What changed in this filing

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Item 1. Business

2024-03-15 compared with 2023-03-13 · 117 added, 79 removed, 214 unchanged (48% of the section changed)

We are a real estate credit focused company that originates, structures, funds and manages commercial real estate credit investments, including mezzanine loans, first mortgage loans, subordinated mortgage loans and preferred equity investments throughout the United States, which we collectively refer to as our targeted assets.

Our loans finance the acquisition, construction, development or redevelopment of quality commercial real estate in the United States.

We focus on the origination of middle market loans in the approximately $10 million to $50 million range, to finance properties primarily in primary and secondary markets.

We believe loans in this size range are subject to less competition, offer higher risk adjusted returns than larger loans with similar risk metrics and facilitate portfolio diversification.

Our investment objective is to provide attractive risk-adjusted returns to our stockholders, primarily through regular distributions.

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.

Each of our loans was originated by Terra Capital Partners or its affiliates.

We may also make strategic real estate equity and non-real estate-related investments that align with our investment objectives and criteria.

Each of our investments 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 December 31, 2022, our portfolio included underlying properties located in 31 markets, across ten states and includes property types such as multifamily housing, hotels, student housing, commercial offices, medical offices, mixed-use and industrial properties.

As of December 31, 2023, our portfolio included underlying properties located in 21 markets, across nine states and includes property types such as multifamily housing, hotels, student housing, commercial offices, medical offices, mixed-use, industrial and infrastructure properties.

The profile of these properties ranges from stabilized and value-added properties to pre-development and construction.

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Subsequent to the Merger, Terra Fund 5 and Terra Fund 7 contributed their shares of our common stock to Terra JV in exchange for ownership interest in Terra JV.

In addition, on March 2, 2020, we issued 2,457,684.59 shares of our common stock to Terra Offshore REIT in exchange for the settlement of $32.1 million of participation interests in loans also held by us, $8.6 million in cash and other net working capital (“Issuance of Common Stock to Terra Offshore REIT”).

On October 1, 2022 (the “Closing Date”), pursuant to that certain Agreement and Plan of Merger, dated as of May 2, 2022 (the “Merger Agreement”), Terra BDC merged with and into Terra LLC, our wholly owned subsidiary, with Terra LLC continuing as the surviving entity of the merger (the “BDC Merger”) and as our wholly owned subsidiary.

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Pursuant to the terms of the transactions described in the Merger Agreement, approximately 4,847,910 shares of Class B Common Stock were issued to former Terra BDC stockholders in connection with the BDC Merger, based on the number of outstanding shares of Terra BDC Common Stock as of the Closing Date.

Following the consummation of the BDC Merger and as of December 31, 2022, former Terra BDC stockholders owned approximately 19.9% of our common equity, Terra JV held

70.0% of the issued and outstanding shares of our common stock with the remainder of 10.1% held by Terra Offshore REIT;

and Terra Fund 5 and Terra Fund 7 owned an 87.6% and 12.4% interest, respectively, in Terra JV.

On the Closing Date, we filed with the SDAT our Articles of Amendment to the Articles of Amendment and Restatement (the “Charter Amendment”).

Pursuant to the Charter Amendment, (i) the authorized shares of our stock which we have authority to issue were increased 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, $0.01 par value per share (“Preferred Stock”), and (ii) each share of our common stock issued and outstanding immediately prior to the Effective Time was automatically changed into one issued and outstanding share of Class B 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 our common stock, except as set forth below with respect to conversion.

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

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

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

For additional information on our Class A Common Stock, please see the “ Potential Liquidity Transactions ” section below.

Distribution of Class B Common Stock by Terra Fund 5

Prior to undertaking the REIT Formation Transaction, the Terra Funds distributed a consent solicitation memorandum disclosing the details of the proposed transactions and received the requisite consent of investors in each of the Terra Funds to engage in the REIT Formation Transaction.

The consent solicitation memorandum disclosed that Terra Fund 5 could in the future make a distribution-in-kind to its members of shares of our company, rather than a cash distribution.

The limited liability company agreement of Terra Fund 5 provides that the term of Terra Fund 5 expired on December 31, 2023.

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 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 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, prior to the Distribution Date, Terra JV first distributed the shares of Class B Common Stock to Terra Fund 5, and Terra Fund 5 then distributed those shares to its members on the Distribution Date.

