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 March 31, 2024

☐ 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 May 13, 2024, the registrant had 24,336,582 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 March 31, 2024 (unaudited) and December 31, 2023	2
	Consolidated Statements of Operations and Comprehensive (Loss) Income for the three months ended March 31, 2024 and 2023 (unaudited)	3
	Consolidated Statements of Changes in Equity for the three months ended March 31, 2024 and 2023 (unaudited)	4
	Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)	5
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	51
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults upon Senior Securities	52
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	52
Item 6.	Exhibits	52
Signatures		54

1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Terra Property Trust, Inc.

Consolidated Balance Sheets

	March 31, 2024		December 31, 2023
	(Unaudited)
Assets
Cash and cash equivalents	$	17,914,875	$	10,674,475
Restricted cash	4,097,364		3,954,986
Cash held in escrow by lender	4,541,731		4,907,316
Marketable securities	3,174,690		4,961,879
Loans held for investment, net of allowance for credit losses of $58,055,856    and $56,749,498	377,169,978		417,913,773
Loans held for investment acquired through participation, net of allowance for     credit losses of $687,939 and $226,527	38,089,285		38,558,485
Equity investment in unconsolidated investments	42,525,905		37,171,326
Real estate owned, net (Note 5)
Land, building and building improvements, net	125,948,852		126,724,333
Lease intangible assets, net	8,534,578		9,869,364
Interest receivable	8,014,178		6,537,368
Due from related parties	1,092,348		655,263
Other assets	9,090,039		8,811,583
Total assets	$	640,193,823	$	670,740,151
Liabilities and Equity
Liabilities:
Unsecured notes payable, net	$	118,872,834	$	118,380,897
Secured financing agreements, net	258,749,238		290,525,313
Obligations under participation agreements (Note 7 )	15,137,755		—
Interest reserve and other deposits held on investments	4,097,364		3,954,986
Lease intangible liabilities, net (Note 5)	6,014,031		6,838,875
Due to Manager (Note 7)	2,381,620		4,183,293
Interest payable	1,408,314		1,575,463
Accounts payable and accrued expenses	1,654,112		2,405,749
Unearned income	455,497		314,260
Other liabilities	935,168		907,507
Total liabilities	409,705,933		429,086,343
Commitments and contingencies (Note 9)
Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized and none issued	—		—
Class A Common Stock, $0.01 par value, 450,000,000 shares authorized and no    shares issued, as of both March 31, 2024 and December 31, 2023	—		—
Class B Common Stock, $0.01 par value, 450,000,000 shares authorized and    24,336,424 and 24,336,033 shares issued and outstanding as of March 31, 2024     and December 31, 2023, respectively	243,364		243,360
Additional paid-in capital	444,462,676		444,458,206
Accumulated deficit	(213,882,368)		(203,047,758)
Accumulated other comprehensive loss	(335,782)		—
Total equity	230,487,890		241,653,808
Total liabilities and equity	$	640,193,823	$	670,740,151

See notes to unaudited consolidated financial statements.

2

Terra Property Trust, Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Revenues
Interest income	$	12,148,735	$	15,615,807
Real estate operating revenue	2,719,701		1,332,969
Other operating income	140,909		53,395
	15,009,345		17,002,171
Operating expenses
Operating expenses reimbursed to Manager	2,178,164		2,177,004
Asset management fee	1,715,042		1,997,427
Asset servicing fee	406,525		470,525
Provision for (reversal of provision for) credit losses	1,873,111		(850,051)
Real estate operating expenses	691,006		1,209,912
Depreciation and amortization	2,116,682		681,813
Professional fees	885,569		979,895
Directors’ fees	83,750		96,464
Other	262,911		215,244
	10,212,760		6,978,233
Operating income	4,796,585		10,023,938
Other income and expenses
Interest expense on secured financing	(7,289,912)		(6,119,731)
Interest expense on unsecured notes payable	(2,440,375)		(2,394,306)
Interest expense on obligations under participation agreements	(618,495)		(532,146)
Unrealized (loss) gain on investments, net	(22,931)		6,584
Loss from equity investment in unconsolidated investments	(473,387)		(436,860)
Realized loss on investments, net	(135,459)		—
	(10,980,559)		(9,476,459)
Net (loss) income	$	(6,183,974)	$	547,479
Series A preferred stock dividend declared	$	—	$	(3,907)
Net (loss) income allocable to common stock	$	(6,183,974)	$	543,572
Other Comprehensive loss
Available-for-sale debt securities	(335,782)		—
	(335,782)		—
Comprehensive (loss) income	$	(6,519,756)	$	543,572
Per share data
(Loss) income per share — basic and diluted	$	(0.25)	$	0.02
Weighted-average shares — basic and diluted	24,336,157		24,335,373
Distributions declared per common share	$	0.19	$	0.19

See notes to unaudited consolidated financial statements.

3

Terra Property Trust, Inc.

Consolidated Statements of Changes in Equity

(Unaudited)

	Preferred Stock		Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive loss
			$0.01 Par Value			$0.01 Par Value
			Shares	Amount		Shares	Amount								Total Equity
Balance at January 1, 2024	$	—	—	$	—	24,336,033	$	243,360	$	444,458,206	$	(203,047,758)	$	—	$	241,653,808
Shares issued from reinvestment of shareholder    distributions	—		—	—		391	4		4,470		—		—		4,474
Distributions declared on common shares ($0.19 per    share)	—		—	—		—	—		—		(4,650,636)		—		(4,650,636)
Net loss	—		—	—		—	—		—		(6,183,974)		—		(6,183,974)
Other comprehensive loss:
Available-for-sale debt securities	—		—	—		—	—		—		—		(335,782)		(335,782)
Balance at March 31, 2024	$	—	—	$	—	24,336,424	$	243,364	$	444,462,676	$	(213,882,368)	$	(335,782)	$	230,487,890

	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

See notes to unaudited consolidated financial statements.

4

Terra Property Trust, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net (loss) income	$	(6,183,974)	$	547,479
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	2,116,682		681,813
Provision for (reversal of provision for) credit losses	1,873,111		(850,051)
Amortization of net purchase premiums on loans	78,132		346,780
Straight-line rent adjustments	(58,436)		27,813
Amortization of deferred financing costs	978,280		535,276
Amortization of discount on unsecured notes payable	445,205		402,571
Amortization of above- and below-market rent intangibles	(824,843)		(34,764)
Amortization and accretion of investment-related fees, net	(475,630)		(4,745)
Amortization of above-market rent ground lease	—		(32,587)
Realized loss on investments, net	135,459		—
Unrealized loss (gain) on investments, net	22,931		(6,584)
Distributions received from equity investment in unconsolidated investments	648,911		4,050,553
Loss from equity investment in unconsolidated investments	473,387		1,010,625
Changes in operating assets and liabilities:
Deal deposits	—		4,241,892
Interest receivable	(1,476,810)		(1,127,241)
Due from related parties	(437,085)		(138,508)
Other assets	999,329		(806,166)
Due to Manager	(1,646,207)		—
Unearned income	141,237		—
Interest payable	(167,149)		424,772
Accounts payable and accrued expenses	(751,637)		402,443
Other liabilities	(77,673)		(1,010,363)
Net cash (used in) provided by operating activities	(4,186,780)		8,661,008
Cash flows from investing activities:
Proceeds from repayments of loans	46,981,320		59,177,506
Origination and purchase of loans	(7,173,474)		(46,214,722)
Purchase of equity interests in unconsolidated investments	(6,476,877)		—
Funding for promissory note receivable	(1,225,656)		—
Proceeds from sale of marketable securities	1,292,897		—
Purchase of real estate properties	—		(48,798,273)
Purchase of held-to-maturity securities	—		(20,025,024)
Return of capital on equity interests in unconsolidated investments	—		3,870,322
Net cash provided by (used in) investing activities	33,398,210		(51,990,191)

5

Terra Property Trust, Inc.

Consolidated Statements of Cash Flows (Continued)

	Three Months Ended March 31,
	2024		2023
Cash flows from financing activities:
Principal repayments on secured financing	(84,780,619)		(19,230,071)
Proceeds from secured financing	53,019,501		68,264,993
Proceeds from obligations under participation agreements	15,000,000		521,886
Distributions paid	(4,646,162)		(4,653,921)
Payment of financing costs	(929,335)		(844,415)
Change in interest reserve and other deposits held on investments	142,378		(21,410)
Redemption of Series A Preferred Stock	—		(125,000)
Net cash (used in) provided by financing activities	(22,194,237)		43,912,062
Net increase in cash, cash equivalents and restricted cash	7,017,193		582,879
Cash, cash equivalents and restricted cash at beginning of period	19,536,777		36,469,592
Cash, cash equivalents and restricted cash at end of period (Note 2)	$	26,553,970	$	37,052,471

	Three Months Ended March 31,
	2024		2023
Supplemental Disclosure of Cash Flows Information:
Cash paid for interest	$	9,091,697	$	7,683,565
Supplemental non-cash information:
Reinvestment of shareholder distributions	$	4,474	$	478

See notes to unaudited consolidated financial statements.

6

Terra Property Trust, Inc.

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2024

Note 1. Business

    Terra Property Trust, Inc. (and, together with its consolidated subsidiaries, the “Company” or “Terra Property Trust”) is a real estate investment trust (“REIT”) that originates, invests in and manages a diverse portfolio of real estate and real estate-related assets. The Company was incorporated under the Maryland General Corporation Law on December 31, 2015. The Company focuses primarily on commercial real estate credit investments, including first mortgage loans, subordinated loans (including B-notes, mezzanine and preferred equity) and credit facilities throughout the United States. The Company’s loans finance the acquisition, development or recapitalization of high-quality commercial real estate in the United States. The Company focuses on middle market loans in the approximately $10 million to $50 million range, which in the Company’s experience have been subject to less competition, offer higher risk-adjusted returns than larger loans with similar risk metrics and facilitate portfolio diversification. The Company may also make strategic real estate equity and non-real estate-related investments that align with its investment objectives and criteria.

    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 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 (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 7). 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. Pursuant to the terms of the transactions described in the Merger Agreement, approximately 4,847,910 shares of the Company’s Class B Common Stock, $0.01 par value per share (“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 October 1, 2022.

On December 20, 2023, Terra Fund 5 announced that effective December 29, 2023 (the “Distribution Date”), Terra Fund 5 would distribute all of its shares of the Company’s Class B Common Stock to its members as part of the winding up of Terra Fund 5. On the Distribution Date, each member of Terra Fund 5 received 2,252.02 shares of the Company’s Class B Common Stock for each unit of membership interest in Terra Fund 5 held by such member. Because Terra Fund 5 previously owned its interests in the shares of Class B Common Stock indirectly through its ownership of interests in Terra JV, LLC (“Terra JV”), prior to the Distribution Date, Terra JV first distributed the shares of Class B Common Stock to Terra Fund 5 and Terra Secured Income Fund 7, LLC (“Terra Fund 7”), and Terra Fund 5 then distributed those shares to its members on the Distribution Date and Terra Fund 7 became a direct stockholder of the Company’s Class B Common Stock.

7

Notes to Unaudited Consolidated Financial Statements

As of March 31, 2024, Terra Fund 7 and Terra Offshore Funds REIT, LLC (“Terra Offshore REIT”) held 8.7% and 10.1%, respectively, of the issued and outstanding shares of the Company’s common stock.

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 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 4).

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. Amortized cost is the amount at which a financing receivable or a loan is originated or acquired, adjusted for accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash and write-offs.

Allowance for Credit Losses

On January 1, 2023, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses. ASC 326 mandates the use of a current expected credit loss (“CECL”) methodology for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” methodology previously required under United States generally accepted accounting principles (“U.S. GAAP”). The CECL methodology requires the consideration of possible credit losses over the life of an instrument as opposed to estimating credit losses upon the occurrence of an actual loss event under the previous “incurred loss” methodology. 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 ASC 326 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 member’s capital as of January 1,

8

Notes to Unaudited Consolidated Financial Statements

2023. Subsequent to the adoption of the CECL methodology, any increase or decrease to the allowance for credit losses is recorded in earnings on the consolidated statement of operations.

Performing Loans

The Company uses a model-based approach for estimating the allowance for credit losses on performing loans on a collective basis, including future funding commitments for which the Company does not have the unconditional right to cancel, as these loans share similar risk characteristics. The Company utilizes information obtained from internal and external sources relating to past events, current economic conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. The Company utilizes a commercial mortgage-based, third-party loan loss model and because the Company does not have a meaningful history of realized credit losses on its loan portfolio, it subscribes to a database service to provide historical proxy loan loss information. The Company 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 has chosen to incorporate a weighted average macroeconomic forecast that encompasses baseline, optimistic and pessimistic scenarios, into its allowance for credit losses on performing loans estimate during the reasonable and supportable forecast period which is currently eight quarters. The Company selects certain economics variables from a group of independent variables such as Commercial Real Estate Price Index, unemployment and interest rate which are included in the model as part of macroeconomic forecast and updated regularly based on current economic trends. On a quarterly basis, adjustments to the weights ascribed to the multiple macroeconomic forecast scenarios are made in response to changes in expectations of macroeconomic conditions such as inflation and interest rates. The specific loan level information input into the model includes 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. Based on the inputs, the loan loss model determines a loan loss rate through the generation of a probability of default (PD) and loss given default (LGD) for each loan. The allowance for credit losses on performing loans is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. A significant amount of judgment is applied in selecting inputs and analyzing results produced by the models to determine the allowance for credit losses on performing loans. Changes in such estimates can significantly affect the expected credit losses.

Beyond the Company’s reasonable and supportable forecast period, the Company reverts to historical loss information on a straight-line basis over the remaining contractual loan term, 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 determination of the performing loans credit loss estimate considers historical loss information and current economic conditions for each loan, reversion period 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. The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed.

The Company also performs a qualitative assessment and applies qualitative adjustments as necessary, usually due to limitations of the loan loss model. 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 certain contractual extension options, renewals, modifications, and prepayments.

Unfunded Commitments

Some of the Company’s performing 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 methodology because the Company does not have an unconditional right to cancel such commitments. The allowance for credit losses related to unfunded commitments is recorded as a component of other liabilities on the Company’s consolidated balance sheets. This allowance for credit losses is estimated using the same method outlined above for the Company’s outstanding performing loan balances and increases or decreases are also recorded in earnings on the consolidated statements of operations.

9

Notes to Unaudited Consolidated Financial Statements

Non-Performing Loans

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.

Loans Not Secured by Real Estate

The Company has two loans that are not secured by real estate. These loans, which are included in other assets on the consolidated balance sheets, are recorded at amortized cost. The Company performs a separate analysis based on recoverability to determine the allowance for credit losses on these loans. As of March 31, 2024, the Company did not record any allowance for credit losses on these two loans because the Company believes that it will be able to collect all outstanding interest and principal on or before the maturity date of each loan.

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 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.

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

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

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.

10

Notes to Unaudited Consolidated Financial Statements

    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 provides 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.

As of October 19, 2023, in connection with the deed in lieu of foreclosure discussed in Note 5, the Company is no longer a party to the ground lease and the related ROU assets and liabilities were written off.

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 interest and principal becomes not probable. 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 may 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.

11

Notes to Unaudited Consolidated Financial Statements

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:

	March 31,
	2024		2023
Cash and cash equivalents	$	17,914,875	$	28,869,594
Restricted cash	4,097,364		4,611,794
Cash held in escrow by lender	4,541,731		3,571,083
Total cash, cash equivalents and restricted cash shown in the consolidated    statements of cash flows	$	26,553,970	$	37,052,471

 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 not probable. See “Obligations Under Participation Agreements” in Note 8 for additional information.

Secured Financing Agreements, Net

The Company's secured financing agreements include two master repurchase agreements, a revolving line of credit, non-recourse property mortgages, note-on-note financing arrangements and a term loan. The Company accounts for borrowings under these financing arrangements as secured transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees. See “Secured Financing Arrangements” in Note 8 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 amortized 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.

12

Notes to Unaudited Consolidated Financial Statements

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 March 31, 2024, 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 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 months ended March 31, 2024 and 2023, 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 2020-2023 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 March 31, 2024 and December 31, 2023, and common stock and preferred stock outstanding prior to March 31, 2023. As a result, earnings per share, as presented, represents 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.

Note 3. Loans Held for Investment

The Company elected the practical expedient under ASC 326 to exclude accrued interest from amortized cost. As of March 31, 2024 and December 31, 2023, accrued interest receivable of $8.0 million and $6.5 million, respectively, is included in interest receivable on the consolidated balance sheets, and is excluded from the amortized cost of loans held for investment.

13

Notes to Unaudited Consolidated Financial Statements

Portfolio Summary

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

	March 31, 2024									December 31, 2023
	Fixed Rate			Floating Rate (1)(2)(3)			Total			Fixed Rate			Floating Rate (1)(2)(3)			Total
Number of loans	4			15			19			5			16			21
Principal balance	$	33,212,781		$	436,440,199		$	469,652,980		$	53,998,648		$	455,462,178		$	509,460,826
Carrying value	$	32,961,215		$	382,298,048		$	415,259,263		$	54,095,173		$	402,377,085		$	456,472,258
Fair value	$	32,773,591		$	384,981,808		$	417,755,399		$	53,435,742		$	403,904,207		$	457,339,949
Weighted-average coupon rate	12.29		%	13.10		%	13.04		%	12.95		%	12.92		%	12.93		%
Weighted-average remaining  term (years)	1.10			0.70			0.75			1.18			0.70			0.77

_______________

(1)These loans pay a coupon rate of 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 the London Interbank Offered Rate (“LIBOR”) of 5.44%, average SOFR of 5.32% and Term SOFR of 5.33% as of March 31, 2024 and average SOFR of 5.34% and Term SOFR of 5.35% as of December 31, 2023.

(2)As of March 31, 2024 and December 31, 2023, amount included $323.9 million and $342.9 million of senior mortgages used as collateral for $187.6 million and $204.9 million of borrowings under secured financing arrangements, respectively (Note 9).

(3)As of March 31, 2024 and December 31, 2023, 13 and 14 loans, respectively, were subject to a 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, 2024	$	417,913,773	$	38,558,485	$	456,472,258
Principal repayments received	(46,981,320)		—		(46,981,320)
New loans made	7,173,474		—		7,173,474
Net amortization of premiums on loans	(78,132)		—		(78,132)
Accrual, payment and accretion of investment-related fees and other,    net	448,541		(7,788)		440,753
Provision for credit losses	(1,306,358)		(461,412)		(1,767,770)
Balance, March 31, 2024	$	377,169,978	$	38,089,285	$	415,259,263

14

Notes to Unaudited Consolidated Financial Statements

	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)	(4,250,052)		—		(4,250,052)
New loans made	46,214,722		—		46,214,722
Principal repayments received	(55,895,298)		(3,282,208)		(59,177,506)
Net amortization of premiums on loans	(346,780)		—		(346,780)
Accrual, payment and accretion of investment-related fees and other,    net	(34,186)		(18,541)		(52,727)
Reversal of provision for credit losses	1,070,365		—		1,070,365
Balance, March 31, 2023	$	571,176,710	$	38,772,079	$	609,948,789

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:

	March 31, 2024						December 31, 2023
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
First mortgages	$	325,243,521	$	329,118,182	79.2	%	$	365,465,500	$	368,918,890	80.9	%
Preferred equity investments	126,965,102		127,455,045		30.7	%	126,550,969		127,105,312		27.8	%
Mezzanine loans	17,444,357		17,429,831		4.2	%	17,444,357		17,424,081		3.8	%
Allowance for credit losses	—		(58,743,795)		(14.1)	%	—		(56,976,025)		(12.5)	%
Total	$	469,652,980	$	415,259,263	100.0	%	$	509,460,826	$	456,472,258	100.0	%

	March 31, 2024						December 31, 2023
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Office	$	142,231,299	$	142,268,711	34.2	%	$	144,812,619	$	144,853,769	31.7	%
Multifamily	67,379,930		67,867,269		16.3	%	85,660,082		86,210,868		18.9	%
Industrial	68,965,222		69,507,417		16.7	%	67,579,869		67,612,621		14.8	%
Mixed-use	63,046,365		63,457,260		15.3	%	63,096,365		63,531,806		13.9	%
Infill land	53,807,782		55,235,602		13.3	%	52,839,509		54,172,663		11.9	%
Hotel - full/select service	43,222,382		43,816,761		10.6	%	43,222,382		43,801,303		9.6	%
Student housing	31,000,000		31,850,038		7.7	%	31,000,000		31,821,832		7.0	%
Infrastructure	—		—		—	%	21,250,000		21,443,421		4.7	%
Allowance for credit losses	—		(58,743,795)		(14.1)	%	—		(56,976,025)		(12.5)	%
Total	$	469,652,980	$	415,259,263	100.0	%	$	509,460,826	$	456,472,258	100.0	%

15

Notes to Unaudited Consolidated Financial Statements

	March 31, 2024						December 31, 2023
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	117,093,246	$	118,276,335	28.4	%	$	119,093,246	$	120,296,944	26.4	%
New York	90,486,288		90,486,288		21.8	%	90,483,672		90,483,672		19.8	%
New Jersey	84,773,004		86,455,588		20.8	%	82,419,378		83,489,049		18.3	%
Georgia	74,166,025		74,391,413		17.9	%	74,335,828		74,602,328		16.3	%
Arizona	31,000,000		31,287,431		7.5	%	31,000,000		31,296,235		6.9	%
Utah	28,000,000		28,910,000		7.0	%	49,250,000		50,329,949		11.0	%
North Carolina	21,826,479		21,927,383		5.3	%	21,826,479		21,929,657		4.8	%
Washington	15,307,938		15,268,620		3.7	%	34,052,223		34,020,449		7.5	%
Massachusetts	7,000,000		7,000,000		1.7	%	7,000,000		7,000,000		1.5	%
Allowance for credit losses	—		(58,743,795)		(14.1)	%	—		(56,976,025)		(12.5)	%
Total	$	469,652,980	$	415,259,263	100.0	%	$	509,460,826	$	456,472,258	100.0	%

Allowance for Credit Losses

As described in Note 2, on January 1, 2023, the Company adopted the provisions of 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. 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:

	Three Months Ended March 31,
	2024		2023
Allowance for credit losses, beginning of period	$	56,976,025	$	25,471,890
Cumulative effect of credit loss accounting standard effective    January 1, 2023 (Note 2)	—		4,250,052
Provision (reversal of provision) for credit losses	1,767,770		(1,070,365)
Charge-offs	—		—
Recoveries	—		—
Allowance for credit losses, end of period	$	58,743,795	$	28,651,577

Certain of the Company’s performing loans contain provisions for future funding commitments, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. These unfunded commitments amounted to approximately $30.7 million and $35.7 million as of March 31, 2024 and December 31, 2023, respectively. The following table presents the activity in the liability for credit losses on unfunded commitments:

	Three Months Ended March 31,
	2024		2023
Liability for credit losses on unfunded commitments, beginning of period	$	326,907	$	—
Cumulative effect of credit loss accounting standard effective January 1, 2023 (Note 2)	—		369,671
Provision for credit losses	105,341		220,314
Liability for credit losses on unfunded commitments, end of period	$	432,248	$	589,985

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 manner. 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 accrue for interest. For the three months ended March 31, 2024 and 2023, the Company did not reverse any interest income

16

Notes to Unaudited Consolidated Financial Statements

accrual because all accrued interest income was deemed collectible. For the three months ended March 31, 2024 and 2023, the Company suspended interest income accrual of $5.8 million and $3.4 million on four and four loans, respectively, because recovery of such income was not probable. As of March 31, 2024 and December 31, 2023, there was no interest receivable recognized 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 for recoverability. As of March 31, 2024 and December 31, 2023, the Company had eight and six non-performing loans with total carrying value of $263.5 million and $209.3 million, respectively. Accordingly, the Company utilized the estimated fair value of the loan collateral or sponsor’s guarantee to estimate the total allowance for credit losses of $55.7 million and $54.6 million as of March 31, 2024 and December 31, 2023, respectively. Please see “Note 6. Fair Value Measurements – Significant Unobservable Inputs” for information on how the fair values of these loans were determined.

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 tables present the amortized cost of the Company’s loan portfolio by year of origination and loan risk rating:

 

	March 31, 2024
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2024		2023		2022		2021		2020		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	1	7,000,000		1.5	%	—		—		—		—		—		7,000,000
3	9	184,699,879		39.0	%	—		15,268,620		31,287,431		47,554,081		27,795,536		62,794,211
4	1	18,831,851		4.0	%	—		—		18,831,851		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	8	263,471,328		55.5	%	—		—		86,455,588		28,910,000		—		148,105,740
	19	474,003,058		100.0	%	$	—	$	15,268,620	$	136,574,870	$	76,464,081	$	27,795,536	$	217,899,951
Allowance for credit losses		(58,743,795)
Total, net of allowance for credit losses		$	415,259,263

17

Notes to Unaudited Consolidated Financial Statements

	December 31, 2023
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2023		2022		2021		2020		2019		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	1	7,000,000		1.4	%	—		—		—		—		—		7,000,000
3	13	278,296,080		54.2	%	10,809,959		77,383,153		97,514,884		27,810,327		61,842,453		2,935,304
4	1	18,855,139		3.7	%	—		18,855,139		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	6	209,297,064		40.7	%	—		60,612,621		—		—		58,200,770		90,483,673
	21	513,448,283		100.0	%	$	10,809,959	$	156,850,913	$	97,514,884	$	27,810,327	$	120,043,223	$	100,418,977
Allowance for credit losses		(56,976,025)
Total, net of allowance for credit losses		$	456,472,258

Note 4. Equity Investment in Unconsolidated Investments

The Company owns interests in a limited partnership and four joint ventures. The Company accounts for its interests in these investments under the equity method of accounting (Note 2).

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. 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.

The following tables present a summary of information regarding the Company’ equity investment in RESOF:

	March 31, 2024					December 31, 2023
	Ownership Interest	Carrying Value		Unfunded Commitment		Ownership Interest	Carrying Value		Unfunded Commitment
Equity investment in RESOF	14.9%	$	24,510,818	$	31,479,273	14.9%	$	18,196,583	$	37,444,080

	Three Months Ended March 31,
	2024		2023
Income from equity investment in RESOF	$	998,339	$	303,600
Distributions received from RESOF	$	648,911	$	3,787,783

18

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:

	March 31, 2024		December 31, 2023
Investments at fair value (cost of $273,515,287 and $196,129,031, respectively)	$	273,515,289	$	199,032,013
Other assets	19,955,399		16,502,225
Total assets	293,470,688		215,534,238
Revolving line of credit, net of financing costs	79,014,554		44,762,534
Obligations under participation agreement (proceeds of $38,444,357 and     $38,444,357, respectively)	38,799,425		38,881,032
Other liabilities	16,524,914		13,641,742
Total liabilities	134,338,893		97,285,308
Partners’ capital	$	159,131,795	$	118,248,930

	Three Months Ended March 31,
	2024		2023
Total investment income	$	10,833,147	$	8,111,779
Total expenses	4,182,329		3,166,795
Net investment income	6,650,818		4,944,984
Unrealized depreciation on investments	(527,912)		(595,911)
Net increase in partners’ capital resulting from operations	$	6,122,906	$	4,349,073

Equity Investment in Joint Ventures

As of March 31, 2024 and December 31, 2023, the Company beneficially owned equity interests in four 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.

The following tables present a summary of the Company’s equity investment in the joint ventures:

		March 31, 2024			December 31, 2023
Entity	Co-owner	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
LEL Arlington JV LLC	Third party/Affiliate	27.2%	$	6,817,220	27.2%	$	7,024,245
LEL NW 49th JV LLC	Third party/Affiliate	27.2%	1,572,436		27.2%	1,619,157
TCG Corinthian FL Portfolio     JV LLV	Third party/Affiliate	30.6%	5,415,771		30.6%	5,590,427
Windy Hill PV Five CM, LLC (1)	Third party	41.9%	4,209,660		42.4%	4,740,914
			$	18,015,087		$	18,974,743

_______________

(1)This investment was acquired in November 2023.

	Three Months Ended March 31,
	2024		2023
Loss from equity investment in the joint ventures	$	(1,471,726)	$	(740,460)
Distributions received from the joint ventures	$	—	$	262,770

19

Notes to Unaudited Consolidated Financial Statements

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:

	March 31, 2024		December 31, 2023
Net investments in real estate	$	219,800,521	$	223,039,486
Other assets	20,185,658		18,362,425
Total assets	239,986,179		241,401,911
Mortgage loans payable	187,687,424		187,269,209
Other liabilities	5,034,206		4,509,167
Total liabilities	192,721,630		191,778,376
Members’ capital	$	47,264,549	$	49,623,535

	Three Months Ended March 31,
	2024		2023
Revenues	$	4,462,871	$	3,924,579
Operating expenses	(2,472,969)		(2,143,267)
Depreciation and amortization expense	(1,955,076)		(1,965,037)
Interest expense	(3,362,558)		(2,559,954)
Unrealized loss	(852,253)		(826,501)
Net loss	$	(4,179,985)	$	(3,570,180)

Note 5. Real Estate Owned, Net

Real Estate Activities

2024 — In January 2024, a lease for a space in one of the industrial properties was terminated and the Company received a termination fee of $0.03 million. In connection with the lease termination, the Company wrote off the related unamortized in-place lease of $0.3 million and unamortized below-market rent of $0.1 million. Subsequent to the lease termination, the Company entered into a new lease with another tenant for the same space.

2023 — In March 2023, the Company purchased three industrial properties located in Texas for total costs of $48.8 million, including capitalized transaction costs. This acquisition was deemed to be a real estate asset acquisition, and therefore 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
Land	$	9,327,855
Buildings and improvements	39,248,352
Intangible asset and liability:
In-please lease (weighted-average expected life of 2.63 years)	4,315,333
Below-market rent (weighted-average expected life of 2.69 years)	(4,093,267)
	$	48,798,273

20

Notes to Unaudited Consolidated Financial Statements

Real Estate Owned, Net

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

	March 31, 2024						December 31, 2023
	Cost		Accumulated Depreciation/Amortization		Net		Cost		Accumulated Depreciation/Amortization		Net
Real estate:
Land	$	23,785,004	$	—	$	23,785,004	$	23,785,004	$	—	$	23,785,004
Building and building    improvements	104,924,922		(2,785,916)		102,139,006		104,915,714		(1,986,016)		102,929,698
Tenant improvements	25,032		(190)		24,842		25,032		(15,401)		9,631
Total real estate	128,734,958		(2,786,106)		125,948,852		128,725,750		(2,001,417)		126,724,333
Lease intangible assets:
In-place lease	12,060,731		(3,526,153)		8,534,578		12,719,000		(2,849,636)		9,869,364
Total intangible assets	12,060,731		(3,526,153)		8,534,578		12,719,000		(2,849,636)		9,869,364
Lease intangible liabilities:
Below-market rent	(8,649,073)		2,635,042		(6,014,031)		(8,864,138)		2,025,263		(6,838,875)
Total intangible liabilities	(8,649,073)		2,635,042		(6,014,031)		(8,864,138)		2,025,263		(6,838,875)
Total real estate	$	132,146,616	$	(3,677,217)	$	128,469,399	$	132,580,612	$	(2,825,790)	$	129,754,822

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 March 31,
	2024		2023
Real estate operating revenues:
Lease revenue	$	2,104,222	$	1,085,459
Other operating income	615,479		247,510
Total	$	2,719,701	$	1,332,969
Real estate operating expenses:
Utilities	$	11,720	$	36,414
Real estate taxes	390,810		354,680
Repairs and maintenances	26,972		207,365
Management fees	62,254		39,418
Lease expense, including amortization of above-market ground lease	—		487,163
Other operating expenses	199,250		84,872
Total	$	691,006	$	1,209,912

Net amortization of above- and below-market rent intangibles was $0.8 million and $0.03 million for the three months ended March 31, 2024 and 2023, respectively, and is recorded as an adjustment to lease revenues on the consolidated statements of operations.

Amortization of in-place lease intangibles was $1.3 million and $0.3 million for the three months ended March 31, 2024 and 2023, respectively, and is included in depreciation and amortization expense on the consolidated statements of operations.

21

Notes to Unaudited Consolidated Financial Statements

Supplemental Ground Lease Disclosures

    The Company previously owned an office building that was subject to a ground lease whereby the Company was the lessee (or a tenant) to the ground lease. On October 19, 2023, the Company conveyed its interest in the office building to a subsidiary of Centennial Bank by deed in lieu of foreclosure. Accordingly, the Company is no longer a party to the ground lease.

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

	Three Months Ended March 31, 2023
Operating lease cost	$	519,750

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

	Three Months Ended March 31, 2023
Amounts included in the measurement of lease liability:
Operating cash flows from an operating lease	$	519,750
Right-of-use asset obtained in exchange for lease obligations:
Operating lease	$	519,750

Note 6. 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, rate of prepayment, loss severities, credit risks and default rates) or other market corroborated inputs.

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

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

22

Notes to Unaudited Consolidated Financial Statements

As of March 31, 2024 and December 31, 2023, 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 8, in March 2023, the Company entered into a loan agreement with a lender to provide financing for the acquisition of real estate properties (Note 5). 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 the consolidated statements of operations.

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

	March 31, 2024
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	2,274,674	$	—	$	—	$	2,274,674
Marketable securities - debt securities	812,872		—		—		812,872
Marketable securities - equity securities	2,361,818		—		—		2,361,818
Derivative - interest rate cap (2)	—		83,928		—		83,928
Total	$	5,449,364	$	83,928	$	—	$	5,533,292

	December 31, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	2,244,992	$	—	$	—	$	2,244,992
Marketable securities - debt securities	1,148,653		—		—		1,148,653
Marketable securities - equity securities	3,813,226		—		—		3,813,226
Derivative - interest rate cap (2)	—		83,807		—		83,807
Total	$	7,206,871	$	83,807	$	—	$	7,290,678

_______________

(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.

23

Notes to Unaudited Consolidated Financial Statements

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

	Three Months Ended March 31,
	2024				2023
	Marketable Securities		Derivatives		Marketable Securities		Derivatives
Beginning balance	$	4,961,879	$	83,807	$	147,960	$	—
Purchases	—		—		—		258,500
Proceeds from sale	(1,292,897)		—		—		—
Reclassification of net realized loss on marketable securities    into earnings	(135,459)		—		—		—
Unrealized (loss) gain on marketable securities and derivatives	(358,833)		121		6,584		—
Ending balance	$	3,174,690	$	83,928	$	154,544	$	258,500

Financial Instruments Not Carried at Fair Value

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:

		March 31, 2024						December 31, 2023
	Level	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Loans:
Loans held for investment	3	$	431,208,623	$	435,225,834	$	378,955,975	$	471,016,469	$	474,663,271	$	418,458,916
Loans held for investment    acquired through    participation	3	38,444,357		38,777,224		38,799,424		38,444,357		38,785,012		38,881,033
Allowance for loan losses		—		(58,743,795)		—		—		(56,976,025)		—
Total loans		$	469,652,980	$	415,259,263	$	417,755,399	$	509,460,826	$	456,472,258	$	457,339,949
Liabilities:
Unsecured notes payable	1	$	123,500,000	$	118,872,834	$	81,293,650	$	123,500,000	$	118,380,897	$	98,020,050
Secured financing agreements	3	261,652,639		258,749,238		260,794,611		293,413,757		290,525,313		293,413,757
Obligations under participation    agreements	3	15,000,000		15,137,755		15,196,628		—		—		—
Total liabilities		$	400,152,639	$	392,759,827	$	357,284,889	$	416,913,757	$	408,906,210	$	391,433,807

    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 March 31, 2024 and December 31, 2023 due to their short-term nature.

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 ability of our borrowers and investees to make payments and their 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.

24

Notes to Unaudited Consolidated Financial Statements

The Manager designates a valuation committee to oversee the entire valuation process of the Company’s Level 3 investments. The valuation committee is comprised of members of the Manager’s senior management, deal and portfolio management teams, who meet on a quarterly basis, or more frequently as needed, to review 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 March 31, 2024 and December 31, 2023. 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 March 31, 2024		Primary Valuation Technique	Unobservable Inputs	March 31, 2024
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net (1)	$	378,955,975	Discounted cash flow	Discount rate	10.46	%	16.38	%	12.13	%
Loans held for investment acquired through    participation, net	38,799,424		Discounted cash flow	Discount rate	15.55	%	18.33	%	17.79	%
Total Level 3 Assets	$	417,755,399
Liabilities:
Secured financing agreements	$	260,794,611	Discounted cash flow	Discount rate	6.25	%	11.30	%	8.97	%
Obligation under participation agreement	15,196,628		Discounted cash flow	Discount rate	16.38	%	16.38	%	16.38	%
Total Level 3 Liabilities	$	275,991,239

	Fair Value at December 31, 2023		Primary Valuation Technique	Unobservable Inputs	December 31, 2023
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net (1)	$	418,458,916	Discounted cash flow	Discount rate	9.58	%	16.95	%	7.02	%
Loans held for investment acquired through    participation, net	38,881,033		Discounted cash flow	Discount rate	15.30	%	18.35	%	17.76	%
Total Level 3 Assets	$	457,339,949
Liabilities:
Secured financing agreements	$	293,413,757	Discounted cash flow	Discount rate	6.25	%	12.72	%	8.91	%
Total Level 3 Liabilities	$	293,413,757

_______________

(1)Amount includes $207.8 million and $154.6 million of non-performing loans (Note 3) as of March 31, 2024 and December 31, 2023, respectively. The fair market value estimates were determined primarily using discounted cash flow models and Level 3 inputs, which include estimates of property-specific cash flows over a specific holding period, a discount rate range of 6.75% to 7.00% and a terminal capitalization rate range of 5.75% to 6.00% as of both March 31, 2024 and December 31, 2023. These inputs are based on the location, type and nature of the property, current sales and lease comparables, anticipated real estate and capital market conditions, and management’s knowledge, experience and judgment. Additionally, the Company may use sales comparables, purchase price and appraisals to corroborate the estimated value of a loan’s collateral or may use sponsor’s guarantee to estimate the value of a non-performing loan.

Note 7. 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 following table presents a summary of fees paid and costs reimbursed to the Manager in connection with

25

Notes to Unaudited Consolidated Financial Statements

providing services to the Company that are included on the consolidated statements of operations:

	Three Months Ended March 31,
	2024		2023
Origination and extension fee expense (1)	$	262,772	$	951,448
Asset management fee	1,715,042		1,997,427
Asset servicing fee	406,525		470,525
Operating expenses reimbursed to Manager	2,178,164		2,177,004
Disposition fee (2)	340,000		290,813
Total	$	4,902,503	$	5,887,217

_______________

(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)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 March 31, 2024 and December 31, 2023, 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

26

Notes to Unaudited Consolidated Financial Statements

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.

