What changed in this filing

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Item 1. Business

2025-03-14 compared with 2024-03-15 · 28 added, 28 removed, 303 unchanged (16% of the section changed)

5 unchanged sentences

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.

We 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, 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.

As of December 31, 2024, our portfolio included underlying properties located in 13 markets, across nine states and includes property types such as multifamily housing, student housing, commercial offices, medical offices, mixed-use and infill properties.

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

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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.

We 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:

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Our Financing Strategy

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

Prior to the REIT Formation, we utilized only limited amounts of borrowings as part of our financing strategy.

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.

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As of December 31, 2024, we had outstanding indebtedness, consisting of unsecured notes payable of $123.5 million and secured financing of $207.6 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.

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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.

As our access to capital and financial flexibility has grown, our use of participation agreements has diminished.

As of December 31, 2024, we had obligations under one participation agreement with an aggregate outstanding principal amount of $18.0 million.

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

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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.

As of December 31, 2024, we owned two mezzanine loans with a total net principal amount of $15.0 million, which constituted 5.0% of our net loan investment portfolio.

Preferred Equity Investments .

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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.

As of December 31, 2024, we owned three preferred equity investments with a total net principal amount of $76.2 million, which constituted 25.5% of our net loan investment portfolio.

Equity Participations .

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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The real estate and related lease intangible assets and liabilities had a net carrying value of $125.3 million, and the mortgage loans payable encumbering the industrial buildings had an outstanding principal amount of $74.4 million.

Equity Investment in Unconsolidated Investments and Joint Ventures.

Equity Interest 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 .

As of December 31, 2024, 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 com mercial real estate assets.

We also owned beneficial equity interests in five joint ventures that invest in real estate properties and opportunistic debt and equity securities, and a preferred equity investment with residual profit sharing from sale of the underlying property.

The equity interests had a total carrying value o f $78.3 million as of December 31, 2024 .

Other Real Estate-Related Securities .

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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.

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

As of December 31, 2024, we owned $30.6 million in non-real estate-related investments, which include equity interests in non-real estate operating companies across various industries, including life insurance and equipment financing.

Non-real estate-related investments may take various forms, including preferred and common equity interests in private companies and other financial assets.

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 optimal returns

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.

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government securities and cash items).

In addition, we conduct our operations so that neither we nor our subsidiaries will be considered an investment company under Section 3(a)(1)(A) of the 1940 Act, as neither we nor our subsidiaries are engaged primarily nor do we hold ourselves out as being engaged primarily in the business of investing, reinvesting or trading in securities.

In addition, we conduct our operations so that neither we nor our subsidiaries will be considered an investment company under Section 3(a)(1)(A) of the 1940 Act, as neither we nor our

subsidiaries are engaged primarily nor do we hold ourselves out as being engaged primarily in the business of investing, reinvesting or trading in securities.

Rather, we and our subsidiaries are primarily engaged in the non-investment company businesses.

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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 has also served as Chief Investment Officer for our company, Terra Capital Partners and our Manager since February 2018.

Uppal served as the Chief Executive Officer of Terra Income Advisors and Terra BDC from April 2019 to October 2022 and as the Chairman of the board of directors and President of Terra BDC from November 2019 to October 2022.

Uppal served as the Chief Executive Officer of Terra Income Advisors and Terra BDC from April 2019 to October 2022 and as the Chairman of

the board of directors and President of Terra BDC from November 2019 to October 2022.

Prior to joining Terra Capital Partners, Mr.

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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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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.

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

She also sits on the board of Riley's Ways and 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;

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

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

(iii) the Chief Operating Officer of Terra Income Advisors 2 since October 2016;

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Cooperman has served as Chief Originations Officer of our company, our Manager, and Terra Fund Advisors since January 2016, September 2017 and September 2017, respectively.

Cooperman has served as Chief Originations Officer of (i) each of Terra Capital Advisors and Terra Capital Advisors 2 since January 2015, having previously served as Managing Director of Originations until January 2015 of Terra Capital Advisors and Terra Capital Advisors 2 since April 2009 and September 2012, respectively;

Cooperman has served as Chief Originations Officer of (i) each of Terra Capital Advisors, LLC and Terra Capital Advisors 2, LLC since January 2015, having previously served as Managing Director of Originations until January 2015 of Terra Capital Advisors, LLC and Terra Capital Advisors 2, LLC since April 2009 and September 2012, respectively;

(ii) Fund 5 International since January 2015, having previously served as Managing Director of Originations of Terra BDC from June 2014 to June 2014;

17 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