Current Interest Rate	Maturity Date	Principal Amount		Carrying Value		Carrying Value of Collateral		Principal Amount		Carrying Value		Carrying Value of Collateral
Centennial    Bank (1)	Term SOFR + 3.85% (Term SOFR Floor of 2.23%)	May 31, 2023	$	27,603,118	$	27,869,606	$	27,603,118	$	29,252,308	$	29,488,326	$	40,581,847
TPG RE   Finance   24, LTD (2)	Term SOFR +3.5% (Term SOFR Floor of 3.75%	April 9, 2027	32,368,367		31,581,757		48,498,431		—		—		—
GSF Lender, LLC (3)	6.254%	June 6, 2028	40,250,000		39,235,822		83,205,033		—		—		—
			$	100,221,485	$	98,687,185	$	159,306,582	$	29,252,308	$	29,488,326	$	40,581,847

___________________

(1)This loan is collateralized by a multi-tenant office building that the Company acquired through foreclosure. This loan is currently in maturity default. The Company has sought to convey its interest in the office building and ground lease in lieu of foreclosure.

(2)This loan is collateralized by three industrial buildings that the Company acquired in March 2023.

(3)This loan is collateralized by five industrial buildings that the Company acquired in May 2023.

Schedule of Long-term Debt Instruments

Scheduled debt principal payments for each of the five calendar years following June 30, 2023 are as follows:

Years Ending December 31,	Total
2023 (July 1 through December 31)	$	42,603,118
2024	228,280,702
2025	—
2026	123,500,000
2027	32,368,368
Thereafter	40,250,000
	467,002,188
Unamortized deferred financing costs	(8,700,440)
Total	$	458,301,748

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Equity (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table presents earnings per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net (loss) income	$	(19,237,065)	$	1,292,434	$	(18,689,586)	$	534,547
Series A preferred stock dividend declared	—		(3,906)		(3,907)		(7,812)
Net (loss) income allocable to common stock	$	(19,237,065)	$	1,288,528	$	(18,693,493)	$	526,735
Weighted-average shares outstanding - basic and diluted	24,335,430		19,487,460		24,335,402		19,487,460
(Loss) income per share - basic and diluted	$	(0.79)	$	0.07	$	(0.77)	$	0.03

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Business (Details) - USD ($) $ in Millions	Jun. 30, 2023	Mar. 02, 2020
Financial Highlights
Common stock, shares, issued (in shares)		4,574,470.35
Participating mortgage loans, participation liabilities, amount		$ 49.8
Cash		$ 25.5
Partnership interest | Terra JV
Financial Highlights
Beneficial ownership interest (as percent)	70.00%
Partnership interest | Terra BDC
Financial Highlights
Beneficial ownership interest (as percent)	19.90%
Partnership interest | Terra Offshore REIT
Financial Highlights
Beneficial ownership interest (as percent)	10.10%
Minimum
Financial Highlights
Loan origination amount	$ 10.0
Maximum
Financial Highlights
Loan origination amount	$ 50.0

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Summary of Significant Accounting Policies - Narratives (Details) - USD ($)		1 Months Ended	6 Months Ended
	Feb. 18, 2022	Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022	Jan. 01, 2023	Dec. 31, 2022
Accounting Policies [Line Items]
Increase to total reserve		$ 33,128,796	$ 33,128,796			$ 25,471,890
Useful life (in years)		40 years	40 years
Repayments of loan			$ 1,649,191	$ 413,065
Accounting Standards Update 2016-13
Accounting Policies [Line Items]
Allowance for loan losses					$ 4,600,000
Term Loan | Terra BDC
Accounting Policies [Line Items]
Debt assumed	$ 25,000,000
Repayments of loan		$ 10,000,000
Cumulative Effect, Period of Adoption, Adjustment | Credit Losses Reserve
Accounting Policies [Line Items]
Increase to total reserve					$ 4,600,000

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Summary of Significant Accounting Policies - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Cash and cash equivalents	$ 51,808,573	$ 28,567,825	$ 28,978,788
Restricted cash	3,201,935	4,633,204	7,421,852
Cash held in escrow by lender	3,086,398	3,268,563	4,352,755
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$ 58,096,906	$ 36,469,592	$ 40,753,395	$ 51,098,647

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BDC Merger - Narratives (Details)	Oct. 01, 2022 USD ($) member $ / shares shares	Jun. 30, 2023 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) $ / shares shares	Sep. 30, 2022 shares	Mar. 02, 2020 shares
Business Acquisition
Common stock, shares, issued (in shares) | shares					4,574,470.35
Obligation under participation agreement | $		$ 13,789,070	$ 12,680,594
Gain on extinguishment of debt | $	$ 3,400,000
Class B Common Stock
Business Acquisition
Common stock, par or stated value per share (in usd per share)		$ 0.01	$ 0.01
Share conversion rate	0.595
Share price (in usd per share)	$ 14.38
Common stock, shares, issued (in shares) | shares		24,335,513	24,335,370
Terra BDC | Class B Common Stock
Business Acquisition
Common stock, shares, issued (in shares) | shares	4,847,910			1
Terra BDC
Business Acquisition
Common stock, par or stated value per share (in usd per share)	$ 0.001
Sale of stock, percentage of ownership after transaction	19.90%
Obligation under participation agreement | $	$ 37,000,000
Board member increase | member	3
Terra BDC | Class B Common Stock
Business Acquisition
Common stock, par or stated value per share (in usd per share)	$ 0.01
Share price (in usd per share)	$ 14.66
Common stock, shares, issued (in shares) | shares	4,847,910

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BDC Merger - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - Terra BDC	Oct. 01, 2022 USD ($)
Total Consideration
Fair value of Terra Property Trust shares of common stock issued	$ 71,054,620
Cash paid for fractional shares	12,920
Transaction costs	2,283,785
Total Consideration	73,351,325
Assets Acquired and Liabilities Assumed at Fair Value
Cash and cash equivalents	24,321,951
Restricted cash	260,614
Interest receivable	1,367,044
Other assets	55,465
Term loan payable	(25,000,000)
Unsecured notes payable	(33,770,000)
Obligations under participation agreements	(6,114,979)
Interest reserve and other deposits held on investments	(260,614)
Due to manager	(682,541)
Interest payable	(53,186)
Accounts payable and accrued expenses	(740,824)
Other liabilities	(387,446)
Net assets acquired	73,351,325
Loans Held For Investment
Assets Acquired and Liabilities Assumed at Fair Value
Loans held for investment	77,562,528
Loans Held For Investment Acquired Through Participation
Assets Acquired and Liabilities Assumed at Fair Value
Loans held for investment	$ 36,793,313

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Loans Held for Investment - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Loans Held for Investment
Loans and Financing Receivable
Accrued interest receivable	$ 3.9	$ 4.1

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Loans Held for Investment - Schedule of Portfolio Summary (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2023 USD ($) loan	Dec. 31, 2022 USD ($) loan
Loans and Financing Receivable
Number of loans | loan	23	31
Principal balance	$ 541,855,443	$ 645,795,459
Carrying value	513,818,507	626,490,767
Fair value	$ 517,494,731	$ 623,145,754
Weighted-average coupon rate	12.82%	11.59%
Weighted-average remaining term (years)	8 months 8 days	1 year 1 month 20 days
Debt instrument, face	$ 480,681,006	$ 451,349,737
Fixed Rate
Loans and Financing Receivable
Number of loans | loan	5	8
Principal balance	$ 52,940,319	$ 90,990,183
Carrying value	53,069,799	92,274,998
Fair value	$ 52,504,064	$ 90,729,098
Weighted-average coupon rate	13.22%	13.82%
Weighted-average remaining term (years)	1 year 5 months 19 days	1 year 4 months 6 days
Floating Rate
Loans and Financing Receivable
Number of loans | loan	18	23
Principal balance	$ 488,915,124	$ 554,805,276
Carrying value	460,748,708	534,215,769
Fair value	$ 464,990,667	$ 532,416,656
Weighted-average coupon rate	12.77%	11.23%
Weighted-average remaining term (years)	7 months 2 days	1 year 1 month 6 days
Floating Rate | Revolving line of credit | Collateral
Loans and Financing Receivable
Principal balance	$ 336,800,000	$ 413,100,000
Debt instrument, face	$ 228,300,000	$ 261,000,000
Floating Rate | Term Loan
Loans and Financing Receivable
Number of loans | loan	16	21
Floating Rate | Term Loan | LIBOR
Loans and Financing Receivable
Interest rate base (as percent)	5.22%	4.39%
Floating Rate | Term Loan | SOFR
Loans and Financing Receivable
Interest rate base (as percent)	5.07%	4.06%
Floating Rate | Term Loan | Term SOFR
Loans and Financing Receivable
Interest rate base (as percent)	5.14%	4.36%