On February 8, 2024, each of Terra Fund 5 and Terra JV were dissolved.

As of December 31, 2023, Terra Fund 7 and Terra Offshore REIT held approximately 8.7% and 10.1%, respectively, of our issued and outstanding Class B Common Stock.

Potential Liquidity Transactions

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 in-kind distribution of our shares of common stock indirectly owned by certain Terra Funds to the ultimate investors in the Terra Funds.

We may pursue such a liquidity transaction as early as 2023, but we cannot provide any assurance that any alternative liquidity transaction will be available to us or, if available, that we will pursue or be successful in completing any such alternative liquidity transaction.

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 to us 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 the 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 our common stock redeemed for cash.

To this end, as previously disclosed, we amended our articles of amendment and restatement on December 1, 2023 (the “A&R Articles”), to provide our board of directors (our “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 our stock not listed on an exchange.

These non-traded REIT provisions will spring into effect and become operative if we ultimately decide to register and sell shares in a non-traded REIT format.

We have elected to be taxed as a REIT for U.S.

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We are externally managed by our Manager, which is registered as an investment adviser under the Investment Advisers Act of 1940 Act, and is a subsidiary of Terra Capital Partners.

On April 1, 2021, MAVIK Capital Management, LP (“Mavik”), an entity controlled by Vikram S.

Uppal, our Chief Executive Officer, completed a series of related transactions that resulted in all of the outstanding interests in Terra Capital Partners being acquired by Mavik for a combination of cash and interests in Mavik (the “Recapitalization”).

As part of the Recapitalization, a private fund managed by a division of a publicly-traded alternative asset manager, acquired a passive interest consisting of “non-voting securities,” as that term is defined under the 1940 Act, in Mavik.

Terra Capital Partners is led by Vikram S.

Uppal (Chief Executive Officer), Gregory M.

Mavik Capital Management, LP (“Mavik”), an entity controlled by Vikram S.

Uppal, our Chief Executive Officer and Chief Investment Officer, is the sole member of Terra Capital Partners.

Terra Capital Partners is led by Mr.

Uppal (Chief Executive Officer), Sarah Schwarzschild (Chief Operating Officer), Gregory M.

Pinkus (Chief Financial Officer) and Daniel Cooperman (Chief Originations Officer).

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Members of the Terra Capital Partners management team have broad based, long-term relationships with major financial institutions, property owners and commercial real estate service providers.

entire senior management team has held leadership roles at many top international real estate and investment banking firms, including Mount Kellett Capital Management and Fortress Investment Group.

Terra Capital Partners is a real estate credit focused investment manager based in New York City with a 19-year track record focused primarily on the origination and management of mezzanine loans, as well as first mortgage loans, bridge loans, and preferred equity investments in all major property types through multiple public and private pooled investment vehicles.

The entire senior management team has held leadership roles at many top international real estate and investment banking firms, including Mount Kellett Capital Management, Fortress Investment Group and BGO Strategic Capital Partners.

Terra Capital Partners is a real estate credit focused investment manager based in New York City with a 20-year track record focused primarily on the origination and management of mezzanine loans, as well as first mortgage loans, bridge loans, and preferred equity investments in all major property types through multiple pooled investment vehicles.

Since its formation in 2001 and its commencement of operations in 2002, Terra Capital Partners has been engaged in providing financing on commercial properties of all major property types throughout the United States.

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Our Investment Strategy

We focus on providing commercial real estate loans to creditworthy borrowers and seek to generate an attractive and consistent low volatility cash income stream.

We focus on providing real estate (primarily commercial real estate) loans to creditworthy borrowers and seek to generate an attractive and consistent low volatility cash income stream.

Our focus on originating debt and debt-like instruments emphasizes the payment of current returns to investors and the preservation of invested capital.

From time to time, we may acquire real estate encumbering the senior loans through foreclosure, may invest in real estate related joint ventures and may directly acquire real estate properties.

We may also elect to make strategic non-real estate-related investments that align with our investment objectives and criteria.

As part of our investment strategy, we:

• target middle market loans of approximately $10 million to $50 million;

• focus on the origination of new loans, not on the acquisition of loans originated by other lenders;

• focus on the origination of new loans;

• focus on loans backed by properties in the United States;

• invest primarily in floating rate rather than fixed rate loans, but our Manager reserves the right to make debt investments that bear interest at a fixed rate;

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• hold loans until maturity unless, in our Manager’s judgment, market conditions warrant earlier disposition;

• invest in strategic non-real estate-related investments that align with our investment objectives and criteria.