Management Agreement Amendment

On March 11, 2024, the Company and the Manager entered into an amendment to the Management Agreement, effective as of January 1, 2024 (the “Amendment”), in order to extend the term of the Management Agreement and modify the terms upon which the Management Agreement may be terminated. Except as discussed below, the terms of the Management Agreement remain unchanged by the Amendment. Except where the context requires otherwise, all references herein to the “Management Agreement” are to the Management Agreement as modified by the Amendment.

The term of the Management Agreement will expire on December 31, 2027 (the “Initial Term”) and will automatically renew for an unlimited number of additional one-year terms upon each anniversary date of the last day of the Initial Term (each, a “Renewal Term”), unless terminated by the Company or the Manager during the Initial Term or a Renewal Term in accordance with the terms of the Management Agreement (as described below).

The Management Agreement may be terminated by the Company during the Initial Term or any Renewal Term upon a finding by either (i) at least two-thirds of the independent directors on the Board or (ii) the holders of a majority of the outstanding shares of the Company’s common stock (other than those shares held by members of the Company’s senior management team or affiliates of the Manager) that either (a) there has been unsatisfactory performance by the Manager that is materially detrimental to the Company, or (b) the compensation payable to the Manager pursuant to the Management Agreement is unfair; provided, however, that the Company will not have the right to terminate the Management Agreement on the basis of unfair compensation to the Manager if the Manager agrees to continue to provide its services under the Management Agreement in exchange for reduced fees that at least two-thirds of the independent directors on the Board determine to be fair pursuant to the procedures set forth in the Management Agreement. The Company must deliver prior written notice of any such termination to the Manager at least 180 days prior to the last calendar day of the Initial Term or the then-current Renewal Term, as applicable, and the Management Agreement will terminate effective as of the last calendar day of the Initial Term or the then-current Renewal Term, as applicable.

Upon any termination of the Management Agreement by the Company as discussed above, the Company will pay the Manager, on the date on which such termination is effective, a termination fee in an amount equal to three times the average annual fees of all types and expense reimbursements received by or owed to the Manager pursuant to the Management Agreement during the 24-month period immediately preceding such termination (the “Termination Fee”), calculated as of the end of the most recently completed monthly prior to the date of such termination.

The Company may also terminate the Management Agreement, effective upon 30 calendar days’ prior written notice from the Board to the Manager, without payment of any Termination Fees or other penalties, upon (i) the material breach of the Management Agreement by the Manager or its affiliates that continues for 30 days after written notice thereof to the Manager (or 45 days after delivery of written notice thereof if the Manager takes diligent steps to cure such breach within 30 days of delivery of the written notice), (ii) any fraud or other criminal conduct, gross negligence or breach of fiduciary duty by the Manager or its affiliates in connection with the Management Agreement, as determined by a final, non-appealable judgment of a court of competent jurisdiction, (iii) the Manager’s bankruptcy, insolvency or dissolution, or (iv) an Internalization Event (as defined in the Management Agreement). No Termination Fee or other penalty is payable upon such a termination by the Company.

The Manager may terminate the Management Agreement, effective upon 60 days’ prior written from the Manager to the Company, if the Company breaches the Management Agreement and such breach continues for 30 days after written notice thereof. The Company will pay the Manager the Termination Fee upon such termination by the Manager.

Due From Affiliate

On December 1, 2022, the Company entered into a revolving promissory note receivable with Mavik Special Opps Co-Investments, LP, an affiliate of the Company. The promissory note receivable bears interest at the Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days. In January 2024, the promissory note was amended to (i) extend the maturity date from June 30, 2024 to April 30, 2025 and to (ii) modify the interest rate from Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days, to 15.0%. During the three months ended March 31, 2024 and 2023, the Company provided funding under the promissory note receivable of $1.2 million and none, respectively. As of

27

Notes to Unaudited Consolidated Financial Statements

March 31, 2024 and December 31, 2023, amount outstanding under the promissory note receivable was $5.1 million and $3.8 million, respectively, which is included in Other assets on the consolidated balance sheets.

Due from Related Parties

As of March 31, 2024 and December 31, 2023, amount due from related parties was $1.1 million and $0.7 million, primarily related to operational cash requirements the Company paid on behalf of its affiliates.

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 March 31, 2024 and 2023, the Company made distributions to investors totaling $4.7 million and $4.7 million, respectively, of which $4.7 million and $4.2 million were returns of capital, respectively (Note 10).

Due to Manager

    As of March 31, 2024 and December 31, 2023, approximately $2.4 million and $4.2 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 4.

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” in Note 8).

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.

28

Notes to Unaudited Consolidated Financial Statements

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

	March 31, 2024
	Participating Interests	Principal Balance		Carrying Value
Mesa AZ Industrial Owner, LLC (1)	38.27%	$	31,000,000	$	31,287,431
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,489,793
Allowance for credit losses		—		(687,939)
		$	38,444,357	$	38,089,285

	December 31, 2023
	Participating Interests	Principal Balance		Carrying Value
Mesa AZ Industrial Owner, LLC (1)	38.27%	$	31,000,000	$	31,296,235
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,488,777
Allowance for credit losses		—		(226,527)
		$	38,444,357	$	38,558,485

________________

(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.

Transfers of Participation Interests by the Company

The following table summarizes the investment that was subject to a PA with an investment partnership affiliated with the Manager as of March 31, 2024. There was no such investment as of December 31, 2023.

					March 31, 2024
					Transfers treated as obligations under participation agreements
	Principal		Carrying Value		% Transferred		Principal		Carrying Value
Asano Bankers Hill, LLC (1)	$	18,567,296	$	18,831,851	80.8	%	$	15,000,000	$	15,137,755

________________

(1)Participant is a certain separately managed account, an investment partnership managed by the Manager.

This investment is held in the name of the Company, but 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 its pro rata participation interest in such participated investment, as specified in the participation agreement. The Participant’s share of the investment is repayable only from the proceeds received from the related borrower/issuer of the investment and, therefore, the Participant also is subject to credit risk (i.e., risk of default by the underlying borrower/issuer). Pursuant to the participation agreement with this entity, the Company receives and allocates the interest income and other related investment income to the Participant based on its pro rata participation interest. The Participant pays any expenses, including any fees to the Manager, only on its pro rata participation interest, subject to the terms of the governing fee arrangements.

29

Notes to Unaudited Consolidated Financial Statements

Note 8. Debt

Unsecured Notes Payable

The following table presents a summary of the Company’s unsecured notes payable outstanding as of:

	Coupon Rate		Effective Rate (1)		Maturity Date	March 31, 2024		December 31, 2023
6.00% Senior Notes Due 2026	6.00	%	6.84	%	6/30/2026	$	85,125,000	$	85,125,000
7.00% Senior Notes Due 2026 (2)	7.00	%	10.27	%	3/31/2026	38,375,000		38,375,000
Total principal amount						123,500,000		123,500,000
Unamortized issue discount						(1,313,154)		(1,444,813)
Unamortized purchase discount (2)						(2,847,913)		(3,161,457)
Unamortized deferred financing costs						(466,099)		(512,833)
Unsecured notes payable, net						$	118,872,834	$	118,380,897

_______________

(1)Includes issue discount, purchase discount and deferred financing costs that are amortized to interest expense over the life of the notes.

(2)In connection with the BDC Merger, Terra LLC assumed all the obligations under the 7.00% Senior Notes and recorded a purchase discount of $4.6 million, representing the difference between the carrying value and the fair value of the notes on the date of the merger.

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, and on June 25, 2021, the underwriters partially exercised their option to purchase an additional $6.6 million of the notes (collectively the “6.00% Senior Notes Due 2026”). The 6.00% Senior Notes Due 2026 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, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest.

The 7.00% Senior Notes Due 2026

On February 10, 2021, Terra BDC issued $34.8 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, and on February 26, 2021, the underwriters exercised the option to purchase an additional $3.6 million of the notes (collectively the “7.00% Senior Notes Due 2026”). The 7.00% Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at Terra BDC’s option on or after February 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest. In connection with the BDC Merger, Terra LLC agreed to take all necessary action to assume the payment of the principal of and interest on all of the outstanding 7.00% Senior Notes Due 2026.

Covenant Compliance

The Company’s unsecured notes payable contain certain financial covenants. As of March 31, 2024, the Company was in compliance with such covenants.

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Notes to Unaudited Consolidated Financial Statements

Secured Financing Arrangements

The following table is a summary of the Company’s secured financing agreements in place as of:

	March 31, 2024										December 31, 2023
	Current Maturity	Extended Maturity	Weighted Average Interest Rate (1)		Pledged Asset Carrying Value		Maximum Facility Size		Principal Amount		Principal  Amount
Repurchase Agreements:
Goldman Sachs Bank facility (2)(3)	February 2025	February 2025	8.59	%	$	138,036,063	$	200,000,000	$	73,855,624	$	75,455,624
UBS AG facility (2)(4)	November 2024	(5)	8.70	%	—		—		—		18,480,000
Total					138,036,063		200,000,000		73,855,624		93,935,624
Non-Recourse Financing:
Promissory notes payable (2)(6)	March 2025 - March 2026	March 2026 - March 2027	10.91	%	130,634,208		N/A		78,997,103		63,509,518
Property mortgages - fixed rate	June 2028	June 2028	6.25	%	80,692,752		N/A		40,250,000		40,250,000
Property mortgages - variable rate (7)	April 2027	April 2028	8.83	%	47,776,647		N/A		33,788,801		33,256,885
Total					259,103,607				153,035,904		137,016,403
Other Secured Financing:
Revolving line of credit (2)(8)	September 2024	September 2025	8.68	%	59,082,967		75,000,000		34,761,111		47,461,730
Term loan (9)					—		—		—		15,000,000
Total					59,082,967		75,000,000		34,761,111		62,461,730
					$	456,222,637	$	275,000,000	261,652,639		293,413,757
Unamortized deferred financing costs and other									(2,903,401)		(2,888,444)
Secured financing agreements, net									$	258,749,238	$	290,525,313

_______________

(1)Amount is calculated using the applicable index rate as of March 31, 2024.

(2)These facilities were used to finance the Company’s senior loan investments.

(3)Interest rate is based on Term SOFR (subject to underlying loan floors on a case-by-case basis) plus a spread ranging from 2.0% to 5.00%. In March 2024, the Company amended the Goldman Sachs Bank facility agreement to extend the maturity date to February 18, 2025 and to reduce the minimum interest coverage ratio covenant.

(4)Interest rate is based on Term SOFR plus a spread of 1.965%. In February 2024, the outstanding balance was repaid. In March 2024, the Company amended the side letter to the UBS AG facility agreement to reduce the maximum amount available under this facility to zero. In connection with this amendment, UBS AG waived the payment of any fees and the meeting of any representations, warranties or covenants for the period commencing on December 31, 2023 until such time as there are amounts outstanding under the UBS AG facility agreement.

(5)The maturity of this facility can be extended annually on mutually agreeable terms.

(6)Interest rate is based on Term SOFR plus a spread ranging from 4.75% to 5.98% with a combined floor rate ranging from 9.0% to 11.28%.

(7)Interest rate is based on Term SOFR plus a spread of 3.5% with a Term SOFR floor of 3.75%.

(8)In March 2024, the Company amended the facility agreement to extend the maturity date to September 12, 2024 with an option to extend the facility term for an additional 12-month period, reduce the credit limit to $75.0 million, increase the coupon rate and revise the minimum profitability and net worth covenants. As of March 31, 2024, interest rate is based on Term SOFR + 3.5% with a combined floor of 7.0%. The lender agreed to waive the minimum profitability covenant for the three months ended March 31, 2024 and the Company agreed to provide the lender with a plan to reduce the balance under the line by June 30, 2024.

(9)In March 2024, the term loan was repaid in full.

In the normal course of business, the Company is in discussions with its lenders to extend, amend, or replace any financing facilities which contain near term expirations.

For the three months ended March 31, 2024 and 2023, approximately $0.9 million and $0.5 million, respectively, of amortization of deferred financing costs and other from secured financing agreements was included in interest expense on the consolidated statements of operations. Additionally, for the three months ended March 31, 2024 and 2023, the Company

31

Notes to Unaudited Consolidated Financial Statements

received proceeds from secured financing of $53.0 million and $68.3 million, respectively, and made repayments on secured financing of $84.8 million and $19.2 million, respectively.

Repurchase Agreements

The Company seeks to mitigate risks associated with its repurchase agreements by managing risk related to the credit quality of its assets, interest rates, liquidity, the rate of prepayment and market value. The margin call provisions under the repurchase facilities provide the lender with certain rights in the event of a decline in the credit of the underlying assets purchased. To monitor credit risk associated with the performance and value of its loans and investments, the Company’s asset management team regularly reviews its investment portfolios and is in regular contact with its borrowers, monitoring performance of the collateral and enforcing its rights as necessary. The Company further seeks to manage risks associated with the repurchase agreements by matching the maturities and interest rate characteristics of its loans with the related repurchase agreement.

Covenant Compliance

The Company’s secured financing agreements contain certain financial tests and covenants. In the event of a default or any breach of covenant of a related agreement, the lender has the right to accelerate all amounts due, charge interest at a default rate, retain all cash flow from the loans originated and/or sell such loans in a private sale on terms possibly unfavorable to the Company. As of March 31, 2024, the Company was in compliance with all such covenants, as amended or waived.

Scheduled Debt Principal Payments

    Scheduled debt principal payments for each of the five calendar years following March 31, 2024 are as follows:

Years Ending December 31,	Total
2024 (April 1 through December 31)	$	34,761,111
2025	142,355,624
2026	133,997,103
2027	33,788,801
2028	40,250,000
Thereafter	—
	385,152,639
Unamortized deferred financing costs and other	(7,530,567)
Total	$	377,622,072

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 March 31, 2024, obligations under participation agreements were $15.1 million (see “Participation Agreements” in Note 7). The interest rate on the obligations under participation agreements was 20.32%. There were no such obligations under participation agreements as of December 31, 2023.

Note 9. 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 $30.7 million and $35.7 million as of March 31, 2024 and December 31, 2023, 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.

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Notes to Unaudited Consolidated Financial Statements

Unfunded Investment Commitment

As discussed in Note 4, 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 March 31, 2024 and December 31, 2023, the unfunded investment commitment was $31.5 million and $37.4 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.

Additionally, from time to time, we and individuals employed by us and our Manager 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 borrowers and investees. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that such proceedings will have a material effect upon our financial condition or results of operations.

See Note 7 for a discussion of the Company’s commitments to the Manager.

Note 10. Equity

Earnings Per Share

The following table presents earnings per share:

	Three Months Ended March 31,
	2024		2023
Net (loss) income	$	(6,183,974)	$	547,479
Series A preferred stock dividend declared	—		(3,907)
Net (loss) income allocable to common stock	$	(6,183,974)	$	543,572
Weighted-average shares outstanding - basic and diluted	24,336,157		24,335,373
(Loss) income per share - basic and diluted	$	(0.25)	$	0.02

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 March 31, 2024, there were no shares of Preferred Stock issued or outstanding. As of December 31, 2023 there were no 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. 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 March 31, 2024, Terra Fund 7

33

Notes to Unaudited Consolidated Financial Statements

and Terra Offshore REIT held 8.7% and 10.1%, respectively, of the issued and outstanding shares of the Company’s common stock.

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.

In connection with the potential liquidity transactions discussed in Note 1, on December 1, 2023, the Company amended its articles of amendment and restatement (the “A&R Articles”) to provide the Board with greater flexibility to pursue a direct listing. In connection with a listing of shares of Class A Common Stock on a national securities exchange, the outstanding shares of Class B Common Stock will be convertible on a one-for-one basis into listed shares of Class A Common Stock, subject to certain conversion terms and holding periods. Currently, there are no outstanding shares of Class A Common Stock.

The A&R Articles also incorporate the provisions generally required by state regulators in order to become a non-traded REIT and publicly sell shares of the Company’s stock not listed on an exchange. These non-traded REIT provisions will spring into effect and become operative if the Company ultimately decides to register and sell shares in a non-traded REIT format.

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 March 31, 2024 and 2023, the Company made distributions to investors totaling $4.7 million and $4.7 million, respectively, of which $4.7 million and $4.2 million were returns of capital, respectively. Additionally, for the three months ended March 31, 2023, the Company made distributions to preferred stockholders of $3,907. There were no such distributions for the three months ended March 31, 2024.

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 three months ended March 31, 2024 and 2023, the Company issued 391 and 34 shares of Class B Common Stock for a total of $4,474 and $478 pursuant to the Plan, respectively.

Note 11. 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 that would require adjustment to, or disclosure in, the Company’s consolidated financial statements.

34

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 (our “Manager”); Terra Capital Partners, LLC (“Terra Capital Partners”), our sponsor; 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, an amendment of our charter to incorporate certain provisions generally required by state securities regulators to allow us to publicly sell unlisted shares (provided that such provisions would only take effect when a registration statement related to the publicly offered unlisted shares is declared effective), an adoption of a share repurchase plan or a strategic business

35

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, 2023. 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 investment trust that originates, invests in and manages a diverse portfolio of real estate and real estate-related assets. We focus primarily on commercial real estate credit investments, including first mortgage loans, subordinated loans (including B-notes, mezzanine and preferred equity) and credit facilities throughout the United States, which we collectively refer to as our targeted assets. Our loans finance the acquisition, development or recapitalization of high-quality commercial real estate in the United States. We focus on middle market loans in the approximately $10 million to $50 million range, which we believe 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 by earning high current income that allows for regular distributions, and, in certain instances, benefiting from potential capital appreciation. There can be no assurances that we will be successful in meeting our investment objective. We may also make strategic real estate equity and non-real estate-related investments that align with our investment objectives and criteria.

    As of March 31, 2024, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of 19 loans in nine states with an aggregate net principal balance of $454.7 million, a weighted average coupon rate of 12.8% 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 March 31, 2024, our portfolio included underlying properties located in 19 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 (the “REIT Formation Transaction”). Following the REIT Formation Transaction, Terra Secured Income Fund 5, LLC (“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.

On October 1, 2022, 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 Income Fund 6, LLC (“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. Pursuant to the terms of the transactions described in the Merger Agreement, approximately 4,847,910 shares of our Class B Common Stock, $0.01 par value per share ("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 October 1, 2022.

As of March 31, 2024, Terra Fund 7 and Terra Offshore REIT held approximately 8.7% and 10.1%, respectively, of our issued and outstanding Class B Common Stock.

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

One of the potential future liquidity transactions that we continue to evaluate is a “direct listing” of its Class A Common Stock, $0.01 par value per share (“Class A Common Stock”), on a national securities exchange (i.e., a listing not involving a concurrent public offering of newly issued shares). If market conditions are not supportive of a direct listing that would in our view lead to a constructive trading environment for the Class A Common Stock, we will explore alternative paths to pursue our investment strategy and provide liquidity to our investors, including converting our company into a traditional “non-traded REIT.” As part of a potential conversion to a non-traded REIT, we would adopt a customary share repurchase plan pursuant to which our investors could request to have their shares of its common stock redeemed for cash.

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    

Securities Purchase Program

As previously disclosed, we may repurchase certain of our 6.00% senior notes due 2026 listed on the New York Stock Exchange (“NYSE”) under the trading symbol “TPTA” and Terra LLC’s 7.00% senior notes due 2026 listed on the NYSE under the trading symbol “TFSA”. The repurchases may be made directly by us or made indirectly through an affiliated purchaser entity managed by our Manager and co-owned by us and other vehicles managed by our Manager or its affiliates. Such affiliate purchaser entity may also purchase third-party marketable securities. The timing and amount of any transactions will be determined by our Manager based on its evaluation of market conditions, prices, legal requirements and other factors, and may be made from time to time on the open market, in privately negotiated transactions or otherwise, in each case subject to compliance with all SEC rules and other legal requirements.

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Portfolio Summary

Net Loan Portfolio

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

	March 31, 2024
	Fixed Rate			Floating Rate (1)(2)(3)			Total Gross Loans			Obligations under Participation Agreements			Total Net Loans
Number of loans	4			15			19			1			19
Principal balance	$	33,212,781		$	436,440,199		$	469,652,980		$	15,000,000		$	454,652,980
Carrying value	32,961,215			382,298,048			415,259,263			15,137,755			400,121,508
Fair value	32,773,591			384,981,808			417,755,399			15,196,628			402,558,771
Weighted average coupon rate	12.29		%	13.10		%	13.04		%	20.32		%	12.80		%
Weighted-average remaining term (years)	1.10			0.70			0.75			0.85			0.75

	December 31, 2023
	Fixed Rate			Floating Rate (1)(2)(3)			Total Gross Loans			Obligations under Participation Agreements			Total Net Loans
Number of loans	5			16			21			—			21
Principal balance	$	53,998,648		$	455,462,178		$	509,460,826		$	—		$	509,460,826
Carrying value	54,095,173			402,377,085			456,472,258			—			456,472,258
Fair value	53,435,742			403,904,207			457,339,949			—			457,339,949
Weighted average coupon rate	12.95		%	12.92		%	12.93		%	—		%	12.93		%
Weighted-average remaining term (years)	1.18			0.70			0.77			—			0.77

_______________

(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 5.44%, average SOFR of 5.32% and Term SOFR of 5.33% as of March 31, 2024, and LIBOR of 5.47%, average SOFR of 5.34% and Term SOFR of 5.35% as of December 31, 2023.

(2)As of March 31, 2024 and December 31, 2023, amount included $323.9 million and $342.9 million of senior mortgages used as collateral for $187.6 million and $204.9 million of borrowings under credit facilities, respectively.

(3)As of March 31, 2024 and December 31, 2023, 13 and 14 loans, respectively, are subject to a SOFR, or Term SOFR floor, as applicable.

Real Estate Ownership

In addition to our net loan portfolio, we own eight industrial buildings. As of March 31, 2024 and December 31, 2023, the real estate and related lease intangible assets and liabilities had a net carrying value of $128.5 million and $129.8 million, respectively, and the mortgage loans payable encumbering the real estate properties had an outstanding principal amount of $74.0 million and $73.5 million, respectively.

Equity Investments

Additionally, as of March 31, 2024 and December 31, 2023, we owned 14.9% and 14.9%, 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 four joint ventures that invest in real estate properties. As of March 31, 2024 and December 31, 2023, these equity investments had total carrying value of $42.5 million and $37.2 million, respectively.

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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 March 31, 2024 and December 31, 2023 was $9.47 and $9.93, respectively.

Portfolio Investment Activity

Net Loan Portfolio

For the three months ended March 31, 2024 and 2023, we invested $11.4 million and $25.7 million in new and add-on investments and had $27.5 million and $39.9 million of repayments, resulting in net repayments of $16.1 million and $14.2 million, respectively. Amounts are net of obligations under participation agreements and secured financing agreements.

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:

	March 31, 2024						December 31, 2023
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
First mortgages	$	325,243,521	$	329,118,182	82.2	%	$	365,465,500	$	368,918,890	80.9	%
Preferred equity investments	111,965,102		112,317,290		28.1	%	126,550,969		127,105,312		27.8	%
Mezzanine loans	17,444,357		17,429,831		4.4	%	17,444,357		17,424,081		3.8	%
Allowance for credit losses	—		(58,743,795)		(14.7)	%	—		(56,976,025)		(12.5)	%
Total	$	454,652,980	$	400,121,508	100.0	%	$	509,460,826	$	456,472,258	100.0	%

	March 31, 2024						December 31, 2023
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Office	$	142,231,299	$	142,268,711	35.5	%	$	144,812,619	$	144,853,769	31.7	%
Multifamily	67,379,930		67,867,269		16.9	%	85,660,082		86,210,868		18.9	%
Industrial	68,965,222		69,507,417		17.4	%	67,579,869		67,612,621		14.8	%
Mixed-use	48,046,365		48,319,505		12.1	%	63,096,365		63,531,806		13.9	%
Infill land	53,807,782		55,235,602		13.8	%	52,839,509		54,172,663		11.9	%
Hotel - full/select service	43,222,382		43,816,761		11.0	%	43,222,382		43,801,303		9.6	%
Student housing	31,000,000		31,850,038		8.0	%	31,000,000		31,821,832		7.0	%
Infrastructure	—		—		—	%	21,250,000		21,443,421		4.7	%
Allowance for credit losses	—		(58,743,795)		(14.7)	%	—		(56,976,025)		(12.5)	%
Total	$	454,652,980	$	400,121,508	100.0	%	$	509,460,826	$	456,472,258	100.0	%

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	March 31, 2024						December 31, 2023
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	102,093,246	$	103,138,580	25.9	%	$	119,093,246	$	120,296,944	26.4	%
New York	90,486,288		90,486,288		22.6	%	90,483,672		90,483,672		19.8	%
New Jersey	84,773,004		86,455,588		21.6	%	82,419,378		83,489,049		18.3	%
Georgia	74,166,025		74,391,413		18.6	%	74,335,828		74,602,328		16.3	%
Utah	28,000,000		28,910,000		7.2	%	49,250,000		50,329,949		11.0	%
Washington	15,307,938		15,268,620		3.8	%	34,052,223		34,020,449		7.5	%
Arizona	31,000,000		31,287,431		7.8	%	31,000,000		31,296,235		6.9	%
North Carolina	21,826,479		21,927,383		5.5	%	21,826,479		21,929,657		4.8	%
Massachusetts	7,000,000		7,000,000		1.7	%	7,000,000		7,000,000		1.5	%
Texas	—		—		—	%	—		—		—	%
Allowance for credit losses	—		(58,743,795)		(14.7)	%	—		(56,976,025)		(12.5)	%
Total	$	454,652,980	$	400,121,508	100.0	%	$	509,460,826	$	456,472,258	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

Our loans and investments are subject to credit risk. The performance and value of our loans and investments depend upon the owners’ ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our asset management team reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

    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.

Concentration Risk

    We hold real estate and real estate-related loans. Thus, our investment 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 investments 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 and 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;

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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 and 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.

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Results of Operations

    The following table presents the comparative results of our operations:

	Three Months Ended March 31,
	2024		2023		Change
Revenues
Interest income	$	12,148,735	$	15,615,807	$	(3,467,072)
Real estate operating revenue	2,719,701		1,332,969		1,386,732
Other operating income	140,909		53,395		87,514
	15,009,345		17,002,171		(1,992,826)
Operating expenses
Operating expenses reimbursed to Manager	2,178,164		2,177,004		1,160
Asset management fee	1,715,042		1,997,427		(282,385)
Asset servicing fee	406,525		470,525		(64,000)
Provision for (reversal of provision for) credit losses	1,873,111		(850,051)		2,723,162
Real estate operating expenses	691,006		1,209,912		(518,906)
Depreciation and amortization	2,116,682		681,813		1,434,869
Professional fees	885,569		979,895		(94,326)
Directors’ fees	83,750		96,464		(12,714)
Other	262,911		215,244		47,667
	10,212,760		6,978,233		3,234,527
Operating income	4,796,585		10,023,938		(5,227,353)
Other income and expenses
Interest expense on secured financing	(7,289,912)		(6,119,731)		(1,170,181)
Interest expense on unsecured notes payable	(2,440,375)		(2,394,306)		(46,069)
Interest expense on obligations under participation agreements	(618,495)		(532,146)		(86,349)
Unrealized (loss) gain on investments, net	(22,931)		6,584		(29,515)
Loss from equity investment in unconsolidated investments	(473,387)		(436,860)		(36,527)
Realized loss on investments, net	(135,459)		—		(135,459)
	(10,980,559)		(9,476,459)		(1,504,100)
Net (loss) income	$	(6,183,974)	$	547,479	$	(6,731,453)

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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, promissory notes payable, revolving credit facility and repurchase agreements payable.

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

	Three Months Ended March 31, 2024				Three Months Ended March 31, 2023
	Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)		Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)
Total portfolio
Gross loans	$	486,104,899	13.1	%	$	634,362,529	11.9	%
Obligations under participation agreements	(12,032,967)		20.3	%	(12,900,803)		16.8	%
Promissory notes payable	(65,985,924)		10.9	%	—		—	%
Repurchase agreements payable	(80,820,899)		8.6	%	(166,262,832)		6.7	%
Revolving line of credit payable	(46,881,127)		8.7	%	(97,062,727)		8.1	%
Net loans (3)	$	280,383,982	15.3	%	$	358,136,167	15.2	%
Senior loans
Gross loans	$	378,176,428	12.8	%	$	498,798,978	11.3	%
Promissory notes payable	(65,985,924)		10.9	%	—		—	%
Repurchase agreements payable	(80,820,899)		8.6	%	(166,262,832)		6.7	%
Revolving line of credit payable	(46,881,127)		8.7	%	(97,062,727)		8.1	%
Net loans (3)	$	184,488,478	16.4	%	$	235,473,419	15.9	%
Subordinated loans (4)
Gross loans	$	107,928,471	14.0	%	$	135,563,551	14.0	%
Obligations under participation agreements	(12,032,967)		20.3	%	(12,900,803)		16.8	%
Net loans (3)	$	95,895,504	13.2	%	$	122,662,748	13.7	%

_______________

(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 months ended March 31, 2024 as compared to the three months ended March 31, 2023, interest income decreased by $3.5 million, primarily due to a decrease in contractual interest income as a result of a decrease in the weighted average principal balance of gross loans, partially offset by an increase in the weighted average coupon rate due to increases in the underlying index rates.

Real Estate Operating Revenue

For the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, real estate operating revenue increased by $1.4 million, primarily due to an increase in lease revenue contributed by the eight industrial buildings acquired in 2023, partially offset by a reduction in lease revenue resulting from the disposal of the office building in October 2023.

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Other Operating Income

For the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, other operating income increased by $0.1 million, primarily due to an increase in dividend income recognized on marketable securities, partially offset by a decrease in application fees income on deals under application.

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 months ended March 31, 2024 as compared to the three months ended March 31, 2023, asset management fees decreased by $0.3 million, primarily due to a decrease in total assets under management primarily resulting from repayment of loans.

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 months ended March 31, 2024 as compared to the three months ended March 31, 2023, asset servicing fees decreased by $0.1 million, primarily due to a decrease in total assets under management resulting from the repayment of loans.

Provision for Credit Losses

    On January 1, 2023, we adopted the provisions of 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.

    For the three months ended March 31, 2024, provision for credit losses was $1.9 million, primarily related to the decline in fair value of collateral underlying one loan in the investment portfolio as well as a decline in modeled macroeconomic forecasts for commercial real estate. For the three months ended March 31, 2023, we reversed provision for credit losses of $0.9 million due to an improvement in macroeconomic forecasts during the period, partially offset by incremental credit losses incurred on newly originated loans.

Real Estate Operating Expenses

For the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, real estate operating expenses decreased by $0.5 million, primarily due to a reduction in ground lease rent on the office building disposed of in October 2023, partially offset by an increase in real estate operating expenses related to the industrial buildings that we acquired in 2023.

Depreciation and Amortization

For the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, depreciation and amortization increased by $1.4 million, primarily due to the industrial buildings that we acquired in 2023, partially offset by a reduction in depreciation and amortization related to the disposal of the office building in October 2023.

Interest Expense on Secured Financing

Our secured financing consists of repurchase agreements, revolving line of credit, term loan, promissory notes and property mortgages.

For the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, interest expense on secured financing increased by $1.2 million as a result of an increase in the weighted average principal amount outstanding as well as an increase in the index rate on secured financing agreements.

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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.

For the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, interest expense on unsecured notes payable remained substantially the same.

Interest from Obligations under Participation Agreements

    For the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, interest expense from obligations under participation agreements increased by $0.1 million, primarily as a result of an increase in the weighted average interest rate on the outstanding obligations under participation agreements, partially offset by a slight decrease in the weighted average principal amount outstanding.

Loss from Equity Investment in Unconsolidated Investments

As of both March 31, 2024 and December 31, 2023, we owned a 14.9% equity interest in RESOF, 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 four joint ventures that invest in real estate properties.

For the three months ended March 31, 2024, we recognized loss from equity investment in unconsolidated investments of $0.5 million, which consisted of net equity loss from the joint ventures of $1.5 million, partially offset by equity income from RESOF of $1.0 million. For the three months ended March 31, 2023, we recognized a loss from equity investment in unconsolidated investments of $0.4 million, which primarily consisted of net equity loss from the joint ventures and the mezzanine loan of $0.7 million, partially offset by equity income from RESOF of $0.3 million. The equity loss from the joint ventures was the result of depreciation and amortization and interest expense recognized by the joint ventures.

Realized Loss On Investments, Net

For the three months ended March 31, 2024, we sold a portion of our investments in common stock and recognized a net loss on sale of $0.1 million. There were no such realized loss for three months ended March 31, 2023.

Net (Loss) Income

    For the three months ended March 31, 2024, the resulting net loss was $6.2 million, compared to a net income of $0.5 million for the three months ended March 31, 2023.

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 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

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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 $21.8 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. Obligation under participation agreement of $15.0 million will mature in the next twelve months. We use the proceeds from the repayment of the corresponding investment to repay the participation obligation. Our revolving line of credit with outstanding principal balance of $34.8 million is to come due on September 12, 2024 and our Goldman Sachs Bank repurchase agreement with outstanding principal balance of $73.9 million is to come due on February 18, 2025. The lender agreed to waive our minimum profitability covenant for the three months ended March 31, 2024 in our revolving line of credit and we agreed to provide the lender with a plan to reduce the balance under the line by June 30, 2024. We expect to either extend the facility term of the facilities or convert the facilities to a term loan with maturity co-terminus with the underlying loans and use the proceeds from the repayment of the underlying loans to repay the term loans, or refinance with another lender. Additionally, a promissory note payable with an outstanding principal balance of $49.5 million that is collateralized by two senior loans with aggregate principal balance of $84.8 million will mature on March 22, 2025. We expect to use proceeds from the repayment of the underlying loans to repay the promissory note payable.

Summary of Financing

The table below summarizes our debt financing as of March 31, 2024:

Type of Financing	Maximum Amount Available		Outstanding Balance		Amount Remaining Available		Interest Rate	Maturity Date
Fixed Rate:
Unsecured notes payable	N/A		$	85,125,000	N/A		6.00%	June 2026
Unsecured notes payable	N/A		38,375,000		N/A		7.00%	March 2026
Property mortgages	N/A		40,250,000		N/A		6.25%	June 2028
			$	163,750,000
Variable Rate:
Property mortgages	N/A		$	33,788,801	N/A		Term SOFR +3.5% (Term SOFR Floor of 3.75%)	April 2027
Promissory notes payable	N/A		78,997,103		N/A		Term SOFR plus a spread ranging from 4.75% to 5.98% with a combined floor rate ranging from 9.0% to 11.28%	March 2025 - March 2026
Revolving line of    credit	$	75,000,000	34,761,111		$	40,238,889	Term SOFR + 3.5% (combined floor rate of 7.0%)	September 2024
Goldman Sachs Bank    repurchase agreement	200,000,000		73,855,624		126,144,376		Term SOFR (subject to underlying loan floors on a case-by-case basis) plus a spread ranging from 2.0% to 5.00%)	February 2025
	$	275,000,000	$	221,402,639	$	166,383,265

Cash Flows (Used in) Provided by Operating Activities

    For the three months ended March 31, 2024, cash flows used in operating activities was $4.2 million, compared to cash flow from operating activities of $8.7 million for the three months ended March 31, 2023. The decrease in operating cash flows was primarily due to a decrease in net contractual interest income.

Cash Flows Provided by (Used in) Investing Activities

    For the three months ended March 31, 2024, cash flows provided by investing activities were $33.4 million, primarily related to proceeds from repayment of loans of $47.0 million, partially offset by origination and purchase of loans of $7.2 million and purchase of equity interests in unconsolidated investments of $6.5 million.

    For the three months ended March 31, 2023, cash flows used in investing activities were $52.0 million, primarily related to purchase of real estate properties of $48.8 million, origination and purchase of loans of $46.2 million and purchase of held-to-maturity debt securities of $20.0 million, partially offset by proceeds from repayments of loans of $59.2 million and return of capital on unconsolidated investments of $3.9 million.

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Cash Flows (Used in) Provided by Financing Activities

    For the three months ended March 31, 2024, cash flows used in financing activities were $22.2 million, primarily related to principal repayments on secured financing of $84.8 million, distributions paid of $4.6 million and payment for financing costs of $0.9 million, partially offset by proceeds from secured financing of $53.0 million and proceeds from obligations under participation agreements of $15.0 million.

For the three months ended March 31, 2023, cash flows provided by financing activities were $43.9 million, primarily due to proceeds from secured financing of $68.3 million, partially offset by principal repayments on secured financing of $19.2 million and distributions paid of $4.7 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.

Allowance for Credit Losses

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 estimating credit losses upon the occurrence of an actual loss event under the previous “incurred loss” methodology.

We use a model-based approach for estimating the allowance for credit losses on performing loans on a collective basis, including future funding commitments for which we do not have the unconditional right to cancel, as these loans share similar risk characteristics. We utilize information obtained from internal and external sources relating to past events, current economic conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for our loan portfolio. We utilize a commercial mortgage-based, third-party loan loss model and because we do not have a meaningful history of realized credit losses on our loan portfolio, we subscribe to a database service to provide historical proxy loan loss information. We employ 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 have chosen to incorporate a weighted average macroeconomic forecast that encompasses baseline, optimistic and pessimistic scenarios, into our allowance for credit losses on performing loans estimate during the reasonable and supportable forecast period which is currently eight quarters. We select certain economics variables from a group of independent variables such as Commercial Real Estate Price Index, unemployment and interest rate which are included in the model as part of macroeconomic forecast and updated regularly based on current economic trends. The specific loan level information input into the model includes 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. Based on the inputs, the loan loss model determines a loan loss rate through the generation of a probability of default (PD) and loss given default (LGD) for each loan. The allowance for credit losses on performing loans 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

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by the models to determine the allowance for credit losses. Changes in such estimates can significantly affect the expected credit losses.

Management Agreement with our Manager

    We currently pay the following fees to our Manager 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.

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 March 31,
	2024		2023
Origination and extension fee expense (1)	$	262,772	$	471,448
Asset management fee	1,715,042		1,997,427
Asset servicing fee	406,525		470,525
Operating expenses reimbursed to Manager	2,178,164		2,177,004
Disposition fee (2)	340,000		290,813
Total	$	4,902,503	$	5,407,217

_______________

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

Management Agreement Amendment

On March 11, 2024, we and our Manager entered into an amendment to the Management Agreement, effective as of January 1, 2024 (the “Amendment”), in order to extend the term of the Management Agreement and modify the terms upon which the Management Agreement may be terminated. Except as discussed below, the terms of the Management Agreement

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remain unchanged by the Amendment. Except where the context requires otherwise, all references herein to the “Management Agreement” are to the Management Agreement as modified by the Amendment.

The term of the Management Agreement will expire on December 31, 2027 (the “Initial Term”) and will automatically renew for an unlimited number of additional one-year terms upon each anniversary date of the last day of the Initial Term (each, a “Renewal Term”), unless terminated by us or the Manager during the Initial Term or a Renewal Term in accordance with the terms of the Management Agreement (as described below).