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Loans Held for Investment - Schedule of Lending Activities (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Investment in Movement in Mortgage Loans on Real Estate [Roll Forward]
Provision for credit losses	$ (4,652,644)	$ (25,633)	$ (3,802,593)	$ (75,929)
Real Estate Loan
Investment in Movement in Mortgage Loans on Real Estate [Roll Forward]
Beginning balance			626,490,767	469,673,314
New loans made			63,775,372	120,420,961
Principal repayments received			(98,977,506)	(56,610,198)
Net amortization of premiums on loans			(823,785)	(122,783)
Settlement of loans in exchange for real estate properties (Note 6)			(68,737,877)
Accrual, payment and accretion of investment-related fees and other, net			(251,558)	557,037
Provision for credit losses			(3,406,854)	(75,929)
Ending balance	513,818,507	533,842,402	513,818,507	533,842,402
Real Estate Loan | Cumulative Effect, Period of Adoption, Adjustment
Investment in Movement in Mortgage Loans on Real Estate [Roll Forward]
Beginning balance			(4,250,052)
Real Estate Loan | Loans Held for Investment
Investment in Movement in Mortgage Loans on Real Estate [Roll Forward]
Beginning balance			584,417,939	457,329,582
New loans made			63,775,372	119,461,668
Principal repayments received			(95,695,298)	(56,610,198)
Net amortization of premiums on loans			(823,785)	(122,783)
Settlement of loans in exchange for real estate properties (Note 6)			(68,737,877)
Accrual, payment and accretion of investment-related fees and other, net			(242,361)	537,682
Provision for credit losses			(3,397,676)	(75,929)
Ending balance	475,173,171	520,520,022	475,173,171	520,520,022
Real Estate Loan | Loans Held for Investment | Cumulative Effect, Period of Adoption, Adjustment
Investment in Movement in Mortgage Loans on Real Estate [Roll Forward]
Beginning balance			(4,123,143)
Real Estate Loan | Loans Held for Investment through Participation Interests
Investment in Movement in Mortgage Loans on Real Estate [Roll Forward]
Beginning balance			42,072,828	12,343,732
New loans made			0	959,293
Principal repayments received			(3,282,208)	0
Net amortization of premiums on loans			0	0
Settlement of loans in exchange for real estate properties (Note 6)			0
Accrual, payment and accretion of investment-related fees and other, net			(9,197)	19,355
Provision for credit losses			(9,178)	0
Ending balance	$ 38,645,336	$ 13,322,380	38,645,336	$ 13,322,380
Real Estate Loan | Loans Held for Investment through Participation Interests | Cumulative Effect, Period of Adoption, Adjustment
Investment in Movement in Mortgage Loans on Real Estate [Roll Forward]
Beginning balance			$ (126,909)

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Loans Held for Investment - Loan Structure (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Loans and Financing Receivable
Principal Balance	$ 541,855,443	$ 645,795,459
Carrying Value	546,947,303	651,962,657
Allowance for credit losses	(33,128,796)	(25,471,890)
Total, net of allowance for credit losses	$ 513,818,507	$ 626,490,767
% of Total	100.00%	100.00%
Allowance for loan losses (as a percent)	(6.40%)	(4.10%)
Credit facility
Loans and Financing Receivable
Principal Balance	$ 0	$ 28,802,833
Carrying Value	$ 0	$ 29,080,183
% of Total	0.00%	4.60%
Preferred equity investments
Loans and Financing Receivable
Principal Balance	$ 123,242,640	$ 121,231,434
Carrying Value	$ 123,957,220	$ 122,132,177
% of Total	24.10%	19.50%
Mezzanine loans
Loans and Financing Receivable
Principal Balance	$ 37,689,011	$ 39,352,303
Carrying Value	$ 37,812,413	$ 39,451,115
% of Total	7.30%	6.30%
First mortgages
Loans and Financing Receivable
Principal Balance	$ 380,923,792	$ 456,408,889
Carrying Value	$ 385,177,670	$ 461,299,182
% of Total	75.00%	73.70%

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Loans Held for Investment - Property Type (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Loans and Financing Receivable
Principal Balance	$ 541,855,443	$ 645,795,459
Carrying Value	546,947,303	651,962,657
Allowance for credit losses	(33,128,796)	(25,471,890)
Total, net of allowance for credit losses	$ 513,818,507	$ 626,490,767
% of Total	100.00%	100.00%
Allowance for loan losses (as a percent)	(6.40%)	(4.10%)
Office
Loans and Financing Receivable
Principal Balance	$ 164,837,437	$ 184,196,708
Carrying Value	$ 165,327,122	$ 184,722,657
% of Total	32.20%	29.40%
Multifamily
Loans and Financing Receivable
Principal Balance	$ 103,427,397	$ 104,589,464
Carrying Value	$ 104,222,850	$ 105,570,432
% of Total	20.30%	16.90%
Industrial
Loans and Financing Receivable
Principal Balance	$ 64,340,667	$ 147,796,164
Carrying Value	$ 64,865,942	$ 148,891,742
% of Total	12.60%	23.80%
Mixed-use
Loans and Financing Receivable
Principal Balance	$ 62,746,351	$ 64,880,450
Carrying Value	$ 63,257,099	$ 65,838,965
% of Total	12.30%	10.50%
Infill land
Loans and Financing Receivable
Principal Balance	$ 51,031,209	$ 48,860,291
Carrying Value	$ 52,122,303	$ 49,565,437
% of Total	10.10%	7.90%
Hotel - full/select service
Loans and Financing Receivable
Principal Balance	$ 43,222,382	$ 43,222,382
Carrying Value	$ 43,826,614	$ 43,758,804
% of Total	8.50%	7.00%
Student housing
Loans and Financing Receivable
Principal Balance	$ 31,000,000	$ 31,000,000
Carrying Value	$ 31,768,579	$ 31,774,261
% of Total	6.20%	5.10%
Infrastructure
Loans and Financing Receivable
Principal Balance	$ 21,250,000	$ 21,250,000
Carrying Value	$ 21,556,794	$ 21,840,359
% of Total	4.20%	3.50%

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Loans Held for Investment - Geographic Locations (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Loans and Financing Receivable
Principal Balance	$ 541,855,443	$ 645,795,459
Carrying Value	546,947,303	651,962,657
Allowance for credit losses	(33,128,796)	(25,471,890)
Total, net of allowance for credit losses	$ 513,818,507	$ 626,490,767
% of Total	100.00%	100.00%
Allowance for loan losses (as a percent)	(6.40%)	(4.10%)
California
Loans and Financing Receivable
Principal Balance	$ 139,246,557	$ 164,253,345
Carrying Value	$ 140,733,468	$ 165,839,561
% of Total	27.30%	26.50%
New York
Loans and Financing Receivable
Principal Balance	$ 88,336,078	$ 91,845,479
Carrying Value	$ 88,336,079	$ 91,877,084
% of Total	17.20%	14.70%
New Jersey
Loans and Financing Receivable
Principal Balance	$ 77,371,876	$ 62,228,622
Carrying Value	$ 78,691,851	$ 62,958,482
% of Total	15.30%	10.00%
Georgia
Loans and Financing Receivable
Principal Balance	$ 75,205,257	$ 72,401,718
Carrying Value	$ 75,840,968	$ 73,101,964
% of Total	14.80%	11.70%
Washington
Loans and Financing Receivable
Principal Balance	$ 52,969,210	$ 56,671,267
Carrying Value	$ 53,070,927	$ 57,027,639
% of Total	10.30%	9.10%
Utah
Loans and Financing Receivable
Principal Balance	$ 49,250,000	$ 49,250,000
Carrying Value	$ 50,399,536	$ 50,698,251
% of Total	9.80%	8.10%
Arizona
Loans and Financing Receivable
Principal Balance	$ 31,000,000	$ 31,000,000
Carrying Value	$ 31,296,394	$ 31,276,468
% of Total	6.10%	5.00%
North Carolina
Loans and Financing Receivable
Principal Balance	$ 21,476,465	$ 43,520,028
Carrying Value	$ 21,578,080	$ 44,041,162
% of Total	4.20%	7.00%
Massachusetts
Loans and Financing Receivable
Principal Balance	$ 7,000,000	$ 7,000,000
Carrying Value	$ 7,000,000	$ 7,000,000
% of Total	1.40%	1.10%
Texas
Loans and Financing Receivable
Principal Balance	$ 0	$ 67,625,000
Carrying Value	$ 0	$ 68,142,046
% of Total	0.00%	10.90%

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Loans Held for Investment - Current Expected Credit Losses Reserve (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	$ 25,471,890
Allowance for credit losses, end of period	33,128,796
Credit Losses Reserve | Funded Loans
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	25,471,890	$ 13,658,481
(Reversal of) provision for credit losses	3,406,854	75,929
Charge-offs	0	0
Recoveries	0	0
Allowance for credit losses, end of period	33,128,796	$ 13,734,410
Credit Losses Reserve | Funded Loans | Cumulative Effect, Period of Adoption, Adjustment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	4,250,052
Credit Losses Reserve | Unfunded Loan Commitment
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for credit losses on unfunded commitments, beginning of period	0
Provision for credit losses	395,739
Liability for credit losses on unfunded commitments, end of period	765,410
Credit Losses Reserve | Unfunded Loan Commitment | Cumulative Effect, Period of Adoption, Adjustment
Off-Balance-Sheet, Credit Loss, Liability [Roll Forward]
Liability for credit losses on unfunded commitments, beginning of period	$ 369,671

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Loans Held for Investment - Narratives - Past-Due Loans and Loan Risk Rating (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023 USD ($) loan	Jun. 30, 2022 USD ($) loan	Jun. 30, 2023 USD ($) loan	Jun. 30, 2022 USD ($) loan	Dec. 31, 2022 USD ($) loan
Loans and Financing Receivable
Unfunded commitments	$ 53,200,000		$ 53,200,000		$ 47,300,000
Interest receivable	3,889,641		$ 3,889,641		$ 4,100,501
Number of loans with a loan risk rating | loan			23		31
Carrying Value	546,947,303		$ 546,947,303		$ 651,962,657
Loans held for investment, net of allowance for credit losses	33,128,796		$ 33,128,796		$ 25,471,890
Nonperforming Loans
Loans and Financing Receivable
Number of loans with a loan risk rating | loan			4		4
Carrying Value	$ 89,701,023		$ 89,701,023		$ 89,928,215
Nonperforming Loans | Suspended Interest Income Accrual
Loans and Financing Receivable
Number of loans in default | loan	3	2	3	2
Suspended interest income accrual	$ 3,700,000	$ 1,200,000	$ 7,200,000	$ 2,300,000
Interest receivable	0		$ 0		$ 0
4
Loans and Financing Receivable
Percent of carrying amounts of loans (as percent)					1.50%
Number of loans with a loan risk rating | loan			2		0
Carrying Value	39,337,304		$ 39,337,304		$ 0
5
Loans and Financing Receivable
Percent of carrying amounts of loans (as percent)					5.00%
Number of loans with a loan risk rating | loan			0		0
Carrying Value	0		$ 0		$ 0
Other | Nonperforming Loans
Loans and Financing Receivable
Number of loans with a loan risk rating | loan			4		4
Carrying Value	89,700,000		$ 89,700,000		$ 89,900,000
Loans held for investment, net of allowance for credit losses	$ 25,500,000		$ 25,500,000		$ 25,500,000