Our Financing Strategy

We have historically utilized only limited amounts of borrowings as part of our financing strategy.

One of the reasons we completed the REIT formation transactions, as described under “—Overview,” is to expand our financing options, access to capital and capital flexibility in order to position us for future growth.

One of the reasons we completed the REIT Formation Transaction, as described under “—Overview,” is to expand our financing options, access to capital and capital flexibility in order to position us for future growth.

We deploy moderate amounts of leverage as part of our operating strategy, which currently consists of unsecured notes payable, borrowings under first mortgage financings, a revolving line of credit, repurchase agreements and a term loan.

We may in the future also deploy leverage through other credit facilities and senior notes and 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 in the future also deploy leverage through other credit facilities and senior notes and 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.

In addition, we intend to match our use of floating rate leverage with floating rate investments.

As of December 31, 2022, we had outstanding indebtedness, consisting of borrowings under a mortgage loan of $29.3 million, unsecured notes payable of $123.5 million, a term loan of $25.0 million, a line of credit of $90.1 million and the repurchase agreements of $170.9 million.

As of December 31, 2022, the amount remaining available under the line of credit and the repurchase agreements was $34.9 million and $224.1 million, respectively.

Additionally, as of December 31, 2022, we had obligations under participation agreements with an aggregate outstanding principal amount of $12.6 million.

However, we do not have direct liability to a participant under the participation agreements 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).

With our larger size and enhanced access to capital and capital flexibility, our company expects to deemphasize our use of participation arrangements.

As of December 31, 2023, we had outstanding indebtedness, consisting of unsecured notes payable of $123.5 million and secured financing of $293.4 million.

As of December 31, 2023, the amount remaining available under our credit facilities was $378.6 million.

Additionally, from time to time, we may enter into participation agreements with related parties, primarily other affiliated funds managed by the Manager, and to a lesser extent, unrelated parties.

The purpose of the participation agreements is to allow us and an affiliate to originate a specified loan when, individually, we do not have the liquidity to do so.

We do not have direct liability to a participant under the participation agreements 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).

With our larger size and enhanced access to capital and capital flexibility, our company expects to de-emphasize our use of participation arrangements.

As of December 31, 2023, we did not have any obligations under participation agreements outstanding.

For additional information concerning our indebtedness, see “ Item 7.

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Targeted Assets

Real Estate-Related Loans

Real Estate-Related Investments

We originate, structure, fund and manage commercial real estate loans, including mezzanine loans, first mortgage loans, subordinated mortgage loans and preferred equity investments related to high-quality commercial real estate in the United States.

We may also, to the extent consistent with our qualification as a REIT, acquire equity participations in the underlying collateral of some of such loans.

We may, to the extent consistent with our qualification as a REIT, invest in our targeted assets directly or through joint ventures and acquire equity participations in the underlying collateral of some of such loans.

Certain of our real estate-related loans require the borrower to make payments of interest on the fully committed principal amount of the loan regardless of whether the full loan amount is outstanding.

We may also acquire real estate properties encumbering the first mortgage loans through foreclosure or deed-in-lieu of foreclosure, may invest in joint ventures that own real estate properties and may directly acquire real estate properties.

We originate, structure and underwrite most, if not all, of our loans.

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We continue to see attractive lending opportunities, and we expect market conditions to remain favorable for our strategy for the foreseeable future.

Mezzanine Loans .

These are loans secured by ownership interests in an entity that owns commercial real estate and that generally finance the acquisition, refinancing, rehabilitation or construction of commercial real estate.

Mezzanine loans may be either short-term (one to five years) or long-term (up to 10 years) and may be fixed or floating rate.

We may own mezzanine loans directly or we may hold a participation in a mezzanine loan or a sub-participation in a mezzanine loan.

These loans generally pay interest on a specified due date (although there may be a portion of the interest that is deferred) and may, to the extent consistent with our qualification as a REIT, provide for participation in the value or cash flow appreciation of the underlying property as described below.

Generally, we invest in mezzanine loans with last dollar loan-to-value ratios ranging from 60% to 85%.