The Management Agreement may be terminated by us during the Initial Term or any Renewal Term upon a finding by either (i) at least two-thirds of the independent directors on our Board or (ii) the holders of a majority of the outstanding shares of our common stock (other than those shares held by members of the our senior management team or affiliates of our Manager) that either (a) there has been unsatisfactory performance by our Manager that is materially detrimental to us, or (b) the compensation payable to our Manager pursuant to the Management Agreement is unfair; provided, however, that we will not have the right to terminate the Management Agreement on the basis of unfair compensation to our Manager if our Manager agrees to continue to provide its services under the Management Agreement in exchange for reduced fees that at least two-thirds of the independent directors on our Board determine to be fair pursuant to the procedures set forth in the Management Agreement. We must deliver prior written notice of any such termination to our Manager at least 180 days prior to the last calendar day of the Initial Term or the then-current Renewal Term, as applicable, and the Management Agreement will terminate effective as of the last calendar day of the Initial Term or the then-current Renewal Term, as applicable.

Upon any termination of the Management Agreement by us as discussed above, we will pay our Manager, on the date on which such termination is effective, a termination fee in an amount equal to three times the average annual fees of all types and expense reimbursements received by or owed to our Manager pursuant to the Management Agreement during the 24-month period immediately preceding such termination (the “Termination Fee”), calculated as of the end of the most recently completed monthly prior to the date of such termination.

We may also terminate the Management Agreement, effective upon 30 calendar days’ prior written notice from our Board to our Manager, without payment of any Termination Fees or other penalties, upon (i) the material breach of the Management Agreement by our Manager or its affiliates that continues for 30 days after written notice thereof to our Manager (or 45 days after delivery of written notice thereof if our Manager takes diligent steps to cure such breach within 30 days of delivery of the written notice), (ii) any fraud or other criminal conduct, gross negligence or breach of fiduciary duty by our Manager or its affiliates in connection with the Management Agreement, as determined by a final, non-appealable judgment of a court of competent jurisdiction, (iii) our Manager’s bankruptcy, insolvency or dissolution, or (iv) an Internalization Event (as defined in the Management Agreement). No Termination Fee or other penalty is payable upon such a termination by us.

Our Manager may terminate the Management Agreement, effective upon 60 days’ prior written from our Manager to us, if we breach the Management Agreement and such breach continues for 30 days after written notice thereof. We will pay our Manager the Termination Fee upon such termination by our Manager.

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.

    As of March 31, 2024, the principal balance of our participation obligation was $15.0 million, which was a participation obligation to a related-party managed by the Manager.

    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

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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 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 months ended March 31, 2024, the weighted average outstanding principal balance on obligations under participation agreements was approximately $12.0 million and the weighted average interest rate was approximately 20.3%, compared to the weighted average outstanding principal balance on obligations under participation agreements of approximately $12.9 million and the weighted average interest rate was approximately 16.8% for the three months ended March 31, 2023.

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.

    The following table summarizes the aggregate principal balance of variable rate investments and indebtedness as of:

	March 31, 2024
Variable rate investments	$	404,867,022
Variable rate debt	$	221,402,639

    The following table summarizes estimated changes in net investment income on our variable rate investments and indebtedness as of March 31, 2024 assuming hypothetical increases or decreases in Term SOFR or SOFR:

    

	1.00% Decrease		1.00% Increase
Investment income from variable rate investments	$	(4,175,598)	$	4,214,402
Interest expense from variable rate debt	1,558,213		(2,214,026)
Net investment income from variable rate instruments	$	(2,617,385)	$	2,000,376

    We may hedge against interest rate fluctuations by using standard hedging instruments, such as futures, options and forward contracts. 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 months ended March 31, 2024 and 2023, 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

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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 both our Chief Executive Officer and Chief Investment Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2024. Based on that evaluation, our management 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.

Changes in Internal Control Over Financial Reporting

    During the most recent fiscal quarter, there was no change in our internal controls over financial reporting, as defined under Rule 13a-15(f) under the Exchange Act, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II

Item 1. Legal Proceedings.

From time to time, we and individuals employed by us and our Manager 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 borrowers and investees. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that such proceedings will have a material effect upon our financial condition or results of operations.

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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, 2023.

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.

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	Second 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 with the SEC on December 5, 2023).
3.3	Articles of Supplementary of Terra Property Trust, Inc. Designating 12.5% Series 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).

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Exhibit No.	Description and Method of Filing
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*	Amendment to Amended and Restated Management Agreement, dated March 11, 2024, between Terra Property Trust, Inc., and Terra REIT Advisors, LLC.
10.2*	Fifth Amendment to Loan Documents and Waiver, dated as of March 7, 2024, between Terra Mortgage Portfolio II, LLC, as Borrower, and Terra Property Trust, Inc., as Guarantor, and Western Alliance Bank, as Lender.
10.3*	Continuing Guaranty, dated as of March 7, 2024, by Terra Property Trust, Inc., as Guarantor, in favor of Western Alliance Bank.
10.4*	First Amendment to Uncommitted Master Repurchase and Securities Contract Agreement and Other Transaction Documents, dated as of March 7, 2024, among Terra Mortgage Capital I, LLC, as Seller, Terra Property Trust, Inc., as Guarantor, and Goldman Sachs Bank USA, as Buyer.
10.5*	Amendment No. 1 to Pricing Letter, dated as of March 7, 2024, between Terra Mortgage Capital III, LLC, as Seller, and UBS AG, as Buyer.
10.6*	Waiver Letter, dated as of March 7, 2024, from UBS AG, as Buyer, to Terra Mortgage Capital III, LLC, as Seller, and Terra Property Trust, Inc., as Guarantor.
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.

53

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: May 13, 2024

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

54

EX-10.1

Exhibit 10.1

AMENDMENT

TO

AMENDED AND RESTATED

MANAGEMENT AGREEMENT

THIS AMENDMENT TO AMENDED AND RESTATED MANAGEMENT AGREEMENT (this“Amendment”), dated as of March 11, 2024 and effective as of January 1, 2024 (the “Effective Date”), is entered into by Terra Property Trust, Inc., a Maryland corporation (“Company”), and Terra REIT Advisors, LLC, a Delaware limited liability company (the “Manager”). The Company and the Manager are collectively referred to herein as the “Parties” and each as a “Party.”

RECITALS

WHEREAS,the Parties are parties to that certain Amended and Restated Management Agreement, dated as of February 8, 2018 (the “Existing Agreement”); and

WHEREAS,the Parties desire to amend the Existing Agreement in accordance with the terms and conditions of this Amendment.

AGREEMENT

NOW THEREFORE, in consideration of the mutual covenants and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

SECTION 1.    Amendment to Term and Termination Provisions. Section 8 (Term) of the Existing Agreement is hereby amended and restated in its entirety as set forth below:

(a)    Term. This Agreement shall initially be in effect from the Effective Date until the first December 31st following the third anniversary of the Effective Date (the “Initial Term”) and shall automatically renew without any action by either Party for an unlimited number of additional one-year terms upon each anniversary date of the last day of the Initial Term (each, a “Renewal Term”), unless terminated by the Parties during the Initial Term or a Renewal Term in accordance with the terms of this Section 8.

(b)    Termination For Unsatisfactory Performance or Unfair Compensation. Subject to the terms of this Section 8(b), the Company may elect to terminate this Agreement, during the Initial Term or any Renewal Term, upon a finding by either (i) at least two-thirds of the Independent Directors or (ii) the holders of a majority of the outstanding shares of Common Stock (other than those shares of Common Stock held by members of the Company’s senior management team and Affiliates of the Manager) that either (1) there has been unsatisfactory performance by the Manager that is materially detrimental to the Company and the Subsidiaries, or (2) the compensation payable to the Manager hereunder is unfair; provided, however, that the Company shall not have the right to terminate this Agreement under clause (2) above if the Manager agrees to continue to provide the services under this Agreement in exchange for reduced fees that at least two-thirds of the Independent Directors determines to be fair pursuant to the procedure set forth below.

If the Company elects to terminate this Agreement pursuant to this Section 8(b), the Company shall deliver prior written notice thereof to the Manager (a “Termination Notice”) not less than one hundred and eighty (180) days prior to the last calendar day of the Initial Term or the then-current Renewal Term, as applicable, and this Agreement shall terminate effective as of the last calendar day of the Initial Term or the then-current Renewal Term, as applicable (such date, “Termination Effective Date”); provided, however, that in the event that such Termination Notice is delivered by the Company in connection with a determination that the compensation payable to the Manager is unfair, then the Manager shall have the right (but not the obligation) to renegotiate such compensation by delivering to the Company, no less than forty-five (45) days prior to the prospective Effective Termination Date set forth in such Termination Notice, written notice (any such notice, a “Notice of Proposal to Negotiate”) of the Manager’s intention to renegotiate its compensation under this Agreement. Thereupon, the Company (represented by the Independent Directors) and the Manager shall endeavor to negotiate in good faith the revised compensation payable to the Manager under this Agreement. If the Manager and the Company (upon approval of at least two-thirds of the Independent Directors) agree to the terms of the revised compensation to be payable to the Manager within forty-five (45) days following the receipt of the Notice of Proposal to Negotiate, the Termination Notice shall be deemed of no force and effect and this Agreement shall continue in full force and effect on the terms stated in this Agreement, except that the compensation payable to the Manager hereunder shall be the revised compensation then agreed upon by the Company and the Manager. The Company and the Manager agree to execute and deliver an amendment to this Agreement setting forth any such revised Manager compensation promptly upon reaching an agreement regarding the same. In the event that the Company and the Manager are unable to agree to the terms of the revised compensation to be payable to the Manager during such forty-five (45)-day period as set forth above, this Agreement shall automatically terminate, such termination to be effective on the Termination Effective Date originally set forth in the Termination Notice.

(c)    Termination Fee.  In recognition of the level of the upfront effort required by the Manager to structure and acquire the assets of the Company and its subsidiaries and the commitment of resources by the Manager, in the event that this Agreement is terminated (i) by the Company in accordance with Section 8(b) or (ii) by the Manager pursuant to Section 8(d)(ii)(A), the Company shall pay to the Manager, on the date on which such termination is effective pursuant to the terms of Section 8(b) or 8(d)(ii)(A), as applicable, a termination fee (the “Termination Fee”) in an amount equal to three (3) times the average annual fees of all types and expense reimbursements received by or owed to the Manager pursuant to Section 3 of this Agreement during the twenty-four (24)-month period immediately preceding the date of such termination, calculated as of the end of the most recently completed monthly prior to the date of such termination. The obligation of the Company to pay the Termination Fee shall survive the termination of this Agreement.

(d)    Termination for Cause.

    (i)    Termination by the Company. The Company may terminate this Agreement, effective upon thirty (30) calendar days’ prior written notice of such termination from the Board to the Manager, without payment of any Termination Fees or other penalties of any kind, upon a Cause Event; provided, however, that the Company shall pay consideration to compensate the Manager for an Internalization Event in an amount that the Company shall negotiate with the Manager in good faith and which will require the approval of a majority of the Company’s Independent Directors. If a Cause Event shall occur, the Manager shall give prompt written notice thereof to the Board.

    (ii)    Termination by the Manager.

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(A)    The Manager may terminate this Agreement, effective upon sixty (60) days’ prior written notice of such termination from the Manager to the Company, in the event that the Company defaults in the performance or observance of any material term, condition or covenant contained in this Agreement and such default shall continue for a period of thirty (30) days after written notice thereof specifying such default and requesting that the default be remedied in such thirty (30)-day period. The Company will pay the Manager the Termination Fee upon the termination of this Agreement by the Manager pursuant to this Section 8(d)(ii)(A).

(B)    The Manager may terminate this Agreement in the event the Company becomes regulated as an “investment company” under the Investment Company Act of 1940, as amended, with such termination deemed to have occurred immediately prior to such event. The Company will pay no Termination Fees or other penalties of any kind in connection with such a termination.

If any of the events specified in this Section 8(d)(ii) shall occur, the Company shall give prompt written notice thereof to the Manager.

(e)    Certain Defined Terms. As used herein, the following terms shall have following meanings:

(i)    “Bankruptcy” means with respect to any Person, (A) the filing by such Person of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code or any other federal, state or foreign insolvency law, or such Person's filing an answer consenting to or acquiescing in any such petition, (B) the making by such Person of any assignment for the benefit of its creditors, (C) the expiration of sixty (60) days after the filing of an involuntary petition under Title 11 of the Unites States Code, an application for the appointment of a receiver for a material portion of the assets of such Person, or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts under any other federal, state or foreign insolvency law, provided that the same shall not have been vacated, set aside or stayed within such sixty (60)-day period or (D) the entry against it of a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereinafter in effect.

(ii)    “Cause Event” means (A) the material breach of any provision of this Agreement by the Manager or its Affiliates that shall continue for a period of thirty (30) days after delivery by the Company of written notice thereof to the Manager specifying such breach and requesting that the same be remedied in such thirty (30)-day period (or forty-five (45) days after delivery of written notice of such breach if the Manager takes diligent steps to cure such breach within thirty (30) days of delivery of the written notice), (B) any act of fraud or other criminal conduct, gross negligence or breach of fiduciary duty by the Manager or its Affiliates in connection with this Agreement or the performance of their duties to the Company, as determined by a final, non-appealable judgment of a court of competent jurisdiction, (C) commencement of any proceeding relating to the Manager’s Bankruptcy or insolvency, including an order for relief in an involuntary Bankruptcy case or the Manager authorizing or filing a voluntary Bankruptcy petition, (D) the dissolution of the Manager, or (E) an Internalization Event.

(iii)    “Independent Directors” means the members of the Board who are not officers or employees of the Manager or its Affiliates and who are otherwise “independent” in accordance

3

with the listing standards for independence of the New York Stock Exchange, the applicable rules of the Securities and Exchange Commission and any other standards established by the Company.

(iv)    “Internalization Event” means (A) the actual or effective termination of this Agreement in connection with a transaction that results in the Company acquiring or otherwise assuming control of the Manager or all or substantially all of its assets, or (B) the actual or effective termination of this Agreement in connection with a transaction that results in the Company hiring substantially all of the management team of the Manager.

(v)    “Person” means any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

SECTION 2.    Miscellaneous.

(a)    Except as expressly set forth in this Amendment, the terms of the Existing Agreement are not amended or modified hereby and shall remain in full force and effect as set forth in the Existing Agreement. Upon the effectiveness of this Amendment, each reference in the Existing Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Existing Agreement shall mean and be a reference to the Existing Agreement as amended by this Amendment. In the event of any conflict between the terms of the Existing Agreement and the terms of this Amendment, the terms of this Amendment shall govern and control. The terms of the Existing Agreement shall be interpreted and applied in all respects in order to give effect to the terms of this Amendment.

(b)    Notwithstanding anything herein to the contrary, this Amendment (and the applicable terms of the Existing Agreement, as amended hereby) shall be deemed to have become effective as of the Effective Date.

(c)    This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any Party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts of this Agreement, individually or taken together, shall bear the signatures of all of the Parties reflected hereon as the signatories.

[SIGNATURE PAGE FOLLOWS]

4

IN WITNESS THEREOF, the parties hereto have caused this Agreement to be duly executed on the date above written.

MANAGER:    

TERRA REIT ADVISORS, LLC

By: /s/ Vikram Uppal

Name: Vikram Uppal

Title: Chief Executive Officer

COMPANY:

TERRA PROPERTY TRUST, INC.

By: /s/ Vikram Uppal

Name: Vikram Uppal

Title: Chief Executive Officer

[Signature Page to Amendment

to Amended and Restated Management Agreement]

EX-10.2

Exhibit 10.2

FIFTH AMENDMENT TO LOAN DOCUMENTS AND WAIVER

THIS FIFTH AMENDMENT TO LOAN DOCUMENTS AND WAIVER (this “Agreement”) is entered into as of March 7, 2024, by and between TERRA MORTGAGE PORTFOLIO II, LLC, a Delaware limited liability company (“Borrower”), and TERRA PROPERTY TRUST, INC., a Maryland corporation (“Guarantor”), on the one hand, and WESTERN ALLIANCE BANK, an Arizona corporation (“Lender”), on the other hand.

RECITALS

1.Lender heretofore extended to Borrower a revolving line of credit in the original maximum principal amount of Seventy-Five Million and No/100 Dollars ($75,000,000.00) (the “Revolving Line of Credit”), which Revolving Line of Credit was evidenced by, without limitation, that certain Promissory Note dated as of March 12, 2021, executed by Borrower in favor of Lender (together with any and all amendments thereto or modifications thereof, the “Original Note”).

2.In connection with the Revolving Line of Credit, Borrower also executed and delivered to and in favor of Lender that certain Business Loan and Security Loan Agreement (Revolving Line of Credit) dated March 12, 2021 (together with any and all amendments thereto or modifications thereof, the “Loan Agreement”), pursuant to which, among other things, Borrower granted to Lender a security interest in the Collateral (as defined in the Loan Agreement) to secure Borrower’s obligations to Lender in connection with the Revolving Line of Credit.

3.Payment and performance of Borrower’s indebtedness and obligations in connection with the Revolving Line of Credit was and is guaranteed by Guarantor to the extent set forth in the Limited Guaranty dated as of March 12, 2021 in favor of Lender (together with any and all amendments thereto or modifications thereof, the “Guaranty”).

4.Lender perfected its interest in and to the Collateral by causing to be filed a UCC-1 financing statement with the Delaware Secretary of State on March 12, 2021, as Filing No. 2021 2003482 (the “UCC Financing Statement”). Lender’s security interest in the Collateral is first in priority and duly perfected under applicable Law.

5.On or about June 9, 2021, Borrower, Guarantor and Lender entered into the First Amendment to Loan Documents (“First Amendment”), whereby the Advance Rate Schedule attached as Exhibit E to the Loan Agreement was modified, as more particularly set forth therein.

6.On or about January 4, 2022, Borrower, Guarantor and Lender entered into the Second Amendment to Loan Documents (“Second Amendment”), whereby, among other things, the Credit Limit (as defined in the Loan Agreement) of the Revolving Line of Credit was increased to $125,000,000.00 and Borrower executed in favor of Lender that certain Amended and Restated Promissory Note dated as of January 4, 2022 (together with any

and all amendments thereto or modifications thereof, the “Note”), which amended, restated, and replaced the Original Note in its entirety.

7.On or about August 3, 2022, Borrower, Guarantor and Lender entered into the Third Amendment to Loan Documents (“Third Amendment”), whereby, among other things, the sublimit applicable to Collateral Loans secured by properties located in New York City was increased and Borrower was allowed to pledge to Lender certain Collateral Loans in which Borrower has granted Participation Interests (as therein defined) to third parties.

8.On or about March 31, 2023, Borrower, Guarantor and Lender entered into the Fourth Amendment to Loan Documents (“Fourth Amendment”), whereby, among other things, the index used to calculate interest under the Note were changed.

9.The Loan Agreement, Note, Guaranty, UCC Financing Statement, First Amendment, Second Amendment, Third Amendment, Fourth Amendment and all other assignments, agreements, instruments and other documents executed by Borrower or Guarantor in connection with the Revolving Line of Credit shall at times hereinafter be referred to collectively as the “Loan Documents.”

10.Pursuant to Section 6.18.1 of Schedule 6.18 of the Loan Agreement, Guarantor is required to maintain a minimum Total Net Worth (as defined in the Loan Agreement) of $250,000,000.00, measured on a quarterly basis . However, for the calendar quarter ending December 31, 2023, Guarantor’s Total Net Worth was below the minimum required, in violation of Section 6.18.1 of Schedule 6.18 of the Loan Agreement (the “Total Net Worth Covenant Violation”).

11.Borrower and Guarantor have requested that Lender, among other items, (i) waive the Total Net Worth Covenant Violation, (ii) extend the Initial Maturity Date (as defined in the Loan Agreement) of the Revolving Line of Credit, (iii) decrease the Credit Limit of the Revolving Line of Credit to $75,000,000.00, (iv) modify the interest rate spread applicable to the Note, (v) modify the Collateral Loan review fee, (vi) modify the Appraisal review fee, (vii) modify the Total Net Worth requirement, (viii) modify the Compensating Balances requirement, and (ix) make certain other changes to the Loan Documents as more particularly set forth herein. Lender has agreed to do so, subject to the terms and conditions set forth herein.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:

1.Recitals; Defined Terms.

The recitals are incorporated herein by this reference as are all exhibits. Borrower and Guarantor, and each of them, agree and acknowledge that the factual information recited

    2

above is true and correct. Except as may be otherwise expressly defined in this Agreement, all terms used in this Agreement beginning with a capital letter shall have the meanings ascribed to them in the Loan Agreement.

2.Borrower and Guarantor Acknowledgments as to Obligations and Other Matters.

a.Borrower and Guarantor each acknowledge, confirm and agree that as of March 4, 2024, the total outstanding principal balance of the Note is $47,461,729.91, plus accrued and unpaid interest thereon.

b.Borrower and Guarantor, and each of them, specifically acknowledge, confirm and agree that they do not have any valid offset or defense to the obligations, indebtedness and liability under the Loan Documents.

3.Reaffirmation of Obligations.

This Agreement is, in part, a reaffirmation of the obligations, indebtedness and liability of Borrower and Guarantor, and each of them, to Lender as evidenced by the Loan Agreement, Guaranty and the other Loan Documents. Therefore, Borrower and Guarantor, and each of them, represent, warrant, acknowledge and agree that, except as specified herein, all of the terms and conditions of the Loan Documents are and shall remain in full force and effect, without waiver or modification of any kind whatsoever, and are ratified and confirmed in all respects.

4.Waiver of Total Net Worth Covenant Violation.

Subject to the satisfaction of all conditions precedent to this Agreement set forth in Section 11, below, Lender hereby waives the Total Net Worth Covenant Violation. The waiver granted herein is expressly limited to the Total Net Worth Covenant Violation and shall not be deemed to be, nor shall it constitute a waiver of Borrower's and/or Guarantor’s obligation to satisfy the financial covenants set forth in the Loan Documents for any other period of time, or a waiver of any other condition, term or provision now existing or hereafter arising under the Loan Documents, or of Lender's right to insist upon strict compliance with each and every term, condition and provision of the Loan Documents.

5.Extension of Initial Maturity Date and Commitment Term.

The Initial Maturity Date and the end of the Commitment Term are hereby extended to September 12, 2024, at which time the entire principal balance under the Loan plus all accrued and unpaid interest thereon is and shall be due and payable as provided under the Loan Documents. Any and all references in the Loan Documents to the “Initial Maturity Date” and the end of the Commitment Term shall hereby mean September 12, 2024.

6.Decrease in Credit Limit.

    3

a.    The Credit Limit is hereby decreased from $125,000,000.00 to $75,000,000.00, subject to the terms and conditions of the Loan Agreement, this Amendment and the Other Loan Documents.

b.    Any and all references in the Note, Loan Agreement, and the other Loan Documents to the principal loan amount of “One Hundred Twenty-Five Million and No/100 Dollars ($125,000,000.00)” and “125,000,000.00” shall be replaced with “Seventy-Five Million and No/100 Dollars ($75,000,000.00)” and “75,000,000.00”, respectively.

7.Amendments to Loan Documents.

a.The definition of “Guaranty” in Section 1 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“’Guaranty’ means the amended and restated Continuing Guaranty from Guarantor, in form and content satisfactory to Lender in its sole opinion and judgment, guarantying certain obligations of Borrower to Lender, as more specifically provided therein.”

b.Section 4.2.2 of the Loan Agreement entitled “Compensating Balances” is hereby deleted in its entirety and replaced with the following:

“4.2.2    Compensating Balances. Borrower, Guarantor, Mavik, the guarantor under the Mavik Loan Documents and Affiliates thereof shall maintain the Compensating Balance Account(s) with an average daily aggregate balance in such Account(s) of not less than $7,500,000.00 at all times (“Compensating Balance Amount”) during the term of the Loan, to be reviewed quarterly, beginning with the calendar quarter ending March 31, 2024. Should the Compensating Balance Requirement fail to be maintained during any calendar quarter, as tested at the end of such quarter during the term of the Loan (“Quarter”), such will not constitute an Event of Default, but the interest rate that is applicable on the Note during the next Quarter shall automatically be increased by one percent (1.00%) (“Increased Spread”) over the interest rate that would otherwise be applicable on the Note for such Quarter had the Compensating Balance Requirement been satisfied. For the avoidance of doubt, in any Quarter that the Compensating Balance Requirement is satisfied, Borrower will not be charged the Increased Spread on the applicable Note rate in the next succeeding Quarter. In any Quarter that the Compensating Balance Requirement is not satisfied, Borrower will be charged the Increased Spread on the applicable Note rate for the next succeeding Quarter.”

c.Section 4.5.4 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“4.5.4    Borrower shall have paid to Lender, in addition to any other fees required under this Agreement or any of the other Loan Documents, a Collateral Loan

    4

review fee of $275.00 for each Collateral Loan (including, without limitation, each of the Collateral Loans included in the Initial Loan Collateral). In addition, in the event Lender retains an appraiser to perform a review of any Appraisal of the Underlying Collateral for a Collateral Loan, Borrower shall pay an Appraisal review fee not to exceed $1,500.00. Notwithstanding the foregoing as it relates to a Borrower Participation Interest, in the event Mavik has made payment of the fees referenced in this Section in accordance with the Mavik Loan Documents, Borrower shall not be required to do so;”

d.Section 4.12 of the Loan Agreement entitled “Extension Option” is hereby deleted in its entirety and replaced with the following:

“4.12    EXTENSION OPTION. On or before the Initial Maturity Date, provided no Event of Default (or event which, with the giving of notice or the passage of time, or both, would become an Event of Default) shall exist under any of the Loan Documents and Borrower is in full compliance with each term, condition and covenant contained in this Agreement and the other Loan Documents, Borrower may submit a written request to extend the Commitment Term for an additional twelve (12) month period. In the event Borrower requests an extension of the Commitment Term for an additional twelve (12) month period, Lender may, in its sole discretion, determine whether or not to grant such request and, if so, the terms and conditions for the granting of such request. Borrower shall execute such documents and instruments required by Lender if it grants such request, and shall reimburse Lender for any fees and costs incurred by Lender in the granting and documenting of any extension (if Borrower does not approve any such documents or instruments, then Borrower and Lender agree that the extension shall not be granted by Lender). In the event that Lender grants an extension of the Commitment Term for an additional twelve (12) month period, Borrower shall have the option, in its sole discretion, to request an additional extension of the Commitment Term prior to the end of that twelve (12) month period, subject to the provisions of this Section 4.12. Borrower understands that under no circumstances is Lender required to grant any extension of the Commitment Term if a request is made, and Borrower assumes the risk that no extension of the Commitment Term will be granted by Lender.”

e.Section 6.18.1 of Schedule 6.18 attached to the Loan Agreement entitled “Total Net Worth” is hereby deleted in its entirety and replaced with the following:

“6.18.1    TOTAL NET WORTH. At all times during the term of the Loan, Borrower shall at all times cause Guarantor to maintain minimum Total Net Worth of $200,000,000.00, measured on a quarterly basis as of March 31, June 30, September 30 and December 31 of each calendar year during the term of the Loan, commencing on March 31, 2024, based upon the Financial Statements delivered by Borrower to Lender in accordance with Sections 6.5.4 and 6.5.5 on Schedule 6.5. Borrower shall deliver to Lender any other documentation and

    5

evidence as shall be satisfactory to Lender, in Lender’s reasonable opinion and judgment, evidencing Guarantor’s compliance with the minimum requirement set forth in this Section 6.18.1.”

f.Section 6.18.2 entitled “Minimum Profitability” is hereby deleted in its entirety and replaced with the following:

“6.18.2    MINIMUM PROFITABILITY. At all times during the term of the Loan, Borrower shall not permit Guarantor to report an Operating Loss in excess of $5,000,000.00 for any calendar quarter during the term of the Loan, measured on a trailing quarterly basis as of March 31, June 30, September 30 and December 31 of each calendar year, commencing on March 31, 2024, for the immediately preceding three (3) consecutive calendar month period of time, based upon the Financial Statements delivered by Borrower to Lender in accordance with Sections 6.5.4 and 6.5.5 on Schedule 6.5. Borrower shall deliver to Lender any other documentation and evidence as shall be satisfactory to Lender, in Lender’s reasonable judgment, evidencing Guarantor’s compliance with the minimum requirement set forth in this Section 6.18.2.”

g.The definitions of “Gross Income”, “Operating Expenses”, and “Operating Profit” set forth in Schedule 6.18 attached to the Loan Agreement are hereby deleted in their entirety.

h.The definition of “Operating Profit” in Schedule 6.18 attached to the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“’Operating Profit’ means, at any given time, but only to the extent in accordance with GAAP, the net income of Guarantor in accordance with GAAP, with no

    6

addbacks for fees paid to guarantor and non-cash items, and after interest expense.”

i.A new definition for “Operating Loss” is hereby added to Schedule 6.18 attached to the Loan Agreement to state the following:

“’Operating Loss’ means, at any given time, but only to the extent in accordance with GAAP, the net loss of Guarantor, with no addbacks for fees paid to guarantor and non-cash items, and after interest expense.”

j.Exhibit “E” to the Loan Agreement entitled “Advance Rate Schedule” shall be deleted in its entirety and be replaced with the “Advance Rate Schedule” attached hereto as Exhibit “A” and incorporated herein by this reference.

k.Exhibit “G” to the Loan Agreement entitled “Form of Compliance Certificate” shall be deleted in its entirety and be replaced with the “Form of Compliance Certificate” attached hereto as Exhibit “B” and incorporated herein by this reference.

l.The section entitled “INTEREST RATE” in the Note is hereby deleted in its entirety and replaced with the following:

“INTEREST RATE. Interest on the outstanding principal balance of this Note shall be computed and calculated based upon a three hundred sixty (360)-day year and actual days elapsed and shall accrue at the per annum rate (the ‘Note Rate’) equal to the greater of (i) seven percent (7.00%) (‘Floor’) or (ii) three one half of one percent (3.50%) in excess of the Term SOFR Rate, as the same may change from time to time. ‘Term SOFR Rate’ means the 1-month Term SOFR Reference Rate (‘Term SOFR’) which is published for loans in United States Dollars by CME Group Benchmark Administration Limited and is obtained by Lender from Bloomberg Financial Services Systems with the code TSFR1M (or, if no longer available, any similar or successor publication selected by Lender). The Term SOFR Rate shall initially be determined on the date that is two U.S. Government Securities Business Days immediately before the date of this Agreement and shall thereafter be adjusted monthly on the first day of each calendar month to be the Term SOFR determined by Lender to be in effect on the date that is two U.S. Government Securities Business Days prior to the first day of each calendar month. ‘U.S. Government Securities Business Day’ means any day except for (i) a Saturday, (ii) a Sunday or (iii) 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.

If Lender determines (which determination shall be conclusive absent manifest error) that either of the following has occurred: (i) Term SOFR ceases to exist or is no longer available; or (ii) a public announcement by the regulatory supervisor for the administrator of Term SOFR, or a determination made by Lender, that

    7

Term SOFR is no longer representative, then commencing on the next reset date, the interest rate hereunder shall be replaced with such alternate base rate and spread (collectively, ‘Benchmark Replacement’) as Lender determines in its reasonable discretion to be most comparable to the then-current interest rate. If the Benchmark Replacement as determined pursuant to this section would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Note and the other Loan Documents.

In connection with the implementation of a Benchmark Replacement, Lender 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 Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of Borrower. ‘Benchmark Replacement Conforming Changes’ means, with respect to any Benchmark Replacement, any technical, administrative or operational changes, such as changes to the definitions of ‘Business Day,’ ‘Interest Period,’ or timing and frequency of determining rates and making payments of interest, that Lender decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof in a manner substantially consistent with market practice (or, if the Lender decides that adoption of any portion of such market practice is not administratively feasible or if Lender determines that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as Lender decides is reasonably necessary in connection with the administration of this Note and the other Loan Documents).

Notwithstanding the foregoing, and pursuant to the terms of the Loan Agreement, should the Compensating Balance Amount (as defined in the Loan Agreement) fail to be maintained on any date during any calendar quarter (i.e., calendar quarters ending March 31, June 30, September 30 and December 31) during the term of the Loan (‘Quarter’) starting with the quarter ending March 31, 2024, the interest rate that is applicable on the Note during the next Quarter shall automatically be increased by one percent (1.00%) (‘Increased Spread’) over the interest rate that would otherwise be applicable on the Note for such Quarter had the Compensating Balance Requirement been satisfied. For the avoidance of doubt, in any Quarter that the Compensating Balance Requirement is satisfied, Borrower will not be charged the Increased Spread on the applicable Note rate in the next succeeding Quarter. In any Quarter that the Compensating Balance Requirement is not satisfied, Borrower will be charged the Increased Spread on the applicable Note rate for the next succeeding Quarter.”

8.Agreement as a Loan Document.

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From and after the effective date of this Agreement, this Agreement and any other documents and instruments executed in connection herewith shall each constitute one of the “Loan Documents.”

9.Effective Date of Agreement.

This Agreement and the amendments provided for herein shall be effective as of the date set forth above, subject to the timely and complete satisfaction of each and all of the conditions precedent set forth in Section 11 of this Agreement.

10.Borrower’s and Guarantor’s Representations and Warranties.

Borrower and Guarantor, and each of them, hereby represent and warrant to Lender and covenant and agree with Lender as follows:

a.Borrower and Guarantor, and each of them, have full legal right, power and authority to enter into and perform this Agreement. The execution and delivery of this Agreement by Borrower and Guarantor and the consummation by Borrower and Guarantor of the transactions contemplated hereby have been duly authorized by all necessary action by or on behalf of Borrower and Guarantor. This Agreement is a valid and binding obligation of Borrower and Guarantor, and each of them, enforceable against Borrower and Guarantor in accordance with its terms.

b.Neither the execution and delivery of this Agreement by Borrower and Guarantor, or either of them, nor the consummation by Borrower and Guarantor, or either of them, of the transactions contemplated hereby, conflicts with or constitutes a violation or a default under any law applicable to Borrower and Guarantor, or either of them, or any contract, commitment, agreement, arrangement or restriction of any kind to which Borrower and Guarantor, or either of them, is a party, by which Borrower and Guarantor, or either of them, is bound or to which any of Borrower’s and Guarantor’s, or either of their, property or assets is subject.

c.There are no actions, suits or proceedings pending, or to the knowledge of Borrower and Guarantor, or either of them, threatened against or affecting Borrower and Guarantor, or either of them, respectively, in relation to their obligations to Lender or involving the validity and enforceability of this Agreement, the Loan Agreement, the Note, the Guaranty or any of the other Loan Documents, as applicable, or the priority of any liens given by Borrower to Lender in accordance with the Loan Agreement, and the other Loan Documents, at law or in equity, or before or by any governmental agency, or which could have an adverse effect on the financial condition, operations, properties, assets, liabilities or earnings of Borrower and Guarantor, or either of them, or the ability of Borrower and Guarantor, or either of them, to perform their respective obligations to Lender.

d.Borrower and Guarantor, and each of them, hereby reaffirm and confirm that the representations and warranties of Borrower and Guarantor, as applicable, contained in

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the Loan Documents are true, correct and complete in all respects as of the date of this Agreement.

e.Borrower and Guarantor, and each of them, are in full and complete compliance with the terms, covenants, provisions and conditions of the Loan Agreement, the Note, the Guaranty and the other Loan Documents to which they are a party.

All covenants, representations and warranties of Borrower and Guarantor herein are incorporated by reference and hereby made a part of the Loan Agreement and the Guaranty, as applicable.

11.Conditions Precedent to Effectiveness of Agreement.

The effectiveness of this Agreement shall be expressly conditioned upon the following having occurred or Lender having received all of the following on or before March 8, 2024, in form and content satisfactory to Lender and its counsel, in its or their sole and absolute discretion, and suitable for filing or recording, as the case may be, as required:

a.This Agreement, fully executed by Borrower and Guarantor;

b.An amended and restated Continuing Guaranty, fully executed by Guarantor;

c.Payment of $93,750.00 as an extension fee, which fee shall be deemed fully earned and non-refundable when paid;

d.Such additional information, assignments, agreements, resolutions, certificates, reports, approvals, instruments, documents, subordination agreements, financing statements, consents and opinions as Lender may request, in its sole and absolute opinion and judgment, in connection with this Agreement and/or any of the matters which are the subject of this Agreement; and

e.Payment of the fees and costs of Lender in connection with the preparation, negotiation, administration and execution of this Agreement including, but not limited to, attorneys’ fees, and other costs and fees of other professionals retained by Lender.

Upon Lender’s acceptance of the extension fee set forth above, unless otherwise indicated by Lender in writing, all conditions to the effectiveness of the Fifth Amendment will be deemed satisfied.

12.Release. In consideration of the benefits provided by Lender through this Agreement, Borrower and Guarantor, and each of them, hereby fully, finally, and absolutely and forever release and discharge Lender and its present and former directors, shareholders, officers, employees, agents, representatives, attorneys, successors and assigns, and their separate and respective heirs, personal representatives, successors and assigns (the “Released Parties”), for, from, and against any and all actions, causes of action, claims, debts, damages, demands, liabilities, obligations, and suits, of whatever kind or nature, in law or equity of the Borrower

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and/or Guarantor, and, whether now known or which, upon reasonable investigation, would have been known to the Borrower and/or Guarantor, and whether contingent or matured: (i) in respect of any of the Loan Documents, or the actions or omissions of Lender occurring prior to the date of this Agreement in respect of the obligations, or any duties under the Loan Documents; and (ii) arising from events occurring prior to the date of this Agreement. Borrower and Guarantor, and each of them, acknowledge that they have been informed by their attorneys, and are aware of and familiar with the general principle of law which provides that a general release does not extend to claims which a creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with a debtor (the “Unknown Claims”). To the extent applicable, Borrower and Guarantor, and each of them, expressly waive and relinquish all rights and benefits they may have under the principle of law relating to the release of Unknown Claims.

13.Miscellaneous.

a.Section headings used in this Agreement are for convenience only and shall not affect the construction of this Agreement.

b.This Agreement may be executed in one or more counterparts but all of the counterparts shall constitute one agreement; provided, however, this Agreement shall not be effective and enforceable unless and until it is executed by all parties hereto.

c.GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO ANY CONFLICTS OF LAW CONCEPTS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

d.Counterparts. This Amendment may be executed in one or more counterparts, all of which when taken together shall constitute but one instrument, and in the event any signature is delivered by facsimile or “.pdf” transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” were an original thereof.

e.This Agreement and the other documents and instruments executed in connection therewith constitute the product of the negotiation of the parties hereto and the enforcement hereof shall be interpreted in a neutral manner, and not more strongly for or against any party based upon the source of the draftsmanship hereof.

f.This Agreement shall be binding upon and inure to the benefit of Lender, Borrower and Guarantor, and each of them, and their respective successors and assigns, except that neither Borrower nor any Guarantor shall assign their rights hereunder or any interest therein without the prior written consent of Lender.

g.This Agreement is not a novation, nor, except as expressly provided in this Agreement, is it to be construed as a release or modification of any of the terms, conditions,

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warranties, waivers or rights set forth in the Loan Documents. Nothing contained in this Agreement shall be deemed to constitute a waiver by Lender of any required performance by Borrower or Guarantor, and each of them, of any Event of Default or default heretofore or hereafter occurring under or in connection with the other Loan Documents. In the event there is a conflict in any term, condition or provision of this Agreement, on the one hand, and the Loan Agreement, the Guaranty, or any of the other Loan Documents, on the other hand, the terms, conditions and provisions of this Agreement are to control.