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Loans Held for Investment - Loan Risk Rating (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2023 USD ($) loan	Dec. 31, 2022 USD ($) loan
Loans and Financing Receivable
Number of Loans | loan	23	31
Principal Balance	$ 541,855,443	$ 645,795,459
Amortized Cost	546,947,303	651,962,657
Allowance for credit losses	(33,128,796)	(25,471,890)
Total, net of allowance for credit losses	$ 513,818,507	$ 626,490,767
% of Total	100.00%	100.00%
2023	$ 6,120,513
2022	172,529,139
2021	119,894,853
2020	27,750,542
2019	122,390,340
Prior	$ 98,261,916
Nonperforming Loans
Loans and Financing Receivable
Number of Loans | loan	4	4
Principal Balance		$ 89,928,215
Amortized Cost	$ 89,701,023	$ 89,928,215
% of Total	16.40%	13.80%
2023	$ 0
2022	0
2021	0
2020	0
2019	1,364,944
Prior	$ 88,336,079
Nonperforming Loans | Specific Allowance
Loans and Financing Receivable
Allowance for credit losses		$ (25,500,000)
1
Loans and Financing Receivable
Number of Loans | loan	0	0
Principal Balance		$ 0
Amortized Cost	$ 0	$ 0
% of Total	0.00%	0.00%
2023	$ 0
2022	0
2021	0
2020	0
2019	0
Prior	$ 0
2
Loans and Financing Receivable
Number of Loans | loan	2	2
Principal Balance		$ 25,000,000
Amortized Cost	$ 25,043,198	$ 25,041,782
% of Total	4.60%	3.80%
2023	$ 0
2022	0
2021	0
2020	0
2019	18,043,198
Prior	$ 7,000,000
3
Loans and Financing Receivable
Number of Loans | loan	15	25
Principal Balance		$ 530,867,244
Amortized Cost	$ 392,865,778	$ 536,992,660
% of Total	71.80%	82.40%
2023	$ 6,120,513
2022	133,191,835
2021	119,894,853
2020	27,750,542
2019	102,982,198
Prior	$ 2,925,837
4
Loans and Financing Receivable
Number of Loans | loan	2	0
Principal Balance		$ 0
Amortized Cost	$ 39,337,304	$ 0
% of Total	7.20%	0.00%
2023	$ 0
2022	39,337,304
2021	0
2020	0
2019	0
Prior	$ 0
5
Loans and Financing Receivable
Number of Loans | loan	0	0
Principal Balance		$ 0
Amortized Cost	$ 0	$ 0
% of Total	0.00%	0.00%
2023	$ 0
2022	0
2021	0
2020	0
2019	0
Prior	$ 0

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Loans Held for Investment - Narratives - TDR (Details) - USD ($)	1 Months Ended	6 Months Ended		12 Months Ended
	Dec. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Troubled Debt Restructuring
Debt instrument, face	$ 451,349,737	$ 480,681,006		$ 451,349,737
Repayments of loan		1,649,191	$ 413,065
Converted to subordinated equity		$ 1,400,000		1,400,000
Senior Loans
Troubled Debt Restructuring
Debt instrument, face	40,100,000			40,100,000
Repayments of loan	38,700,000
Converted to subordinated equity	$ 1,400,000
Accrued dividends rate (as percent)	8.00%
Principal Forgiveness
Troubled Debt Restructuring
Investment in troubled debt restructuring	$ 1			$ 1

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Loans Held for Investment - Troubled Debt Restructuring (Details) - Principal Forgiveness	1 Months Ended	6 Months Ended
	Dec. 31, 2022 USD ($) loan	Jun. 30, 2023 USD ($)
Troubled Debt Restructuring
Number of loans modified | loan	1
Pre-modified recorded carrying value	$ 40,072,138
Post-modified recorded carrying value	$ 1,364,944	$ 1,400,000

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Equity Investment in Unconsolidated Investments - Narratives (Details)		1 Months Ended		3 Months Ended		6 Months Ended
	Aug. 03, 2020 USD ($)	May 31, 2023 USD ($)	Sep. 30, 2022 USD ($) venture	Jun. 30, 2023 USD ($) venture	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) venture	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) venture
Schedule of Equity Method Investments
Number of join ventures | venture				3		3		3
Equity investment in unconsolidated investments				$ 32,608,994		$ 32,608,994		$ 62,498,340
Equity income (loss) from investment				(1,759,934)	$ 1,364,332	(2,196,794)	$ 2,783,667
Distributions received from equity investment in unconsolidated investments						5,087,025	225,280
Number of joint interests with interests sold | venture			2
Proceeds from sale of equity method investments			$ 33,700,000
Realized gain on disposal			$ 800,000
Debt instrument, face				480,681,006		480,681,006		$ 451,349,737
Percentage of net cash flow (as a percent)								35.00%
Repayments of loan						1,649,191	413,065
Mezzanine Loan, Acquisition
Schedule of Equity Method Investments
Debt instrument, face								$ 10,000,000
Repayments of loan		$ 10,000,000
Mavik RESOF
Schedule of Equity Method Investments
Committed capital	$ 50,000,000
Unfunded commitment outstanding				$ 37,400,000		$ 37,400,000		$ 22,400,000
Equity method investment, ownership percentage				14.90%		14.90%		27.90%
Equity investment in unconsolidated investments				$ 18,100,000		$ 18,100,000		$ 36,800,000
Equity income (loss) from investment				(1,200,000)	1,600,000	(900,000)	2,900,000
Distributions received from equity investment in unconsolidated investments				900,000	0	4,700,000	0
Payments for origination of mortgage loans held-for-sale	$ 500,000
Joint Venture
Schedule of Equity Method Investments
Equity method investment, ownership percentage			53.00%
Equity income (loss) from investment				$ (600,000)	200,000	(1,300,000)	100,000
Distributions received from equity investment in unconsolidated investments					$ 400,000		$ 700,000
Acquisition costs, period cost						$ 500,000
Another Joint venture
Schedule of Equity Method Investments
Equity method investment, ownership percentage			59.00%

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Equity Investment in Unconsolidated Investments - Equity Investment in a Limited Partnership (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Schedule of Equity Method Investments
Other assets	$ 7,784,490		$ 7,784,490		$ 2,928,327
Total assets	819,702,405		819,702,405		813,336,892
Revolving line of credit, net of financing costs	105,260,351		105,260,351		89,807,448
Obligations under participation agreement (proceeds of $38,444,357 and $41,726,565, respectively)	13,789,070		13,789,070		12,680,594
Total liabilities	530,557,452		530,557,452		491,454,718
Unrealized (depreciation) appreciation on investments	51,224	$ (34,950)	57,808	$ (133,994)
Obligations under participation agreement			1,093,862	16,522,472
Mavik RESOF
Schedule of Equity Method Investments
Investments at fair value (cost of $166,181,966 and $176,035,290, respectively)	167,673,063		167,673,063		178,283,703
Other assets	33,566,430		33,566,430		23,918,841
Total assets	201,239,493		201,239,493		202,202,544
Revolving line of credit, net of financing costs	27,648,565		27,648,565		14,795,985
Obligations under participation agreement (proceeds of $38,444,357 and $41,726,565, respectively)	38,764,750		38,764,750		41,962,861
Other liabilities	16,193,681		16,193,681		17,120,804
Total liabilities	82,606,996		82,606,996		73,879,650
Partners’ capital	118,632,497		118,632,497		128,322,894
Total investment income	8,264,132	5,891,371	16,375,911	10,736,035
Total expenses	3,827,584	1,761,814	6,994,379	3,055,130
Net investment income	4,436,548	4,129,557	9,381,532	7,680,905
Unrealized (depreciation) appreciation on investments	(288,031)	1,493,140	(883,942)	1,562,191
Provision for income tax	(138,944)	0	(138,944)	0
Net increase in partners’ capital resulting from operations	4,009,573	$ 5,622,697	8,358,646	$ 9,243,096
Carrying Value	$ 166,181,966		166,181,966		176,035,290
Obligations under participation agreement			$ 38,444,357		$ 41,726,565

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Equity Investment in Unconsolidated Investments - Equity Investment in Joint Venture (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Schedule of Equity Method Investments
Carrying Value	$ 32,608,994	$ 62,498,340
Joint Venture
Schedule of Equity Method Investments
Carrying Value	$ 14,472,554	$ 25,703,666
Joint Venture | LEL Arlington JV LLC
Schedule of Equity Method Investments
Beneficial Ownership Interest	27.20%	27.20%
Carrying Value	$ 6,689,133	$ 7,271,603
Joint Venture | LEL NW 49th JV LLC
Schedule of Equity Method Investments
Beneficial Ownership Interest	27.20%	27.20%
Carrying Value	$ 1,546,725	$ 1,521,556
Joint Venture | TCG Corinthian FL Portfolio JV LLV
Schedule of Equity Method Investments
Beneficial Ownership Interest	30.60%	30.60%
Carrying Value	$ 6,236,696	$ 6,896,816
Joint Venture | SF-Dallas Industrial, LLC
Schedule of Equity Method Investments
Carrying Value	$ 0	$ 10,013,691