As of December 31, 2022, we owned five mezzanine loans with a total net principal amount of $26.8 million, which constituted 4.2% of our net loan investment portfolio.

Preferred Equity Investments .

These are investments in preferred membership interests in an entity that owns commercial real estate and generally finance the acquisition, refinancing, rehabilitation or construction of commercial real estate.

These investments are expected to have characteristics and returns similar to mezzanine loans.

As of December 31, 2022, we owned five preferred equity investments with a total net principal amount of $121.2 million, which constituted 19.1% of our net loan investment portfolio.

First Mortgage Loans .

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First mortgage loans may be either short-term (one to five years) or long-term (up to 10 years), may be fixed or floating rate and are predominantly current-pay loans.

Our Manager originates current-pay first mortgage loans backed by high-quality properties in the United States that fit our investment strategy.

Our Manager originates first mortgage loans backed by high-quality properties in the United States that fit our investment strategy.

Certain of our first mortgage loans finance the acquisition, rehabilitation and construction of infill land property and for these loans we target a weighted average last dollar loan-to-value of 70%.

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First mortgage loans are expected to provide for a higher recovery rate and lower defaults than other debt positions due to the lender’s senior position.

However, such loans typically generate lower returns than subordinate debt such as mezzanine

loans, B-notes, or preferred equity investments.

However, such loans typically generate lower returns than subordinate debt such as mezzanine loans, B-notes, or preferred equity investments.

As of December 31, 2023, we owned 13 first mortgage loans with a total net principal amount of $365.5 million, which constituted 71.7% of our net loan investment portfolio.

As of December 31, 2022, we used $413.1 million of senior mortgage loans as collateral for $261.0 million of borrowings under a revolving line of credit and two repurchase agreements.

As of December 31, 2023, we used $342.9 million of senior mortgage loans as collateral for $204.9 million of borrowings under secured financing agreements.

Subordinated Mortgage Loans (B-notes) .

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We may create B-notes by tranching our directly originated first mortgage loans generally through syndications of senior first mortgages or buy these loans directly from third-party originators.

As a result of the current credit market disruption related to the most recent recession and the decrease in capital available in this part of the capital structure, we believe that the opportunities to both directly originate and to buy these types of loans from third parties on favorable terms will continue to be attractive.

We believe that the opportunities to both directly originate and to buy these types of loans from third parties on favorable terms will continue to be attractive.

Investors in B-notes are compensated for the increased risk of such assets from a pricing perspective but still benefit from a mortgage lien on the related property.

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As of December 31, 2023, we did not own any B-notes.

Mezzanine Loans .

Mezzanine loans may be either short-term (one to five years) or long-term (up to 10 years) and may be fixed or floating rate.

We may own mezzanine loans directly or we may hold a participation in a mezzanine loan or a sub-participation in a mezzanine loan.

Generally, we invest in mezzanine loans with last dollar loan-to-value ratios ranging from 60% to 85%.

As of December 31, 2023, we owned three mezzanine loans with a total net principal amount of $17.4 million, which constituted 3.4% of our net loan investment portfolio.

Preferred Equity Investments .

These investments are expected to have characteristics and returns similar to mezzanine loans.

As of December 31, 2023, we owned five preferred equity investments with a total net principal amount of $126.6 million, which constituted 24.8% of our net loan investment portfolio.

Equity Participations .

In connection with our loan origination activities, we may pursue equity participation opportunities, or interests in the projects being financed, in instances when we believe that the risk-reward characteristics of the loan merit additional upside participation because of the possibility of appreciation in value of the underlying properties securing the loan.

In connection with our loan investments, we may pursue equity participation opportunities, or interests in the projects being financed, in instances when we believe that the risk-reward characteristics of the loan merit

additional upside participation because of the possibility of appreciation in value of the underlying properties securing the loan.

Equity participations can be paid in the form of additional interest, exit fees or warrants in the borrower.

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As of December 31, 2023, we did not own any equity participations.

Other Real Estate-Related Investments .

We may invest in other real estate-related investments, which may include CMBS or other real estate debt or equity securities, so long as such investments do not constitute more than 15% of our assets .

As of December 31, 2022, we owned a 27.9% equity interest in a limited partnership that invests in performing and non-performing mortgages, loans, mezzanines, B-notes and other credit instru ments supported by underlying commercial real estate assets.