[Signature Page Follows]

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IN WITNESS WHEREOF, Borrower, Guarantor and Lender have executed and delivered this Agreement as of the date set forth above.

BORROWER:

TERRA MORTGAGE PORTFOLIO II, LLC,

a Delaware limited liability company

By:    /s/ Greg Pinkus_____________

Name:    Greg Pinkus

Its:    Authorized Signatory

GUARANTOR:

TERRA PROPERTY TRUST, INC.,

a Maryland corporation

By: /s/ Greg Pinkus______________

Name: Greg Pinkus

Its: Authorized Signatory

[SIGNATURE PAGE CONTINUES]

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LENDER:

WESTERN ALLIANCE BANK,

an Arizona corporation

By: /s/ David Bernard_______

Name: David Bernard

Title: Senior Managing Director

EXHIBIT A

ADVANCE RATE SCHEDULE

Notwithstanding the foregoing, Advances are subject to the following additional limitations:

1.Advances on any single Collateral Loan shall not exceed $18,750,000.00. On a case by case basis, Lender may approve advances greater than $18,750,000.00 at its sole and absolute discretion, and subject to additional recourse being available to Lender for proceeds in excess of $18,750,000.00.

2.The aggregate amount of all Advances on Collateral Loans secured by Underlying Collateral located in the New York City metropolitan areas shall not exceed Thirty-One Million Two Hundred and Fifty Thousand and No/100 Dollars ($31,250,000.00).

3.Advances on any Borrower Participation Interest shall be based on Borrower’s interest in the Collateral Loan.

4.In the event that the Collateral Loan is acquired by Borrower, as opposed to originated by Borrower, subject to the Advance sublimits set forth above, the Advance Rate shall not exceed one hundred percent (100%) of the acquisition price for such Collateral Loan.

5.Advances on any Borrower Participation Interest shall be based on Borrower’s interest in the Collateral Loan.

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

BORROWER:	Terra Mortgage Portfolio II, LLC
LENDER:	Western Alliance Bank, an Arizona corporation
TODAY’S DATE:	____/____/20__
REPORTING PERIOD ENDED:	____/____/20__

This certificate is delivered to Lender under the Business Loan and Security Agreement dated effective as of March 12, 2021 with any and all subsequent Loan Modifications between Borrower and Western Alliance Bank, an Arizona corporation (the “Agreement”), all the defined terms of which have the same meanings when used herein.

I hereby certify that: (a) I am, and at all times mentioned herein have been, the duly elected, qualified, and acting officer of Borrower designated below; (b) to the best of my knowledge, the financial statements of Borrower from the period shown above (the “Reporting Period”) and which accompany this certificate were prepared in accordance with GAAP and present fairly the financial condition of Borrower as of the end of the Reporting Period and the results of its operations for the Reporting Period; (c) to the best of my knowledge, all of the representations and warranties made by Borrower in Section 3 of the Agreement are true and correct in all material respects on the date of this certificate as if made on this date; (d) a review of the Agreement and of the activities of Borrower during the Reporting Period has been made under my supervision with a view to determining Borrower’s compliance with the covenants, requirements, terms, and conditions of the Agreement, and such review has not disclosed the existence during or at the end of the Reporting Period (and I have no knowledge of the existence as of the date hereof) of any Default or Event of Default, except as disclosed herein (which specifies the nature and period of existence of each Default or Event of Default, if any, and what action Borrower has taken, is taking, and proposes to take with respect to each); and (e) the calculations described herein evidence that Borrower is in compliance with the requirements of the Agreement at the end of the Reporting Period (or if Borrower is not in compliance, showing the extent of non-compliance and specifying the period of non-compliance and what actions Borrower proposes to take with respect thereto).

Terra Mortgage Portfolio II, LLC

By:

Name:

Title:

All financial calculations set forth herein are as of the end of the Reporting Period and calculated in accordance with the Agreement.

I.TOTAL NET WORTH (Section 6.18.1 of the Agreement)

The Total Net Worth for Terra Property Trust, Inc. is:
Total Assets	$
Minus: Intangible Assets & Loans to Stakeholders	$
Minus: Prepaid Taxes and/or Expenses	$
Minus: Total Liabilities	$
TOTAL NET WORTH	$
REQUIRED MINIMUM	$200,000,000.00
In compliance?	☐Yes ☐No

II.PROFITABILITY (Section 6.18.2 of the Agreement)

Operating Profit/Loss for Terra Property Trust, Inc. is:
NET OPERATING PROFIT/LOSS	$
MINIMUM REQUIRED (not to exceed)	($5,000,000.00)
In compliance?	☐Yes ☐No

III.GLOBAL LEVERAGE RATIO (Section 6.18.3 of the Agreement)

The Global Leverage Ratio for Terra Property Trust, Inc. is:
Total Global Debt:	$
Divided by: Total Net Worth (see above)	$
TOTAL LIABILITIES / ADJUSTED TANGIBLE NET WORTH :	__:1
MAXIMUM PERMITTED	2.50:1
In compliance?	☐Yes ☐No

IV.INDEBTEDNESS (Section 6.14 of the Agreement)

Total Other Indebtedness except Trade Obligations:	$
MAXIMUM PERMITTED	$0.00
In compliance?	☐Yes ☐No

V.REPORTING REQUIREMENTS (Schedule 6.5 of the Agreement)

Financial Reporting Requirements Current? ☐Yes ☐No

DEFAULTS OR EVENTS OF DEFAULT

Disclose nature and period of existence and action being taken in connection therewith; if none, write “None”: ___________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

EX-10.3

Exhibit 10.3

CONTINUING GUARANTY

THIS CONTINUING GUARANTY (“Guaranty”) is made as of March 7, 2024, by TERRA PROPERTY TRUST, INC., a Maryland corporation (the “Guarantor”), whose address is set forth below, in favor of WESTERN ALLIANCE BANK, an Arizona corporation (“Lender”), whose address is set forth below.

RECITALS

A.    Guarantor is executing this Guaranty to induce Lender to extend TERRA MORTGAGE PORTFOLIO II, LLC, a Delaware limited liability company (“Borrower”), a credit facility (the “Loan”) in the maximum amount of $75,000,000.00, subject to the terms and conditions of which are more particularly described in the Business Loan and Security Agreement (Revolving Line of Credit) dated as of March 12, 2021 (as amended, supplemented, restated or otherwise modified from time to time, the “Loan Agreement”), and the other Loan Documents (as defined in the Loan Agreement).

B.    This Guaranty is one of the Loan Documents.

C.    Each capitalized term used herein and not otherwise defined has the meaning given to such term in the Loan Agreement.

GUARANTY

1.Guaranteed Obligations. In order to induce Lender to extend the Loan to Borrower, Guarantor hereby unconditionally and irrevocably guarantees to Lender and to its successors, endorsees and/or assigns, the full and prompt payment and performance of the Guaranteed Obligations. The term “Guaranteed Obligations”, as used herein means: all obligations, indebtedness, and liabilities of Borrower to Lender, now existing or hereafter arising under or in connection with the Loan Agreement or any of the Loan Documents (the “Obligations”), whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, and all extensions, renewals, and modifications thereof, and shall include, without limitation, any and all post-petition interest and expenses (including attorneys’ fees) whether or not allowed under any bankruptcy, insolvency, or other similar law. The Guaranteed Obligations shall include any reasonable costs or expenses incurred by Lender in connection with collecting or enforcing this Guaranty. Guarantor acknowledges that fluctuations may occur in the aggregate amount of the Guaranteed Obligations and Guarantor agrees that reductions in the amount of the Guaranteed Obligations, even to zero dollars, shall not constitute a termination of this Guaranty. This Guaranty is binding upon Guarantor and Guarantor’s successors and assigns so long as any of the Guaranteed Obligations remain unpaid and even though the Guaranteed Obligations may from time to time be zero dollars.

2.Guarantor’s Liability. Guarantor agrees, represents and warrants to Lender as follows:

(a)Guarantor shall continue to be liable under this Guaranty and the provisions hereof shall remain in full force and effect notwithstanding (i) any modification, agreement or stipulation between Borrower and Lender, or their respective successors and assigns, with respect to the Loan Documents or the obligations encompassed thereby, including, without limitation, the Guaranteed Obligations; (ii) Lender’s waiver of or failure to enforce any of the terms, covenants or conditions contained in the Loan Documents or in any modification thereof; (iii) any release of Borrower or any other guarantor from any liability with respect to the Guaranteed Obligations; (iv) any release or subordination of any real or personal property then held by Lender as security for the performance of the Guaranteed Obligations; (v) any disability of Borrower, or the dissolution, insolvency, or bankruptcy of Borrower, Guarantor, or any other party at any time liable for the payment of any or all of the Guaranteed Obligations; (vi) the unenforceability or invalidity of any or all of the Guaranteed Obligations, or of any of the Loan Documents; (vii) any payment by Borrower or any other party to Lender is held to constitute a preference under applicable bankruptcy or insolvency law or if for any other reason Lender is required to refund any payment or pay the amount thereof to someone else; (viii) the settlement or compromise of any of the Guaranteed Obligations; (ix) the non-perfection of any security interest or lien securing any or all of the Guaranteed Obligations; or (x) any impairment of any Collateral securing any or all of the Guaranteed Obligations.

(b)Guarantor’s liability under this Guaranty shall continue until all sums due under the Note have been paid in full and until all of Borrower’s other obligations to Lender have been paid and performed in full, and shall not be reduced by virtue of any payment by Borrower of any amount due under the Loan Agreement or under any of the Loan Documents or by Lender’s recourse to any Collateral. Guarantor acknowledges that Lender may apply any payment made by Borrower to Lender to any obligation of Borrower to Lender under the terms of any Loan Documents in such amounts and such manner as Lender may elect, regardless of whether such application complies with any instruction or designation given or made by Borrower with respect to such payment and agrees that any such application shall not in any manner reduce, extinguish or otherwise affect the liability of Guarantor hereunder.

(c)Guarantor acknowledges that it has and will continue to have full and complete access to any and all information concerning the transactions contemplated by the Loan Documents or referred to therein, the value of the assets owned or to be acquired by Borrower, Borrower’s financial status and its ability to pay and perform its obligations under the Loan Documents. Guarantor further warrants and represents that it has reviewed and approved copies of the Loan Documents and is fully informed of the remedies Lender may pursue, with or without notice to Borrower, in the event of default under the Loan Agreement or other Loan Documents. So long as any of the Guaranteed Obligations remains unsatisfied or owing to Lender, Guarantor shall keep itself fully informed as to all aspects of Borrower’s financial condition and the performance of Borrower’s obligations under the Loan Documents.

(d)If acceleration of the time for payment of any amount payable by Borrower under the Loan Documents is stayed upon the insolvency, bankruptcy, or reorganization of Borrower, all such amounts otherwise subject to acceleration under the terms

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of the Loan Documents shall nonetheless be payable by Guarantor hereunder forthwith on demand by Lender

(e)Lender is not required to inquire into the powers of Borrower or Guarantor or of the officers, directors, or other agents acting or purporting to act on their behalf, and any indebtedness or obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Guaranty.

3.Fair Consideration; Solvency.

(a)Guarantor represents and warrants to Lender that: (i) Guarantor is receiving fair consideration and reasonably equivalent value for its execution of this Guaranty; (ii) Guarantor is not now insolvent, nor will the execution of this Guaranty render Guarantor insolvent; (iii) the execution of this Guaranty will not leave Guarantor with unreasonably small capital or assets in order to conduct the business of Guarantor as it is currently conducted; (iv) the obligations incurred under this Guaranty have not been incurred with the intent to hinder, delay, or defraud present or future creditors; and (v) the execution of this Guaranty is not intended or believed by Guarantor to be an incurrence of an obligation or debt of Guarantor beyond Guarantor’s ability to pay such obligation or debt as it becomes due.

(b)Guarantor acknowledges that: (i) the execution of this Guaranty by Guarantor is a necessary condition for the extension of the Loan by Lender to Borrower; and (ii) the extension of the Loan by Lender to Borrower is of substantial economic benefit to Borrower and, therefore, beneficial to Guarantor.

4.Fraudulent Transfer. In the event that, notwithstanding the representations, warranties and acknowledgements of Guarantor contained in Section 3 above, the incurring of the obligations under this Guaranty is found, by a final, non-appealable judgment or order of a court, to constitute a fraudulent transfer under the Uniform Fraudulent Transfer Act (Arizona Revised Statutes (“ARS”) Sections 44-1001 et seq., as amended and any successor statute), the Bankruptcy Code (Title 11 of the United States Code), or any similar statutes, then the amount of the Guaranteed Obligations of Guarantor pursuant to this Guaranty shall be reduced to $1.00 less than the amount that would otherwise make this Guaranty a fraudulent conveyance. The limitation on the liability of Guarantor contained in this Section 4 shall not limit any right of Lender against Guarantor available at law or in equity, including, without limitation, rights of Lender against Guarantor based upon any inaccuracy of, or the failure of Guarantor to comply with, the provisions of Section 3 above.

5.Independent Obligation. The obligations of Guarantor hereunder are separate and independent of the obligations of Borrower and of every other guarantor, and a separate action or actions may be brought and prosecuted against Guarantor regardless of whether an action is brought against Borrower or any other guarantor or whether Borrower or any other guarantor is joined in any such action or actions, or whether Lender forecloses upon, sells or otherwise disposes of or collects any collateral securing the Loan. This Guaranty may be enforced against Guarantor regardless of whether a judicial or non-judicial foreclosure sale is held under any

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security agreement, deed of trust, mortgage or other security instrument securing all or any part of the Loan.

6.Nature of Guaranty. The liability of Guarantor under this Guaranty is a guaranty of payment and performance and not of collection, and is not conditioned or contingent upon the genuineness, validity, regularity or enforceability of the Loan Documents or other instruments relating to the creation or performance of the Guaranteed Obligations or the pursuit by Lender of any remedies which it now has or may hereafter have with respect thereto under the Loan Documents, at law, in equity or otherwise.

7.Guarantor Waivers. Guarantor hereby fully and completely waives, releases and relinquishes: (a) all notices to Guarantor, to Borrower, or to any other person or entity, including, without limitation, notices of the acceptance of this Guaranty, or the creation, renewal, extension, modification or accrual of any of Borrower’s obligations to Lender under the Loan Documents and, except to the extent set forth herein, enforcement of any right or remedy with respect thereto, and notice of any other matters relating thereto; (b) diligence and demand of payment, presentment, protest, dishonor and notice of dishonor; (c) any statute of limitations affecting Guarantor’s liability hereunder or the enforcement thereof; (d) all defenses and claims based on principles of suretyship and/or guaranty; (e) any and all benefits under ARS Sections 12-1641 through 12-1646, Section 44-142 and Rule 17(e) of the Arizona Rules of Civil Procedure, as now enacted or hereafter modified, amended or replaced; and (f) any “one action” or “anti-deficiency” law, including, without limitation, ARS Sections 33-814 and 33-729, as now enacted or hereafter modified, amended or replaced. Notwithstanding any foreclosure of the lien of any security agreement, deed of trust, mortgage, or other security instrument with respect to any or all of any real or personal property secured thereby, whether by the exercise of the power of sale, by an action for judicial foreclosure or by an acceptance of a deed in lieu of foreclosure, Guarantor shall remain bound under this Guaranty. Guarantor further agrees that Lender may enforce this Guaranty upon the occurrence and during the continuation of an Event of Default, notwithstanding the existence of any dispute between Borrower and Lender with respect to the existence of the Event of Default or performance of any of Borrower’s obligations under the Loan Documents, or any counterclaim, set-off or other claim which Borrower may allege against Lender with respect thereto (provided that Guarantor is not waiving its right to assert in good faith that no Event of Default then exists or is continuing as a defense to payment under this Guaranty). Moreover, Guarantor agrees that its obligations shall not be affected by any circumstances which constitute a legal or equitable discharge of a guarantor or surety.

8.No Duty To Pursue Others.Guarantor agrees that Lender may enforce this Guaranty without the necessity of resorting to or exhausting any security or collateral and without the necessity of proceeding against Borrower or any other guarantor, including, without limitation, any other Guarantor named herein. Guarantor hereby waives the right to require Lender to proceed against Borrower, to proceed against any other guarantor, including, without limitation, any other Guarantor named herein, to foreclose any lien on any real or personal property, to exercise any right or remedy under the Loan Documents, to pursue any other remedy or to enforce any other right.

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9.Authorization of Lender. Guarantor authorizes Lender, without notice or demand, and without affecting Guarantor’s liability hereunder, from time to time to: (a) amend, modify, or restate any instrument, document or agreement evidencing or relating to all or any portion of the Guaranteed Obligations; (b) renew, compromise, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of Borrower’s obligations under the Loan Documents or any part thereof, including, without limitation, any increase or decrease of the rate of interest thereon or any late charge; (c) take and hold collateral as security for the payment of this Guaranty or Borrower’s obligations under the Loan Documents, and exchange, substitute, subordinate, enforce, waive and release any such collateral; (d) apply any and all payments from Borrower, Guarantor or any other guarantor, or recoveries from any collateral securing all or any portion of the Loan, in such order or manner as Lender in its sole and absolute discretion may determine; (e) direct the order or manner of sale of any collateral securing any part of Borrower’s obligations under the Loan Documents as Lender in its sole and absolute discretion may determine; (f) release or substitute any one or more of the Borrower, Guarantor or any other guarantor, or acquire additional guarantors; and (g) assign its rights under this Guaranty in whole or in part.

10.Waivers of Subrogation and Other Rights and Defenses.

(a)Guarantor agrees that nothing contained herein shall prevent Lender from suing on the Loan Agreement or from exercising any rights available to it thereunder or under any of the Loan Documents and that the exercise of any of the aforesaid rights shall not constitute a legal or equitable discharge of any Guarantor. Guarantor understands that the exercise by Lender of certain rights and remedies contained in the Loan Documents may affect or eliminate Guarantor’s right of subrogation against Borrower and that Guarantor may therefore incur a partially or totally non-reimbursable liability hereunder; nevertheless, Guarantor hereby authorizes and empowers Lender to exercise, in its sole discretion and absolute, any rights and remedies, or any combination thereof, which may then be available to Lender, because it is the intent and purpose of Guarantor that the obligations hereunder shall be absolute, independent and unconditional under any and all circumstances.

(b)Guarantor hereby waives, releases, and relinquishes any and all rights of reimbursement, contribution, and subrogation, which Guarantor may now or hereafter have against Borrower. Guarantor further agrees that, to the extent the waiver of its rights of subrogation as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation Guarantor may have against Borrower or against any collateral or security shall be junior and subordinate to any right Lender may have against Borrower and to all right, title and interest Lender may have in any collateral or security. Lender may use, sell or dispose of any item of collateral or security as it sees fit without regard to any subrogation right Guarantor may have, and upon disposition or sale, any right of subrogation Guarantor may have shall terminate. With respect to the enforced collection of Borrower’s obligations under the Loan Documents or the foreclosure of any security interest in any personal property collateral then securing any of Borrower’s obligations under the Loan Documents, Lender agrees to give Guarantor ten (10) days’ prior written notice, in the manner set forth in Section 13 hereof, of any sale or disposition of any such personal property collateral,

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other than collateral which is perishable, threatens to decline speedily in value, is of a type customarily sold on a recognized market, or is cash, cash equivalents, certificates of deposit or the like.

(c)Guarantor’s sole right with respect to any such foreclosure of real or personal property collateral shall be to bid at such sale in accordance with applicable law. Guarantor acknowledges and agrees that Lender may also bid at any such sale and in the event such collateral is sold to Lender in whole or in partial satisfaction of the Guaranteed Obligations, Guarantor shall have no further right or interest with respect thereto. Notwithstanding anything to the contrary contained herein, no provision of this Guaranty shall be deemed to limit, decrease, or in any way to diminish any rights of set-off Lender may have with respect to any cash, cash equivalents, certificates of deposit or the like which may now or hereafter be put on deposit with Lender by Borrower.

(d)If, after the date hereof, an additional guarantor of obligations owed to Lender hereunder is added, then, to the extent any dispute exists at any time between or among any of the guarantors as to Guarantor’s right to contribution or otherwise, Guarantor agrees to indemnify, defend and hold Lender harmless for, from and against any loss, damage, claim, demand, cost or any other liability (including reasonable attorneys’ fees and costs) Lender may suffer as a result of such dispute.

(e)If from time to time Borrower shall have liabilities or obligations to Guarantor (collectively the “Subordinate Obligations”), such Subordinate Obligations shall be subject to the following terms:

(i)The Subordinate Obligations and any and all assignments as security, grants in trust, liens, mortgages, security interests, other encumbrances, and other interests and rights securing such liabilities and obligations shall at all times be fully subordinate with respect to (1) assignment as security, grant in trust, lien, mortgage, security interest, other encumbrance, and other interest and right (if any), (2) time and right of payment and performance, and (3) rights against any collateral therefor (if any), to payment and performance in full of the Guaranteed Obligations and the right of Lender to realize upon any or all security for such Obligations.

(ii)Guarantor agrees that the Subordinate Obligations shall not be secured by any assignment as security, grant in trust, lien, mortgage, security interest, other encumbrance or other interest or right in any property, interests in property, or rights to property of Borrower.

(iii)Guarantor agrees that all promissory notes, accounts receivable, ledgers, records, or any other evidence of Subordinate Obligations shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under the terms of this Guaranty.

(iv)Guarantor agrees that after the occurrence and during the continuance of a default or Event of Default under the Loan Documents, no payments of

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principal or interest may be made or given, directly or indirectly, by or on behalf of the Borrower or received, accepted, retained or applied by the Guarantor unless and until the Guaranteed Obligations shall have been paid and performed in full. Prior to the occurrence and continuance of a default or Event of Default under the Loan Documents, Guarantor shall have the right to receive payments on the Subordinate Obligations made in the ordinary course of business.

(v)If Guarantor receives any payment from Borrower or any other party on account of the Subordinate Obligations when such payment is not permitted hereunder, such payment shall be held in trust by Guarantor for the benefit of Lender, shall be segregated from the other funds of Guarantor, and shall forthwith be paid by Guarantor to Lender, without affecting the liability of Guarantor under this Guaranty, and applied to payment of the Guaranteed Obligations, whether or not then due.

(vi)Without the prior written consent of Lender, Guarantor shall not (1) file suit against Borrower or exercise or enforce any other creditor's right it may have against Borrower, or (2) foreclose, repossess, sequester, appoint a receiver or otherwise take steps or institute any action or proceedings (judicial or otherwise, including, without limitation, the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor's relief or insolvency proceeding) to enforce any liens, security interests, collateral rights, judgments or other encumbrances held by Guarantor on assets of Borrower.

(vii)To secure the Guaranteed Obligations, Guarantor grants to Lender a lien and security interest in all Subordinate Obligations and any documents or instruments evidencing or pertaining to the Subordinate Obligations, and in all of Guarantor’s right, title, and interest in and to any payments, property, interests in property, or rights to property acquired or received by Guarantor from Borrower in respect of the Subordinate Obligations.

(viii)In the event of any receivership, bankruptcy, reorganization, rearrangement, debtor's relief, or other insolvency proceeding involving Borrower as debtor, Lender shall have the right to prove and vote any claim under the Subordinate Obligations and to receive directly from the receiver, trustee or other court custodian all dividends, distributions, and payments made in respect of the Subordinate Obligations. Lender may apply any such dividends, distributions, and payments against the Guaranteed Obligations in such order and manner as Lender may determine in its sole discretion.

11.Guarantor’s Representations and Warranties. As an inducement to Lender to extend the Loan to Borrower, Guarantor represents and warrants to Lender that the following statements are true, correct and complete as of the date hereof and will be true, correct and complete as of the closing date of the Loan, the date that each Advance is made under the Loan, and each and every date during the term of the Loan.

(a)No approvals, authorizations or consents of any trustee or holder of any indebtedness or obligation of Guarantor are required for the due execution, delivery and performance by Guarantor of this Guaranty or any of the other Loan Documents to which Guarantor is a party.

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(b)This Guaranty and any other Loan Documents to which Guarantor is a party have been duly executed by Guarantor, and are legally, valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general principles of equity.

(c)Other than any Event of Default waived by Lender in writing, there exists no material violation of or material default by Guarantor and no event has occurred which, upon the giving of notice or the passage of time, or both, would constitute a material default with respect to (i) the terms of any instrument evidencing or securing any obligations of Guarantor, (ii) any lease or other agreement to which Guarantor is a party, (iii) any license, permit, statute, ordinance, law, judgment, order, writ, injunction, decree, rule or regulation of any governmental authority, or any determination or award of any arbitrator to or by which Guarantor or Guarantor’s property may be subject or bound, or (iv) any deed of trust, mortgage, security agreement, instrument, or other agreement by which Guarantor or any of its property is bound which, in any such case, is likely, as determined by Lender in its reasonable discretion, to (1) materially and adversely affect the ability of Guarantor to perform its obligations under this Guaranty or any other material instrument, agreement or document to which it is a party, or (2) adversely affect the priority of the liens and security interests created by this Guaranty or any of the other Loan Documents.

(d)There is no action, suit, investigation, proceeding or arbitration (whether or not purportedly on behalf of Guarantor) at law or in equity or before or by any foreign or domestic court or other governmental entity (a “Legal Action”), pending or, to the knowledge of Guarantor, threatened against or affecting Guarantor or any of its assets which could reasonably be expected to materially and adversely affect Guarantor’s ability to perform its obligations under this Guaranty and any of the other Loan Documents to which it is a party. Guarantor is not (i) in violation of any applicable law which violation materially and adversely affects or is reasonably likely to materially and adversely affect Guarantor’s ability to perform its obligations under this Guaranty or any other Loan Documents to which it is a party, or (ii) subject to, or in default with respect to, any other legal requirement that would have a materially adverse effect on Guarantor’s ability to perform its obligations under this Guaranty or any other Loan Documents to which it is a party. There is no Legal Action pending or, to the knowledge of Guarantor, threatened against or affecting Guarantor questioning the validity or the enforceability of this Guaranty or any of the other Loan Documents as to which there is a reasonable likelihood that, upon resolution of such Legal Action, such validity or enforceability will be impaired.

(e)Guarantor has good, sufficient and legal title in all material respects to all properties and assets reflected in its most recent balance sheet or financial statement, as applicable, delivered to Lender.

(f)All tax returns, extension filings, and reports of Guarantor required to be filed by it have been timely filed, and all taxes, assessments, fees and other governmental charges upon Guarantor or upon its properties, assets, income and franchises which are due and

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payable have been paid when due and payable, except to the extent of items which, in the aggregate, are not material to Guarantor’s financial condition. Guarantor does not know of any proposed tax assessment against it or its property that would be material to its financial condition, and Guarantor has not contracted with any government entity in connection with such taxes.

(g)The financial statements and all financial data previously delivered to Lender in connection with the Loan and/or relating to Guarantor are true, correct and complete in all material respects. Such financial statements fairly present the financial position of the subject thereof as of the date thereof. No material adverse change has occurred in such financial position since the date of the most recent of such statements and, except for this Loan, no borrowings have been made by Guarantor since the date thereof which are secured by, or might reasonably give rise to, a lien or claim against the proceeds of the Loan or any collateral that secures the Loan.

12.Financial Covenants; No Transfers.

(a)Guarantor covenants and agrees to provide to Lender the financial statements required with respect to Guarantor as provided in Schedule 6.5 of the Loan Agreement.

(b)Guarantor covenants and agrees to maintain the financial covenants applicable to Guarantor as provided in Schedule 6.18 of the Loan Agreement.

(c)Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or substantially all of Guarantor’s assets or any interest therein. Guarantor further covenants and agrees that no assets belonging to Guarantor (whether or not disclosed in a financial statement or loan application to Lender) have been transferred into an asset protection trust or an irrevocable trust within two (2) years prior to the date of this Guaranty, and Guarantor will not transfer any assets into an asset protection trust or an irrevocable trust while this Guaranty is outstanding without Lender’s prior written consent.

13.Notices. All notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission) and shall be given to such party at its address set forth below. Each such notice, request or other communication shall be effective (a) if given by mail, three (3) days after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, (b) if given by reputable overnight delivery service, when delivered, or (c) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified below.

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    To Lender:    WESTERN ALLIANCE BANK

                2701 East Camelback Road, Suite 110

                Phoenix, Arizona 85016
                Attention: Maria Englert, Vice President

                Email: menglert@westernalliancebank.com

            WESTERN ALLIANCE BANK

                2701 East Camelback Road, Suite 110

                Phoenix, Arizona 85016
                Attention: docs@westernalliancebank.com and

notefinancing@westernalliancebank.com

        To Guarantor:    TERRA PROPERTY TRUST, INC.

    c/o Terra Capital Partners, LLC

    205 West 28th Street, 12th Floor

New York, NY 10001

                Attention: Vik Uppal and Greg Pinkus

     With a copy to:    TERRA CAPITAL PARTNERS, LLC

    205 West 28th Street, 12th Floor

New York, NY 10001

    Attention: Chief Legal Officer

14.Successors and Assigns. This Guaranty shall be binding upon Guarantor, its successors and assigns and shall inure to the benefit of and shall be enforceable by Lender, its successors, endorsees and assigns.

15.Costs of Enforcement. If any or all of the Guaranteed Obligations are not paid when due, Guarantor agrees to pay all costs of enforcement and collection of such Guaranteed Obligations and preparation therefore (including, without limitation, reasonable attorneys’ fees and any amounts disbursed by Lender in connection with enforcing Lender’s remedies under the Loan Documents) whether or not any action or proceeding is brought (including, without limitation, all such costs incurred in connection with any bankruptcy, receivership, or other court proceedings (whether at the trial or appellate level)) together with interest thereon from the date of demand at the default rate applicable to the Note.

16.WAIVER OF DEFENSES AND RELEASE OF CLAIMS. The undersigned hereby (a) represents that neither the undersigned nor any affiliate or principal of the undersigned has any defenses to or setoffs against any indebtedness or other obligations owing by the undersigned, or by the undersigned’s affiliates or principals, to Lender or Lender’s affiliates (the “Liabilities”), nor any claims against Lender or Lender’s affiliates for any matter whatsoever, related or unrelated to the Liabilities, and (b) releases Lender and Lender’s affiliates, officers, directors, employees and agents from all claims, causes of action, and costs, in law or equity, known or unknown, whether or not matured or contingent, existing as of the date hereof that the undersigned has or may have by reason of any matter of any conceivable kind or character

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whatsoever, related or unrelated to the Liabilities, including, without limitation, the subject matter of this Guaranty. The foregoing release does not apply, however, to claims for future performance of express contractual obligations that mature after the date hereof that are owing to the undersigned by Lender or Lender’s affiliates. The undersigned acknowledges that Lender has been induced to enter into or continue the Liabilities by, among other things, the waivers and releases in this paragraph.

17.JURY WAIVER. GUARANTOR WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH GUARANTOR AND LENDER MAY BE PARTIES, ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY PERTAINING TO, THIS GUARANTY, THE LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTION OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS GUARANTY. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR HEREBY REPRESENTS THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. GUARANTOR FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS GUARANTY AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.

18.Right of Setoff. In addition to all liens upon, and rights of setoff against, the monies, instruments, certificates of deposit, securities or other property of Guarantor given to Lender by law, Lender shall have a lien and a right of setoff against, and Guarantor hereby grants to Lender a security interest in, all monies, instruments, certificates of deposit, securities and other property of Guarantor now or hereafter in the possession of or on deposit with Lender, whether held in a general or special account or deposit including any account or deposit held jointly by Guarantor with any other person or entity, or for safekeeping or otherwise, except to the extent specifically prohibited by law. Every such lien, right of setoff and security interest may be exercised without demand upon or notice to Guarantor. No lien, right of setoff, or security interest shall be deemed to have been waived by any act or conduct on the part of Lender, by any neglect to exercise such right of setoff or to enforce such lien or security interest, or by any delay in so doing. The rights and remedies of Lender hereunder are in addition to other rights and remedies (including, without limitation, other rights of setoff) which Lender may have.

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19.GOVERNING LAW; JURISDICTION.

(a)THIS GUARANTY HAS BEEN DELIVERED IN ARIZONA AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES.

(b)Guarantor irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Lender or any affiliate of the Lender in any way relating to this Guaranty or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of Arizona sitting in Maricopa County, and of the United States District Court of the District of Arizona, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such Arizona 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 in this Guaranty or in any other Loan Document shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Guaranty or any other Loan Document against the Guarantor or its properties in the courts of any jurisdiction.

20.No Third Party Beneficiaries. This Guaranty is solely for the benefit of Lender, its successors, endorsees and assigns, and is not intended to nor shall it be deemed to be for the benefit of any third party, including Borrower.

21.Severability. If any provision of this Guaranty is unenforceable, the enforceability of the other provisions shall not be affected and they shall remain in full force and effect.

22.Counterparts. This Guaranty may be executed in counterparts, all of which executed counterparts shall together constitute a single document.

23.Counsel. Guarantor acknowledges that Guarantor has had adequate opportunity to carefully read this Guaranty and to consult with an attorney of Guarantor’s choice prior to signing it.

24.Amendments. No amendment or waiver of any provision of this Guaranty or consent to any departure by Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by Lender.

25.Amended and Restated Guaranty. This Guaranty amends, restates, replaces and supersedes in its entirety that certain Limited Guaranty dated March 12, 2021 given by Guarantor to Lender in connection with that certain Business Loan and Security Agreement (Revolving Line of Credit) dated March 12, 2021 between Borrower and Lender.

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26.General Release of Lender. Except as to the obligations imposed upon Lender as provided herein, Guarantor, on behalf of itself and its successors and assigns, and each of them, does hereby forever relieve, release, acquit and discharge Lender, and its predecessors, successors and assigns, and their respective past and present attorneys, accountants, insurers, representatives, affiliates, partners, subsidiaries, officers, employees, directors, and shareholders, and each of them (collectively, the “Released Parties”), for, from, and against any and all actions, causes of action, claims, debts, damages, demands, liabilities, obligations, and suits, of whatever kind or nature, in law or equity of the Guarantor and, whether now known or unknown to the Borrower, and whether contingent or matured: (i) in respect of any of the Loan Documents, or the actions or omissions of Lender occurring prior to the date of this Guaranty in respect of the obligations, or any duties under the Loan Documents; and (ii) arising from events occurring prior to the date of this Guaranty. Guarantor acknowledges that it has been informed by their attorneys, and are aware of and familiar with the general principle of law which provides that a general release does not extend to claims which a creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with a debtor (the “Unknown Claims”). To the extent applicable, Guarantor expressly waives and relinquishes all rights and benefits they may have under the principle of law relating to the release of Unknown Claims.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day and year first above written.

GUARANTOR:

TERRA PROPERTY TRUST, INC.,

a Maryland corporation

By:/s/ Greg Pinkus____________

Name: Greg Pinkus

Its: Authorized Signatory

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EX-10.4

Exhibit 10.4

FIRST AMENDMENT TO UNCOMITTED MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT

AND OTHER TRANSACTION DOCUMENTS

THIS FIRST AMENDMENT TO UNCOMITTED MASTER REPURCHASE AND SECURITIES CONTRACT AGREEMENT AND OTHER TRANSACTION DOCUMENTS (this “Amendment”), dated as of March 6, 2024, is entered into by and among TERRA MORTGAGE CAPITAL I, LLC, a Delaware limited liability company (“Seller”), TERRA PROPERTY TRUST, INC., a Maryland corporation (“Guarantor”), and GOLDMAN SACHS BANK USA, a New York State member bank (including any successor thereto, “Buyer”). Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Fee Letter (as defined below), and if not defined therein, in the Existing Repurchase Agreement (as defined below).

RECITALS

WHEREAS, Buyer and Seller are parties to that certain Uncommitted Master Repurchase and Securities Contract Agreement, dated as of February 18, 2022 (the “Existing Repurchase Agreement”, as amended by this Amendment, as the same may be further amended, replaced, restated, supplemented or otherwise modified from time to time, the “Repurchase Agreement”);

WHEREAS, in connection with the Existing Repurchase Agreement, Seller and Buyer are parties to that certain Fee Letter, dated as of February 18, 2022 (as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, the “Existing Fee Letter”, as amended by this Amendment, as the same may be further amended, replaced, restated, supplemented or otherwise modified from time to time, the “Fee Letter”);

WHEREAS, in connection with the Existing Repurchase Agreement, Terra Property Trust, Inc., a Maryland corporation (“Guarantor”), delivered for the benefit of Buyer that certain Guarantee Agreement, dated as of February 18, 2022 (as amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to time, the “Existing Guaranty”, as amended by this Amendment, as the same may be further amended, replaced, restated, supplemented or otherwise modified from time to time, the “Guaranty”);

WHEREAS, in connection with the Existing Repurchase Agreement, Terra Mortgage Portfolio I, LLC, a Delaware limited liability company (“Pledgor”), and Buyer are parties to that certain Pledge and Security Agreement, dated as of February 18, 2022 (the “Pledge and Security Agreement”);

WHEREAS, it is a condition to the effectiveness of this Amendment that Pledgor execute the Reaffirmation of Pledgor (attached hereto as Exhibit A) (the “Reaffirmation of Pledgor”);

WHEREAS, the parties hereto desire to make a certain amendments to the Existing Repurchase Agreement and the Existing Fee Letter.

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NOW THEREFORE, in consideration of the foregoing recitals, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1AMENDMENTS TO THE EXTISTING REPURCHASE AGREEMENT

(a)The following defined terms set forth in Article 2 and any references thereto in the Existing Repurchase Agreement are hereby deleted in their entirety: “Outside Repurchase Date Renewal Conditions, ” “Renewal Fee,” “Renewal Period” and “Termination Date Extension Conditions”.

(b)The definition of “Outside Repurchase Date” in Article 2 of the Existing Repurchase Agreement is hereby amended and restated in its entirety as follows:

“Outside Repurchase Date” shall mean February 18, 2025.

(c)The definition of “Termination Date” in Article 2 of the Existing Repurchase Agreement is hereby amended and restated in its entirety as follows:

“Termination Date” shall mean the day that is the later of (a) the Outside Repurchase Date and (b) if the Amortization Extension Period is exercised pursuant to and in accordance with Article 3(j) hereof, the last day of such Amortization Extension Period.