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Equity Investment in Unconsolidated Investments - Schedule of Equity Method Investments JV (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Schedule of Equity Method Investments
Other assets	$ 7,784,490		$ 7,784,490		$ 2,928,327
Total assets	819,702,405		819,702,405		813,336,892
Mortgage loan payable	98,687,185		98,687,185		29,488,326
Total liabilities	530,557,452		530,557,452		491,454,718
Revenues	18,782,455	$ 14,688,113	35,784,626	$ 26,800,383
Depreciation and amortization expense			(2,438,477)	(3,436,745)
Unrealized (losses) gains	51,224	(34,950)	57,808	(133,994)
Joint Venture
Schedule of Equity Method Investments
Net investments in real estate	191,629,757		191,629,757		192,616,298
Other assets	12,413,292		12,413,292		12,817,388
Total assets	204,043,049		204,043,049		205,433,686
Mortgage loan payable	148,454,820		148,454,820		147,740,645
Other liabilities	5,010,555		5,010,555		3,104,624
Total liabilities	153,465,375		153,465,375		150,845,269
Members’ capital	50,577,674		50,577,674		$ 54,588,417
Revenues	4,243,689	3,681,032	8,168,268	6,131,470
Operating expenses	(2,181,707)	(2,206,984)	(4,324,974)	(3,023,665)
Depreciation and amortization expense	(1,728,214)	(1,065,066)	(3,693,251)	(1,755,897)
Interest expense	(2,595,844)	(1,744,226)	(5,155,798)	(2,829,787)
Unrealized (losses) gains	(423,481)	1,170,866	(1,249,982)	1,406,377
Net (loss) income	$ (2,685,557)	$ (164,378)	$ (6,255,737)	$ (71,502)

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Real Estate Owned, Net - Narratives (Details)	1 Months Ended			3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) a	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Jun. 30, 2023 USD ($) building tenant	Jun. 30, 2022 USD ($) a	Jun. 30, 2023 USD ($) building tenant	Jun. 30, 2022 USD ($) a	Dec. 31, 2022 tenant
Real Estate [Line Items]
Impairment charge				$ 11,765,540	$ 0	$ 11,765,540	$ 1,604,989
Real estate investments, net				132,087,234		132,087,234
Area of land | a	4.9				4.9		4.9
Proceeds from sale of real estate	$ 8,600,000					0	$ 8,585,500
Loss on sale of investments	$ 100,000
Impairment of real estate		$ 1,600,000	$ 3,400,000
Real estate and intangibles | Fair Value, Nonrecurring
Real Estate [Line Items]
Impairment charge				$ 11,765,540	$ 0	$ 11,765,540	$ 1,604,989
Ground Lease
Real Estate [Line Items]
Weighted average remaining lease term — operating lease (years)				63 years 3 months 18 days		63 years 3 months 18 days		63 years 9 months 18 days
Base rent renewal term (in years)						5 years
Percent of fair market value of land				9.00%		9.00%
Industrial
Real Estate [Line Items]
Number of leased buildings | building				8		8
Number of tenants | tenant				10		10
Office
Real Estate [Line Items]
Number of tenants | tenant				3		3		3

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Real Estate Owned, Net - Investment Related to Real Estate Acquisition (Details)	Jun. 30, 2023 USD ($)	May 25, 2023 USD ($) property	Mar. 24, 2023 USD ($) property
Real Estate [Line Items]
Real estate investments, net	$ 132,087,234
Industrial | Texas, United States
Real Estate [Line Items]
Number of Properties | property		5	3
Real estate investments, net		$ 83,288,961	$ 48,798,273

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Real Estate Owned, Net - Total Capitalized Costs (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	May 31, 2023	Dec. 31, 2022	Jun. 30, 2022
Total Capitalized Costs:
Cash and cash equivalents	$ 51,808,573		$ 28,567,825	$ 28,978,788
Total, net of allowance for credit losses	513,818,507		626,490,767
Equity investment in unconsolidated investments	32,608,994		62,498,340
Interest receivable	3,889,641		4,100,501
Other assets	7,784,490		2,928,327
Total assets	819,702,405		$ 813,336,892
Industrial Buildings
Total Capitalized Costs:
Cash and cash equivalents	52,313,739	$ 3,515,466
Total, net of allowance for credit losses	68,737,877	68,737,877
Equity investment in unconsolidated investments	10,149,642	10,149,642
Interest receivable	456,650	456,650
Other assets	429,326	429,326
Total assets	132,087,234	83,288,961
Net Assets Acquired
Cash and cash equivalents	712,608	712,608
Other assets	33,802	33,802
In-place lease (weighted-average expected life of 3.95 years)		8,403,667
Below-market rent (weighted-average expected life of 3.98 years)		(4,770,870)
Accounts payable and accrued expenses	(912,771)	(912,771)
Net assets acquired	132,087,234	83,288,961
Land | Industrial Buildings
Net Assets Acquired
Land, building and improvements	23,785,004	14,457,149
Building and building improvements | Industrial Buildings
Net Assets Acquired
Land, building and improvements	104,613,728	$ 65,365,376
In-place lease | Industrial Buildings
Net Assets Acquired
In-place lease (weighted-average expected life of 3.95 years)	$ 12,719,000
Weighted-average expected life (in years)	3 years 11 months 12 days
Below-market rent | Industrial Buildings
Net Assets Acquired
Below-market rent (weighted-average expected life of 3.98 years)	$ (8,864,137)
Weighted-average expected life (in years)	3 years 11 months 23 days

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Real Estate Owned, Net - Real Estate Owned, Net (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Real Estate [Line Items]
Real estate, Net	$ 162,063,697	$ 46,660,226
Lease intangible liabilities, Net	(16,827,043)	(8,646,840)
Real Estate Investment
Real Estate [Line Items]
Real estate, Cost	177,792,552	57,304,497
Real estate, Accumulated Depreciation/Amortization	(18,485,970)	(16,722,650)
Real estate, Net	159,306,582	40,581,847
Lease intangible assets, Cost	27,858,079	15,139,080
Lease intangible assets, Accumulated Depreciation/Amortization	(13,788,151)	(12,570,619)
Total	14,069,928	2,568,461
Lease intangible liabilities, Cost	(20,515,329)	(11,651,192)
Lease intangible liabilities, Accumulated Depreciation/Amortization	3,688,286	3,004,352
Lease intangible liabilities, Net	(16,827,043)	(8,646,840)
Real Estate Investment | Total real estate
Real Estate [Line Items]
Real estate, Cost	170,449,802	53,816,609
Real estate, Accumulated Depreciation/Amortization	(8,386,105)	(7,156,383)
Real estate, Net	162,063,697	46,660,226
Real Estate Investment | Land
Real Estate [Line Items]
Real estate, Cost	23,785,004	0
Real estate, Accumulated Depreciation/Amortization	0	0
Real estate, Net	23,785,004	0
Real Estate Investment | Building and building improvements
Real Estate [Line Items]
Real estate, Cost	144,574,158	51,725,969
Real estate, Accumulated Depreciation/Amortization	(6,786,818)	(5,711,468)
Real estate, Net	137,787,340	46,014,501
Real Estate Investment | Tenant improvements
Real Estate [Line Items]
Real estate, Cost	1,854,640	1,854,640
Real estate, Accumulated Depreciation/Amortization	(1,363,287)	(1,224,648)
Real estate, Net	491,353	629,992
Real Estate Investment | Furniture and fixtures
Real Estate [Line Items]
Real estate, Cost	236,000	236,000
Real estate, Accumulated Depreciation/Amortization	(236,000)	(220,267)
Real estate, Net	0	15,733
Real Estate Investment | In-place lease
Real Estate [Line Items]
Lease intangible assets, Cost	27,701,537	14,982,538
Lease intangible assets, Accumulated Depreciation/Amortization	(13,701,834)	(12,493,079)
Total	13,999,703	2,489,459
Real Estate Investment | Above-market rent
Real Estate [Line Items]
Lease intangible assets, Cost	156,542	156,542
Lease intangible assets, Accumulated Depreciation/Amortization	(86,317)	(77,540)
Total	70,225	79,002
Real Estate Investment | Below-market rent
Real Estate [Line Items]
Lease intangible liabilities, Cost	(11,619,059)	(2,754,922)
Lease intangible liabilities, Accumulated Depreciation/Amortization	3,047,407	2,428,647
Lease intangible liabilities, Net	(8,571,652)	(326,275)
Real Estate Investment | Above-market ground lease
Real Estate [Line Items]
Lease intangible liabilities, Cost	(8,896,270)	(8,896,270)
Lease intangible liabilities, Accumulated Depreciation/Amortization	640,879	575,705
Lease intangible liabilities, Net	$ (8,255,391)	$ (8,320,565)

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Real Estate Owned, Net - Real Estate Operating Revenues and Expenses (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Real estate operating revenues:
Total	$ 2,803,934	$ 2,991,321	$ 4,136,903	$ 5,970,775
Real estate operating expenses:
Management fees	2,105,049	1,640,628	4,102,476	3,128,723
Total	1,864,212	1,247,328	3,074,124	2,465,291
Real Estate Investment
Real estate operating revenues:
Lease revenue	2,283,272	1,744,262	3,368,731	3,498,823
Other operating income	520,662	1,247,059	768,172	2,471,952
Total	2,803,934	2,991,321	4,136,903	5,970,775
Real estate operating expenses:
Utilities	69,919	56,171	106,333	101,505
Real estate taxes	537,681	344,727	892,361	691,159
Repairs and maintenances	256,187	169,817	463,552	327,233
Management fees	86,880	70,219	126,298	138,087
Lease expense, including amortization of above-market ground lease	487,163	487,163	974,326	974,326
Other operating expenses	426,382	119,231	511,254	232,981
Total	$ 1,864,212	$ 1,247,328	$ 3,074,124	$ 2,465,291