Additionally, we owned beneficial equity interests in three joint ventures that invest in real estate properties.

We also owned a credit facility that is collateralized by underlying commercial real estate assets.

In 2022, in connection with a mezzanine loan we originated, we entered into a residual profit sharing arrangement with the borrower.

We accounted for this arrangement as an equity investment.

These equity interests had a total carrying value of $62.5 million and the credit facility had a principal balance of $28.8 million as of December 31, 2022 .

Operating Real Estate

From time to time, we may acquire operating real estate properties, including properties acquired in connection with foreclosures or deed in lieu of foreclosure.

In July 2018, we acquired a multi-tenant office building through foreclosure of a first mortgage loan.

In January 2019, we acquired a 4.9 acre development parcel through deed in lieu of foreclosure.

In June 2022, the development parcel was sold.

As of December 31, 2022, the multi-tenant office building had a carrying value of $40.6 million, and the mortgage loan payable encumbering the office building had a principal amount of $29.3 million.

Operating Real Estate and Real Estate Owned .

From time to time, we may acquire operating real estate properties that meet our investment criteria.

As well, we may assume control of properties acquired in connection with foreclosures or deed in lieu of foreclosure.

As of December 31, 2023, we owned eight industrial buildings purchased in 2023.

The real estate and related lease intangible assets and liabilities had a net carrying value of $129.8 million, and the mortgage loans payable encumbering the industrial buildings had an outstanding principal amount of $73.5 million.

Equity Investment in Unconsolidated Investments and Joint Ventures.

We may, to the extent consistent with our qualification as a REIT, invest in our targeted assets directly or through joint ventures.

As of December 31, 2023, we owned equity interest in a limited partnership that invests in performing and non-performing mortgages, loans, mezzanines, B-notes and other credit instru ments supported by underlying commercial real estate assets.

We also owned beneficial equity interests in four joint ventures that invest in real estate properties.

The equity interests had a total carrying value of $37.2 million as of December 31, 2023 .

Other Real Estate-Related Securities .

We may invest in other real estate-related securities, which may include marketable securities and securitizations, so long as such securities do not constitute more than 15% of our assets.

As of December 31, 2023, we owned $5.0 million in other real estate-related securities.

Non-Real Estate-Related Investments

From time to time, to the extent consistent with our qualification as a REIT for so long as we elect to be taxed as a REIT, we may invest in strategic non-real estate-related investments that align with our investment objectives and criteria.

Investment Guidelines

Our Board has adopted investment guidelines, which may be amended from time to time, that set forth certain criteria for the Manger to use when evaluating specific investment opportunities as well as our overall portfolio composition.

will review the Manager’s compliance with the investment guidelines periodically and receive an investment report at each quarter-end in conjunction with the review of our quarterly results by our Board.

Our Board will review the Manager’s compliance with the investment guidelines periodically and receive an investment report at each quarter-end in conjunction with the review of our quarterly results by our Board.

Our Board adopted the following investment guidelines:

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Our Manager has developed a well-defined exit strategy for each of our investments.

Our Manager continually performs a hold-sell analysis on each asset in order to determine the optimal time to hold the asset and generate a strong return to our stockholders.

Our Manager continually performs a hold-sell analysis on each asset in order to determine the optimal time to hold the asset and generate optimal returns

to our stockholders.

Economic and market conditions may influence us to hold investments for longer or shorter periods of time.

We may sell an asset before the end of the expected holding period if we believe that market conditions have maximized its value to us or the sale of the asset would otherwise be in our best interests.

We may dispose of an asset before the end of the expected holding period if we believe that market conditions have maximized its value to us or the sale of the asset would otherwise be in our best interests.

We intend to make any such dispositions in a manner consistent with our qualification as a REIT and our desire to avoid being subject to the “prohibited transaction” penalty tax.

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federal, state and local taxes on our income or property.

In addition, subject to maintaining our qualification as a REIT, a portion of our business may be conducted through, and a portion of our income may be earned with respect to, our taxable REIT subsidiaries (“TRSs”), should we decide to form TRSs in the future, which are subject to corporate income tax.

In addition, subject to maintaining our qualification as a REIT, a portion of our business may be conducted through, and a portion of our income may be earned with respect to, our taxable REIT subsidiaries (“TRSs”), should we decide to utilize TRSs in the future, which are subject to corporate income tax.