(d)Article 3(i) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(i)[Reserved].

ARTICLE 2AMENDMENT TO THE EXISTING FEE LETTER

(a)The definition of “Renewal Fee” in Section 1 of the Existing Fee Letter is hereby deleted in its entirety.

ARTICLE 3AMENDMENT TO THE EXISTING GUARANTY

(a)Section 9(a)(iv) of the Existing Guaranty is hereby amended and restated in its entirety as follows:

(iv)    permit its Interest Coverage Ratio to be less than 1.4 to 1.0; and

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ARTICLE 1
AMENDMENT TO OTHER TRANSACTION DOCUMENTS

Each Transaction Document is hereby amended such that each reference to the Repurchase Agreement and/or the Fee Letter, as applicable, shall mean the Existing Repurchase Agreement and/or the Existing Fee Letter, as applicable, as modified pursuant to the terms of this Amendment.

ARTICLE 4REPRESENTATIONS

Seller and Guarantor each represents and warrants to Buyer, as of the date of this Amendment, as follows:

(a)all representations and warranties made by it in the Transaction Documents to which it is a party are true and correct in all respects as of the date hereof with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

(b)no Default or Event of Default has occurred and is continuing under or with respect to the Transaction Documents;

(c)no Margin Deficit Notice has been delivered and remains outstanding;

(d)it has no knowledge of any actual or prospective development, event or other fact that could reasonably be expected to have a Material Adverse Effect;

(e)this Amendment is a legal, valid and binding obligation of Seller and Guarantor, as applicable, enforceable against Seller and Guarantor in accordance with its terms subject to bankruptcy, insolvency, and other limitations on creditors’ rights generally and to equitable principles;

(f)it is duly authorized to execute and deliver this Amendment and has taken all necessary action to authorize such execution, delivery and performance;

(g)the person signing this Amendment on its behalf is duly authorized to do so on its behalf;

(h)no consent, approval or other action of, or filing by, Seller and/or Guarantor with any Governmental Authority or any other Person is required to authorize, or is otherwise required in connection with, the execution, delivery and performance of this Amendment (other than consents, approvals and filings that have been obtained or made, as applicable, and any such consents, approvals and filings that have been obtained are in full force and effect);

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(i)the execution, delivery and performance of this Amendment will not violate any Requirement of Law applicable to it, any material contractual obligations by which Seller or Guarantor is bound or to which any assets of Seller or Guarantor are subject or constitute a default thereunder, or result thereunder in the creation or imposition of any Lien upon any of the assets of Seller or Guarantor, other than pursuant to this Amendment and the other Transaction Documents, any judgment or order, writ, injunction, decree or demand of any court applicable to Seller or Guarantor or their respective organizational documents or any agreement by which it is bound or by which any of its assets are affected; and

(j)this Amendment has been duly executed and delivered by it.

ARTICLE 5EXPENSES

Seller shall pay on demand all of Buyer’s actual out-of-pocket costs and expenses, including reasonable fees and expenses of Buyer’s outside counsel, incurred in connection with the preparation, negotiation, execution and consummation of this Amendment.

ARTICLE 6CONDITIONS PRECEDENT

(a)The effectiveness of this Amendment is subject to the delivery to Buyer of the following:

(1)the execution and delivery of this Amendment by a duly authorized officer(s) of Seller and Guarantor; and

(2)the execution and delivery of the Reaffirmation of Pledgor by a duly authorized officer of Pledgor.

(b)Buyer hereby acknowledges (i) payment of the Renewal Fee (as defined in the Existing Fee Letter) by Seller, and receipt of the same by Buyer, on or prior to the date hereof and (ii) satisfaction of the Outside Repurchase Date Renewal Conditions (as defined in the Existing Repurchase Agreement) as of the date hereof.

ARTICLE 7REAFFIRMATION AND ACKNOWLEDGMENT

Seller and Guarantor each hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, and grants of security interests and liens in favor of Buyer, under each Transaction Document to which it is a party, (ii) agrees and acknowledges that such ratification and reaffirmation is not a condition to the continued effectiveness of such Transaction Documents, and (iii) agrees that neither such ratification and

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reaffirmation, nor Buyer’s solicitation of such ratification and reaffirmation, constitutes a course of dealing giving rise to any obligation or condition requiring a similar or any other ratification or reaffirmation from Seller, Guarantor and/or Pledgor with respect to any subsequent modifications to the Transaction Documents.  The Existing Repurchase Agreement, the Existing Fee Letter and the Existing Guaranty (each as amended by this Amendment) and the other Transaction Documents shall remain in full force and effect and are hereby ratified and confirmed.

ARTICLE 8GOVERNING LAW

THIS AMENDMENT (AND ANY CLAIM OR CONTROVERSY HEREUNDER) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTION 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

ARTICLE 9MISCELLANEOUS

(a)Except as expressly amended or modified hereby, the Transaction Documents shall remain in full force and effect in accordance with their terms and are hereby ratified and confirmed. All references to the Transaction Documents shall be deemed to mean the Transaction Documents as modified by this Amendment.

(b)This Amendment may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment in electronic format shall be as effective as delivery of a manually executed original counterpart of this Amendment.

(c)The headings in this Amendment are for convenience of reference only and shall not affect the interpretation or construction of this Amendment.

(d)This Amendment may not be amended or otherwise modified, waived or supplemented except as provided in the Existing Repurchase Agreement.

(e)This Amendment contains a final and complete integration of all prior expressions by the parties with respect to the subject matter hereof and shall constitute the entire agreement between the parties with respect to such subject matter, superseding all prior oral or written understandings.

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(f)This Amendment and the Fee Letter, as amended hereby, are a single Transaction Document.

[SIGNATURES FOLLOW]

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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed, as of the date first above written.

GOLDMAN SACHS BANK USA, as Buyer

By: /s/ Prachi Bansal
Name: Prachi Bansal
Title: Authorized Person

[SIGNATURES CONTINUE ON FOLLOWING PAGE]

[GS/Mavik – Signature Page to First Amendment to Uncommitted Master Repurchase and Securities Contract Agreement and Other Transaction Documents]

TERRA MORTGAGE CAPITAL I, LLC, as Seller

By: /s/ Gregory Pinkus
Name: Gregory Pinkus
Title: Authorized Signatory

TERRA PROPERTY TRUST, INC., as Guarantor

By:    /s/ Gregory Pinkus

    Name: Gregory Pinkus
Title: Authorized Signatory

[GS/Mavik – Signature Page to First Amendment to Uncommitted Master Repurchase and Securities Contract Agreement and Other Transaction Documents]

Exhibit A

Reaffirmation of Pledgor

REAFFIRMATION OF PLEDGOR

THIS REAFFIRMATION OF PLEDGOR (this “Reaffirmation”), dated as of March 6, 2024, by TERRA MORTGAGE PORTFOLIO I, LLC, a Delaware limited liability company (“Pledgor) in connection with that certain First Amendment to Uncommitted Master Repurchase and Securities Contract Agreement and Other Transaction Documents, dated as of the date hereof (the “Amendment”), by and among TERRA MORTGAGE CAPITAL I, LLC, a Delaware limited liability company (“Seller”), TERRA PROPERTY TRUST, INC., a Maryland corporation (“Guarantor”), and Goldman Sachs Bank USA, a New York State member bank (including any successor thereto, “Buyer”), to which this Reaffirmation is attached. Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Pledge and Security Agreement (as defined below).

A.    Pledgor hereby (i) ratifies and reaffirms all of its obligations, contingent or otherwise under that certain Pledge and Security Agreement, dated as of February 18, 2022, by and between Pledgor and Buyer (the “Pledge and Security Agreement”), made for the benefit of Buyer, (ii) agrees and acknowledges that such ratification and reaffirmation is not a condition to the continued effectiveness of the Pledge and Security Agreement and (iii) agrees that neither such ratification and reaffirmation, nor Buyer’s solicitation of such ratification and reaffirmation, constitutes a course of dealing giving rise to any obligation or condition requiring a similar or any other ratification or reaffirmation from Pledgor with respect to any subsequent modifications to the Fee Letter or any other Transaction Document.  The Pledge and Security Agreement remains in full force and effect and is hereby ratified and confirmed.

B. Pledgor hereby acknowledges, agrees and approves the Amendment.

C. Pledgor represents and warrants to Buyer, as of the date of this Reaffirmation, as follows:

1. all representations and warranties made by it in Section 4 of Pledge and Security Agreement true and correct in all material respects (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

2. it is duly authorized to execute and deliver this Reaffirmation and has taken all necessary action to authorize such execution, delivery and performance;

3. the person signing this Reaffirmation on its behalf is duly authorized to do so on its behalf;

4. the execution, delivery and performance by Pledgor of this Reaffirmation and the consummation of the transactions contemplated hereunder do not, and will not violate any Requirement of Law to which Pledgor is subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any material contract, agreement or other instrument to which Pledgor is a party to or which Pledgor is bound by, and in each case that would have a Material Adverse Effect;

1

5. this Reaffirmation is a legal and binding obligation of Pledgor and is enforceable against Pledgor in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights and subject, as to enforceability, to general principals of equity, regardless of whether enforcement is sought in a proceeding in equity or at law; and

6. this Reaffirmation has been duly executed and delivered by it.

D.    THIS REAFFIRMATION SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

E.    This Reaffirmation may be executed in counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Reaffirmation in electronic format shall be as effective as delivery of a manually executed original counterpart of this Reaffirmation.

[SIGNATURES FOLLOW]

2

BUSINESS.31073163.4

PLEDGOR:

TERRA MORTGAGE PORTFOLIO I, LLC,

a Delaware limited liability company

By:    /s/ Gregory Pinkus
Name: Gregory Pinkus
Title: Authorized Signatory

[GS/Mavik – Signature Page to Reaffirmation of Pledgor]

EX-10.5

Exhibit 10.5

AMENDMENT NO. 1 TO PRICING LETTER

AMENDMENT NO. 1 TO PRICING LETTER, dated as of March 7, 2024 (this “Amendment”), between TERRA MORTGAGE CAPITAL III, LLC, a Delaware limited liability company (“Seller”) and UBS AG, by and through its branch office at 1285 Avenue of the Americas, New York, New York (“Buyer”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Repurchase Agreement or, if not defined therein, in the Repurchase Agreement (as defined below).

RECITALS

WHEREAS, Seller and Buyer are parties to that certain Uncommitted Master Repurchase Agreement, dated as of November 8, 2021, as amended by that certain Amendment No. 1 to Uncommitted Master Repurchase Agreement, dated as of May 24, 2022 (as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”);

WHEREAS, in connection with the Repurchase Agreement, Buyer and Seller entered into that certain Pricing Letter, dated as of November 8, 2021 (as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Pricing Letter”); and

WHEREAS, Buyer and Seller have agreed to amend certain provisions of the Pricing Letter in the manner set forth herein.

Therefore, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree as follows:

SECTION 1.Pricing Letter Amendment. The defined term “Maximum Aggregate Purchase Price”, as set forth in Section 1 of the Repurchase Agreement, is hereby amended and restated in its entirety to read as follows:

“Maximum Aggregate Purchase Price” shall mean $0.

SECTION 2.Conditions Precedent. This Amendment and its provisions shall become effective on the first date on which this Amendment is executed and delivered by a duly authorized officer of each of Seller and Buyer.

SECTION 3.Representations, Warranties and Covenants. Seller hereby represents and warrants to Buyer, as of the date hereof that (i) it is in compliance with all of the terms and provisions of the Repurchase Agreement and the Pricing Letter, (ii) no Default or Event of Default, each as defined in the Repurchase Agreement, has occurred or is continuing, (iii) all representations and warranties of Seller set forth in the Repurchase Agreement are true and correct in all material respects, and (iv) this Amendment has been duly executed and delivered by or on behalf of Seller and constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms subject to applicable bankruptcy, insolvency, and other limitations on creditors’ rights generally and to equitable principles.

SECTION 4.Limited Effect. Except as expressly amended and modified by this Amendment, the Repurchase Agreement, Pricing Letter and each of the other Program Documents shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the date hereof: (i) each reference therein and herein to the “Program Documents” shall be deemed to include, in any event, this Amendment, (ii) each reference to the “Pricing Letter” in any of the Program Documents shall be deemed to be a reference to the Pricing Letter, as amended by this Amendment, and (iii) each reference in the Pricing Letter, to “this Agreement”, “hereof”, “herein” or words of similar effect in referring to the Pricing Letter, shall be deemed to be references to the Pricing Letter, as amended by this Amendment.

SECTION 5.No Novation, Effect of Agreement.  Seller and Buyer have entered into this Amendment solely to amend the terms of the Pricing Letter and do not intend this Amendment or the transactions contemplated hereby to be, and this Amendment and the transactions contemplated hereby shall not be construed to be, a novation of any of the obligations owing by any of Seller or Guarantor (the “Repurchase Parties”) under or in connection with the Pricing Letter or any of the other Program Document.  It is the intention of each of the parties hereto that (i) the perfection and priority of all security interests securing the payment of the obligations of the Repurchase Parties under the Pricing Letter and the other Program Documents are preserved, (ii) the liens and security interests granted under the Pricing Letter continue in full force and effect, and (iii) any reference to the Pricing Letter in any such Program Document shall be deemed to also reference this Amendment.

SECTION 6.Counterparts. This Amendment may be executed in multiple counterparts, all of which shall together be considered one and the same agreement. This Amendment shall be valid, binding and enforceable against a party when executed and delivered by an authorized individual on behalf of the party by means of (i) an original manual signature; (ii) a faxed, scanned or photocopied manual signature; or (iii) any other electronic signature

    -2-

permitted by the federal Electronic Signatures in Global and National Commerce Act, state enactments of the Uniform Electronic Transaction Act, and/or any other relevant electronic signatures law, including any relevant provisions of the Uniform Commercial Code (collectively, “Signature Law”), in each case, to the extent applicable. Each faxed, scanned, or photocopied manual signature, or other electronic signature, shall for all purposes have the same validity, legal effect, and admissibility in evidence as an original manual signature. Each party hereto shall be entitled to conclusively rely upon, and shall have no liability with respect to, any faxed, scanned, or photocopied manual signature, or other electronic signature, of any other party and shall have no duty to investigate, confirm or otherwise verify the validity or authenticity thereof. For the avoidance of doubt, original manual signatures shall be used for execution or indorsement of writings when required under the Uniform Commercial Code or other Signature Law due to the character or intended character of the writings.

SECTION 7.Expenses. Seller agrees to pay and reimburse Buyer for all reasonable and documented out-of-pocket costs and expenses actually incurred by Buyer in connection with the preparation, execution and delivery of this Amendment, including, without limitation, the reasonable and documented fees and disbursements of counsel to Buyer.

SECTION 8.Consent to Jurisdiction; Waiver of Jury Trial. Each party irrevocably and unconditionally (i) submits to the non-exclusive jurisdiction of any United States Federal or New York State court sitting in Manhattan, and any appellate court from any such court, solely for the purpose of any suit, action or proceeding brought to enforce its obligations under this Amendment or relating in any way to this Amendment or any Transaction under the Repurchase Agreement and (ii) waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding and irrevocably consent to the service of any summons and complaint and any other process by the mailing of copies of such process to them at their respective address specified in the Repurchase Agreement. The parties hereby agree that a final judgment in any such action 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 in this Section 8 shall affect the right of the Buyer to serve legal process in any other manner permitted by law or affect the right of the Buyer to bring any action or proceeding against the Guarantor or its property in the courts of other jurisdictions.

SECTION 9.GOVERNING LAW. THIS AMENDMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO OR IN CONNECTION WITH THIS AMENDMENT, THE RELATIONSHIP OF THE PARTIES, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES

    -3-

OF THE PARTIES WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES FOLLOW]

    -4-

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

BUYER:

UBS AG, by and through its branch office at 1285 Avenue of the Americas, New York, New York

By:    /s/ Michael Zoccoli
Name: Michael Zoccoli
Title: Executive Director

By:    /s/ Nicholas Martin
Name: Nicholas Martin
Title: Associate Director

Signature Page to Amendment No. 1 to Pricing Letter (UBS – Terra)

SELLER:

TERRA MORTGAGE CAPITAL III, LLC, a
Delaware limited liability company

By:    /s/ Gregory Pinkus
Name: Gregory Pinkus
Title: Authorized Signatory

Signature Page to Amendment No. 1 to Pricing Letter (UBS – Terra)

EX-10.6

EXHIBIT 10.6

UBS AG, by and through its branch office at
1285 Avenue of the Americas, New York, New York
1285 Avenue of the Americas
New York, New York 10019

March 7, 2024

Terra Mortgage Capital III, LLC
205 West 28th Street

12th Floor

New York, New York 10001

Re:    Uncommitted Master Repurchase Agreement, dated as of November 8, 2021 , as amended by that certain Amendment No. 1 to Uncommitted Master Repurchase Agreement, dated as of May 24, 2022 (as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”) between UBS AG, by and through its branch office at 1285 Avenue of the Americas, New York, New York and its successors and assigns (“Buyer”) and TERRA MORTGAGE CAPITAL III, LLC (“Seller”)

Ladies and Gentlemen:

    Reference is made to the Repurchase Agreement (as defined above). All capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to those terms in the Repurchase Agreement. In connection with the Repurchase Agreement, Buyer and Seller entered into that certain Pricing Letter, dated as of November 8, 2021 (as amended by that certain Amendment No. 1 to Pricing Letter, dated as of March 7, 2024 (the “Pricing Letter Amendment”) and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Pricing Letter”). Pursuant to the Pricing Letter Amendment, Buyer and Seller agreed to reduce the Maximum Aggregate Purchase Price to “$0”.

    Seller has requested, and Buyer has agreed, in accordance with the terms and conditions set forth in this letter agreement (this “Letter”), to grant a temporary waiver of each of Seller and Guarantor’s obligations under the Repurchase Agreement or any other Program Document concerning (i) the payment of any fees, including any fees that have accrued or been unpaid as of the date hereof and (ii) the meeting of any representations, warranties or covenants (the “Specified Waivers”) for a period commencing on December 31, 2023 and terminating on the date that the parties agree to enter into an amendment to the Repurchase Agreement increasing the Maximum Aggregate Purchase Price (the “Waiver Period”). The Buyer, Guarantor and Seller agree that, during the continuance of the Waiver Period, no Event of Default shall be deemed to have occurred with respect to the Specified Waivers and that, notwithstanding anything to the contrary in the Repurchase Agreement, Buyer may terminate the Repurchase Agreement at will by delivering written notice of such termination to Seller. Further, so long as the Maximum Aggregate Purchase price is zero, Seller shall not be required to deliver an officer’s certificate.

This waiver shall not be construed to apply on an ongoing basis to the obligation of Seller or Guarantor to comply with such terms and conditions under the Repurchase Agreement or any other

Program Document or any other requirement set forth in the Repurchase Agreement or any other Program Document.

    By signing this Letter below, Guarantor and Seller hereby represent and warrant that, as of the date of this Letter: (i) each of the representations and warranties made by Seller pursuant to the Repurchase Agreement and made by Guarantor pursuant to the Guarantee are true and correct in all material respects as of the date hereof unless such representation or warranty expressly relates only to a prior date and in which case such representation or warranty was true and correct in all material respects as of such prior date; (ii) Guarantor has performed in all material respects all agreements and satisfied all conditions that the Guarantee requires to be performed or satisfied by Guarantor and Seller has performed in all material respects all agreements and satisfied all conditions that the Repurchase Agreement requires to be performed or satisfied by Seller; (iii) except as expressly waived herein, no Event of Default has occurred and is continuing and, to knowledge of Guarantor and Seller, no Default has occurred and is continuing; and (iv) neither Guarantor nor Seller have any, and Guarantor and Seller hereby waive all defenses, rights of setoff, claims, counterclaims or causes of action of any kind or description against Buyer arising under or in respect of the Guarantee, the Repurchase Agreement or any other related document.

    The waiver set forth herein shall automatically expire at the end of the Waiver Period. Further, during the Waiver Period, other than as expressly set forth herein with respect to the Specified Covenant during the Waiver Period, this Letter shall not be construed as an agreement by Buyer to waive any Event of Default (other than as expressly set forth in this Letter) or any action or inaction on the part of Seller, Guarantor or any other Person. Except as expressly provided hereby, all of the terms and provisions of the Guarantee, the Repurchase Agreement and the other Program Documents are and shall remain in full force and effect, and all rights of Buyer thereunder and under applicable law are expressly reserved.

    Nothing set forth in this Letter shall (a) cure any breach, Default or Event of Default under any Program Document, (b) constitute a waiver (except as expressly set forth in this Letter), impairment, modification, alteration, amendment or release of any of the requirements of the Program Documents or of Buyer’s various rights, privileges, powers, claims or remedies pursuant to the Program Documents, at law or in equity, all of which rights, privileges, powers, claims and remedies are hereby expressly reserved, (c) constitute a course of dealing, or (d) constitute a commitment or any agreement to make a commitment with respect to any possible further waiver, amendment, consent or other modification of the terms provided in the Program Documents, each of which Program Documents remain in full force and effect in accordance with their respective terms.

    This Letter and any claim, controversy or dispute arising under or related to this Letter, the relationship of the parties to this Letter, and/or the interpretation and enforcement of the rights and duties of the parties to this Letter shall be governed by and construed in accordance with the internal laws and decisions of the State of New York, without regard to the choice of law rules thereof. The parties hereto intend that the provisions of Section 5-1401 and Section 5-1402 of the New York General Obligations Law shall apply to this Letter.

    This Letter may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument, and the words “executed,” “signed,” “signature,” and words of like import as used above and elsewhere in this Letter or in any other certificate, agreement or document related to this transaction shall include, in

addition to manually executed signatures, images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf”, “tif” or “jpg”) and other electronic signatures (including, without limitation, any electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.

[Signatures contained on following pages]

Very truly yours,

UBS AG, by and through its branch office at 1285 Avenue of the Americas, New York, New York, as Buyer

By:     /s/ Michael Zoccoli
Name: Michael Zoccoli
Title: Executive Director

By:     /s/ Nicholas Martin
Name: Nicholas Martin
Title: Associate Director

Signature Page to Waiver Letter (UBS – Terra)

Acknowledged and agreed:

TERRA MORTGAGE CAPITAL III, LLC, a

    Delaware limited liability company, as Seller

By:    /s/ Gregory Pinkus
Name: Gregory Pinkus
Title: Authorized Signatory

TERRA PROPERTY TRUST, INC., a Maryland corporation, as Guarantor

By:    /s/ Gregory Pinkus
Name: Gregory Pinkus
Title: Authorized Signatory

Signature Page to Waiver Letter (UBS – Terra)

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:	May 13, 2024
		/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:	May 13, 2024
		/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 quarter ended March 31, 2024, 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:	May 13, 2024
		/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	3 Months Ended
	Mar. 31, 2024	May 13, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
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
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		24,336,582
Entity Central Index Key	0001674356
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Assets
Cash and cash equivalents	$ 17,914,875	$ 10,674,475
Restricted cash	4,097,364	3,954,986
Cash held in escrow by lender	4,541,731	4,907,316
Marketable securities	3,174,690	4,961,879
Total, net of allowance for credit losses	415,259,263	456,472,258
Equity investment in unconsolidated investments	42,525,905	37,171,326
Real estate owned, net (Note 5)
Land, building and building improvements, net	125,948,852	126,724,333
Lease intangible assets, net	8,534,578	9,869,364
Interest receivable	8,014,178	6,537,368
Other assets	9,090,039	8,811,583
Total assets	640,193,823	670,740,151
Liabilities:
Unsecured notes payable, net	118,872,834	118,380,897
Secured financing agreements, net	258,749,238	290,525,313
Obligations under participation agreements (Note 7 )	15,137,755	0
Interest reserve and other deposits held on investments	4,097,364	3,954,986
Lease intangible liabilities, net (Note 5)	6,014,031	6,838,875
Interest payable	1,408,314	1,575,463
Accounts payable and accrued expenses	1,654,112	2,405,749
Unearned income	455,497	314,260
Total liabilities	409,705,933	429,086,343
Commitments and contingencies (Note 9)
Equity:
Preferred stock	0	0
Additional paid-in capital	444,462,676	444,458,206
Accumulated deficit	(213,882,368)	(203,047,758)
Accumulated other comprehensive loss	(335,782)	0
Total equity	230,487,890	241,653,808
Total liabilities and equity	640,193,823	670,740,151
Class A Common Stock
Equity:
Common stock	0	0
Class B Common Stock
Equity:
Common stock	243,364	243,360
Related Party
Real estate owned, net (Note 5)
Due from related parties	1,092,348	655,263
Liabilities:
Other liabilities	2,381,620	4,183,293
Nonrelated Party
Liabilities:
Other liabilities	935,168	907,507
Loans held for investment
Assets
Total, net of allowance for credit losses	377,169,978	417,913,773
Loans held for investment acquired through participation
Assets
Total, net of allowance for credit losses	$ 38,089,285	$ 38,558,485

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Consolidated Balance Sheets (Parentheticals) - USD ($)	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Oct. 01, 2022	Mar. 02, 2020
Loans held for investment, net of allowance for credit losses	$ 58,743,795	$ 56,976,025
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	50,000,000	50,000,000
Preferred stock, issued (in shares)	0	0
Common stock, shares authorized (in shares)				950,000,000
Common stock, shares, issued (in shares)					4,574,470.35
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
Common stock, shares, issued (in shares)	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
Common stock, shares, issued (in shares)	24,336,424	24,336,033
Common stock, shares, outstanding (in shares)	24,336,424	24,336,033
Loans held for investment
Loans held for investment, net of allowance for credit losses	$ 58,055,856	$ 56,749,498
Loans held for investment acquired through participation
Loans held for investment, net of allowance for credit losses	$ 687,939	$ 226,527

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Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenues
Interest income	$ 12,148,735	$ 15,615,807
Real estate operating revenue	2,719,701	1,332,969
Other operating income	140,909	53,395
Total revenues	15,009,345	17,002,171
Operating expenses
Operating expenses reimbursed to Manager	2,178,164	2,177,004
Asset management fee	1,715,042	1,997,427
Asset servicing fee	406,525	470,525
Provision for (reversal of provision for) credit losses	1,873,111	(850,051)
Real estate operating expenses	691,006	1,209,912
Depreciation and amortization	2,116,682	681,813
Professional fees	885,569	979,895
Directors’ fees	83,750	96,464
Other	262,911	215,244
Operating expenses	10,212,760	6,978,233
Operating income	4,796,585	10,023,938
Other income and expenses
Interest expense on secured financing	(7,289,912)	(6,119,731)
Interest expense on unsecured notes payable	(2,440,375)	(2,394,306)
Interest expense on obligations under participation agreements	(618,495)	(532,146)
Unrealized (loss) gain on investments, net	(22,931)	6,584
Loss from equity investment in unconsolidated investments	(473,387)	(436,860)
Realized loss on investments, net	(135,459)	0
Total other income and expense	(10,980,559)	(9,476,459)
Net loss	(6,183,974)	547,479
Series A preferred stock dividend declared	0	(3,907)
Net (loss) income allocable to common stock	(6,183,974)	543,572
Other Comprehensive loss
Available-for-sale debt securities	(335,782)	0
Other comprehensive loss	(335,782)	0
Comprehensive (loss) income	$ (6,519,756)	$ 543,572
(Loss) income per share — basic (in usd per share)	$ (0.25)	$ 0.02
(Loss) income per share — diluted (in usd per share)	$ (0.25)	$ 0.02
Weighted-average shares — basic (in shares)	24,336,157	24,335,373
Weighted-average shares — diluted (in shares)	24,336,157	24,335,373
Distributions declared per common share (in usd per share)	$ 0.19	$ 0.19

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Consolidated Statements of Changes in Equity - USD ($)	Total	Cumulative Effect, Period of Adoption, Adjustment	Class B Common Stock	Preferred Stock Preferred Stock	Preferred Stock 12.5% Series A Cumulative Non-Voting Preferred 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	Accumulated Other Comprehensive loss
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
Common stock, beginning balance (in shares) at Dec. 31, 2022						0	24,335,370
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued from reinvestment of shareholder distributions (in shares)	34						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	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, 2023	$ 241,653,808			0		$ 0	$ 243,360	444,458,206	(203,047,758)		$ 0
Common stock, beginning balance (in shares) at Dec. 31, 2023			24,336,033			0	24,336,033
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued from reinvestment of shareholder distributions (in shares)	391						391
Shares issued from reinvestment of shareholder distributions	$ 4,474						$ 4	4,470
Distributions declared on common shares	(4,650,636)								(4,650,636)
Net loss	(6,183,974)								(6,183,974)
Available-for-sale debt securities	(335,782)										(335,782)
Ending balance at Mar. 31, 2024	$ 230,487,890			$ 0		$ 0	$ 243,364	$ 444,462,676	$ (213,882,368)		$ (335,782)
Common stock, ending balance (in shares) at Mar. 31, 2024			24,336,424			0	24,336,424

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Consolidated Statements of Changes in Equity (Parentheticals) - $ / shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Oct. 01, 2022
Distributions declared per common share (in usd per share)	$ 0.19	$ 0.19
Class A Common Stock
Common stock, par or stated value per share (in usd per share)	0.01	0.01	$ 0.01	$ 0.01
Class B Common Stock
Common stock, par or stated value per share (in usd per share)	$ 0.01	$ 0.01	$ 0.01
12.5% Series A Cumulative Non-Voting Preferred Stock
Preferred stock, dividend rate, percentage		12.50%

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Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net (loss) income	$ (6,183,974)	$ 547,479
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	2,116,682	681,813
Provision for (reversal of provision for) credit losses	1,873,111	(850,051)
Amortization of net purchase premiums on loans	78,132	346,780
Straight-line rent adjustments	(58,436)	27,813
Amortization of deferred financing costs	978,280	535,276
Amortization of discount on unsecured notes payable	445,205	402,571
Amortization of above- and below-market rent intangibles	(824,843)	(34,764)
Amortization and accretion of investment-related fees, net	(475,630)	(4,745)
Amortization of above-market rent ground lease	0	(32,587)
Realized loss on investments, net	135,459	0
Unrealized loss (gain) on investments, net	22,931	(6,584)
Distributions received from equity investment in unconsolidated investments	648,911	4,050,553
Loss from equity investment in unconsolidated investments	473,387	1,010,625
Changes in operating assets and liabilities:
Deal deposits	0	4,241,892
Interest receivable	(1,476,810)	(1,127,241)
Due from related parties	(437,085)	(138,508)
Other assets	999,329	(806,166)
Due to Manager	(1,646,207)	0
Unearned income	141,237	0
Interest payable	(167,149)	424,772
Accounts payable and accrued expenses	(751,637)	402,443
Other liabilities	(77,673)	(1,010,363)
Net cash (used in) provided by operating activities	(4,186,780)	8,661,008
Cash flows from investing activities:
Proceeds from repayments of loans	46,981,320	59,177,506
Origination and purchase of loans	(7,173,474)	(46,214,722)
Purchase of equity interests in unconsolidated investments	(6,476,877)	0
Funding for promissory note receivable	(1,225,656)	0
Proceeds from sale of marketable securities	1,292,897	0
Purchase of real estate properties	0	(48,798,273)
Purchase of held-to-maturity securities	0	(20,025,024)
Return of capital on equity interests in unconsolidated investments	0	3,870,322
Net cash provided by (used in) investing activities	33,398,210	(51,990,191)
Cash flows from financing activities:
Principal repayments on secured financing	(84,780,619)	(19,230,071)
Proceeds from secured financing	53,019,501	68,264,993
Proceeds from obligations under participation agreements	15,000,000	521,886
Distributions paid	(4,646,162)	(4,653,921)
Payment of financing costs	(929,335)	(844,415)
Change in interest reserve and other deposits held on investments	142,378	(21,410)
Redemption of Series A Preferred Stock	0	(125,000)
Net cash (used in) provided by financing activities	(22,194,237)	43,912,062
Net increase in cash, cash equivalents and restricted cash	7,017,193	582,879
Cash, cash equivalents and restricted cash at beginning of period	19,536,777	36,469,592
Cash, cash equivalents and restricted cash at end of period (Note 2)	26,553,970	37,052,471
Supplemental Disclosure of Cash Flows Information:
Cash paid for interest	9,091,697	7,683,565
Supplemental non-cash information:
Reinvestment of shareholder distributions	$ 4,474	$ 478

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Business

3 Months Ended

Mar. 31, 2024

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”) is a real estate investment trust (“REIT”) that originates, invests in and manages a diverse portfolio of real estate and real estate-related assets. The Company was incorporated under the Maryland General Corporation Law on December 31, 2015. The Company focuses primarily on commercial real estate credit investments, including first mortgage loans, subordinated loans (including B-notes, mezzanine and preferred equity) and credit facilities throughout the United States. The Company’s loans finance the acquisition, development or recapitalization of high-quality commercial real estate in the United States. The Company focuses on middle market loans in the approximately $10 million to $50 million range, which in the Company’s experience have been subject to less competition, offer higher risk-adjusted returns than larger loans with similar risk metrics and facilitate portfolio diversification. The Company may also make strategic real estate equity and non-real estate-related investments that align with its investment objectives and criteria.

    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 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 (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 7). 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. Pursuant to the terms of the transactions described in the Merger Agreement, approximately 4,847,910 shares of the Company’s Class B Common Stock, $0.01 par value per share (“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 October 1, 2022.

On December 20, 2023, Terra Fund 5 announced that effective December 29, 2023 (the “Distribution Date”), Terra Fund 5 would distribute all of its shares of the Company’s Class B Common Stock to its members as part of the winding up of Terra Fund 5. On the Distribution Date, each member of Terra Fund 5 received 2,252.02 shares of the Company’s Class B Common Stock for each unit of membership interest in Terra Fund 5 held by such member. Because Terra Fund 5 previously owned its interests in the shares of Class B Common Stock indirectly through its ownership of interests in Terra JV, LLC (“Terra JV”), prior to the Distribution Date, Terra JV first distributed the shares of Class B Common Stock to Terra Fund 5 and Terra Secured Income Fund 7, LLC (“Terra Fund 7”), and Terra Fund 5 then distributed those shares to its members on the Distribution Date and Terra Fund 7 became a direct stockholder of the Company’s Class B Common Stock.

As of March 31, 2024, Terra Fund 7 and Terra Offshore Funds REIT, LLC (“Terra Offshore REIT”) held 8.7% and 10.1%, respectively, of the issued and outstanding shares of the Company’s common stock.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

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 4).

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. Amortized cost is the amount at which a financing receivable or a loan is originated or acquired, adjusted for accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash and write-offs.

Allowance for Credit Losses

On January 1, 2023, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses. ASC 326 mandates the use of a current expected credit loss (“CECL”) methodology for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” methodology previously required under United States generally accepted accounting principles (“U.S. GAAP”). The CECL methodology requires the consideration of possible credit losses over the life of an instrument as opposed to estimating credit losses upon the occurrence of an actual loss event under the previous “incurred loss” methodology. 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 ASC 326 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 member’s capital as of January 1,

2023. Subsequent to the adoption of the CECL methodology, any increase or decrease to the allowance for credit losses is recorded in earnings on the consolidated statement of operations.

Performing Loans

The Company uses a model-based approach for estimating the allowance for credit losses on performing loans on a collective basis, including future funding commitments for which the Company does not have the unconditional right to cancel, as these loans share similar risk characteristics. The Company utilizes information obtained from internal and external sources relating to past events, current economic conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. The Company utilizes a commercial mortgage-based, third-party loan loss model and because the Company does not have a meaningful history of realized credit losses on its loan portfolio, it subscribes to a database service to provide historical proxy loan loss information. The Company 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 has chosen to incorporate a weighted average macroeconomic forecast that encompasses baseline, optimistic and pessimistic scenarios, into its allowance for credit losses on performing loans estimate during the reasonable and supportable forecast period which is currently eight quarters. The Company selects certain economics variables from a group of independent variables such as Commercial Real Estate Price Index, unemployment and interest rate which are included in the model as part of macroeconomic forecast and updated regularly based on current economic trends. On a quarterly basis, adjustments to the weights ascribed to the multiple macroeconomic forecast scenarios are made in response to changes in expectations of macroeconomic conditions such as inflation and interest rates. The specific loan level information input into the model includes 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. Based on the inputs, the loan loss model determines a loan loss rate through the generation of a probability of default (PD) and loss given default (LGD) for each loan. The allowance for credit losses on performing loans is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. A significant amount of judgment is applied in selecting inputs and analyzing results produced by the models to determine the allowance for credit losses on performing loans. Changes in such estimates can significantly affect the expected credit losses.

Beyond the Company’s reasonable and supportable forecast period, the Company reverts to historical loss information on a straight-line basis over the remaining contractual loan term, 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 determination of the performing loans credit loss estimate considers historical loss information and current economic conditions for each loan, reversion period 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. The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed.

The Company also performs a qualitative assessment and applies qualitative adjustments as necessary, usually due to limitations of the loan loss model. 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 certain contractual extension options, renewals, modifications, and prepayments.

Unfunded Commitments

Some of the Company’s performing 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 methodology because the Company does not have an unconditional right to cancel such commitments. The allowance for credit losses related to unfunded commitments is recorded as a component of other liabilities on the Company’s consolidated balance sheets. This allowance for credit losses is estimated using the same method outlined above for the Company’s outstanding performing loan balances and increases or decreases are also recorded in earnings on the consolidated statements of operations.

Non-Performing Loans

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.

Loans Not Secured by Real Estate

The Company has two loans that are not secured by real estate. These loans, which are included in other assets on the consolidated balance sheets, are recorded at amortized cost. The Company performs a separate analysis based on recoverability to determine the allowance for credit losses on these loans. As of March 31, 2024, the Company did not record any allowance for credit losses on these two loans because the Company believes that it will be able to collect all outstanding interest and principal on or before the maturity date of each loan.

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 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.

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

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

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 provides 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.

As of October 19, 2023, in connection with the deed in lieu of foreclosure discussed in Note 5, the Company is no longer a party to the ground lease and the related ROU assets and liabilities were written off.

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 interest and principal becomes not probable. 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 may 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:

	March 31,
	2024		2023
Cash and cash equivalents	$	17,914,875	$	28,869,594
Restricted cash	4,097,364		4,611,794
Cash held in escrow by lender	4,541,731		3,571,083
Total cash, cash equivalents and restricted cash shown in the consolidated    statements of cash flows	$	26,553,970	$	37,052,471

 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 not probable. See “Obligations Under Participation Agreements” in Note 8 for additional information.