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Real Estate Owned, Net - Future Minimum Rent Income (Details)	Jun. 30, 2023 USD ($)
Real Estate [Abstract]
2023 (July 1 through December 31)	$ 4,650,111
2024	9,456,610
2025	4,940,447
2026	4,600,139
2027	3,162,610
Thereafter	5,821,613
Total	$ 32,631,530

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Real Estate Owned, Net - Annual Net Amortization of Intangibles (Details)	Jun. 30, 2023 USD ($)
Real Estate [Line Items]
2023 (July 1 through December 31)	$ 1,125,124
2024	2,232,457
2025	512,438
2026	492,017
2027	261,333
Thereafter	(7,380,484)
Total	(2,757,115)
Net Decrease in Real Estate Operating Revenue
Real Estate [Line Items]
2023 (July 1 through December 31)	(1,567,274)
2024	(3,104,584)
2025	(1,549,275)
2026	(1,158,163)
2027	(444,207)
Thereafter	(677,924)
Total	(8,501,427)
Increase in Depreciation and Amortization
Real Estate [Line Items]
2023 (July 1 through December 31)	2,757,572
2024	5,467,389
2025	2,192,061
2026	1,780,528
2027	835,888
Thereafter	966,265
Total	13,999,703
Decrease in Rent Expense
Real Estate [Line Items]
2023 (July 1 through December 31)	(65,174)
2024	(130,348)
2025	(130,348)
2026	(130,348)
2027	(130,348)
Thereafter	(7,668,825)
Total	$ (8,255,391)

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Real Estate Owned, Net - Ground Lease Disclosures (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Real Estate [Line Items]
Operating lease right-of-use asset	$ 27,370,242	$ 27,378,786
Operating lease liability	27,370,242	27,378,786
Ground Lease
Real Estate [Line Items]
Operating lease right-of-use asset	27,370,242	27,378,786
Operating lease liability	$ 27,370,242	$ 27,378,786
Weighted average remaining lease term — operating lease (years)	63 years 3 months 18 days	63 years 9 months 18 days
Weighted average discount rate — operating lease	7.60%	7.60%

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Real Estate Owned, Net - Schedule of Lease Expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Ground Lease
Real Estate [Line Items]
Operating lease cost	$ 519,750	$ 519,750	$ 1,039,500	$ 1,039,500

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Real Estate Owned, Net - Schedule of Non-cash Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Real Estate [Abstract]
Amounts included in the measurement of lease liability, Operating lease	$ 1,039,500	$ 1,039,500
Right-of-use assets obtained in exchange for lease obligations, Operating lease	$ 1,039,500	$ 1,039,500

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Real Estate Owned, Net - Maturities of Operating Lease Liabilities (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Real Estate [Abstract]
2023 (July 1 through December 31)	$ 1,039,500
2024	2,079,000
2025	2,079,000
2026	2,079,000
2027	2,079,000
Thereafter	122,227,875
Total lease payments	131,583,375
Less: Imputed interest	(104,213,133)
Total	$ 27,370,242	$ 27,378,786

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Fair Value Measurements - Narrative (Details)	1 Months Ended	3 Months Ended			6 Months Ended
	Mar. 31, 2023 USD ($)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Jun. 30, 2022 USD ($) a	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($) a
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Purchases					$ 258,500
Corporate bonds purchased			$ 20,000,000
Coupon rate on purchased bonds (as percent)	6.125%		6.125%
Impairment charge		$ 11,765,540		$ 0	$ 11,765,540	$ 1,604,989
Area of land | a				4.9		4.9
Real estate and intangibles | Discount Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Real Estate and intangibles, measurement input		0.0850			0.0850
Real estate and intangibles | Terminal Capitalization Rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Real Estate and intangibles, measurement input		0.0750			0.0750
Real estate and intangibles | Fair Value, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Impairment charge		$ 11,765,540		$ 0	$ 11,765,540	$ 1,604,989
Level 3 | Derivative - interest rate cap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Purchases	$ 258,500
Derivative, cap interest rate (as percent)	5.00%		5.00%

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Fair Value Measurements - Fair Value Measurements of Marketable Securities, by Major Class (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	$ 1,203,973	$ 147,960	$ 0	$ 1,310,000
Derivatives	281,028	0
Total	6,526,527	147,960
Debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	1,203,973	147,960
Money market fund
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market fund	5,041,526
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total	6,245,499	147,960
Level 1 | Debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	1,203,973	147,960
Level 1 | Money market fund
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market fund	5,041,526
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total	0	0
Level 2 | Debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	0	0
Level 2 | Money market fund
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market fund	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total	281,028	0
Level 3 | Debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	0	$ 0
Level 3 | Money market fund
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market fund	0
Derivative - interest rate cap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives	281,028
Derivative - interest rate cap | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives	0
Derivative - interest rate cap | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives	0
Derivative - interest rate cap | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives	$ 281,028

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Fair Value Measurements - Activities of the Marketable Securities (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Marketable Securities
Beginning balance	$ 147,960	$ 1,310,000
Purchases	1,051,754	0
Proceeds from sale	0	(1,259,417)
Amortization of interest rate cap	0	0
Reclassification of net realized gains on marketable securities into earnings	0	83,411
Unrealized (losses) gains on marketable securities and derivatives	4,259	(133,994)
Ending balance	1,203,973	$ 0
Derivatives
Beginning balance	0
Purchases	258,500
Proceeds from sale	0
Amortization of interest rate cap	(31,021)
Reclassification of net realized gains on marketable securities into earnings	0
Unrealized (losses) gains on marketable securities and derivatives	53,549
Ending balance	$ 281,028

XML

Fair Value Measurements - Fair Value Measurements, Nonrecurring (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Loans:
Principal Amount	$ 541,855,443	$ 645,795,459
Carrying Value	546,947,303	651,962,657
Allowance for loan losses	(33,128,796)	(25,471,890)
Total, net of allowance for credit losses	513,818,507	626,490,767
Fair Value	517,494,731	623,145,754
Liabilities:
Principal Amount	480,681,006	451,349,737
Carrying Value	472,090,818	442,811,751
Fair Value	458,785,745	431,569,684
Loans Held For Investment
Loans:
Allowance for loan losses	(32,992,709)	(25,471,890)
Total, net of allowance for credit losses	475,173,171	584,417,939
Loans held for investment acquired through participation
Loans:
Allowance for loan losses	(136,087)	0
Total, net of allowance for credit losses	38,645,336	42,072,828
Unsecured notes payable
Liabilities:
Principal Amount	123,500,000	123,500,000
Carrying Value	117,433,372	116,530,673
Fair Value	101,228,000	103,481,748
Level 3
Loans:
Allowance for loan losses	(33,128,796)	(25,471,890)
Fair Value	517,494,731	623,145,754
Liabilities:
Fair Value	357,557,745	328,087,936
Level 3 | Revolving line of credit
Liabilities:
Principal Amount	105,448,019	90,135,865
Carrying Value	105,260,351	89,807,448
Fair Value	105,448,019	90,135,865
Level 3 | Loans Held For Investment
Loans:
Principal Amount	503,411,086	604,068,894
Carrying Value	508,301,967	609,889,829
Fair Value	478,729,965	581,182,892
Level 3 | Loans held for investment acquired through participation
Loans:
Principal Amount	38,444,357	41,726,565
Carrying Value	38,645,336	42,072,828
Fair Value	38,764,766	41,962,862
Level 3 | Term loan payable
Liabilities:
Principal Amount	15,000,000	25,000,000
Carrying Value	14,850,000	25,000,000
Fair Value	15,000,000	25,000,000
Level 3 | Repurchase agreement payable
Liabilities:
Principal Amount	122,832,682	170,876,606
Carrying Value	122,070,840	169,304,710
Fair Value	122,832,682	170,876,606
Level 3 | Obligations under participation agreements
Liabilities:
Principal Amount	13,678,820	12,584,958
Carrying Value	13,789,070	12,680,594
Fair Value	13,789,071	12,680,595
Level 3 | Mortgage loan payable
Liabilities:
Principal Amount	100,221,485	29,252,308
Carrying Value	98,687,185	29,488,326
Fair Value	100,487,973	29,394,870
Level 1 | Unsecured notes payable
Liabilities:
Principal Amount	123,500,000	123,500,000
Carrying Value	117,433,372	116,530,673
Fair Value	$ 101,228,000	$ 103,481,748

XML

Fair Value Measurements - Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charges) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Impairment charge	$ 11,765,540	$ 0	$ 11,765,540	$ 1,604,989
Fair Value, Nonrecurring | Real estate and intangibles
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Real estate and intangibles	27,603,118	0		8,395,011
Impairment charge	$ 11,765,540	$ 0	$ 11,765,540	$ 1,604,989