Any distributions paid by us generally will not be eligible for taxation at the preferential U.S.

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Emerging Growth Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), and as such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not

previously approved.

A number of these exemptions are not relevant to us, but we intend to take advantage of the exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002.

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We compete with other REITs, numerous regional and community banks, specialty finance companies, savings and loan associations and other entities, and we expect that others may be organized in the future.

The effect of the existence of additional REITs and other institutions may be increased competition for the available supply of our targeted assets suitable for purchase, which may cause the price for such assets to rise.

The effect of the existence of

additional REITs and other institutions may be increased competition for the available supply of our targeted assets suitable for purchase, which may cause the price for such assets to rise.

In the face of this competition, we expect to have access to our Manager’s professionals and their industry expertise, which may provide us with a competitive advantage in sourcing transactions and help us assess origination and acquisition risks and determine appropriate pricing for potential assets.

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Uppal 40 Chairman of the Board of Directors, Chief Executive Officer and Chief Investment

Pinkus 58 Chief Financial Officer, Chief Operating Officer, Treasurer and Secretary

Sarah Schwarzschild 43 Chief Operating Officer

Pinkus 59 Chief Financial Officer, Treasurer and Secretary

Cooperman 49 Chief Originations Officer

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From 2012 to 2015, Mr.

Uppal worked at Mount Kellett Capital Management, a private investment organization, and served as Co-Head of North American Real Estate Investments.

Uppal worked at Mount Kellett Capital Management, a private

investment organization, and served as Co-Head of North American Real Estate Investments.

Uppal holds a B.S.

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from Columbia University.

Pinkus has served as the Chief Financial Officer, Chief Operating Officer, Treasurer and Secretary of our company and the Chief Financial Officer and Chief Operating Officer of our Manager, and Terra Fund Advisors since January 2016, October 2017, and October 2017, respectively.

He has served as (i) the Chief Financial Officer of Terra Capital Advisors, Terra Capital Advisors 2 and Terra Income Advisors 2 since May 2012, September 2012 and October 2016;

Sarah Schwarzschild has served as the Chief Operating Officer of our company since February 2024 and Terra Capital Partners since July 2023.

Prior to joining our company, Ms.

Schwarzschild served as Managing Director and Co-Head of BGO Strategic Capital Partners, a $3 billion global integrated multi-manager platform.

Schwarzschild also managed BGO Strategic Capital Partners’ secondaries funds and separately managed accounts with oversight for the business’ and co-managed the business’ platform.

Prior to merging with BentallGreenOak in April 2021, Ms.

Schwarzschild held the same responsibilities at Metropolitan Real Estate Equity Management (“Metropolitan”), a firm wholly owned by The Carlyle Group.

Prior to joining Metropolitan in 2014, Ms.

Schwarzschild led Partners Group’s real estate Secondary team in the U.S., where she was responsible for acquisitions as well as the portfolio management of Partners Group’s dedicated real estate Secondary capital totaling over $2 billion.

Prior to joining Partners Group, Ms.

Schwarzschild was an Assistant Vice President in the acquisitions team in the Global Opportunity Funds group at RREEF.

She began her career at Rothschild as an investment banking analyst in the Mergers & Acquisitions and Private Placement groups.

Schwarzschild received a B.A.

(summa cum laude) from the University of Pennsylvania and an M.B.A.

with honors from the Tuck School of Business at Dartmouth.

Schwarzschild sits on the MBA Council for the Tuck School of Business and is Secretary of the board of The Mianus River Gorge Preserve and sits on the Advisory Board for INCEPTIV.

Pinkus has served as the Chief Financial Officer, Treasurer and Secretary of our company and the Chief Financial Officer and Chief Operating Officer of our Manager, and Terra Fund Advisors since January 2016, October 2017, and October 2017, respectively.

Pinkus also served as the Chief Operating Officer of our company from January 2016 to February 2024.

He also served as (i) the Chief Financial Officer of Terra Capital Advisors, Terra Capital Advisors 2 and Terra Income Advisors 2 since May 2012, September 2012 and October 2016;

(ii) the Chief Operating Officer of Terra Capital Advisors, Terra Capital Advisors 2 and Terra Capital Partners since July 2014;

32 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business