Secured Financing Agreements, Net

The Company's secured financing agreements include two master repurchase agreements, a revolving line of credit, non-recourse property mortgages, note-on-note financing arrangements and a term loan. The Company accounts for borrowings under these financing arrangements as secured transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees. See “Secured Financing Arrangements” in Note 8 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 amortized 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 March 31, 2024, 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 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 months ended March 31, 2024 and 2023, 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 2020-2023 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 March 31, 2024 and December 31, 2023, and common stock and preferred stock outstanding prior to March 31, 2023. As a result, earnings per share, as presented, represents 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.

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Loans Held for Investment

3 Months Ended

Mar. 31, 2024

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 March 31, 2024 and December 31, 2023, accrued interest receivable of $8.0 million and $6.5 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:

	March 31, 2024									December 31, 2023
	Fixed Rate			Floating Rate (1)(2)(3)			Total			Fixed Rate			Floating Rate (1)(2)(3)			Total
Number of loans	4			15			19			5			16			21
Principal balance	$	33,212,781		$	436,440,199		$	469,652,980		$	53,998,648		$	455,462,178		$	509,460,826
Carrying value	$	32,961,215		$	382,298,048		$	415,259,263		$	54,095,173		$	402,377,085		$	456,472,258
Fair value	$	32,773,591		$	384,981,808		$	417,755,399		$	53,435,742		$	403,904,207		$	457,339,949
Weighted-average coupon rate	12.29		%	13.10		%	13.04		%	12.95		%	12.92		%	12.93		%
Weighted-average remaining  term (years)	1.10			0.70			0.75			1.18			0.70			0.77

_______________

(1)These loans pay a coupon rate of 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 the London Interbank Offered Rate (“LIBOR”) of 5.44%, average SOFR of 5.32% and Term SOFR of 5.33% as of March 31, 2024 and average SOFR of 5.34% and Term SOFR of 5.35% as of December 31, 2023.

(2)As of March 31, 2024 and December 31, 2023, amount included $323.9 million and $342.9 million of senior mortgages used as collateral for $187.6 million and $204.9 million of borrowings under secured financing arrangements, respectively (Note 9).

(3)As of March 31, 2024 and December 31, 2023, 13 and 14 loans, respectively, were subject to a 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, 2024	$	417,913,773	$	38,558,485	$	456,472,258
Principal repayments received	(46,981,320)		—		(46,981,320)
New loans made	7,173,474		—		7,173,474
Net amortization of premiums on loans	(78,132)		—		(78,132)
Accrual, payment and accretion of investment-related fees and other,    net	448,541		(7,788)		440,753
Provision for credit losses	(1,306,358)		(461,412)		(1,767,770)
Balance, March 31, 2024	$	377,169,978	$	38,089,285	$	415,259,263

	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)	(4,250,052)		—		(4,250,052)
New loans made	46,214,722		—		46,214,722
Principal repayments received	(55,895,298)		(3,282,208)		(59,177,506)
Net amortization of premiums on loans	(346,780)		—		(346,780)
Accrual, payment and accretion of investment-related fees and other,    net	(34,186)		(18,541)		(52,727)
Reversal of provision for credit losses	1,070,365		—		1,070,365
Balance, March 31, 2023	$	571,176,710	$	38,772,079	$	609,948,789

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:

	March 31, 2024						December 31, 2023
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
First mortgages	$	325,243,521	$	329,118,182	79.2	%	$	365,465,500	$	368,918,890	80.9	%
Preferred equity investments	126,965,102		127,455,045		30.7	%	126,550,969		127,105,312		27.8	%
Mezzanine loans	17,444,357		17,429,831		4.2	%	17,444,357		17,424,081		3.8	%
Allowance for credit losses	—		(58,743,795)		(14.1)	%	—		(56,976,025)		(12.5)	%
Total	$	469,652,980	$	415,259,263	100.0	%	$	509,460,826	$	456,472,258	100.0	%

	March 31, 2024						December 31, 2023
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Office	$	142,231,299	$	142,268,711	34.2	%	$	144,812,619	$	144,853,769	31.7	%
Multifamily	67,379,930		67,867,269		16.3	%	85,660,082		86,210,868		18.9	%
Industrial	68,965,222		69,507,417		16.7	%	67,579,869		67,612,621		14.8	%
Mixed-use	63,046,365		63,457,260		15.3	%	63,096,365		63,531,806		13.9	%
Infill land	53,807,782		55,235,602		13.3	%	52,839,509		54,172,663		11.9	%
Hotel - full/select service	43,222,382		43,816,761		10.6	%	43,222,382		43,801,303		9.6	%
Student housing	31,000,000		31,850,038		7.7	%	31,000,000		31,821,832		7.0	%
Infrastructure	—		—		—	%	21,250,000		21,443,421		4.7	%
Allowance for credit losses	—		(58,743,795)		(14.1)	%	—		(56,976,025)		(12.5)	%
Total	$	469,652,980	$	415,259,263	100.0	%	$	509,460,826	$	456,472,258	100.0	%

	March 31, 2024						December 31, 2023
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	117,093,246	$	118,276,335	28.4	%	$	119,093,246	$	120,296,944	26.4	%
New York	90,486,288		90,486,288		21.8	%	90,483,672		90,483,672		19.8	%
New Jersey	84,773,004		86,455,588		20.8	%	82,419,378		83,489,049		18.3	%
Georgia	74,166,025		74,391,413		17.9	%	74,335,828		74,602,328		16.3	%
Arizona	31,000,000		31,287,431		7.5	%	31,000,000		31,296,235		6.9	%
Utah	28,000,000		28,910,000		7.0	%	49,250,000		50,329,949		11.0	%
North Carolina	21,826,479		21,927,383		5.3	%	21,826,479		21,929,657		4.8	%
Washington	15,307,938		15,268,620		3.7	%	34,052,223		34,020,449		7.5	%
Massachusetts	7,000,000		7,000,000		1.7	%	7,000,000		7,000,000		1.5	%
Allowance for credit losses	—		(58,743,795)		(14.1)	%	—		(56,976,025)		(12.5)	%
Total	$	469,652,980	$	415,259,263	100.0	%	$	509,460,826	$	456,472,258	100.0	%

Allowance for Credit Losses

As described in Note 2, on January 1, 2023, the Company adopted the provisions of 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. 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:

	Three Months Ended March 31,
	2024		2023
Allowance for credit losses, beginning of period	$	56,976,025	$	25,471,890
Cumulative effect of credit loss accounting standard effective    January 1, 2023 (Note 2)	—		4,250,052
Provision (reversal of provision) for credit losses	1,767,770		(1,070,365)
Charge-offs	—		—
Recoveries	—		—
Allowance for credit losses, end of period	$	58,743,795	$	28,651,577

Certain of the Company’s performing loans contain provisions for future funding commitments, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. These unfunded commitments amounted to approximately $30.7 million and $35.7 million as of March 31, 2024 and December 31, 2023, respectively. The following table presents the activity in the liability for credit losses on unfunded commitments:

	Three Months Ended March 31,
	2024		2023
Liability for credit losses on unfunded commitments, beginning of period	$	326,907	$	—
Cumulative effect of credit loss accounting standard effective January 1, 2023 (Note 2)	—		369,671
Provision for credit losses	105,341		220,314
Liability for credit losses on unfunded commitments, end of period	$	432,248	$	589,985

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 manner. 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 accrue for interest. For the three months ended March 31, 2024 and 2023, the Company did not reverse any interest income

accrual because all accrued interest income was deemed collectible. For the three months ended March 31, 2024 and 2023, the Company suspended interest income accrual of $5.8 million and $3.4 million on four and four loans, respectively, because recovery of such income was not probable. As of March 31, 2024 and December 31, 2023, there was no interest receivable recognized 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 for recoverability. As of March 31, 2024 and December 31, 2023, the Company had eight and six non-performing loans with total carrying value of $263.5 million and $209.3 million, respectively. Accordingly, the Company utilized the estimated fair value of the loan collateral or sponsor’s guarantee to estimate the total allowance for credit losses of $55.7 million and $54.6 million as of March 31, 2024 and December 31, 2023, respectively. Please see “Note 6. Fair Value Measurements – Significant Unobservable Inputs” for information on how the fair values of these loans were determined.

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 tables present the amortized cost of the Company’s loan portfolio by year of origination and loan risk rating:

 

	March 31, 2024
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2024		2023		2022		2021		2020		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	1	7,000,000		1.5	%	—		—		—		—		—		7,000,000
3	9	184,699,879		39.0	%	—		15,268,620		31,287,431		47,554,081		27,795,536		62,794,211
4	1	18,831,851		4.0	%	—		—		18,831,851		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	8	263,471,328		55.5	%	—		—		86,455,588		28,910,000		—		148,105,740
	19	474,003,058		100.0	%	$	—	$	15,268,620	$	136,574,870	$	76,464,081	$	27,795,536	$	217,899,951
Allowance for credit losses		(58,743,795)
Total, net of allowance for credit losses		$	415,259,263

	December 31, 2023
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2023		2022		2021		2020		2019		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	1	7,000,000		1.4	%	—		—		—		—		—		7,000,000
3	13	278,296,080		54.2	%	10,809,959		77,383,153		97,514,884		27,810,327		61,842,453		2,935,304
4	1	18,855,139		3.7	%	—		18,855,139		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	6	209,297,064		40.7	%	—		60,612,621		—		—		58,200,770		90,483,673
	21	513,448,283		100.0	%	$	10,809,959	$	156,850,913	$	97,514,884	$	27,810,327	$	120,043,223	$	100,418,977
Allowance for credit losses		(56,976,025)
Total, net of allowance for credit losses		$	456,472,258

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Equity Investment in Unconsolidated Investments

3 Months Ended

Mar. 31, 2024

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 four joint ventures. The Company accounts for its interests in these investments under the equity method of accounting (Note 2).

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. 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.

The following tables present a summary of information regarding the Company’ equity investment in RESOF:

	March 31, 2024					December 31, 2023
	Ownership Interest	Carrying Value		Unfunded Commitment		Ownership Interest	Carrying Value		Unfunded Commitment
Equity investment in RESOF	14.9%	$	24,510,818	$	31,479,273	14.9%	$	18,196,583	$	37,444,080

	Three Months Ended March 31,
	2024		2023
Income from equity investment in RESOF	$	998,339	$	303,600
Distributions received from RESOF	$	648,911	$	3,787,783

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:

	March 31, 2024		December 31, 2023
Investments at fair value (cost of $273,515,287 and $196,129,031, respectively)	$	273,515,289	$	199,032,013
Other assets	19,955,399		16,502,225
Total assets	293,470,688		215,534,238
Revolving line of credit, net of financing costs	79,014,554		44,762,534
Obligations under participation agreement (proceeds of $38,444,357 and     $38,444,357, respectively)	38,799,425		38,881,032
Other liabilities	16,524,914		13,641,742
Total liabilities	134,338,893		97,285,308
Partners’ capital	$	159,131,795	$	118,248,930

	Three Months Ended March 31,
	2024		2023
Total investment income	$	10,833,147	$	8,111,779
Total expenses	4,182,329		3,166,795
Net investment income	6,650,818		4,944,984
Unrealized depreciation on investments	(527,912)		(595,911)
Net increase in partners’ capital resulting from operations	$	6,122,906	$	4,349,073

Equity Investment in Joint Ventures

As of March 31, 2024 and December 31, 2023, the Company beneficially owned equity interests in four 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.

The following tables present a summary of the Company’s equity investment in the joint ventures:

		March 31, 2024			December 31, 2023
Entity	Co-owner	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
LEL Arlington JV LLC	Third party/Affiliate	27.2%	$	6,817,220	27.2%	$	7,024,245
LEL NW 49th JV LLC	Third party/Affiliate	27.2%	1,572,436		27.2%	1,619,157
TCG Corinthian FL Portfolio     JV LLV	Third party/Affiliate	30.6%	5,415,771		30.6%	5,590,427
Windy Hill PV Five CM, LLC (1)	Third party	41.9%	4,209,660		42.4%	4,740,914
			$	18,015,087		$	18,974,743

_______________

(1)This investment was acquired in November 2023.

	Three Months Ended March 31,
	2024		2023
Loss from equity investment in the joint ventures	$	(1,471,726)	$	(740,460)
Distributions received from the joint ventures	$	—	$	262,770

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:

	March 31, 2024		December 31, 2023
Net investments in real estate	$	219,800,521	$	223,039,486
Other assets	20,185,658		18,362,425
Total assets	239,986,179		241,401,911
Mortgage loans payable	187,687,424		187,269,209
Other liabilities	5,034,206		4,509,167
Total liabilities	192,721,630		191,778,376
Members’ capital	$	47,264,549	$	49,623,535

	Three Months Ended March 31,
	2024		2023
Revenues	$	4,462,871	$	3,924,579
Operating expenses	(2,472,969)		(2,143,267)
Depreciation and amortization expense	(1,955,076)		(1,965,037)
Interest expense	(3,362,558)		(2,559,954)
Unrealized loss	(852,253)		(826,501)
Net loss	$	(4,179,985)	$	(3,570,180)

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Real Estate Owned, Net

3 Months Ended

Mar. 31, 2024

Real Estate [Abstract]

Real Estate Owned, Net

Real Estate Owned, Net

Real Estate Activities

2024 — In January 2024, a lease for a space in one of the industrial properties was terminated and the Company received a termination fee of $0.03 million. In connection with the lease termination, the Company wrote off the related unamortized in-place lease of $0.3 million and unamortized below-market rent of $0.1 million. Subsequent to the lease termination, the Company entered into a new lease with another tenant for the same space.

2023 — In March 2023, the Company purchased three industrial properties located in Texas for total costs of $48.8 million, including capitalized transaction costs. This acquisition was deemed to be a real estate asset acquisition, and therefore 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
Land	$	9,327,855
Buildings and improvements	39,248,352
Intangible asset and liability:
In-please lease (weighted-average expected life of 2.63 years)	4,315,333
Below-market rent (weighted-average expected life of 2.69 years)	(4,093,267)
	$	48,798,273

Real Estate Owned, Net

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

	March 31, 2024						December 31, 2023
	Cost		Accumulated Depreciation/Amortization		Net		Cost		Accumulated Depreciation/Amortization		Net
Real estate:
Land	$	23,785,004	$	—	$	23,785,004	$	23,785,004	$	—	$	23,785,004
Building and building    improvements	104,924,922		(2,785,916)		102,139,006		104,915,714		(1,986,016)		102,929,698
Tenant improvements	25,032		(190)		24,842		25,032		(15,401)		9,631
Total real estate	128,734,958		(2,786,106)		125,948,852		128,725,750		(2,001,417)		126,724,333
Lease intangible assets:
In-place lease	12,060,731		(3,526,153)		8,534,578		12,719,000		(2,849,636)		9,869,364
Total intangible assets	12,060,731		(3,526,153)		8,534,578		12,719,000		(2,849,636)		9,869,364
Lease intangible liabilities:
Below-market rent	(8,649,073)		2,635,042		(6,014,031)		(8,864,138)		2,025,263		(6,838,875)
Total intangible liabilities	(8,649,073)		2,635,042		(6,014,031)		(8,864,138)		2,025,263		(6,838,875)
Total real estate	$	132,146,616	$	(3,677,217)	$	128,469,399	$	132,580,612	$	(2,825,790)	$	129,754,822

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 March 31,
	2024		2023
Real estate operating revenues:
Lease revenue	$	2,104,222	$	1,085,459
Other operating income	615,479		247,510
Total	$	2,719,701	$	1,332,969
Real estate operating expenses:
Utilities	$	11,720	$	36,414
Real estate taxes	390,810		354,680
Repairs and maintenances	26,972		207,365
Management fees	62,254		39,418
Lease expense, including amortization of above-market ground lease	—		487,163
Other operating expenses	199,250		84,872
Total	$	691,006	$	1,209,912

Net amortization of above- and below-market rent intangibles was $0.8 million and $0.03 million for the three months ended March 31, 2024 and 2023, respectively, and is recorded as an adjustment to lease revenues on the consolidated statements of operations.

Amortization of in-place lease intangibles was $1.3 million and $0.3 million for the three months ended March 31, 2024 and 2023, respectively, and is included in depreciation and amortization expense on the consolidated statements of operations.

Supplemental Ground Lease Disclosures

    The Company previously owned an office building that was subject to a ground lease whereby the Company was the lessee (or a tenant) to the ground lease. On October 19, 2023, the Company conveyed its interest in the office building to a subsidiary of Centennial Bank by deed in lieu of foreclosure. Accordingly, the Company is no longer a party to the ground lease.

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

	Three Months Ended March 31, 2023
Operating lease cost	$	519,750

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

	Three Months Ended March 31, 2023
Amounts included in the measurement of lease liability:
Operating cash flows from an operating lease	$	519,750
Right-of-use asset obtained in exchange for lease obligations:
Operating lease	$	519,750

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Fair Value Measurements

3 Months Ended

Mar. 31, 2024

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, rate of prepayment, loss severities, credit risks and default rates) or other market corroborated inputs.

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

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

As of March 31, 2024 and December 31, 2023, 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 8, in March 2023, the Company entered into a loan agreement with a lender to provide financing for the acquisition of real estate properties (Note 5). 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 the consolidated statements of operations.

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

	March 31, 2024
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	2,274,674	$	—	$	—	$	2,274,674
Marketable securities - debt securities	812,872		—		—		812,872
Marketable securities - equity securities	2,361,818		—		—		2,361,818
Derivative - interest rate cap (2)	—		83,928		—		83,928
Total	$	5,449,364	$	83,928	$	—	$	5,533,292

	December 31, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	2,244,992	$	—	$	—	$	2,244,992
Marketable securities - debt securities	1,148,653		—		—		1,148,653
Marketable securities - equity securities	3,813,226		—		—		3,813,226
Derivative - interest rate cap (2)	—		83,807		—		83,807
Total	$	7,206,871	$	83,807	$	—	$	7,290,678

_______________

(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.

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

	Three Months Ended March 31,
	2024				2023
	Marketable Securities		Derivatives		Marketable Securities		Derivatives
Beginning balance	$	4,961,879	$	83,807	$	147,960	$	—
Purchases	—		—		—		258,500
Proceeds from sale	(1,292,897)		—		—		—
Reclassification of net realized loss on marketable securities    into earnings	(135,459)		—		—		—
Unrealized (loss) gain on marketable securities and derivatives	(358,833)		121		6,584		—
Ending balance	$	3,174,690	$	83,928	$	154,544	$	258,500

Financial Instruments Not Carried at Fair Value

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:

		March 31, 2024						December 31, 2023
	Level	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Loans:
Loans held for investment	3	$	431,208,623	$	435,225,834	$	378,955,975	$	471,016,469	$	474,663,271	$	418,458,916
Loans held for investment    acquired through    participation	3	38,444,357		38,777,224		38,799,424		38,444,357		38,785,012		38,881,033
Allowance for loan losses		—		(58,743,795)		—		—		(56,976,025)		—
Total loans		$	469,652,980	$	415,259,263	$	417,755,399	$	509,460,826	$	456,472,258	$	457,339,949
Liabilities:
Unsecured notes payable	1	$	123,500,000	$	118,872,834	$	81,293,650	$	123,500,000	$	118,380,897	$	98,020,050
Secured financing agreements	3	261,652,639		258,749,238		260,794,611		293,413,757		290,525,313		293,413,757
Obligations under participation    agreements	3	15,000,000		15,137,755		15,196,628		—		—		—
Total liabilities		$	400,152,639	$	392,759,827	$	357,284,889	$	416,913,757	$	408,906,210	$	391,433,807

    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 March 31, 2024 and December 31, 2023 due to their short-term nature.

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 ability of our borrowers and investees to make payments and their 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 investments. The valuation committee is comprised of members of the Manager’s senior management, deal and portfolio management teams, who meet on a quarterly basis, or more frequently as needed, to review 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 March 31, 2024 and December 31, 2023. 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 March 31, 2024		Primary Valuation Technique	Unobservable Inputs	March 31, 2024
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net (1)	$	378,955,975	Discounted cash flow	Discount rate	10.46	%	16.38	%	12.13	%
Loans held for investment acquired through    participation, net	38,799,424		Discounted cash flow	Discount rate	15.55	%	18.33	%	17.79	%
Total Level 3 Assets	$	417,755,399
Liabilities:
Secured financing agreements	$	260,794,611	Discounted cash flow	Discount rate	6.25	%	11.30	%	8.97	%
Obligation under participation agreement	15,196,628		Discounted cash flow	Discount rate	16.38	%	16.38	%	16.38	%
Total Level 3 Liabilities	$	275,991,239

	Fair Value at December 31, 2023		Primary Valuation Technique	Unobservable Inputs	December 31, 2023
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net (1)	$	418,458,916	Discounted cash flow	Discount rate	9.58	%	16.95	%	7.02	%
Loans held for investment acquired through    participation, net	38,881,033		Discounted cash flow	Discount rate	15.30	%	18.35	%	17.76	%
Total Level 3 Assets	$	457,339,949
Liabilities:
Secured financing agreements	$	293,413,757	Discounted cash flow	Discount rate	6.25	%	12.72	%	8.91	%
Total Level 3 Liabilities	$	293,413,757

_______________

(1)Amount includes $207.8 million and $154.6 million of non-performing loans (Note 3) as of March 31, 2024 and December 31, 2023, respectively. The fair market value estimates were determined primarily using discounted cash flow models and Level 3 inputs, which include estimates of property-specific cash flows over a specific holding period, a discount rate range of 6.75% to 7.00% and a terminal capitalization rate range of 5.75% to 6.00% as of both March 31, 2024 and December 31, 2023. These inputs are based on the location, type and nature of the property, current sales and lease comparables, anticipated real estate and capital market conditions, and management’s knowledge, experience and judgment. Additionally, the Company may use sales comparables, purchase price and appraisals to corroborate the estimated value of a loan’s collateral or may use sponsor’s guarantee to estimate the value of a non-performing loan.

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Related Party Transactions

3 Months Ended

Mar. 31, 2024

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 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 March 31,
	2024		2023
Origination and extension fee expense (1)	$	262,772	$	951,448
Asset management fee	1,715,042		1,997,427
Asset servicing fee	406,525		470,525
Operating expenses reimbursed to Manager	2,178,164		2,177,004
Disposition fee (2)	340,000		290,813
Total	$	4,902,503	$	5,887,217

_______________

(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)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 March 31, 2024 and December 31, 2023, 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.

Management Agreement Amendment

On March 11, 2024, the Company and the Manager entered into an amendment to the Management Agreement, effective as of January 1, 2024 (the “Amendment”), in order to extend the term of the Management Agreement and modify the terms upon which the Management Agreement may be terminated. Except as discussed below, the terms of the Management Agreement remain unchanged by the Amendment. Except where the context requires otherwise, all references herein to the “Management Agreement” are to the Management Agreement as modified by the Amendment.

The term of the Management Agreement will expire on December 31, 2027 (the “Initial Term”) and will automatically renew for an unlimited number of additional one-year terms upon each anniversary date of the last day of the Initial Term (each, a “Renewal Term”), unless terminated by the Company or the Manager during the Initial Term or a Renewal Term in accordance with the terms of the Management Agreement (as described below).

The Management Agreement may be terminated by the Company during the Initial Term or any Renewal Term upon a finding by either (i) at least two-thirds of the independent directors on the Board or (ii) the holders of a majority of the outstanding shares of the Company’s common stock (other than those shares held by members of the Company’s senior management team or affiliates of the Manager) that either (a) there has been unsatisfactory performance by the Manager that is materially detrimental to the Company, or (b) the compensation payable to the Manager pursuant to the Management Agreement is unfair; provided, however, that the Company will not have the right to terminate the Management Agreement on the basis of unfair compensation to the Manager if the Manager agrees to continue to provide its services under the Management Agreement in exchange for reduced fees that at least two-thirds of the independent directors on the Board determine to be fair pursuant to the procedures set forth in the Management Agreement. The Company must deliver prior written notice of any such termination to the Manager at least 180 days prior to the last calendar day of the Initial Term or the then-current Renewal Term, as applicable, and the Management Agreement will terminate effective as of the last calendar day of the Initial Term or the then-current Renewal Term, as applicable.

Upon any termination of the Management Agreement by the Company as discussed above, the Company will pay the Manager, on the date on which such termination is effective, a termination fee in an amount equal to three times the average annual fees of all types and expense reimbursements received by or owed to the Manager pursuant to the Management Agreement during the 24-month period immediately preceding such termination (the “Termination Fee”), calculated as of the end of the most recently completed monthly prior to the date of such termination.

The Company may also terminate the Management Agreement, effective upon 30 calendar days’ prior written notice from the Board to the Manager, without payment of any Termination Fees or other penalties, upon (i) the material breach of the Management Agreement by the Manager or its affiliates that continues for 30 days after written notice thereof to the Manager (or 45 days after delivery of written notice thereof if the Manager takes diligent steps to cure such breach within 30 days of delivery of the written notice), (ii) any fraud or other criminal conduct, gross negligence or breach of fiduciary duty by the Manager or its affiliates in connection with the Management Agreement, as determined by a final, non-appealable judgment of a court of competent jurisdiction, (iii) the Manager’s bankruptcy, insolvency or dissolution, or (iv) an Internalization Event (as defined in the Management Agreement). No Termination Fee or other penalty is payable upon such a termination by the Company.

The Manager may terminate the Management Agreement, effective upon 60 days’ prior written from the Manager to the Company, if the Company breaches the Management Agreement and such breach continues for 30 days after written notice thereof. The Company will pay the Manager the Termination Fee upon such termination by the Manager.

Due From Affiliate

On December 1, 2022, the Company entered into a revolving promissory note receivable with Mavik Special Opps Co-Investments, LP, an affiliate of the Company. The promissory note receivable bears interest at the Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days. In January 2024, the promissory note was amended to (i) extend the maturity date from June 30, 2024 to April 30, 2025 and to (ii) modify the interest rate from Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days, to 15.0%. During the three months ended March 31, 2024 and 2023, the Company provided funding under the promissory note receivable of $1.2 million and none, respectively. As of

March 31, 2024 and December 31, 2023, amount outstanding under the promissory note receivable was $5.1 million and $3.8 million, respectively, which is included in Other assets on the consolidated balance sheets.

Due from Related Parties

As of March 31, 2024 and December 31, 2023, amount due from related parties was $1.1 million and $0.7 million, primarily related to operational cash requirements the Company paid on behalf of its affiliates.

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 March 31, 2024 and 2023, the Company made distributions to investors totaling $4.7 million and $4.7 million, respectively, of which $4.7 million and $4.2 million were returns of capital, respectively (Note 10).

Due to Manager

    As of March 31, 2024 and December 31, 2023, approximately $2.4 million and $4.2 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 4.

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” in Note 8).

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:

	March 31, 2024
	Participating Interests	Principal Balance		Carrying Value
Mesa AZ Industrial Owner, LLC (1)	38.27%	$	31,000,000	$	31,287,431
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,489,793
Allowance for credit losses		—		(687,939)
		$	38,444,357	$	38,089,285

	December 31, 2023
	Participating Interests	Principal Balance		Carrying Value
Mesa AZ Industrial Owner, LLC (1)	38.27%	$	31,000,000	$	31,296,235
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,488,777
Allowance for credit losses		—		(226,527)
		$	38,444,357	$	38,558,485

________________

(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.

Transfers of Participation Interests by the Company

The following table summarizes the investment that was subject to a PA with an investment partnership affiliated with the Manager as of March 31, 2024. There was no such investment as of December 31, 2023.

					March 31, 2024
					Transfers treated as obligations under participation agreements
	Principal		Carrying Value		% Transferred		Principal		Carrying Value
Asano Bankers Hill, LLC (1)	$	18,567,296	$	18,831,851	80.8	%	$	15,000,000	$	15,137,755

________________

(1)Participant is a certain separately managed account, an investment partnership managed by the Manager.

This investment is held in the name of the Company, but 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 its pro rata participation interest in such participated investment, as specified in the participation agreement. The Participant’s share of the investment is repayable only from the proceeds received from the related borrower/issuer of the investment and, therefore, the Participant also is subject to credit risk (i.e., risk of default by the underlying borrower/issuer). Pursuant to the participation agreement with this entity, the Company receives and allocates the interest income and other related investment income to the Participant based on its pro rata participation interest. The Participant pays any expenses, including any fees to the Manager, only on its pro rata participation interest, subject to the terms of the governing fee arrangements.

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Debt

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Debt

Debt

Unsecured Notes Payable

The following table presents a summary of the Company’s unsecured notes payable outstanding as of:

	Coupon Rate		Effective Rate (1)		Maturity Date	March 31, 2024		December 31, 2023
6.00% Senior Notes Due 2026	6.00	%	6.84	%	6/30/2026	$	85,125,000	$	85,125,000
7.00% Senior Notes Due 2026 (2)	7.00	%	10.27	%	3/31/2026	38,375,000		38,375,000
Total principal amount						123,500,000		123,500,000
Unamortized issue discount						(1,313,154)		(1,444,813)
Unamortized purchase discount (2)						(2,847,913)		(3,161,457)
Unamortized deferred financing costs						(466,099)		(512,833)
Unsecured notes payable, net						$	118,872,834	$	118,380,897

_______________

(1)Includes issue discount, purchase discount and deferred financing costs that are amortized to interest expense over the life of the notes.

(2)In connection with the BDC Merger, Terra LLC assumed all the obligations under the 7.00% Senior Notes and recorded a purchase discount of $4.6 million, representing the difference between the carrying value and the fair value of the notes on the date of the merger.

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, and on June 25, 2021, the underwriters partially exercised their option to purchase an additional $6.6 million of the notes (collectively the “6.00% Senior Notes Due 2026”). The 6.00% Senior Notes Due 2026 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, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest.

The 7.00% Senior Notes Due 2026

On February 10, 2021, Terra BDC issued $34.8 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, and on February 26, 2021, the underwriters exercised the option to purchase an additional $3.6 million of the notes (collectively the “7.00% Senior Notes Due 2026”). The 7.00% Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at Terra BDC’s option on or after February 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest. In connection with the BDC Merger, Terra LLC agreed to take all necessary action to assume the payment of the principal of and interest on all of the outstanding 7.00% Senior Notes Due 2026.

Covenant Compliance

The Company’s unsecured notes payable contain certain financial covenants. As of March 31, 2024, the Company was in compliance with such covenants.

Secured Financing Arrangements

The following table is a summary of the Company’s secured financing agreements in place as of:

	March 31, 2024										December 31, 2023
	Current Maturity	Extended Maturity	Weighted Average Interest Rate (1)		Pledged Asset Carrying Value		Maximum Facility Size		Principal Amount		Principal  Amount
Repurchase Agreements:
Goldman Sachs Bank facility (2)(3)	February 2025	February 2025	8.59	%	$	138,036,063	$	200,000,000	$	73,855,624	$	75,455,624
UBS AG facility (2)(4)	November 2024	(5)	8.70	%	—		—		—		18,480,000
Total					138,036,063		200,000,000		73,855,624		93,935,624
Non-Recourse Financing:
Promissory notes payable (2)(6)	March 2025 - March 2026	March 2026 - March 2027	10.91	%	130,634,208		N/A		78,997,103		63,509,518
Property mortgages - fixed rate	June 2028	June 2028	6.25	%	80,692,752		N/A		40,250,000		40,250,000
Property mortgages - variable rate (7)	April 2027	April 2028	8.83	%	47,776,647		N/A		33,788,801		33,256,885
Total					259,103,607				153,035,904		137,016,403
Other Secured Financing:
Revolving line of credit (2)(8)	September 2024	September 2025	8.68	%	59,082,967		75,000,000		34,761,111		47,461,730
Term loan (9)					—		—		—		15,000,000
Total					59,082,967		75,000,000		34,761,111		62,461,730
					$	456,222,637	$	275,000,000	261,652,639		293,413,757
Unamortized deferred financing costs and other									(2,903,401)		(2,888,444)
Secured financing agreements, net									$	258,749,238	$	290,525,313

_______________

(1)Amount is calculated using the applicable index rate as of March 31, 2024.

(2)These facilities were used to finance the Company’s senior loan investments.

(3)Interest rate is based on Term SOFR (subject to underlying loan floors on a case-by-case basis) plus a spread ranging from 2.0% to 5.00%. In March 2024, the Company amended the Goldman Sachs Bank facility agreement to extend the maturity date to February 18, 2025 and to reduce the minimum interest coverage ratio covenant.

(4)Interest rate is based on Term SOFR plus a spread of 1.965%. In February 2024, the outstanding balance was repaid. In March 2024, the Company amended the side letter to the UBS AG facility agreement to reduce the maximum amount available under this facility to zero. In connection with this amendment, UBS AG waived the payment of any fees and the meeting of any representations, warranties or covenants for the period commencing on December 31, 2023 until such time as there are amounts outstanding under the UBS AG facility agreement.

(5)The maturity of this facility can be extended annually on mutually agreeable terms.

(6)Interest rate is based on Term SOFR plus a spread ranging from 4.75% to 5.98% with a combined floor rate ranging from 9.0% to 11.28%.

(7)Interest rate is based on Term SOFR plus a spread of 3.5% with a Term SOFR floor of 3.75%.

(8)In March 2024, the Company amended the facility agreement to extend the maturity date to September 12, 2024 with an option to extend the facility term for an additional 12-month period, reduce the credit limit to $75.0 million, increase the coupon rate and revise the minimum profitability and net worth covenants. As of March 31, 2024, interest rate is based on Term SOFR + 3.5% with a combined floor of 7.0%. The lender agreed to waive the minimum profitability covenant for the three months ended March 31, 2024 and the Company agreed to provide the lender with a plan to reduce the balance under the line by June 30, 2024.

(9)In March 2024, the term loan was repaid in full.

In the normal course of business, the Company is in discussions with its lenders to extend, amend, or replace any financing facilities which contain near term expirations.

For the three months ended March 31, 2024 and 2023, approximately $0.9 million and $0.5 million, respectively, of amortization of deferred financing costs and other from secured financing agreements was included in interest expense on the consolidated statements of operations. Additionally, for the three months ended March 31, 2024 and 2023, the Company

received proceeds from secured financing of $53.0 million and $68.3 million, respectively, and made repayments on secured financing of $84.8 million and $19.2 million, respectively.

Repurchase Agreements

The Company seeks to mitigate risks associated with its repurchase agreements by managing risk related to the credit quality of its assets, interest rates, liquidity, the rate of prepayment and market value. The margin call provisions under the repurchase facilities provide the lender with certain rights in the event of a decline in the credit of the underlying assets purchased. To monitor credit risk associated with the performance and value of its loans and investments, the Company’s asset management team regularly reviews its investment portfolios and is in regular contact with its borrowers, monitoring performance of the collateral and enforcing its rights as necessary. The Company further seeks to manage risks associated with the repurchase agreements by matching the maturities and interest rate characteristics of its loans with the related repurchase agreement.

Covenant Compliance

The Company’s secured financing agreements contain certain financial tests and covenants. In the event of a default or any breach of covenant of a related agreement, the lender has the right to accelerate all amounts due, charge interest at a default rate, retain all cash flow from the loans originated and/or sell such loans in a private sale on terms possibly unfavorable to the Company. As of March 31, 2024, the Company was in compliance with all such covenants, as amended or waived.

Scheduled Debt Principal Payments

    Scheduled debt principal payments for each of the five calendar years following March 31, 2024 are as follows:

Years Ending December 31,	Total
2024 (April 1 through December 31)	$	34,761,111
2025	142,355,624
2026	133,997,103
2027	33,788,801
2028	40,250,000
Thereafter	—
	385,152,639
Unamortized deferred financing costs and other	(7,530,567)
Total	$	377,622,072

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 March 31, 2024, obligations under participation agreements were $15.1 million (see “Participation Agreements” in Note 7). The interest rate on the obligations under participation agreements was 20.32%. There were no such obligations under participation agreements as of December 31, 2023.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

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 $30.7 million and $35.7 million as of March 31, 2024 and December 31, 2023, 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 4, 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 March 31, 2024 and December 31, 2023, the unfunded investment commitment was $31.5 million and $37.4 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.

Additionally, from time to time, we and individuals employed by us and our Manager 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 borrowers and investees. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that such proceedings will have a material effect upon our financial condition or results of operations.

See Note 7 for a discussion of the Company’s commitments to the Manager.

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Equity

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Equity

Equity

Earnings Per Share

The following table presents earnings per share:

	Three Months Ended March 31,
	2024		2023
Net (loss) income	$	(6,183,974)	$	547,479
Series A preferred stock dividend declared	—		(3,907)
Net (loss) income allocable to common stock	$	(6,183,974)	$	543,572
Weighted-average shares outstanding - basic and diluted	24,336,157		24,335,373
(Loss) income per share - basic and diluted	$	(0.25)	$	0.02

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 March 31, 2024, there were no shares of Preferred Stock issued or outstanding. As of December 31, 2023 there were no 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. 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 March 31, 2024, Terra Fund 7

and Terra Offshore REIT held 8.7% and 10.1%, respectively, of the issued and outstanding shares of the Company’s common stock.

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.

In connection with the potential liquidity transactions discussed in Note 1, on December 1, 2023, the Company amended its articles of amendment and restatement (the “A&R Articles”) to provide the Board with greater flexibility to pursue a direct listing. In connection with a listing of shares of Class A Common Stock on a national securities exchange, the outstanding shares of Class B Common Stock will be convertible on a one-for-one basis into listed shares of Class A Common Stock, subject to certain conversion terms and holding periods. Currently, there are no outstanding shares of Class A Common Stock.

The A&R Articles also incorporate the provisions generally required by state regulators in order to become a non-traded REIT and publicly sell shares of the Company’s stock not listed on an exchange. These non-traded REIT provisions will spring into effect and become operative if the Company ultimately decides to register and sell shares in a non-traded REIT format.

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 March 31, 2024 and 2023, the Company made distributions to investors totaling $4.7 million and $4.7 million, respectively, of which $4.7 million and $4.2 million were returns of capital, respectively. Additionally, for the three months ended March 31, 2023, the Company made distributions to preferred stockholders of $3,907. There were no such distributions for the three months ended March 31, 2024.

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 three months ended March 31, 2024 and 2023, the Company issued 391 and 34 shares of Class B Common Stock for a total of $4,474 and $478 pursuant to the Plan, respectively.

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Subsequent Events	3 Months Ended
	Mar. 31, 2024
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsManagement 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 that would require adjustment to, or disclosure in, the Company’s consolidated financial statements.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

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 4).

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. Amortized cost is the amount at which a financing receivable or a loan is originated or acquired, adjusted for accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash and write-offs.

Allowance for Credit Losses

Allowance for Credit Losses

On January 1, 2023, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses. ASC 326 mandates the use of a current expected credit loss (“CECL”) methodology for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” methodology previously required under United States generally accepted accounting principles (“U.S. GAAP”). The CECL methodology requires the consideration of possible credit losses over the life of an instrument as opposed to estimating credit losses upon the occurrence of an actual loss event under the previous “incurred loss” methodology. 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 ASC 326 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 member’s capital as of January 1,

2023. Subsequent to the adoption of the CECL methodology, any increase or decrease to the allowance for credit losses is recorded in earnings on the consolidated statement of operations.