XML

Fair Value Measurements - Valuation Techniques (Details)	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Fair Value Measurement Inputs and Valuation Techniques
Assets, Fair Value	$ 517,494,731	$ 623,145,754
Liabilities, Fair Value	458,785,745	431,569,684
Level 3
Fair Value Measurement Inputs and Valuation Techniques
Assets, Fair Value	517,494,731	623,145,754
Liabilities, Fair Value	357,557,745	328,087,936
Level 3 | Revolving line of credit
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, Fair Value	105,448,019	90,135,865
Level 3 | Loans Held For Investment
Fair Value Measurement Inputs and Valuation Techniques
Assets, Fair Value	478,729,965	581,182,892
Level 3 | Loans Held For Investment Acquired Through Participation
Fair Value Measurement Inputs and Valuation Techniques
Assets, Fair Value	38,764,766	41,962,862
Level 3 | Repurchase agreement payable
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, Fair Value	122,832,682	170,876,606
Level 3 | Obligations under participation agreements
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, Fair Value	13,789,071	12,680,595
Level 3 | Mortgage loan payable
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, Fair Value	100,487,973	29,394,870
Level 3 | Term loan payable
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, Fair Value	$ 15,000,000	$ 25,000,000
Level 3 | Discounted Cash Flow | Discount Rate | Revolving line of credit | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0849	0.0764
Level 3 | Discounted Cash Flow | Discount Rate | Revolving line of credit | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0849	0.0764
Level 3 | Discounted Cash Flow | Discount Rate | Revolving line of credit | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0849	0.0764
Level 3 | Discounted Cash Flow | Discount Rate | Loans Held For Investment | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0879	0.0871
Level 3 | Discounted Cash Flow | Discount Rate | Loans Held For Investment | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1714	0.1936
Level 3 | Discounted Cash Flow | Discount Rate | Loans Held For Investment | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1221	0.1146
Level 3 | Discounted Cash Flow | Discount Rate | Loans Held For Investment Acquired Through Participation | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1530	0.1525
Level 3 | Discounted Cash Flow | Discount Rate | Loans Held For Investment Acquired Through Participation | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1784	0.1706
Level 3 | Discounted Cash Flow | Discount Rate | Loans Held For Investment Acquired Through Participation | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1735	0.1667
Level 3 | Discounted Cash Flow | Discount Rate | Repurchase agreement payable | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0601	0.0522
Level 3 | Discounted Cash Flow | Discount Rate | Repurchase agreement payable | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0761	0.0617
Level 3 | Discounted Cash Flow | Discount Rate | Repurchase agreement payable | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0697	0.0682
Level 3 | Discounted Cash Flow | Discount Rate | Obligations under participation agreements | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1714	0.1636
Level 3 | Discounted Cash Flow | Discount Rate | Obligations under participation agreements | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1714	0.1636
Level 3 | Discounted Cash Flow | Discount Rate | Obligations under participation agreements | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1714	0.1636
Level 3 | Discounted Cash Flow | Discount Rate | Mortgage loan payable | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0625	0.0824
Level 3 | Discounted Cash Flow | Discount Rate | Mortgage loan payable | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0899	0.0824
Level 3 | Discounted Cash Flow | Discount Rate | Mortgage loan payable | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.0778	0.0824
Level 3 | Discounted Cash Flow | Discount Rate | Term loan payable | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1248	0.0563
Level 3 | Discounted Cash Flow | Discount Rate | Term loan payable | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1248	0.0563
Level 3 | Discounted Cash Flow | Discount Rate | Term loan payable | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Measurement input	0.1248	0.0563

XML

Related Party Transactions - Schedule of Fees Paid and Costs Reimbursed to the Manager (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) building	Jun. 30, 2022 USD ($)
Related Party Transaction [Line Items]
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 Manager	2,120,029	2,140,635	4,297,033	4,069,198
Related Party
Related Party Transaction [Line Items]
Origination and extension fee expense	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 Manager	2,120,029	2,140,635	4,297,033	4,069,198
Disposition fee	917,750	479,500	1,208,563	479,500
Total	$ 5,982,361	$ 5,038,428	11,389,578	9,490,780
Mavik RESOF
Related Party Transaction [Line Items]
Acquisition costs, period cost			$ 500,000	$ 200,000
Building acquired | building			3

XML

Related Party Transactions - Narratives (Details)		3 Months Ended				6 Months Ended
	Aug. 03, 2020 USD ($)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Related Party Transaction [Line Items]
Manager's entitled transaction break-up fee						0.5
Termination fee		$ 0				$ 0		$ 0
Distribution to investors		4,650,501	$ 4,650,492	$ 3,780,568	$ 3,893,595	9,300,000	$ 7,700,000
Investment company, return of capital distribution		$ 4,700,000		$ 2,800,000		$ 8,800,000	$ 5,700,000
Related Party
Related Party Transaction [Line Items]
Percent of origination fees payable		1.00%				1.00%
Percent of principal amount of loan extended		1.00%				1.00%
Management fee, annual rate (as percent)						1.00%
Asset servicing fee annual rate (as percent)		0.25%				0.25%
Disposition fee due to manager percent		1.00%				1.00%
Due to manager		$ 3,431,790				$ 3,431,790		$ 3,935,997
Mavik Real Estate Special Opportunities Fund, LP
Related Party Transaction [Line Items]
Committed capital	$ 50,000,000

XML

Related Party Transactions - Participation Interests Purchased (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Principal Balance	$ 541,855,443	$ 645,795,459
Carrying Value	513,818,507	626,490,767
Allowance for credit losses	(33,128,796)	(25,471,890)
Loans Held For Investment Acquired Through Participation
Related Party Transaction [Line Items]
Carrying Value	38,645,336	42,072,828
Allowance for credit losses	(136,087)	0
Loans Held For Investment Acquired Through Participation | Related Party
Related Party Transaction [Line Items]
Principal Balance	38,444,357	41,726,565
Carrying Value	38,645,336	$ 42,072,828
Allowance for credit losses	$ (136,087)
Havemeyer TSM LLC | Loans Held For Investment Acquired Through Participation | Related Party
Related Party Transaction [Line Items]
Participating Interests		23.00%
Principal Balance		$ 3,282,208
Carrying Value		$ 3,313,813
Mesa AZ Industrial Owner, LLC | Loans Held For Investment Acquired Through Participation | Related Party
Related Party Transaction [Line Items]
Participating Interests	38.27%	38.27%
Principal Balance	$ 31,000,000	$ 31,000,000
Carrying Value	$ 31,296,394	$ 31,276,468
UNIJ Sole Member LLC | Loans Held For Investment Acquired Through Participation | Related Party
Related Party Transaction [Line Items]
Participating Interests	40.80%	40.80%
Principal Balance	$ 7,444,357	$ 7,444,357
Carrying Value	$ 7,485,029	$ 7,482,547

XML

Related Party Transactions - Transferred to Third-Party (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Principal Balance	$ 541,855,443	$ 645,795,459
Debt instrument, face	480,681,006	451,349,737
Carrying Value	14,850,000	25,000,000
Participating Mortgage Loan
Related Party Transaction [Line Items]
Principal Balance	20,244,654	18,625,738
Carrying Value	20,401,547	18,738,386
Debt instrument, face	13,678,820	12,584,958
Carrying Value	13,789,070	12,680,594
610 Walnut Investors LLC | Participating Mortgage Loan
Related Party Transaction [Line Items]
Principal Balance	20,244,654	18,625,738
Carrying Value	$ 20,401,547	$ 18,738,386
% Transferred	67.57%	67.57%
Debt instrument, face	$ 13,678,820	$ 12,584,958
Carrying Value	$ 13,789,070	$ 12,680,594

XML

Debt - Narratives - Unsecured Notes Payable (Details) - USD ($)	Jun. 25, 2021	Jun. 10, 2021	Feb. 26, 2021	Feb. 10, 2021	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument
Principal Amount					$ 480,681,006	$ 451,349,737
Unsecured notes payable
Debt Instrument
Principal Amount					123,500,000	123,500,000
Unsecured notes payable | 6.00% Senior Notes Due 2026
Debt Instrument
Fixed rate (as percent)	6.00%	6.00%
Principal Amount	$ 6,600,000	$ 78,500,000			$ 85,125,000	85,125,000
Proceeds from issuance of debt	6,400,000	76,000,000
Debt issuance costs, gross	$ 200,000	$ 2,500,000
Asset coverage ratio					150.00%
Unsecured notes payable | 7.00% Senior Notes Due 2026
Debt Instrument
Fixed rate (as percent)			7.00%	7.00%
Principal Amount			$ 3,600,000	$ 34,800,000	$ 38,375,000	$ 38,375,000
Proceeds from issuance of debt			3,500,000	33,700,000
Debt issuance costs, gross			$ 100,000	$ 1,100,000
Debt instrument, redemption price, percentage				100.00%

XML

Debt - Unsecured Notes Payable (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Jun. 25, 2021	Jun. 10, 2021	Feb. 26, 2021	Feb. 10, 2021
Debt Instrument
Debt instrument, face	$ 480,681,006	$ 451,349,737
Carrying Value	472,090,818	442,811,751
Fair Value	458,785,745	431,569,684
Unsecured notes payable
Debt Instrument
Debt instrument, face	123,500,000	123,500,000
Carrying Value	117,433,372	116,530,673
Fair Value	101,228,000	103,481,748
Unsecured notes payable | 6.00% Senior Notes Due 2026
Debt Instrument
Debt instrument, face	85,125,000	85,125,000	$ 6,600,000	$ 78,500,000
Carrying Value	82,821,395	82,487,769
Fair Value	64,695,000	68,100,000
Unamortized discount	1,700,000	1,900,000
Unamortized deferred financing costs	600,000	700,000
Unsecured notes payable | 7.00% Senior Notes Due 2026
Debt Instrument
Debt instrument, face	38,375,000	38,375,000			$ 3,600,000	$ 34,800,000
Carrying Value	34,611,977	34,042,904
Fair Value	36,533,000	35,381,748
Unamortized discount	$ 3,800,000	$ 4,300,000

XML

Debt - Narratives - Revolving Line of Credit (Details)				6 Months Ended
	Mar. 12, 2023	Mar. 12, 2021 USD ($)	Mar. 12, 2021 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Jan. 04, 2022 USD ($)	Nov. 08, 2021 USD ($)
Debt Instrument
Maximum borrowing capacity				$ 105,400,000		$ 90,100,000
Payment of financing costs				2,025,783	$ 975,947
Line of credit facility collateral assets				165,600,000		$ 177,400,000
Proceeds from borrowings under revolving line of credit				57,032,155	41,169,295
Repayments				41,720,000	$ 30,920,124
UBS Master Repurchase Agreement | Related Party | Terra Mortgage Capital LLC
Debt Instrument
Maximum borrowing capacity								$ 195,000,000
Payment guarantee maximum percent		25.00%	25.00%
Minimum net worth required for compliance								$ 215,700,000
Ratio of indebtedness to net capital								3.50
Revolving line of credit
Debt Instrument
Maximum borrowing capacity		$ 75,000,000	$ 75,000,000				$ 125,000,000
Minimum net worth required for compliance				250,000,000
Quarterly operating profit for compliance				$ 3,500,000
Ratio of indebtedness to net capital				2.50
Payment of financing costs		$ 600,000
Revolving line of credit | Floor rate
Debt Instrument
Variable rate (as percent)	6.00%		4.00%
Revolving line of credit | LIBOR
Debt Instrument
Variable rate (as percent)			3.25%
Revolving line of credit | Term SOFR
Debt Instrument
Variable rate (as percent)	3.35%

XML

Debt - Narratives - Repurchase Agreements (Details)			6 Months Ended		12 Months Ended
	Feb. 18, 2022 USD ($)	Nov. 08, 2021 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Mar. 12, 2021
Debt Instrument
Maximum borrowing capacity			$ 105,400,000		$ 90,100,000
Cash and cash equivalents			51,808,573	$ 28,978,788	$ 28,567,825
Proceeds from borrowings under repurchase agreements			1,300,858	148,089,549
Repayments of borrowings under repurchase agreements			$ 49,344,783	0
Terra Mortgage Capital LLC | UBS Master Repurchase Agreement | Related Party
Debt Instrument
Maximum borrowing capacity		$ 195,000,000
Deferred financing costs		600,000
Payment guarantee maximum percent						25.00%
Cash liquidity		$ 5,000,000
Debt instrument covenant minimum percentage of cash liquidity		5.00%
Cash and cash equivalents		$ 15,000,000
Minimum percentage of total liquidity		10.00%
Minimum net worth required for compliance		$ 215,700,000
Debt instrument covenant requirement on consolidated tangible net worth minimum percent		75.00%
EBITDA To interest expense ratio		1.50	1.25		1.25
Ratio of indebtedness to net capital		3.50
Proceeds from borrowings under repurchase agreements			$ 0	29,700,000
Repayments of borrowings under repurchase agreements			13,600,000	0
Terra Mortgage Capital LLC | UBS Master Repurchase Agreement | Related Party | Minimum
Debt Instrument
Value-added assets with loan-to-value ratio		65.00%
Value added assets yield ratio		2.50%
Terra Mortgage Capital LLC | UBS Master Repurchase Agreement | Related Party | Minimum | Term SOFR
Debt Instrument
Variable rate (as percent)		1.60%
Terra Mortgage Capital LLC | UBS Master Repurchase Agreement | Related Party | Maximum
Debt Instrument
Value-added assets with loan-to-value ratio		80.00%
Value added assets yield ratio		5.00%
Terra Mortgage Capital LLC | UBS Master Repurchase Agreement | Related Party | Maximum | Term SOFR
Debt Instrument
Variable rate (as percent)		2.25%
Terra Mortgage Capital LLC | Uncommitted Master Repurchase Agreement | Related Party
Debt Instrument
Maximum borrowing capacity	$ 200,000,000
Deferred financing costs	600,000
Cash liquidity	$ 5,000,000
Debt instrument covenant minimum percentage of cash liquidity	5.00%
Cash and cash equivalents	$ 15,000,000
Minimum percentage of total liquidity	10.00%
Debt instrument covenant requirement on consolidated tangible net worth minimum percent	75.00%
EBITDA To interest expense ratio	1.50
Ratio of indebtedness to net capital	3.00
Proceeds from borrowings under repurchase agreements	$ 103,000,000		1,300,000	118,300,000
Repayments of borrowings under repurchase agreements			$ 35,700,000	$ 0
Unamortized deferred financing costs	$ 1,700,000
Terra Mortgage Capital LLC | Uncommitted Master Repurchase Agreement | Related Party | Nonperforming Loans
Debt Instrument
Payment guarantee maximum percent	50.00%
Terra Mortgage Capital LLC | Uncommitted Master Repurchase Agreement | Related Party | Performing Loans
Debt Instrument
Payment guarantee maximum percent	25.00%
Terra Mortgage Capital LLC | Uncommitted Master Repurchase Agreement | Related Party | Minimum | Term SOFR
Debt Instrument
Variable rate (as percent)			1.75%
Terra Mortgage Capital LLC | Uncommitted Master Repurchase Agreement | Related Party | Maximum | Term SOFR
Debt Instrument
Variable rate (as percent)			3.00%

XML

Debt - Schedule of Repurchase Agreements (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument
Principal Amount	$ 541,855,443	$ 645,795,459
UBS Master Repurchase Agreement
Debt Instrument
Principal Amount	51,100,000	68,100,000
Collateral, Carrying Value	52,046,332	69,163,440
Collateral, Fair Value	52,153,637	69,211,505
Borrowings Under Master Repurchase Agreement, Principal Amount	37,450,000	51,050,000
UBS Master Repurchase Agreement | NB Factory TIC 1, LLC
Debt Instrument
Principal Amount	28,000,000	28,000,000
Collateral, Carrying Value	28,842,742	28,857,892
Collateral, Fair Value	28,917,484	28,902,234
Borrowings Under Master Repurchase Agreement, Principal Amount	$ 18,970,000	$ 18,970,000
UBS Master Repurchase Agreement | NB Factory TIC 1, LLC | LIBOR
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)		1.74%
UBS Master Repurchase Agreement | NB Factory TIC 1, LLC | LIBOR | Floor rate
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)		0.10%
UBS Master Repurchase Agreement | NB Factory TIC 1, LLC | SOFR
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)	1.75%
UBS Master Repurchase Agreement | Grandview's Madison Place, LLC
Debt Instrument
Principal Amount		$ 17,000,000
Collateral, Carrying Value		17,105,928
Collateral, Fair Value		17,105,928
Borrowings Under Master Repurchase Agreement, Principal Amount		$ 13,600,000
UBS Master Repurchase Agreement | Grandview's Madison Place, LLC | SOFR
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)		1.965%
UBS Master Repurchase Agreement | Grandview's Remington Place, LLC
Debt Instrument
Principal Amount	$ 23,100,000	$ 23,100,000
Collateral, Carrying Value	23,203,590	23,199,620
Collateral, Fair Value	23,236,153	23,203,343
Borrowings Under Master Repurchase Agreement, Principal Amount	$ 18,480,000	$ 18,480,000
UBS Master Repurchase Agreement | Grandview's Remington Place, LLC | SOFR
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)	1.965%	1.965%
Uncommitted Master Repurchase Agreement
Debt Instrument
Principal Amount	$ 120,088,373	$ 167,549,028
Collateral, Carrying Value	121,025,396	168,692,405
Collateral, Fair Value	116,562,901	166,891,728
Borrowings Under Master Repurchase Agreement, Principal Amount	85,382,682	119,826,606
Uncommitted Master Repurchase Agreement | 330 Tryon DE LLC
Debt Instrument
Principal Amount		22,800,000
Collateral, Carrying Value		22,902,215
Collateral, Fair Value		22,687,235
Borrowings Under Master Repurchase Agreement, Principal Amount		$ 18,240,000
Uncommitted Master Repurchase Agreement | 330 Tryon DE LLC | SOFR
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)		2.015%
Uncommitted Master Repurchase Agreement | 330 Tryon DE LLC | SOFR | Floor rate
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)		0.01%
Uncommitted Master Repurchase Agreement | 1389 Peachtree St, LP; 1401 Peachtree St, LP; and 1409 Peachtree St, LP
Debt Instrument
Principal Amount	58,865,991	$ 57,184,178
Collateral, Carrying Value	59,155,584	57,453,482
Collateral, Fair Value	55,139,746	56,844,322
Borrowings Under Master Repurchase Agreement, Principal Amount	$ 42,888,134	$ 41,587,275
Uncommitted Master Repurchase Agreement | 1389 Peachtree St, LP; 1401 Peachtree St, LP; and 1409 Peachtree St, LP | SOFR
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)	2.465%	2.465%
Uncommitted Master Repurchase Agreement | AGRE DCP Palm Springs, LLC
Debt Instrument
Principal Amount	$ 43,222,382	$ 43,222,382
Collateral, Carrying Value	43,826,614	43,758,804
Collateral, Fair Value	43,499,719	43,062,933
Borrowings Under Master Repurchase Agreement, Principal Amount	$ 28,094,548	$ 28,094,548
Uncommitted Master Repurchase Agreement | AGRE DCP Palm Springs, LLC | SOFR
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)	1.315%	1.315%
Uncommitted Master Repurchase Agreement | AGRE DCP Palm Springs, LLC | SOFR | Floor rate
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)	1.80%	1.80%
Uncommitted Master Repurchase Agreement | Patrick Henry Recovery Acquisition, LLC
Debt Instrument
Principal Amount	$ 18,000,000	$ 18,000,000
Collateral, Carrying Value	18,043,198	18,041,782
Collateral, Fair Value	17,923,436	17,824,300
Borrowings Under Master Repurchase Agreement, Principal Amount	$ 14,400,000	$ 14,400,000
Uncommitted Master Repurchase Agreement | Patrick Henry Recovery Acquisition, LLC | SOFR
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)	0.865%	0.865%
Uncommitted Master Repurchase Agreement | Patrick Henry Recovery Acquisition, LLC | SOFR | Floor rate
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)	1.50%	1.50%
Uncommitted Master Repurchase Agreement | University Park Berkeley, LLC
Debt Instrument
Principal Amount		$ 26,342,468
Collateral, Carrying Value		26,536,122
Collateral, Fair Value		26,472,938
Borrowings Under Master Repurchase Agreement, Principal Amount		$ 17,504,783
Uncommitted Master Repurchase Agreement | University Park Berkeley, LLC | SOFR
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)		1.365%
Uncommitted Master Repurchase Agreement | University Park Berkeley, LLC | SOFR | Floor rate
Debt Instrument
Borrowings Under Master Repurchase Agreement, Interest Rate (as percent)		1.50%