Performing Loans

The Company uses a model-based approach for estimating the allowance for credit losses on performing loans on a collective basis, including future funding commitments for which the Company does not have the unconditional right to cancel, as these loans share similar risk characteristics. The Company utilizes information obtained from internal and external sources relating to past events, current economic conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. The Company utilizes a commercial mortgage-based, third-party loan loss model and because the Company does not have a meaningful history of realized credit losses on its loan portfolio, it subscribes to a database service to provide historical proxy loan loss information. The Company 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 has chosen to incorporate a weighted average macroeconomic forecast that encompasses baseline, optimistic and pessimistic scenarios, into its allowance for credit losses on performing loans estimate during the reasonable and supportable forecast period which is currently eight quarters. The Company selects certain economics variables from a group of independent variables such as Commercial Real Estate Price Index, unemployment and interest rate which are included in the model as part of macroeconomic forecast and updated regularly based on current economic trends. On a quarterly basis, adjustments to the weights ascribed to the multiple macroeconomic forecast scenarios are made in response to changes in expectations of macroeconomic conditions such as inflation and interest rates. The specific loan level information input into the model includes 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. Based on the inputs, the loan loss model determines a loan loss rate through the generation of a probability of default (PD) and loss given default (LGD) for each loan. The allowance for credit losses on performing loans is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. A significant amount of judgment is applied in selecting inputs and analyzing results produced by the models to determine the allowance for credit losses on performing loans. Changes in such estimates can significantly affect the expected credit losses.

Beyond the Company’s reasonable and supportable forecast period, the Company reverts to historical loss information on a straight-line basis over the remaining contractual loan term, 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 determination of the performing loans credit loss estimate considers historical loss information and current economic conditions for each loan, reversion period 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. The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed.

The Company also performs a qualitative assessment and applies qualitative adjustments as necessary, usually due to limitations of the loan loss model. 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 certain contractual extension options, renewals, modifications, and prepayments.

Unfunded Commitments

Some of the Company’s performing 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 methodology because the Company does not have an unconditional right to cancel such commitments. The allowance for credit losses related to unfunded commitments is recorded as a component of other liabilities on the Company’s consolidated balance sheets. This allowance for credit losses is estimated using the same method outlined above for the Company’s outstanding performing loan balances and increases or decreases are also recorded in earnings on the consolidated statements of operations.

Non-Performing Loans

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.

Loans Not Secured by Real Estate

The Company has two loans that are not secured by real estate. These loans, which are included in other assets on the consolidated balance sheets, are recorded at amortized cost. The Company performs a separate analysis based on recoverability to determine the allowance for credit losses on these loans. As of March 31, 2024, the Company did not record any allowance for credit losses on these two loans because the Company believes that it will be able to collect all outstanding interest and principal on or before the maturity date of each loan.

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 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.

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

Marketable Securities

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

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 provides 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 interest and principal becomes not probable. 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 may 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 not probable.

Secured Financing Agreements, Net

Secured Financing Agreements, Net

The Company's secured financing agreements include two master repurchase agreements, a revolving line of credit, non-recourse property mortgages, note-on-note financing arrangements and a term loan. The Company accounts for borrowings under these financing arrangements as secured transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees.

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 amortized 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, rate of prepayment, loss severities, credit risks and default rates) or other market corroborated inputs.

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

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

As of March 31, 2024 and December 31, 2023, 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 March 31, 2024, 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 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 months ended March 31, 2024 and 2023, the Company did not incur any interest or penalties.

Earnings Per Share

Earnings Per Share

    The Company has a simple equity capital structure with only common stock outstanding as of March 31, 2024 and December 31, 2023, and common stock and preferred stock outstanding prior to March 31, 2023. As a result, earnings per share, as presented, represents 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.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

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 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:

	March 31,
	2024		2023
Cash and cash equivalents	$	17,914,875	$	28,869,594
Restricted cash	4,097,364		4,611,794
Cash held in escrow by lender	4,541,731		3,571,083
Total cash, cash equivalents and restricted cash shown in the consolidated    statements of cash flows	$	26,553,970	$	37,052,471

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:

	March 31,
	2024		2023
Cash and cash equivalents	$	17,914,875	$	28,869,594
Restricted cash	4,097,364		4,611,794
Cash held in escrow by lender	4,541,731		3,571,083
Total cash, cash equivalents and restricted cash shown in the consolidated    statements of cash flows	$	26,553,970	$	37,052,471

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Loans Held for Investment (Tables)

3 Months Ended

Mar. 31, 2024

Receivables [Abstract]

Schedule of Company's Loan Portfolio

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

	March 31, 2024									December 31, 2023
	Fixed Rate			Floating Rate (1)(2)(3)			Total			Fixed Rate			Floating Rate (1)(2)(3)			Total
Number of loans	4			15			19			5			16			21
Principal balance	$	33,212,781		$	436,440,199		$	469,652,980		$	53,998,648		$	455,462,178		$	509,460,826
Carrying value	$	32,961,215		$	382,298,048		$	415,259,263		$	54,095,173		$	402,377,085		$	456,472,258
Fair value	$	32,773,591		$	384,981,808		$	417,755,399		$	53,435,742		$	403,904,207		$	457,339,949
Weighted-average coupon rate	12.29		%	13.10		%	13.04		%	12.95		%	12.92		%	12.93		%
Weighted-average remaining  term (years)	1.10			0.70			0.75			1.18			0.70			0.77

_______________

(1)These loans pay a coupon rate of 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 the London Interbank Offered Rate (“LIBOR”) of 5.44%, average SOFR of 5.32% and Term SOFR of 5.33% as of March 31, 2024 and average SOFR of 5.34% and Term SOFR of 5.35% as of December 31, 2023.

(2)As of March 31, 2024 and December 31, 2023, amount included $323.9 million and $342.9 million of senior mortgages used as collateral for $187.6 million and $204.9 million of borrowings under secured financing arrangements, respectively (Note 9).

(3)As of March 31, 2024 and December 31, 2023, 13 and 14 loans, respectively, were subject to a 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, 2024	$	417,913,773	$	38,558,485	$	456,472,258
Principal repayments received	(46,981,320)		—		(46,981,320)
New loans made	7,173,474		—		7,173,474
Net amortization of premiums on loans	(78,132)		—		(78,132)
Accrual, payment and accretion of investment-related fees and other,    net	448,541		(7,788)		440,753
Provision for credit losses	(1,306,358)		(461,412)		(1,767,770)
Balance, March 31, 2024	$	377,169,978	$	38,089,285	$	415,259,263

	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)	(4,250,052)		—		(4,250,052)
New loans made	46,214,722		—		46,214,722
Principal repayments received	(55,895,298)		(3,282,208)		(59,177,506)
Net amortization of premiums on loans	(346,780)		—		(346,780)
Accrual, payment and accretion of investment-related fees and other,    net	(34,186)		(18,541)		(52,727)
Reversal of provision for credit losses	1,070,365		—		1,070,365
Balance, March 31, 2023	$	571,176,710	$	38,772,079	$	609,948,789

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:

	March 31, 2024						December 31, 2023
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
First mortgages	$	325,243,521	$	329,118,182	79.2	%	$	365,465,500	$	368,918,890	80.9	%
Preferred equity investments	126,965,102		127,455,045		30.7	%	126,550,969		127,105,312		27.8	%
Mezzanine loans	17,444,357		17,429,831		4.2	%	17,444,357		17,424,081		3.8	%
Allowance for credit losses	—		(58,743,795)		(14.1)	%	—		(56,976,025)		(12.5)	%
Total	$	469,652,980	$	415,259,263	100.0	%	$	509,460,826	$	456,472,258	100.0	%

	March 31, 2024						December 31, 2023
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Office	$	142,231,299	$	142,268,711	34.2	%	$	144,812,619	$	144,853,769	31.7	%
Multifamily	67,379,930		67,867,269		16.3	%	85,660,082		86,210,868		18.9	%
Industrial	68,965,222		69,507,417		16.7	%	67,579,869		67,612,621		14.8	%
Mixed-use	63,046,365		63,457,260		15.3	%	63,096,365		63,531,806		13.9	%
Infill land	53,807,782		55,235,602		13.3	%	52,839,509		54,172,663		11.9	%
Hotel - full/select service	43,222,382		43,816,761		10.6	%	43,222,382		43,801,303		9.6	%
Student housing	31,000,000		31,850,038		7.7	%	31,000,000		31,821,832		7.0	%
Infrastructure	—		—		—	%	21,250,000		21,443,421		4.7	%
Allowance for credit losses	—		(58,743,795)		(14.1)	%	—		(56,976,025)		(12.5)	%
Total	$	469,652,980	$	415,259,263	100.0	%	$	509,460,826	$	456,472,258	100.0	%

	March 31, 2024						December 31, 2023
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	117,093,246	$	118,276,335	28.4	%	$	119,093,246	$	120,296,944	26.4	%
New York	90,486,288		90,486,288		21.8	%	90,483,672		90,483,672		19.8	%
New Jersey	84,773,004		86,455,588		20.8	%	82,419,378		83,489,049		18.3	%
Georgia	74,166,025		74,391,413		17.9	%	74,335,828		74,602,328		16.3	%
Arizona	31,000,000		31,287,431		7.5	%	31,000,000		31,296,235		6.9	%
Utah	28,000,000		28,910,000		7.0	%	49,250,000		50,329,949		11.0	%
North Carolina	21,826,479		21,927,383		5.3	%	21,826,479		21,929,657		4.8	%
Washington	15,307,938		15,268,620		3.7	%	34,052,223		34,020,449		7.5	%
Massachusetts	7,000,000		7,000,000		1.7	%	7,000,000		7,000,000		1.5	%
Allowance for credit losses	—		(58,743,795)		(14.1)	%	—		(56,976,025)		(12.5)	%
Total	$	469,652,980	$	415,259,263	100.0	%	$	509,460,826	$	456,472,258	100.0	%

The following tables present the amortized cost of the Company’s loan portfolio by year of origination and loan risk rating:

 

	March 31, 2024
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2024		2023		2022		2021		2020		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	1	7,000,000		1.5	%	—		—		—		—		—		7,000,000
3	9	184,699,879		39.0	%	—		15,268,620		31,287,431		47,554,081		27,795,536		62,794,211
4	1	18,831,851		4.0	%	—		—		18,831,851		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	8	263,471,328		55.5	%	—		—		86,455,588		28,910,000		—		148,105,740
	19	474,003,058		100.0	%	$	—	$	15,268,620	$	136,574,870	$	76,464,081	$	27,795,536	$	217,899,951
Allowance for credit losses		(58,743,795)
Total, net of allowance for credit losses		$	415,259,263

	December 31, 2023
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2023		2022		2021		2020		2019		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	1	7,000,000		1.4	%	—		—		—		—		—		7,000,000
3	13	278,296,080		54.2	%	10,809,959		77,383,153		97,514,884		27,810,327		61,842,453		2,935,304
4	1	18,855,139		3.7	%	—		18,855,139		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	6	209,297,064		40.7	%	—		60,612,621		—		—		58,200,770		90,483,673
	21	513,448,283		100.0	%	$	10,809,959	$	156,850,913	$	97,514,884	$	27,810,327	$	120,043,223	$	100,418,977
Allowance for credit losses		(56,976,025)
Total, net of allowance for credit losses		$	456,472,258

Schedule of Allowance for Credit Losses

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

	Three Months Ended March 31,
	2024		2023
Allowance for credit losses, beginning of period	$	56,976,025	$	25,471,890
Cumulative effect of credit loss accounting standard effective    January 1, 2023 (Note 2)	—		4,250,052
Provision (reversal of provision) for credit losses	1,767,770		(1,070,365)
Charge-offs	—		—
Recoveries	—		—
Allowance for credit losses, end of period	$	58,743,795	$	28,651,577

The following table presents the activity in the liability for credit losses on unfunded commitments:

	Three Months Ended March 31,
	2024		2023
Liability for credit losses on unfunded commitments, beginning of period	$	326,907	$	—
Cumulative effect of credit loss accounting standard effective January 1, 2023 (Note 2)	—		369,671
Provision for credit losses	105,341		220,314
Liability for credit losses on unfunded commitments, end of period	$	432,248	$	589,985

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

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Equity Investment in Unconsolidated Investments (Tables)

3 Months Ended

Mar. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Method Investments

The following tables present a summary of information regarding the Company’ equity investment in RESOF:

	March 31, 2024					December 31, 2023
	Ownership Interest	Carrying Value		Unfunded Commitment		Ownership Interest	Carrying Value		Unfunded Commitment
Equity investment in RESOF	14.9%	$	24,510,818	$	31,479,273	14.9%	$	18,196,583	$	37,444,080

	Three Months Ended March 31,
	2024		2023
Income from equity investment in RESOF	$	998,339	$	303,600
Distributions received from RESOF	$	648,911	$	3,787,783

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:

	March 31, 2024		December 31, 2023
Investments at fair value (cost of $273,515,287 and $196,129,031, respectively)	$	273,515,289	$	199,032,013
Other assets	19,955,399		16,502,225
Total assets	293,470,688		215,534,238
Revolving line of credit, net of financing costs	79,014,554		44,762,534
Obligations under participation agreement (proceeds of $38,444,357 and     $38,444,357, respectively)	38,799,425		38,881,032
Other liabilities	16,524,914		13,641,742
Total liabilities	134,338,893		97,285,308
Partners’ capital	$	159,131,795	$	118,248,930

	Three Months Ended March 31,
	2024		2023
Total investment income	$	10,833,147	$	8,111,779
Total expenses	4,182,329		3,166,795
Net investment income	6,650,818		4,944,984
Unrealized depreciation on investments	(527,912)		(595,911)
Net increase in partners’ capital resulting from operations	$	6,122,906	$	4,349,073

	Three Months Ended March 31,
	2024		2023
Loss from equity investment in the joint ventures	$	(1,471,726)	$	(740,460)
Distributions received from the joint ventures	$	—	$	262,770

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:

	March 31, 2024		December 31, 2023
Net investments in real estate	$	219,800,521	$	223,039,486
Other assets	20,185,658		18,362,425
Total assets	239,986,179		241,401,911
Mortgage loans payable	187,687,424		187,269,209
Other liabilities	5,034,206		4,509,167
Total liabilities	192,721,630		191,778,376
Members’ capital	$	47,264,549	$	49,623,535

	Three Months Ended March 31,
	2024		2023
Revenues	$	4,462,871	$	3,924,579
Operating expenses	(2,472,969)		(2,143,267)
Depreciation and amortization expense	(1,955,076)		(1,965,037)
Interest expense	(3,362,558)		(2,559,954)
Unrealized loss	(852,253)		(826,501)
Net loss	$	(4,179,985)	$	(3,570,180)

Schedule of Joint Venture Ownership Interests

The following tables present a summary of the Company’s equity investment in the joint ventures:

		March 31, 2024			December 31, 2023
Entity	Co-owner	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
LEL Arlington JV LLC	Third party/Affiliate	27.2%	$	6,817,220	27.2%	$	7,024,245
LEL NW 49th JV LLC	Third party/Affiliate	27.2%	1,572,436		27.2%	1,619,157
TCG Corinthian FL Portfolio     JV LLV	Third party/Affiliate	30.6%	5,415,771		30.6%	5,590,427
Windy Hill PV Five CM, LLC (1)	Third party	41.9%	4,209,660		42.4%	4,740,914
			$	18,015,087		$	18,974,743

_______________

(1)This investment was acquired in November 2023.

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Real Estate Owned, Net (Tables)

3 Months Ended

Mar. 31, 2024

Real Estate [Abstract]

Schedule of Real Estate Owned, Net

The following table presents an allocation of the total capitalized costs:

	Total Capitalized Costs
Land	$	9,327,855
Buildings and improvements	39,248,352
Intangible asset and liability:
In-please lease (weighted-average expected life of 2.63 years)	4,315,333
Below-market rent (weighted-average expected life of 2.69 years)	(4,093,267)
	$	48,798,273

The following table presents the components of real estate owned, net as of:

	March 31, 2024						December 31, 2023
	Cost		Accumulated Depreciation/Amortization		Net		Cost		Accumulated Depreciation/Amortization		Net
Real estate:
Land	$	23,785,004	$	—	$	23,785,004	$	23,785,004	$	—	$	23,785,004
Building and building    improvements	104,924,922		(2,785,916)		102,139,006		104,915,714		(1,986,016)		102,929,698
Tenant improvements	25,032		(190)		24,842		25,032		(15,401)		9,631
Total real estate	128,734,958		(2,786,106)		125,948,852		128,725,750		(2,001,417)		126,724,333
Lease intangible assets:
In-place lease	12,060,731		(3,526,153)		8,534,578		12,719,000		(2,849,636)		9,869,364
Total intangible assets	12,060,731		(3,526,153)		8,534,578		12,719,000		(2,849,636)		9,869,364
Lease intangible liabilities:
Below-market rent	(8,649,073)		2,635,042		(6,014,031)		(8,864,138)		2,025,263		(6,838,875)
Total intangible liabilities	(8,649,073)		2,635,042		(6,014,031)		(8,864,138)		2,025,263		(6,838,875)
Total real estate	$	132,146,616	$	(3,677,217)	$	128,469,399	$	132,580,612	$	(2,825,790)	$	129,754,822

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 March 31,
	2024		2023
Real estate operating revenues:
Lease revenue	$	2,104,222	$	1,085,459
Other operating income	615,479		247,510
Total	$	2,719,701	$	1,332,969
Real estate operating expenses:
Utilities	$	11,720	$	36,414
Real estate taxes	390,810		354,680
Repairs and maintenances	26,972		207,365
Management fees	62,254		39,418
Lease expense, including amortization of above-market ground lease	—		487,163
Other operating expenses	199,250		84,872
Total	$	691,006	$	1,209,912

Schedule of Lease Expense

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

	Three Months Ended March 31, 2023
Operating lease cost	$	519,750

Schedule of Non-cash Information

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

	Three Months Ended March 31, 2023
Amounts included in the measurement of lease liability:
Operating cash flows from an operating lease	$	519,750
Right-of-use asset obtained in exchange for lease obligations:
Operating lease	$	519,750

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2024

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:

	March 31, 2024
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	2,274,674	$	—	$	—	$	2,274,674
Marketable securities - debt securities	812,872		—		—		812,872
Marketable securities - equity securities	2,361,818		—		—		2,361,818
Derivative - interest rate cap (2)	—		83,928		—		83,928
Total	$	5,449,364	$	83,928	$	—	$	5,533,292

	December 31, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	2,244,992	$	—	$	—	$	2,244,992
Marketable securities - debt securities	1,148,653		—		—		1,148,653
Marketable securities - equity securities	3,813,226		—		—		3,813,226
Derivative - interest rate cap (2)	—		83,807		—		83,807
Total	$	7,206,871	$	83,807	$	—	$	7,290,678

_______________

(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.

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

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

	Three Months Ended March 31,
	2024				2023
	Marketable Securities		Derivatives		Marketable Securities		Derivatives
Beginning balance	$	4,961,879	$	83,807	$	147,960	$	—
Purchases	—		—		—		258,500
Proceeds from sale	(1,292,897)		—		—		—
Reclassification of net realized loss on marketable securities    into earnings	(135,459)		—		—		—
Unrealized (loss) gain on marketable securities and derivatives	(358,833)		121		6,584		—
Ending balance	$	3,174,690	$	83,928	$	154,544	$	258,500

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:

		March 31, 2024						December 31, 2023
	Level	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Loans:
Loans held for investment	3	$	431,208,623	$	435,225,834	$	378,955,975	$	471,016,469	$	474,663,271	$	418,458,916
Loans held for investment    acquired through    participation	3	38,444,357		38,777,224		38,799,424		38,444,357		38,785,012		38,881,033
Allowance for loan losses		—		(58,743,795)		—		—		(56,976,025)		—
Total loans		$	469,652,980	$	415,259,263	$	417,755,399	$	509,460,826	$	456,472,258	$	457,339,949
Liabilities:
Unsecured notes payable	1	$	123,500,000	$	118,872,834	$	81,293,650	$	123,500,000	$	118,380,897	$	98,020,050
Secured financing agreements	3	261,652,639		258,749,238		260,794,611		293,413,757		290,525,313		293,413,757
Obligations under participation    agreements	3	15,000,000		15,137,755		15,196,628		—		—		—
Total liabilities		$	400,152,639	$	392,759,827	$	357,284,889	$	416,913,757	$	408,906,210	$	391,433,807

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 March 31, 2024 and December 31, 2023. 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 March 31, 2024		Primary Valuation Technique	Unobservable Inputs	March 31, 2024
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net (1)	$	378,955,975	Discounted cash flow	Discount rate	10.46	%	16.38	%	12.13	%
Loans held for investment acquired through    participation, net	38,799,424		Discounted cash flow	Discount rate	15.55	%	18.33	%	17.79	%
Total Level 3 Assets	$	417,755,399
Liabilities:
Secured financing agreements	$	260,794,611	Discounted cash flow	Discount rate	6.25	%	11.30	%	8.97	%
Obligation under participation agreement	15,196,628		Discounted cash flow	Discount rate	16.38	%	16.38	%	16.38	%
Total Level 3 Liabilities	$	275,991,239

	Fair Value at December 31, 2023		Primary Valuation Technique	Unobservable Inputs	December 31, 2023
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net (1)	$	418,458,916	Discounted cash flow	Discount rate	9.58	%	16.95	%	7.02	%
Loans held for investment acquired through    participation, net	38,881,033		Discounted cash flow	Discount rate	15.30	%	18.35	%	17.76	%
Total Level 3 Assets	$	457,339,949
Liabilities:
Secured financing agreements	$	293,413,757	Discounted cash flow	Discount rate	6.25	%	12.72	%	8.91	%
Total Level 3 Liabilities	$	293,413,757

_______________

(1)Amount includes $207.8 million and $154.6 million of non-performing loans (Note 3) as of March 31, 2024 and December 31, 2023, respectively. The fair market value estimates were determined primarily using discounted cash flow models and Level 3 inputs, which include estimates of property-specific cash flows over a specific holding period, a discount rate range of 6.75% to 7.00% and a terminal capitalization rate range of 5.75% to 6.00% as of both March 31, 2024 and December 31, 2023. These inputs are based on the location, type and nature of the property, current sales and lease comparables, anticipated real estate and capital market conditions, and management’s knowledge, experience and judgment. Additionally, the Company may use sales comparables, purchase price and appraisals to corroborate the estimated value of a loan’s collateral or may use sponsor’s guarantee to estimate the value of a non-performing loan.

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2024

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 March 31,
	2024		2023
Origination and extension fee expense (1)	$	262,772	$	951,448
Asset management fee	1,715,042		1,997,427
Asset servicing fee	406,525		470,525
Operating expenses reimbursed to Manager	2,178,164		2,177,004
Disposition fee (2)	340,000		290,813
Total	$	4,902,503	$	5,887,217

_______________

(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)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:

	March 31, 2024
	Participating Interests	Principal Balance		Carrying Value
Mesa AZ Industrial Owner, LLC (1)	38.27%	$	31,000,000	$	31,287,431
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,489,793
Allowance for credit losses		—		(687,939)
		$	38,444,357	$	38,089,285

	December 31, 2023
	Participating Interests	Principal Balance		Carrying Value
Mesa AZ Industrial Owner, LLC (1)	38.27%	$	31,000,000	$	31,296,235
UNJ Sole Member, LLC (1)	40.80%	7,444,357		7,488,777
Allowance for credit losses		—		(226,527)
		$	38,444,357	$	38,558,485

________________

(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.

The following table summarizes the investment that was subject to a PA with an investment partnership affiliated with the Manager as of March 31, 2024. There was no such investment as of December 31, 2023.

					March 31, 2024
					Transfers treated as obligations under participation agreements
	Principal		Carrying Value		% Transferred		Principal		Carrying Value
Asano Bankers Hill, LLC (1)	$	18,567,296	$	18,831,851	80.8	%	$	15,000,000	$	15,137,755

________________

(1)Participant is a certain separately managed account, an investment partnership managed by the Manager.

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Debt (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Schedule of Debt

The following table presents a summary of the Company’s unsecured notes payable outstanding as of:

	Coupon Rate		Effective Rate (1)		Maturity Date	March 31, 2024		December 31, 2023
6.00% Senior Notes Due 2026	6.00	%	6.84	%	6/30/2026	$	85,125,000	$	85,125,000
7.00% Senior Notes Due 2026 (2)	7.00	%	10.27	%	3/31/2026	38,375,000		38,375,000
Total principal amount						123,500,000		123,500,000
Unamortized issue discount						(1,313,154)		(1,444,813)
Unamortized purchase discount (2)						(2,847,913)		(3,161,457)
Unamortized deferred financing costs						(466,099)		(512,833)
Unsecured notes payable, net						$	118,872,834	$	118,380,897

_______________

(1)Includes issue discount, purchase discount and deferred financing costs that are amortized to interest expense over the life of the notes.

(2)In connection with the BDC Merger, Terra LLC assumed all the obligations under the 7.00% Senior Notes and recorded a purchase discount of $4.6 million, representing the difference between the carrying value and the fair value of the notes on the date of the merger.

The following table is a summary of the Company’s secured financing agreements in place as of:

	March 31, 2024										December 31, 2023
	Current Maturity	Extended Maturity	Weighted Average Interest Rate (1)		Pledged Asset Carrying Value		Maximum Facility Size		Principal Amount		Principal  Amount
Repurchase Agreements:
Goldman Sachs Bank facility (2)(3)	February 2025	February 2025	8.59	%	$	138,036,063	$	200,000,000	$	73,855,624	$	75,455,624
UBS AG facility (2)(4)	November 2024	(5)	8.70	%	—		—		—		18,480,000
Total					138,036,063		200,000,000		73,855,624		93,935,624
Non-Recourse Financing:
Promissory notes payable (2)(6)	March 2025 - March 2026	March 2026 - March 2027	10.91	%	130,634,208		N/A		78,997,103		63,509,518
Property mortgages - fixed rate	June 2028	June 2028	6.25	%	80,692,752		N/A		40,250,000		40,250,000
Property mortgages - variable rate (7)	April 2027	April 2028	8.83	%	47,776,647		N/A		33,788,801		33,256,885
Total					259,103,607				153,035,904		137,016,403
Other Secured Financing:
Revolving line of credit (2)(8)	September 2024	September 2025	8.68	%	59,082,967		75,000,000		34,761,111		47,461,730
Term loan (9)					—		—		—		15,000,000
Total					59,082,967		75,000,000		34,761,111		62,461,730
					$	456,222,637	$	275,000,000	261,652,639		293,413,757
Unamortized deferred financing costs and other									(2,903,401)		(2,888,444)
Secured financing agreements, net									$	258,749,238	$	290,525,313

_______________

(1)Amount is calculated using the applicable index rate as of March 31, 2024.

(2)These facilities were used to finance the Company’s senior loan investments.

(3)Interest rate is based on Term SOFR (subject to underlying loan floors on a case-by-case basis) plus a spread ranging from 2.0% to 5.00%. In March 2024, the Company amended the Goldman Sachs Bank facility agreement to extend the maturity date to February 18, 2025 and to reduce the minimum interest coverage ratio covenant.

(4)Interest rate is based on Term SOFR plus a spread of 1.965%. In February 2024, the outstanding balance was repaid. In March 2024, the Company amended the side letter to the UBS AG facility agreement to reduce the maximum amount available under this facility to zero. In connection with this amendment, UBS AG waived the payment of any fees and the meeting of any representations, warranties or covenants for the period commencing on December 31, 2023 until such time as there are amounts outstanding under the UBS AG facility agreement.

(5)The maturity of this facility can be extended annually on mutually agreeable terms.

(6)Interest rate is based on Term SOFR plus a spread ranging from 4.75% to 5.98% with a combined floor rate ranging from 9.0% to 11.28%.

(7)Interest rate is based on Term SOFR plus a spread of 3.5% with a Term SOFR floor of 3.75%.

(8)In March 2024, the Company amended the facility agreement to extend the maturity date to September 12, 2024 with an option to extend the facility term for an additional 12-month period, reduce the credit limit to $75.0 million, increase the coupon rate and revise the minimum profitability and net worth covenants. As of March 31, 2024, interest rate is based on Term SOFR + 3.5% with a combined floor of 7.0%. The lender agreed to waive the minimum profitability covenant for the three months ended March 31, 2024 and the Company agreed to provide the lender with a plan to reduce the balance under the line by June 30, 2024.

(9)In March 2024, the term loan was repaid in full.

Schedule of Long-term Debt Instruments

Scheduled debt principal payments for each of the five calendar years following March 31, 2024 are as follows:

Years Ending December 31,	Total
2024 (April 1 through December 31)	$	34,761,111
2025	142,355,624
2026	133,997,103
2027	33,788,801
2028	40,250,000
Thereafter	—
	385,152,639
Unamortized deferred financing costs and other	(7,530,567)
Total	$	377,622,072

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Equity (Tables)

3 Months Ended

Mar. 31, 2024

Equity [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table presents earnings per share:

	Three Months Ended March 31,
	2024		2023
Net (loss) income	$	(6,183,974)	$	547,479
Series A preferred stock dividend declared	—		(3,907)
Net (loss) income allocable to common stock	$	(6,183,974)	$	543,572
Weighted-average shares outstanding - basic and diluted	24,336,157		24,335,373
(Loss) income per share - basic and diluted	$	(0.25)	$	0.02

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Business (Details) - USD ($) $ / shares in Units, $ in Millions	Dec. 29, 2023	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Oct. 01, 2022	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
Class B Common Stock
Financial Highlights
Common stock, shares, issued (in shares)		24,336,424	24,336,033
Common stock, par or stated value per share (in usd per share)		$ 0.01	$ 0.01	$ 0.01
Partnership interest | Terra Fund 7
Financial Highlights
Beneficial ownership interest (as percent)		8.70%
Partnership interest | Terra Offshore REIT
Financial Highlights
Beneficial ownership interest (as percent)		10.10%
Terra BDC | Class B Common Stock
Financial Highlights
Common stock, shares, issued (in shares)					4,847,910
Common stock, par or stated value per share (in usd per share)					$ 0.01
Stock Distribution | Terra Fund 5
Financial Highlights
Distribution made to limited liability company (LLC) member, unit distribution (in shares)	2,252.02
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 - Narrative (Details)	Mar. 31, 2024 USD ($) loan agreement	Dec. 31, 2023 USD ($)	Jan. 01, 2023 USD ($)
Accounting Policies [Line Items]
Increase to total reserve	$ 58,743,795	$ 56,976,025
Number loans not secured by real estate | loan	2
Useful life (in years)	40 years
Number of master repurchase agreements | agreement	2
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 ($)	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Cash and cash equivalents	$ 17,914,875	$ 10,674,475	$ 28,869,594
Restricted cash	4,097,364	3,954,986	4,611,794
Cash held in escrow by lender	4,541,731	4,907,316	3,571,083
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$ 26,553,970	$ 19,536,777	$ 37,052,471	$ 36,469,592

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Loans Held for Investment - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
Receivables [Abstract]
Accrued interest receivable	$ 8.0	$ 6.5
Financing Receivable, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration]	Interest receivable	Interest receivable

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Loans Held for Investment - Schedule of Portfolio Summary (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2024 USD ($) loan	Dec. 31, 2023 USD ($) loan
Loans and Financing Receivable
Number of loans | loan	19	21
Principal balance	$ 469,652,980	$ 509,460,826
Carrying value	415,259,263	456,472,258
Fair value	$ 417,755,399	$ 457,339,949
Weighted-average coupon rate	13.04%	12.93%
Weighted-average remaining term (years)	9 months	9 months 7 days
Principal	$ 400,152,639	$ 416,913,757
Fixed Rate
Loans and Financing Receivable
Number of loans | loan	4	5
Principal balance	$ 33,212,781	$ 53,998,648
Carrying value	32,961,215	54,095,173
Fair value	$ 32,773,591	$ 53,435,742
Weighted-average coupon rate	12.29%	12.95%
Weighted-average remaining term (years)	1 year 1 month 6 days	1 year 2 months 4 days
Floating Rate
Loans and Financing Receivable
Number of loans | loan	15	16
Principal balance	$ 436,440,199	$ 455,462,178
Carrying value	382,298,048	402,377,085
Fair value	$ 384,981,808	$ 403,904,207
Weighted-average coupon rate	13.10%	12.92%
Weighted-average remaining term (years)	8 months 12 days	8 months 12 days
Floating Rate | Line of Credit | Collateral
Loans and Financing Receivable
Principal balance	$ 323,900,000	$ 342,900,000
Principal	$ 187,600,000	$ 204,900,000
Floating Rate | Term Loan
Loans and Financing Receivable
Number of loans | loan	13	14
Floating Rate | Term Loan | LIBOR
Loans and Financing Receivable
Interest rate base (as percent)	5.44%
Floating Rate | Term Loan | SOFR
Loans and Financing Receivable
Interest rate base (as percent)	5.32%	5.34%
Floating Rate | Term Loan | SOFR
Loans and Financing Receivable
Interest rate base (as percent)	5.33%	5.35%

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Loans Held for Investment - Schedule of Lending Activities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Reconciliation of Mortgage Loans on Real Estate
Provision for credit losses	$ (1,873,111)	$ 850,051
Loans held for investment, net of allowance for credit losses	58,743,795		$ 56,976,025
Loans Held for Investment
Reconciliation of Mortgage Loans on Real Estate
Loans held for investment, net of allowance for credit losses	58,055,856		56,749,498
Loans Held for Investment through Participation Interests
Reconciliation of Mortgage Loans on Real Estate
Loans held for investment, net of allowance for credit losses	687,939		$ 226,527
Real Estate Loan
Reconciliation of Mortgage Loans on Real Estate
Beginning balance	456,472,258	626,490,767
Principal repayments received	(46,981,320)	(59,177,506)
New loans made	7,173,474	46,214,722
Net amortization of premiums on loans	(78,132)	(346,780)
Accrual, payment and accretion of investment-related fees and other, net	440,753	(52,727)
Provision for credit losses	(1,767,770)	1,070,365
Ending balance	415,259,263	609,948,789
Real Estate Loan | Cumulative Effect, Period of Adoption, Adjustment
Reconciliation of Mortgage Loans on Real Estate
Beginning balance		(4,250,052)
Real Estate Loan | Loans Held for Investment
Reconciliation of Mortgage Loans on Real Estate
Beginning balance	417,913,773	584,417,939
Principal repayments received	(46,981,320)	(55,895,298)
New loans made	7,173,474	46,214,722
Net amortization of premiums on loans	(78,132)	(346,780)
Accrual, payment and accretion of investment-related fees and other, net	448,541	(34,186)
Provision for credit losses	(1,306,358)	1,070,365
Ending balance	377,169,978	571,176,710
Real Estate Loan | Loans Held for Investment | Cumulative Effect, Period of Adoption, Adjustment
Reconciliation of Mortgage Loans on Real Estate
Beginning balance		(4,250,052)
Real Estate Loan | Loans Held for Investment through Participation Interests
Reconciliation of Mortgage Loans on Real Estate
Beginning balance	38,558,485	42,072,828
Principal repayments received	0	(3,282,208)
New loans made	0	0
Net amortization of premiums on loans	0	0
Accrual, payment and accretion of investment-related fees and other, net	(7,788)	(18,541)
Provision for credit losses	(461,412)	0
Ending balance	$ 38,089,285	38,772,079
Real Estate Loan | Loans Held for Investment through Participation Interests | Cumulative Effect, Period of Adoption, Adjustment
Reconciliation of Mortgage Loans on Real Estate
Beginning balance		$ 0

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Loans Held for Investment - Loan Structure (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Loans and Financing Receivable
Principal Balance	$ 469,652,980	$ 509,460,826
Carrying Value	474,003,058	513,448,283
Allowance for credit losses	(58,743,795)	(56,976,025)
Total, net of allowance for credit losses	$ 415,259,263	$ 456,472,258
% of Total	100.00%	100.00%
Allowance for loan losses (as a percent)	(14.10%)	(12.50%)
Preferred equity investments
Loans and Financing Receivable
Principal Balance	$ 126,965,102	$ 126,550,969
Carrying Value	$ 127,455,045	$ 127,105,312
% of Total	30.70%	27.80%
Mezzanine loans
Loans and Financing Receivable
Principal Balance	$ 17,444,357	$ 17,444,357
Carrying Value	$ 17,429,831	$ 17,424,081
% of Total	4.20%	3.80%
First mortgages
Loans and Financing Receivable
Principal Balance	$ 325,243,521	$ 365,465,500
Carrying Value	$ 329,118,182	$ 368,918,890
% of Total	79.20%	80.90%

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Loans Held for Investment - Property Type (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Loans and Financing Receivable
Principal Balance	$ 469,652,980	$ 509,460,826
Carrying Value	474,003,058	513,448,283
Allowance for credit losses	(58,743,795)	(56,976,025)
Total, net of allowance for credit losses	$ 415,259,263	$ 456,472,258
% of Total	100.00%	100.00%
Allowance for loan losses (as a percent)	(14.10%)	(12.50%)
Office
Loans and Financing Receivable
Principal Balance	$ 142,231,299	$ 144,812,619
Carrying Value	$ 142,268,711	$ 144,853,769
% of Total	34.20%	31.70%
Multifamily
Loans and Financing Receivable
Principal Balance	$ 67,379,930	$ 85,660,082
Carrying Value	$ 67,867,269	$ 86,210,868
% of Total	16.30%	18.90%
Industrial
Loans and Financing Receivable
Principal Balance	$ 68,965,222	$ 67,579,869
Carrying Value	$ 69,507,417	$ 67,612,621
% of Total	16.70%	14.80%
Mixed-use
Loans and Financing Receivable
Principal Balance	$ 63,046,365	$ 63,096,365
Carrying Value	$ 63,457,260	$ 63,531,806
% of Total	15.30%	13.90%
Infill land
Loans and Financing Receivable
Principal Balance	$ 53,807,782	$ 52,839,509
Carrying Value	$ 55,235,602	$ 54,172,663
% of Total	13.30%	11.90%
Hotel - full/select service
Loans and Financing Receivable
Principal Balance	$ 43,222,382	$ 43,222,382
Carrying Value	$ 43,816,761	$ 43,801,303
% of Total	10.60%	9.60%
Student housing
Loans and Financing Receivable
Principal Balance	$ 31,000,000	$ 31,000,000
Carrying Value	$ 31,850,038	$ 31,821,832
% of Total	7.70%	7.00%
Infrastructure
Loans and Financing Receivable
Principal Balance	$ 0	$ 21,250,000
Carrying Value	$ 0	$ 21,443,421
% of Total	0.00%	4.70%