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Debt - Narratives - Term Loan (Details) - USD ($)		1 Months Ended
	Apr. 09, 2021	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument
Term loan payable		$ 14,850,000	$ 25,000,000
Credit Agreement
Debt Instrument
Term loan payable	$ 25,000,000
Minimum incremental loans	1,000,000
Loans in excess	$ 500,000
Fixed rate (as percent)	5.625%	5.625%
Interest rate, increase (as percent)	6.625%
Commitment fee percentage	2.50%
Unused capacity, commitment fee percentage	0.75%
Loan origination fee		$ 150,000
Principal amount outstanding		$ 15,000,000	$ 25,000,000
Credit Agreement | SOFR | Maximum
Debt Instrument
Variable rate (as percent)		7.375%
Credit Agreement | SOFR | Minimum
Debt Instrument
Variable rate (as percent)		5.00%

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Debt - Mortgage Loan Payable (Details)	6 Months Ended
	Jun. 30, 2023 USD ($)	May 31, 2023 USD ($) building	Mar. 31, 2023 USD ($) building	Dec. 31, 2022 USD ($)
Debt Instrument
Debt instrument, face	$ 480,681,006			$ 451,349,737
Principal Amount	100,221,485			29,252,308
Carrying Value	98,687,185			29,488,326
Carrying Value of Collateral	159,306,582			40,581,847
Centennial Bank
Debt Instrument
Principal Amount	27,603,118			29,252,308
Carrying Value	27,869,606			29,488,326
Carrying Value of Collateral	$ 27,603,118			40,581,847
Centennial Bank | Term SOFR
Debt Instrument
Current Interest Rate	3.85%
Centennial Bank | Term SOFR | Minimum
Debt Instrument
Interest rate (as percent)	2.23%
Acquisition Financing Loan Agreement | Mortgage Loan Payable | TPG RE Finance 24, LTD
Debt Instrument
Number of Properties | building			3
Current Interest Rate	3.50%
Interest rate (as percent)	3.75%
Principal Amount	$ 32,368,367			0
Carrying Value	31,581,757			0
Carrying Value of Collateral	$ 48,498,431			0
Acquisition Financing Loan Agreement | Mortgage Loan Payable | GSF Lender, LLC
Debt Instrument
Number of Properties | building		5
Interest rate (as percent)	6.254%
Principal Amount	$ 40,250,000	$ 40,300,000		0
Carrying Value	39,235,822			0
Carrying Value of Collateral	$ 83,205,033			$ 0
Acquisition Financing Loan Agreement | Real Estate Investment | Mortgage Loan Payable
Debt Instrument
Debt instrument, face			$ 37,000,000

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Debt - Scheduled Debt Principal Payments (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Debt Disclosure [Abstract]
2023 (July 1 through December 31)	$ 42,603,118
2024	228,280,702
2025	0
2026	123,500,000
2027	32,368,368
Thereafter	40,250,000
Long term debt	467,002,188
Unamortized deferred financing costs	(8,700,440)	$ (8,600,000)
Total	$ 458,301,748

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Debt - Narratives - Obligations Under Participation Agreements and Secured Borrowing (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Debt Instrument
Participation mortgage loan	$ 14,850,000	$ 25,000,000
Participating Mortgage Loan
Debt Instrument
Participation mortgage loan	13,789,070	12,680,594
Loans held for investment	$ 20,401,547	$ 18,738,386
Participating Mortgage Loan | Weighted Average
Debt Instrument
Weighted-average interest rate (as percent)	17.10%	16.40%

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Commitments and Contingencies (Details) - USD ($) $ in Millions			6 Months Ended
	Jul. 07, 2023	Aug. 03, 2020	Jun. 30, 2023	Jul. 17, 2023	Dec. 31, 2022
Ground Lease
Other Commitments
Base rent renewal term (in years)			5 years
Percent of fair market value of land			9.00%
Ground Lease | Guarantee Obligations | Subsequent Event
Other Commitments
Stated prepayment of loan	$ 11.3
Original issuance of loan	28.5
Remaining loan amount	$ 17.2
Principal amount outstanding				$ 27.6
Mavik RESOF
Other Commitments
Committed capital		$ 50.0
Unfunded commitment outstanding			$ 37.4		$ 22.4
Mavik RESOF
Other Commitments
Committed capital		$ 50.0
Unfunded commitment outstanding					$ 22.4

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Equity - Earnings Per Share (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
Equity [Abstract]
Net (loss) income	$ (19,237,065)	$ 547,479	$ 1,292,434	$ (757,887)	$ (18,689,586)	$ 534,547
Series A preferred stock dividend declared	0		(3,906)		(3,907)	(7,812)
Net (loss) income allocable to common stock	$ (19,237,065)		$ 1,288,528		$ (18,693,493)	$ 526,735
Weighted-average shares outstanding — basic (in shares)	24,335,430		19,487,460		24,335,402	19,487,460
Weighted-average shares outstanding — diluted (in shares)	24,335,430		19,487,460		24,335,402	19,487,460
(Loss) income per share — basic (in usd per share)	$ (0.79)		$ 0.07		$ (0.77)	$ 0.03
(Loss) income per share — diluted (in usd per share)	$ (0.79)		$ 0.07		$ (0.77)	$ 0.03

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Equity - Preferred Stock Classes (Details) - USD ($)	Nov. 30, 2016	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Dec. 31, 2016
Class of Stock
Preferred stock, authorized (in shares)		50,000,000		50,000,000
Preferred stock, par value (in usd per share)		$ 0.01		$ 0.01
Series A Preferred Stock
Class of Stock
Preferred stock, authorized (in shares)	125
Preferred stock, issued (in shares)		0		125
Preferred stock outstanding (in shares)		0		125
Preferred stock, dividend rate, percentage	12.50%
Preferred stock, liquidation preference (in usd per share)	$ 1,000
Preferred stock sold (in shares)					125
Preferred stock value sold					$ 125,000
Preferred stock, redemption price (in usd per share)		$ 1,000
Preferred stock redemption premium (in usd per share)		$ 50
Preferred Stock redeemed			$ 125,000

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Equity - Common Stock (Details)	Jun. 30, 2023 $ / shares shares	Dec. 31, 2022 $ / shares shares	Oct. 01, 2022 $ / shares shares	Sep. 30, 2022 shares	Mar. 02, 2020 shares
Equity disclosure
Common stock, shares authorized (in shares)			950,000,000
Common stock, shares, issued (in shares)					4,574,470.35
Common And Preferred
Equity disclosure
Common stock, shares authorized (in shares)				500,000,000
Class A Common Stock
Equity disclosure
Common stock, shares authorized (in shares)	450,000,000	450,000,000	450,000,000
Common stock, par or stated value per share (in usd per share) | $ / shares	$ 0.01	$ 0.01	$ 0.01
Common stock, shares, issued (in shares)	0	0
Class B Common Stock
Equity disclosure
Common stock, shares authorized (in shares)	450,000,000	450,000,000	450,000,000
Common stock, par or stated value per share (in usd per share) | $ / shares	$ 0.01	$ 0.01
Common stock, shares, issued (in shares)	24,335,513	24,335,370
Common stock, shares, outstanding (in shares)	24,335,513	24,335,370
Conversion ratio			0.33
Preferred Stock
Equity disclosure
Common stock, shares authorized (in shares)			50,000,000
Terra BDC | Class B Common Stock
Equity disclosure
Common stock, shares, issued (in shares)			4,847,910	1
Common stock, shares, outstanding (in shares)				1
Terra JV | Class B Common Stock
Equity disclosure
Equity method investment, ownership percentage	70.00%
Terra BDC | Class B Common Stock
Equity disclosure
Equity method investment, ownership percentage	19.90%
Terra Offshore REIT | Class B Common Stock
Equity disclosure
Equity method investment, ownership percentage	10.10%

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Equity - Distributions (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
Equity [Abstract]
Distribution to investors	$ 4,650,501	$ 4,650,492	$ 3,780,568	$ 3,893,595	$ 9,300,000	$ 7,700,000
Investment company, return of capital distribution	4,700,000		2,800,000		8,800,000	5,700,000
Distributions declared on preferred shares	$ 0	$ 3,907	$ 3,906	$ 3,906	$ 3,907	$ 7,812

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Equity - Dividend Reinvestment Plan (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2023
Equity [Abstract]
Shares issued from reinvestment of shareholder distributions (in shares)			143
Shares issued from reinvestment of shareholder distributions	$ 1,510	$ 478	$ 1,988

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