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Loans Held for Investment - Geographic Locations (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Loans and Financing Receivable
Principal Balance	$ 469,652,980	$ 509,460,826
Carrying Value	474,003,058	513,448,283
Allowance for credit losses	(58,743,795)	(56,976,025)
Total, net of allowance for credit losses	$ 415,259,263	$ 456,472,258
% of Total	100.00%	100.00%
Allowance for loan losses (as a percent)	(14.10%)	(12.50%)
California
Loans and Financing Receivable
Principal Balance	$ 117,093,246	$ 119,093,246
Carrying Value	$ 118,276,335	$ 120,296,944
% of Total	28.40%	26.40%
New York
Loans and Financing Receivable
Principal Balance	$ 90,486,288	$ 90,483,672
Carrying Value	$ 90,486,288	$ 90,483,672
% of Total	21.80%	19.80%
New Jersey
Loans and Financing Receivable
Principal Balance	$ 84,773,004	$ 82,419,378
Carrying Value	$ 86,455,588	$ 83,489,049
% of Total	20.80%	18.30%
Georgia
Loans and Financing Receivable
Principal Balance	$ 74,166,025	$ 74,335,828
Carrying Value	$ 74,391,413	$ 74,602,328
% of Total	17.90%	16.30%
Arizona
Loans and Financing Receivable
Principal Balance	$ 31,000,000	$ 31,000,000
Carrying Value	$ 31,287,431	$ 31,296,235
% of Total	7.50%	6.90%
Utah
Loans and Financing Receivable
Principal Balance	$ 28,000,000	$ 49,250,000
Carrying Value	$ 28,910,000	$ 50,329,949
% of Total	7.00%	11.00%
North Carolina
Loans and Financing Receivable
Principal Balance	$ 21,826,479	$ 21,826,479
Carrying Value	$ 21,927,383	$ 21,929,657
% of Total	5.30%	4.80%
Washington
Loans and Financing Receivable
Principal Balance	$ 15,307,938	$ 34,052,223
Carrying Value	$ 15,268,620	$ 34,020,449
% of Total	3.70%	7.50%
Massachusetts
Loans and Financing Receivable
Principal Balance	$ 7,000,000	$ 7,000,000
Carrying Value	$ 7,000,000	$ 7,000,000
% of Total	1.70%	1.50%

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Loans Held for Investment - Allowance for Credit Losses (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	$ 56,976,025
Allowance for credit losses, end of period	58,743,795
Credit Losses Reserve | Funded Loans
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	56,976,025	$ 25,471,890
Provision (reversal of provision) for credit losses	1,767,770	(1,070,365)
Charge-offs	0	0
Recoveries	0	0
Allowance for credit losses, end of period	58,743,795	28,651,577
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	0	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	326,907	0
Provision for credit losses	105,341	220,314
Liability for credit losses on unfunded commitments, end of period	432,248	589,985
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	$ 0	$ 369,671

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Loans Held for Investment - Narratives - Past-Due Loans and Loan Risk Rating (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2024 USD ($) loan	Mar. 31, 2023 USD ($) loan	Dec. 31, 2023 USD ($) loan
Loans and Financing Receivable
Unfunded commitments	$ 30,700,000		$ 35,700,000
Interest receivable	$ 8,014,178		$ 6,537,368
Number of loans with a loan risk rating | loan	19		21
Carrying Value	$ 474,003,058		$ 513,448,283
Loans held for investment, net of allowance for credit losses	$ 58,743,795		$ 56,976,025
Non-performing
Loans and Financing Receivable
Number of loans with a loan risk rating | loan	8		6
Carrying Value	$ 263,471,328		$ 209,297,064
Non-performing | Suspended Interest Income Accrual
Loans and Financing Receivable
Suspended interest income accrual	5,800,000	$ 3,400,000
Interest receivable	$ 0		0
Number of loans with a loan risk rating | loan	4	4
Other | Non-performing
Loans and Financing Receivable
Carrying Value	$ 263,500,000		209,300,000
Loans held for investment, net of allowance for credit losses	$ 55,700,000		$ 54,600,000

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Loans Held for Investment - Loan Risk Rating (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2024 USD ($) loan	Dec. 31, 2023 USD ($) loan
Loans and Financing Receivable
Number of Loans | loan	19	21
Amortized Cost	$ 474,003,058	$ 513,448,283
Allowance for credit losses	(58,743,795)	(56,976,025)
Total, net of allowance for credit losses	$ 415,259,263	$ 456,472,258
% of Total	100.00%	100.00%
Current fiscal year	$ 0	$ 10,809,959
Year two, fiscal year before current fiscal year	15,268,620	156,850,913
Year three, fiscal year before current fiscal year	136,574,870	97,514,884
Year four, fiscal year before current fiscal year	76,464,081	27,810,327
Year five, fiscal year before current fiscal year	27,795,536	120,043,223
Prior	$ 217,899,951	$ 100,418,977
Non-performing
Loans and Financing Receivable
Number of Loans | loan	8	6
Amortized Cost	$ 263,471,328	$ 209,297,064
% of Total	55.50%	40.70%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	60,612,621
Year three, fiscal year before current fiscal year	86,455,588	0
Year four, fiscal year before current fiscal year	28,910,000	0
Year five, fiscal year before current fiscal year	0	58,200,770
Prior	$ 148,105,740	$ 90,483,673
1
Loans and Financing Receivable
Number of Loans | loan	0	0
Amortized Cost	$ 0	$ 0
% of Total	0.00%	0.00%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	0
Year three, fiscal year before current fiscal year	0	0
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior	$ 0	$ 0
2
Loans and Financing Receivable
Number of Loans | loan	1	1
Amortized Cost	$ 7,000,000	$ 7,000,000
% of Total	1.50%	1.40%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	0
Year three, fiscal year before current fiscal year	0	0
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior	$ 7,000,000	$ 7,000,000
3
Loans and Financing Receivable
Number of Loans | loan	9	13
Amortized Cost	$ 184,699,879	$ 278,296,080
% of Total	39.00%	54.20%
Current fiscal year	$ 0	$ 10,809,959
Year two, fiscal year before current fiscal year	15,268,620	77,383,153
Year three, fiscal year before current fiscal year	31,287,431	97,514,884
Year four, fiscal year before current fiscal year	47,554,081	27,810,327
Year five, fiscal year before current fiscal year	27,795,536	61,842,453
Prior	$ 62,794,211	$ 2,935,304
4
Loans and Financing Receivable
Number of Loans | loan	1	1
Amortized Cost	$ 18,831,851	$ 18,855,139
% of Total	4.00%	3.70%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	18,855,139
Year three, fiscal year before current fiscal year	18,831,851	0
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior	$ 0	$ 0
5
Loans and Financing Receivable
Number of Loans | loan	0	0
Amortized Cost	$ 0	$ 0
% of Total	0.00%	0.00%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	0
Year three, fiscal year before current fiscal year	0	0
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior	$ 0	$ 0

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Equity Investment in Unconsolidated Investments - Narratives (Details) $ in Millions	Aug. 03, 2020 USD ($)	Mar. 31, 2024 venture	Dec. 31, 2023 venture
Partnership interest
Schedule of Equity Method Investments
Number of join ventures | venture		4	4
Mavik RESOF
Schedule of Equity Method Investments
Committed capital | $	$ 50.0

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Equity Investment in Unconsolidated Investments - Equity Investment (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Schedule of Equity Method Investments
Equity investment in unconsolidated investments	$ 42,525,905		$ 37,171,326
Income from equity investment in RESOF	(473,387)	$ (436,860)
Distributions received from equity investment in unconsolidated investments	648,911	4,050,553
Corporate Joint Venture
Schedule of Equity Method Investments
Equity investment in unconsolidated investments	18,015,087		$ 18,974,743
Income from equity investment in RESOF	(1,471,726)	(740,460)
Distributions received from equity investment in unconsolidated investments	$ 0	262,770
Mavik RESOF
Schedule of Equity Method Investments
Beneficial Ownership Interest	14.90%		14.90%
Equity investment in unconsolidated investments	$ 24,510,818		$ 18,196,583
Unfunded commitment outstanding	31,479,273		$ 37,444,080
Income from equity investment in RESOF	998,339	303,600
Distributions received from equity investment in unconsolidated investments	$ 648,911	$ 3,787,783

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Equity Investment in Unconsolidated Investments - Equity Investment in a Limited Partnership (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Schedule of Equity Method Investments
Other assets	$ 9,090,039		$ 8,811,583
Total assets	640,193,823		670,740,151
Obligations under participation agreement (proceeds of $38,444,357 and $38,444,357, respectively)	15,137,755		0
Total liabilities	409,705,933		429,086,343
Unrealized depreciation on investments	(22,931)	$ 6,584
Obligations under participation agreement	15,000,000	521,886
Mavik RESOF
Schedule of Equity Method Investments
Investments at fair value (cost of $273,515,287 and $196,129,031, respectively)	273,515,289		199,032,013
Other assets	19,955,399		16,502,225
Total assets	293,470,688		215,534,238
Revolving line of credit, net of financing costs	79,014,554		44,762,534
Obligations under participation agreement (proceeds of $38,444,357 and $38,444,357, respectively)	38,799,425		38,881,032
Other liabilities	16,524,914		13,641,742
Total liabilities	134,338,893		97,285,308
Partners’ capital	159,131,795		118,248,930
Total investment income	10,833,147	8,111,779
Total expenses	4,182,329	3,166,795
Net investment income	6,650,818	4,944,984
Unrealized depreciation on investments	(527,912)	(595,911)
Net increase in partners’ capital resulting from operations	6,122,906	4,349,073
Carrying Value	273,515,287		$ 196,129,031
Obligations under participation agreement	$ 38,444,357	$ 38,444,357

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Equity Investment in Unconsolidated Investments - Equity Investment in Joint Venture (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Schedule of Equity Method Investments
Carrying Value	$ 42,525,905	$ 37,171,326
Corporate Joint Venture
Schedule of Equity Method Investments
Carrying Value	$ 18,015,087	$ 18,974,743
Corporate Joint Venture | LEL Arlington JV LLC
Schedule of Equity Method Investments
Beneficial Ownership Interest	27.20%	27.20%
Carrying Value	$ 6,817,220	$ 7,024,245
Corporate Joint Venture | LEL NW 49th JV LLC
Schedule of Equity Method Investments
Beneficial Ownership Interest	27.20%	27.20%
Carrying Value	$ 1,572,436	$ 1,619,157
Corporate Joint Venture | TCG Corinthian FL Portfolio JV LLV
Schedule of Equity Method Investments
Beneficial Ownership Interest	30.60%	30.60%
Carrying Value	$ 5,415,771	$ 5,590,427
Corporate Joint Venture | Windy Hill PV Five CM, LLC
Schedule of Equity Method Investments
Beneficial Ownership Interest	41.90%	42.40%
Carrying Value	$ 4,209,660	$ 4,740,914

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Equity Investment in Unconsolidated Investments - Schedule of Equity Method Investments JV (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Schedule of Equity Method Investments
Other assets	$ 9,090,039		$ 8,811,583
Total assets	640,193,823		670,740,151
Total liabilities	409,705,933		429,086,343
Revenues	15,009,345	$ 17,002,171
Depreciation and amortization expense	(2,116,682)	(681,813)
Unrealized loss	(22,931)	6,584
Net loss	(6,183,974)	547,479
Corporate Joint Venture
Schedule of Equity Method Investments
Net investments in real estate	219,800,521		223,039,486
Other assets	20,185,658		18,362,425
Total assets	239,986,179		241,401,911
Mortgage loans payable	187,687,424		187,269,209
Other liabilities	5,034,206		4,509,167
Total liabilities	192,721,630		191,778,376
Members’ capital	47,264,549		$ 49,623,535
Revenues	4,462,871	3,924,579
Operating expenses	(2,472,969)	(2,143,267)
Depreciation and amortization expense	(1,955,076)	(1,965,037)
Interest expense	(3,362,558)	(2,559,954)
Unrealized loss	(852,253)	(826,501)
Net loss	$ (4,179,985)	$ (3,570,180)

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Real Estate Owned, Net - Narratives (Details)	3 Months Ended
	Mar. 31, 2024 USD ($) property	Mar. 31, 2023 USD ($)	Jan. 31, 2024 USD ($) property
Real Estate [Line Items]
Termination fee			$ 30,000.00
Amortization of above- and below-market rent intangibles	$ (824,843)	$ (34,764)
Industrial
Real Estate [Line Items]
Number of leased buildings | property	8		1
Below-market rent
Real Estate [Line Items]
Amortization of above- and below-market rent intangibles	$ 800,000	30,000.00
Below-market rent | Industrial
Real Estate [Line Items]
Unamortized below-market rent			$ 100,000
In-place lease
Real Estate [Line Items]
Amortization of above- and below-market rent intangibles	$ 1,300,000	$ 300,000
In-place lease | Industrial
Real Estate [Line Items]
Unamortized in-place lease			$ 300,000

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Real Estate Owned, Net - Investment Related to Real Estate Acquisition (Details)	3 Months Ended
	Mar. 31, 2023 USD ($) property	Mar. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)
Real Estate [Line Items]
Land, building and building improvements, net		$ 125,948,852	$ 126,724,333
Land
Real Estate [Line Items]
Land, building and building improvements, net		23,785,004	23,785,004
Building and building improvements
Real Estate [Line Items]
Land, building and building improvements, net		102,139,006	102,929,698
In-place lease
Real Estate [Line Items]
In-please lease (weighted-average expected life of 2.63 years)		12,060,731	12,719,000
Below-market rent
Real Estate [Line Items]
Below-market rent (weighted-average expected life of 2.69 years)		$ (8,649,073)	$ (8,864,138)
Industrial
Real Estate [Line Items]
Real estate investments, net	$ 48,798,273
Total Capitalized Costs	48,798,273
Industrial | Land
Real Estate [Line Items]
Land, building and building improvements, net	9,327,855
Industrial | Building and building improvements
Real Estate [Line Items]
Land, building and building improvements, net	39,248,352
Industrial | In-place lease
Real Estate [Line Items]
In-please lease (weighted-average expected life of 2.63 years)	$ 4,315,333
Weighted-average expected life (in years)	2 years 7 months 17 days
Industrial | Below-market rent
Real Estate [Line Items]
Below-market rent (weighted-average expected life of 2.69 years)	$ (4,093,267)
Weighted-average expected life (in years)	2 years 8 months 8 days
Industrial | Texas
Real Estate [Line Items]
Number of properties | property	3
Real estate investments, net	$ 48,800,000
Total Capitalized Costs	$ 48,800,000

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Real Estate Owned, Net - Real Estate Owned, Net (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Real Estate [Line Items]
Real estate, Net	$ 125,948,852	$ 126,724,333
Lease intangible liabilities, Net	(6,014,031)	(6,838,875)
Total real estate
Real Estate [Line Items]
Real estate, Cost	128,734,958	128,725,750
Real estate, Accumulated Depreciation/Amortization	(2,786,106)	(2,001,417)
Real estate, Net	125,948,852	126,724,333
Land
Real Estate [Line Items]
Real estate, Cost	23,785,004	23,785,004
Real estate, Accumulated Depreciation/Amortization	0	0
Real estate, Net	23,785,004	23,785,004
Building and building improvements
Real Estate [Line Items]
Real estate, Cost	104,924,922	104,915,714
Real estate, Accumulated Depreciation/Amortization	(2,785,916)	(1,986,016)
Real estate, Net	102,139,006	102,929,698
Tenant improvements
Real Estate [Line Items]
Real estate, Cost	25,032	25,032
Real estate, Accumulated Depreciation/Amortization	(190)	(15,401)
Real estate, Net	24,842	9,631
Total intangible assets
Real Estate [Line Items]
Lease intangible assets, Cost	12,060,731	12,719,000
Lease intangible assets, Accumulated Depreciation/Amortization	(3,526,153)	(2,849,636)
Net	8,534,578	9,869,364
In-place lease
Real Estate [Line Items]
Lease intangible assets, Cost	12,060,731	12,719,000
Lease intangible assets, Accumulated Depreciation/Amortization	(3,526,153)	(2,849,636)
Net	8,534,578	9,869,364
Total intangible liabilities
Real Estate [Line Items]
Below-market rent (weighted-average expected life of 2.69 years)	(8,649,073)	(8,864,138)
Lease intangible liabilities, Accumulated Depreciation/Amortization	2,635,042	2,025,263
Lease intangible liabilities, Net	(6,014,031)	(6,838,875)
Below-market rent
Real Estate [Line Items]
Below-market rent (weighted-average expected life of 2.69 years)	(8,649,073)	(8,864,138)
Lease intangible liabilities, Accumulated Depreciation/Amortization	2,635,042	2,025,263
Lease intangible liabilities, Net	(6,014,031)	(6,838,875)
Total real estate
Real Estate [Line Items]
Cost	132,146,616	132,580,612
Accumulated Depreciation/Amortization	(3,677,217)	(2,825,790)
Net	$ 128,469,399	$ 129,754,822

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Real Estate Owned, Net - Real Estate Operating Revenues and Expenses (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Real estate operating revenues:
Total	$ 2,719,701	$ 1,332,969
Real estate operating expenses:
Management fees	1,715,042	1,997,427
Total	691,006	1,209,912
Total real estate
Real estate operating revenues:
Lease revenue	2,104,222	1,085,459
Other operating income	615,479	247,510
Total	2,719,701	1,332,969
Real estate operating expenses:
Utilities	11,720	36,414
Real estate taxes	390,810	354,680
Repairs and maintenances	26,972	207,365
Management fees	62,254	39,418
Lease expense, including amortization of above-market ground lease	0	487,163
Other operating expenses	199,250	84,872
Total	$ 691,006	$ 1,209,912

XML

Real Estate Owned, Net - Schedule of Lease Expense (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)
Ground Lease
Real Estate [Line Items]
Operating lease cost	$ 519,750

XML

Real Estate Owned, Net - Schedule of Non-cash Information (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)
Amounts included in the measurement of lease liability:
Operating cash flows from an operating lease	$ 519,750
Right-of-use asset obtained in exchange for lease obligations:
Operating lease	$ 519,750

XML

Fair Value Measurements - Narrative (Details) - USD ($)	1 Months Ended	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2024	Mar. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Purchases		$ 0	$ 258,500
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%

XML

Fair Value Measurements - Fair Value Measurements of Marketable Securities, by Major Class (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	$ 3,174,690	$ 4,961,879	$ 154,544	$ 147,960
Derivatives	83,928	83,807	$ 258,500	$ 0
Total	5,533,292	7,290,678
Debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	812,872	1,148,653
Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	2,361,818	3,813,226
Money market fund
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market fund	2,274,674	2,244,992
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total	5,449,364	7,206,871
Level 1 | Debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	812,872	1,148,653
Level 1 | Equity Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	2,361,818	3,813,226
Level 1 | Money market fund
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Money market fund	2,274,674	2,244,992
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total	83,928	83,807
Level 2 | Debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	0	0
Level 2 | Equity 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	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total	0	0
Level 3 | Debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Marketable securities	0	0
Level 3 | Equity 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	0
Derivative - interest rate cap
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives	83,928	83,807
Derivative - interest rate cap | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives	0	0
Derivative - interest rate cap | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives	83,928	83,807
Derivative - interest rate cap | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives	$ 0	$ 0

XML

Fair Value Measurements - Activity of Marketable Securities and Derivatives (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Marketable Securities
Beginning balance	$ 4,961,879	$ 147,960
Purchases	0	0
Proceeds from sale	(1,292,897)	0
Reclassification of net realized gains on marketable securities into earnings	(135,459)	0
Unrealized losses on marketable securities and derivatives	(358,833)	6,584
Ending balance	3,174,690	154,544
Derivatives
Beginning balance	83,807	0
Purchases	0	258,500
Proceeds from sale	0	0
Reclassification of net realized gains on marketable securities into earnings	0	0
Unrealized losses on marketable securities and derivatives	121	0
Ending balance	$ 83,928	$ 258,500

XML

Fair Value Measurements - Fair Value Measurements, Nonrecurring (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Loans:
Principal Amount	$ 469,652,980	$ 509,460,826
Carrying Value	474,003,058	513,448,283
Allowance for loan losses	(58,743,795)	(56,976,025)
Total, net of allowance for credit losses	415,259,263	456,472,258
Fair Value	417,755,399	457,339,949
Liabilities:
Principal Amount	400,152,639	416,913,757
Carrying Value	392,759,827	408,906,210
Fair Value	357,284,889	391,433,807
Loans held for investment
Loans:
Allowance for loan losses	(58,055,856)	(56,749,498)
Total, net of allowance for credit losses	377,169,978	417,913,773
Loans held for investment acquired through participation
Loans:
Allowance for loan losses	(687,939)	(226,527)
Total, net of allowance for credit losses	38,089,285	38,558,485
Unsecured notes payable
Liabilities:
Principal Amount	34,761,111	62,461,730
Level 3
Loans:
Allowance for loan losses	(58,743,795)	(56,976,025)
Fair Value	417,755,399	457,339,949
Liabilities:
Fair Value	275,991,239	293,413,757
Level 3 | Loans held for investment
Loans:
Principal Amount	431,208,623	471,016,469
Carrying Value	435,225,834	474,663,271
Fair Value	378,955,975	418,458,916
Level 3 | Loans held for investment acquired through participation
Loans:
Principal Amount	38,444,357	38,444,357
Carrying Value	38,777,224	38,785,012
Fair Value	38,799,424	38,881,033
Level 3 | Secured financing agreements
Liabilities:
Principal Amount	261,652,639	293,413,757
Carrying Value	258,749,238	290,525,313
Fair Value	260,794,611	293,413,757
Level 3 | Obligations under participation agreements
Liabilities:
Principal Amount	15,000,000	0
Carrying Value	15,137,755	0
Fair Value	15,196,628	0
Level 1 | Unsecured notes payable
Liabilities:
Principal Amount	123,500,000	123,500,000
Carrying Value	118,872,834	118,380,897
Fair Value	$ 81,293,650	$ 98,020,050

XML

Fair Value Measurements - Valuation Techniques (Details)	Mar. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)
Fair Value Measurement Inputs and Valuation Techniques
Assets, Fair Value	$ 417,755,399	$ 457,339,949
Liabilities, Fair Value	357,284,889	391,433,807
Carrying Value	474,003,058	513,448,283
Non-performing
Fair Value Measurement Inputs and Valuation Techniques
Carrying Value	263,471,328	209,297,064
Level 3
Fair Value Measurement Inputs and Valuation Techniques
Assets, Fair Value	417,755,399	457,339,949
Liabilities, Fair Value	275,991,239	293,413,757
Level 3 | Non-performing
Fair Value Measurement Inputs and Valuation Techniques
Carrying Value	207,800,000	154,600,000
Level 3 | Loans held for investment
Fair Value Measurement Inputs and Valuation Techniques
Assets, Fair Value	378,955,975	418,458,916
Carrying Value	435,225,834	474,663,271
Level 3 | Loans held for investment acquired through participation
Fair Value Measurement Inputs and Valuation Techniques
Assets, Fair Value	38,799,424	38,881,033
Carrying Value	38,777,224	38,785,012
Level 3 | Secured financing agreements
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, Fair Value	260,794,611	293,413,757
Level 3 | Obligations under participation agreements
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, Fair Value	$ 15,196,628	$ 0
Level 3 | Discount Rate | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.0675	0.0675
Level 3 | Discount Rate | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.0700	0.0700
Level 3 | Terminal Capitalization Rate | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.0575	0.0575
Level 3 | Terminal Capitalization Rate | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.0600	0.0600
Level 3 | Discounted Cash Flow | Discount Rate | Loans held for investment | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.1046	0.0958
Level 3 | Discounted Cash Flow | Discount Rate | Loans held for investment | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.1638	0.1695
Level 3 | Discounted Cash Flow | Discount Rate | Loans held for investment | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.1213	0.0702
Level 3 | Discounted Cash Flow | Discount Rate | Loans held for investment acquired through participation | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.1555	0.1530
Level 3 | Discounted Cash Flow | Discount Rate | Loans held for investment acquired through participation | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.1833	0.1835
Level 3 | Discounted Cash Flow | Discount Rate | Loans held for investment acquired through participation | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Assets, measurement input	0.1779	0.1776
Level 3 | Discounted Cash Flow | Discount Rate | Secured financing agreements | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, measurement input	0.0625	0.0625
Level 3 | Discounted Cash Flow | Discount Rate | Secured financing agreements | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, measurement input	0.1130	0.1272
Level 3 | Discounted Cash Flow | Discount Rate | Secured financing agreements | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, measurement input	0.0897	0.0891
Level 3 | Discounted Cash Flow | Discount Rate | Obligations under participation agreements | Minimum
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, measurement input	0.1638
Level 3 | Discounted Cash Flow | Discount Rate | Obligations under participation agreements | Maximum
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, measurement input	0.1638
Level 3 | Discounted Cash Flow | Discount Rate | Obligations under participation agreements | Weighted Average
Fair Value Measurement Inputs and Valuation Techniques
Liabilities, measurement input	0.1638

XML

Related Party Transactions - Schedule of Fees Paid and Costs Reimbursed to the Manager (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Related Party Transaction [Line Items]
Asset management fee	$ 1,715,042	$ 1,997,427
Asset servicing fee	406,525	470,525
Operating expenses reimbursed to Manager	2,178,164	2,177,004
Related Party
Related Party Transaction [Line Items]
Origination and extension fee expense	262,772	951,448
Asset management fee	1,715,042	1,997,427
Asset servicing fee	406,525	470,525
Operating expenses reimbursed to Manager	2,178,164	2,177,004
Disposition fee	340,000	290,813
Total	$ 4,902,503	$ 5,887,217

XML

Related Party Transactions - Narratives (Details)				1 Months Ended	3 Months Ended
	Mar. 11, 2024	Dec. 01, 2022	Aug. 03, 2020 USD ($)	Jan. 31, 2024	Mar. 31, 2024 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)
Related Party Transaction [Line Items]
Manager's entitled transaction break-up fee					0.5
Termination fee					$ 0		$ 0
Funding under promissory note receivable					1,225,656	$ 0
Distribution to investors					4,650,636	4,650,492
Investment company, return of capital distribution					$ 4,700,000	4,200,000
Related Party
Related Party Transaction [Line Items]
Percent of origination fees payable					1.00%
Percent of principal amount of loan extended					1.00%
Management fee, annual rate (as percent)					1.00%
Asset servicing fee annual rate (as percent)					0.25%
Disposition fee due to manager percent					1.00%
Due from related parties					$ 1,092,348		655,263
Due to manager					2,381,620		4,183,293
Related Party | Mavik Real Estate Special Opportunities Fund, LP
Related Party Transaction [Line Items]
Committed capital			$ 50,000,000
Affiliated Entity | Management Agreement Amendment
Related Party Transaction [Line Items]
Unlimited renewal term	1 year
Termination board approval ratio	0.67
Term immediately preceding termination	24 months
Prior written notice termination term	30 days
Material breach term	30 days
Prior written notice from affiliate termination term	60 days
Affiliated Entity | Management Agreement Amendment | Minimum
Related Party Transaction [Line Items]
Written notice termination term	180 days
Average annual fee multiple	3
Material breach term	30 days
Affiliated Entity | Management Agreement Amendment | Maximum
Related Party Transaction [Line Items]
Material breach term	45 days
Affiliated Entity | Revolving Promissory Note Receivable | Notes Receivable
Related Party Transaction [Line Items]
Related party, number of elapsed days		365 days		365 days
Related party rate				15.00%
Funding under promissory note receivable					1,200,000	$ 0
Receivables					$ 5,100,000		$ 3,800,000

XML

Related Party Transactions - Participation Interests Purchased (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Related Party Transaction [Line Items]
Principal Balance	$ 469,652,980	$ 509,460,826
Carrying Value	415,259,263	456,472,258
Allowance for credit losses	(58,743,795)	(56,976,025)
Related Party | Loans held for investment acquired through participation
Related Party Transaction [Line Items]
Principal Balance	38,444,357	38,444,357
Carrying Value	38,089,285	38,558,485
Allowance for credit losses	$ (687,939)	$ (226,527)
Related Party | Loans held for investment acquired through participation | Mesa AZ Industrial Owner, LLC
Related Party Transaction [Line Items]
Participating Interests	38.27%	38.27%
Principal Balance	$ 31,000,000	$ 31,000,000
Carrying Value	$ 31,287,431	$ 31,296,235
Related Party | Loans held for investment acquired through participation | UNIJ Sole Member LLC
Related Party Transaction [Line Items]
Participating Interests	40.80%	40.80%
Principal Balance	$ 7,444,357	$ 7,444,357
Carrying Value	$ 7,489,793	$ 7,488,777

XML

Related Party Transactions - Transfers of Participation Interest (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Related Party Transaction [Line Items]
Principal Balance	$ 469,652,980	$ 509,460,826
Carrying Value	415,259,263	456,472,258
Principal	400,152,639	416,913,757
Carrying Value	258,749,238	$ 290,525,313
Participating Mortgage Loan | Affiliated Entity | Asano Bankers Hill, LLC
Related Party Transaction [Line Items]
Principal Balance	18,567,296
Carrying Value	$ 18,831,851
% Transferred	80.80%
Principal	$ 15,000,000
Carrying Value	$ 15,137,755

XML

Debt - Unsecured Notes Payable (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023	Oct. 01, 2022	Jun. 25, 2021	Jun. 10, 2021	Feb. 10, 2021
Debt Instrument
Total principal amount	$ 385,152,639
Unsecured notes payable, net	377,622,072
Unsecured notes payable
Debt Instrument
Total principal amount	123,500,000	$ 123,500,000
Unamortized issue discount	(1,313,154)	(1,444,813)
Unamortized purchase discount	(2,847,913)	(3,161,457)
Unamortized deferred financing costs	(466,099)	(512,833)
Unsecured notes payable, net	118,872,834	118,380,897
Unamortized purchase discount	$ 2,847,913	3,161,457
6.00% Senior Notes Due 2026 | Unsecured notes payable
Debt Instrument
Fixed rate (as percent)	6.00%			6.00%	6.00%
Effective rate (as percent)	6.84%
Total principal amount	$ 85,125,000	85,125,000
7.00% Senior Notes Due 2026 | Unsecured notes payable
Debt Instrument
Fixed rate (as percent)	7.00%					7.00%
Effective rate (as percent)	10.27%
Total principal amount	$ 38,375,000	$ 38,375,000
7.00% Senior Notes Due 2026 | Unsecured notes payable | Terra BDC
Debt Instrument
Fixed rate (as percent)			7.00%
Unamortized purchase discount	(4,600,000)
Unamortized purchase discount	$ 4,600,000

XML

Debt - Narratives - Unsecured Notes Payable (Details) - USD ($)	Jun. 25, 2021	Feb. 10, 2021	Mar. 31, 2024	Dec. 31, 2023	Jun. 10, 2021	Feb. 26, 2021
Debt Instrument
Principal			$ 400,152,639	$ 416,913,757
6.00% Senior Notes Due 2026 | Unsecured notes payable
Debt Instrument
Fixed rate (as percent)	6.00%		6.00%		6.00%
Principal	$ 6,600,000				$ 78,500,000
Debt instrument, redemption price, percentage	100.00%	100.00%
7.00% Senior Notes Due 2026 | Unsecured notes payable
Debt Instrument
Fixed rate (as percent)		7.00%	7.00%
Principal		$ 34,800,000				$ 3,600,000

XML

Debt - Secured Financing Arrangements (Details) - USD ($)		3 Months Ended
	Mar. 12, 2024	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument
Maximum Facility Size		$ 275,000,000
Principal Amount		400,152,639	$ 416,913,757
Pledged Asset Carrying Value		456,222,637
Unamortized deferred financing costs and other		(2,903,401)	(2,888,444)
Secured financing agreements, net		$ 258,749,238	290,525,313
Debt instrument, term	12 months
Commitment amount	$ 75,000,000
Floor rate
Debt Instrument
Variable rate (as percent)		7.00%
Secured borrowing
Debt Instrument
Principal Amount		$ 261,652,639	293,413,757
SOFR | Line of Credit | Minimum
Debt Instrument
Variable rate (as percent)		3.50%
SOFR | Line of Credit | Maximum
Debt Instrument
Variable rate (as percent)		3.75%
Nonrecourse
Debt Instrument
Maximum Facility Size
Principal Amount		153,035,904	137,016,403
Pledged Asset Carrying Value		$ 259,103,607
Nonrecourse | Fixed Rate
Debt Instrument
Weighted Average Interest Rate (as percent)		6.25%
Principal Amount		$ 40,250,000	40,250,000
Pledged Asset Carrying Value		$ 80,692,752
Nonrecourse | Variable Rate
Debt Instrument
Weighted Average Interest Rate (as percent)		8.83%
Principal Amount		$ 33,788,801	33,256,885
Pledged Asset Carrying Value		$ 47,776,647
Nonrecourse | SOFR
Debt Instrument
Variable rate (as percent)		3.50%
Nonrecourse | Promissory Note
Debt Instrument
Weighted Average Interest Rate (as percent)		10.91%
Principal Amount		$ 78,997,103	63,509,518
Pledged Asset Carrying Value		$ 130,634,208
Nonrecourse | Promissory Note | Minimum | Floor rate
Debt Instrument
Variable rate (as percent)		9.00%
Nonrecourse | Promissory Note | Maximum | Floor rate
Debt Instrument
Variable rate (as percent)		11.28%
Nonrecourse | Promissory Note | SOFR | Minimum
Debt Instrument
Variable rate (as percent)		4.75%
Nonrecourse | Promissory Note | SOFR | Maximum
Debt Instrument
Variable rate (as percent)		5.98%
Repurchase Agreements
Debt Instrument
Pledged Asset Carrying Value		$ 138,036,063
Maximum Facility Size		200,000,000
Principal Amount		73,855,624	93,935,624
Unsecured notes payable
Debt Instrument
Maximum Facility Size		75,000,000
Principal Amount		34,761,111	62,461,730
Pledged Asset Carrying Value		$ 59,082,967
Unsecured notes payable | Term Loan
Debt Instrument
Principal Amount			15,000,000
Unsecured notes payable | Line of Credit
Debt Instrument
Weighted Average Interest Rate (as percent)		8.68%
Maximum Facility Size		$ 75,000,000
Principal Amount		34,761,111	47,461,730
Pledged Asset Carrying Value		$ 59,082,967
Goldman Sachs Bank facility | SOFR | Line of Credit | Minimum
Debt Instrument
Variable rate (as percent)		2.00%
Goldman Sachs Bank facility | SOFR | Line of Credit | Maximum
Debt Instrument
Variable rate (as percent)		5.00%
Goldman Sachs Bank facility | Repurchase Agreements
Debt Instrument
Weighted Average Interest Rate (as percent)		8.59%
Pledged Asset Carrying Value		$ 138,036,063
Maximum Facility Size		200,000,000
Principal Amount		$ 73,855,624	75,455,624
UBS AG facility | SOFR | Line of Credit
Debt Instrument
Variable rate (as percent)		1.965%
UBS AG facility | Repurchase Agreements
Debt Instrument
Weighted Average Interest Rate (as percent)		8.70%
Pledged Asset Carrying Value		$ 0
Maximum Facility Size		0
Principal Amount		$ 0	$ 18,480,000

XML

Debt - Narratives - Secured Financing Arrangements (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Debt Instrument
Amortization of deferred financing costs	$ 978,280	$ 535,276
Proceeds from secured financing	53,019,501	68,264,993
Principal repayments	84,780,619	19,230,071
Principal	400,152,639		$ 416,913,757
Secured borrowing
Debt Instrument
Amortization of deferred financing costs	900,000	$ 500,000
Principal	261,652,639		293,413,757
Nonrecourse
Debt Instrument
Principal	153,035,904		137,016,403
Nonrecourse | Promissory Note
Debt Instrument
Principal	$ 78,997,103		$ 63,509,518

XML

Debt - Scheduled Debt Principal Payments (Details)	Mar. 31, 2024 USD ($)
Debt Instrument
2024 (April 1 through December 31)	$ 34,761,111
2025	142,355,624
2026	133,997,103
2027	33,788,801
2028	40,250,000
Thereafter	0
Unsecured notes payable, net	385,152,639
Unamortized deferred financing costs and other	(7,530,567)
Unsecured notes payable, net	$ 377,622,072

XML

Debt - Narratives - Obligations Under Participation Agreements (Details) - USD ($)	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument
Obligations under participation agreements (Note 7 )	$ 15,137,755	$ 0
Participating Mortgage Loan
Debt Instrument
Obligations under participation agreements (Note 7 )	$ 15,100,000
Participating Mortgage Loan | Weighted Average
Debt Instrument
Weighted-average interest rate (as percent)	20.32%

XML

Commitments and Contingencies (Details) - USD ($)	Aug. 03, 2020	Mar. 31, 2024	Dec. 31, 2023
Other Commitments
Unfunded commitments		$ 30,700,000	$ 35,700,000
Mavik RESOF
Other Commitments
Committed capital	$ 50,000,000
Unfunded commitment outstanding		$ 31,479,273	$ 37,444,080
Mavik RESOF
Other Commitments
Committed capital	$ 50,000,000

XML

Equity - Preferred Stock Classes (Details) - USD ($)	Nov. 30, 2016	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	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
Preferred stock, issued (in shares)		0	0
Series A Preferred Stock
Class of Stock
Preferred stock, authorized (in shares)	125
Preferred stock, issued (in shares)		0	0
Preferred stock outstanding (in shares)		0	0
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 redeemed				$ 125,000

XML

Equity - Common Stock (Details)	3 Months Ended
	Mar. 31, 2024 $ / shares shares	Dec. 31, 2023 $ / shares shares	Mar. 31, 2023 $ / 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	$ 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	$ 0.01
Common stock, shares, issued (in shares)	24,336,424	24,336,033
Conversion basis	1
Preferred Stock
Equity disclosure
Common stock, shares authorized (in shares)				50,000,000
Terra BDC | Class B Common Stock
Equity disclosure
Common stock, par or stated value per share (in usd per share) | $ / shares				$ 0.01
Common stock, shares, issued (in shares)				4,847,910
Conversion ratio				1
Terra Fund 7 | Partnership interest
Equity disclosure
Equity method investment, ownership percentage	8.70%
Terra Offshore REIT | Partnership interest
Equity disclosure
Equity method investment, ownership percentage	10.10%

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Equity - Distributions (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Equity [Abstract]
Distribution to investors	$ 4,650,636	$ 4,650,492
Investment company, return of capital distribution	4,700,000	4,200,000
Preferred stock dividend declared	$ 0	$ 3,907

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Equity - Dividend Reinvestment Plan (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Equity [Abstract]
Shares issued from reinvestment of shareholder distributions (in shares)	391	34
Reinvestment of shareholder distributions	$ 4,474	$ 478

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Label	Element	Value
Accounting Standards Update [Extensible Enumeration]	us-gaap_AccountingStandardsUpdateExtensibleList	Accounting Standards Update 2016-13 [Member]