What changed in this filing

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Item 1. Financial Statements

2025-08-18 compared with 2025-05-09 · 366 added, 246 removed, 1343 unchanged (31% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Cash and cash equivalents $ 5,928,733 $ 8,578,456

Restricted cash 1,238,731 2,937,959

Cash held in escrow by lender 6,744,251 7,448,611

Cash held in escrow 25,576,658 7,448,611

Available-for-sale debt securities 1,191,299 963,178

Real estate assets held for sale 27,037,500 —

Loans held for investment, net of allowance for credit losses of $ 49,564,614 and $ 45,381,465

29 unchanged sentences

Class A Common Stock, $ 0.01 par value, 450,000,000 shares authorized and no shares

issued, as of both March 31, 2025 and December 31, 2024

issued, as of both June 30, 2025 and December 31, 2024

Class B Common Stock, $ 0.01 par value, 450,000,000 shares authorized and 24,338,919

and 24,337,952 shares issued and outstanding as of March 31, 2025 and

and 24,337,952 shares issued and outstanding as of June 30, 2025 and

December 31, 2024, respectively

2 unchanged sentences

Accumulated deficit ( 276,248,168 ) ( 258,810,775 )

Accumulated other comprehensive loss ( 39,731 ) ( 185,475 )

Accumulated other comprehensive income (loss) 42,646 ( 185,475 )

Total equity 168,526,082 185,726,066

3 unchanged sentences

Consolidated Statements of Operations and Comprehensive Income (Loss)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Interest income $ 6,584,137 $ 8,435,024 $ 16,790,034 $ 20,583,759

10 unchanged sentences

Professional fees 759,427 826,080 1,277,781 1,711,649

Impairment charge on real estate assets held for sale 3,399,684 — 3,399,684 —

Directors’ fees 81,772 91,560 165,522 175,310

1 unchanged sentence

11,051,821 10,471,686 19,424,358 20,684,446

Operating income 4,084,212 4,796,585

Operating (loss) income ( 2,441,710 ) 701,834 1,642,502 5,498,419

Other income and expenses

2 unchanged sentences

Interest expense on obligations under participation agreements ( 940,739 ) ( 770,648 ) ( 1,829,643 ) ( 1,389,143 )

Unrealized loss on investments, net ( 75 ) ( 22,931 )

Income (loss) from equity interest in unconsolidated investments 2,560,110 ( 473,387 )

Unrealized gain (loss) on investments, net — 201,501 ( 75 ) 178,570

Income from equity interest in unconsolidated investments 2,265,597 1,671,970 4,825,707 1,198,583

Loss on sale of real estate, net ( 2,056,550 ) — ( 2,056,550 ) —

Realized loss on investments, net — ( 310,550 ) — ( 446,009 )

29 unchanged sentences

— — — 24,338,581 243,386 444,485,095 ( 264,746,858 ) ( 39,731 ) 179,941,892

Shares issued from reinvestment of shareholder

distributions — — — 338 3 3,120 — — 3,123

Distributions declared on common shares ($ 0.10 per share)

— — — — — — ( 2,329,214 ) — ( 2,329,214 )

Net loss — — — — — — ( 9,172,096 ) — ( 9,172,096 )

Other comprehensive income:

Unrealized gain on available-for-sale debt securities — — — — — — — 82,377 82,377

Balance at June 30, 2025

$ — — $ — 24,338,919 $ 243,389 $ 444,488,215 $ ( 276,248,168 ) $ 42,646 $ 168,526,082

Preferred Stock Class A Common Stock Class B Common Stock Additional

Capital Accumulated Deficit Accumulated Other Comprehensive Loss

Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss)

$ 0.01 Par Value

10 unchanged sentences

Balance at March 31, 2024 — — — 24,336,424 243,364 444,462,676 ( 213,882,368 ) ( 335,782 ) 230,487,890

Shares issued from reinvestment of shareholder

distributions — — — 447 5 5,045 — — 5,050

Distributions declared on common shares ($ 0.19 per share)

— — — — — — ( 4,650,718 ) — ( 4,650,718 )

Net loss — — — — — — ( 7,539,310 ) — ( 7,539,310 )

Other comprehensive income:

Unrealized gain on available-for-sale debt securities — — — — — — — 316,392 316,392

Balance at June 30, 2024

$ — — $ — 24,336,871 $ 243,369 $ 444,467,721 $ ( 226,072,396 ) $ ( 19,390 ) $ 218,619,304

See notes to unaudited consolidated financial statements .

1 unchanged sentence

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net loss $ ( 10,457,160 ) $ ( 13,723,284 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 2,570,933 3,863,801

Provision for credit losses 3,493,917 4,449,436

Impairment charge on real estate assets held for sale 3,399,684 —

Loss on sale of real estate, net 2,056,550 —

Amortization of net purchase premiums on loans 6,913 152,872

5 unchanged sentences

Realized loss on investments, net — 446,009

Unrealized loss on investments, net 75 22,931

Unrealized loss (gain) on investments, net 75 ( 178,570 )

Distributions received from equity interest in unconsolidated investments 4,735,370 1,684,877

(Income) loss from equity interest in unconsolidated investments ( 2,560,110 ) 473,387

Income from equity interest in unconsolidated investments ( 4,825,707 ) ( 1,198,583 )

Changes in operating assets and liabilities:

11 unchanged sentences

Origination, purchase and funding of loans ( 15,286,064 ) ( 42,609,078 )

Capital contributions to and purchase of equity interests in unconsolidated investments ( 263,387 ) ( 6,476,877 )

Proceeds from sale of real estate 13,831,028 —

Capital contributions to and purchase of equity interests in unconsolidated

investments ( 746,658 ) ( 36,600,606 )

Distributions in excess of income 481,297 2,627,499

1 unchanged sentence

Funding for promissory note receivable — ( 4,962,369 )

Proceeds from sale of marketable securities — 1,292,897

Purchase of equity securities — ( 2,022,353 )

Proceeds from sale of trading equity securities — 3,551,098

Net cash provided by investing activities 86,505,261 39,427,985

2 unchanged sentences

Consolidated Statements of Cash Flows (Continued)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from financing activities:

10 unchanged sentences

$ 32,744,122 $ 30,424,280

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental disclosure of cash flow information:

5 unchanged sentences

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2025

June 30, 2025

Terra Property Trust, Inc.

21 unchanged sentences

Notes to Unaudited Consolidated Financial Statements

As of March 31, 2025, 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.

As of June 30, 2025, 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.

Summary of Significant Accounting Policies

18 unchanged sentences

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.

The Company’s preferred equity investments, which are economically similar to mezzanine loans and subordinate to any loans but are senior to common equity, are accounted for as loans held for investment.

Loans are carried at amortized cost less allowance for credit losses.

38 unchanged sentences

Loans Not Secured by Real Estate

As of both March 31, 2025 and December 31, 2024, the Company had one loan that was not secured by real estate.

This loan, which is included in other assets on the consolidated balance sheets, is recorded at amortized cost.

The Company performs a separate analysis based on recoverability to determine the allowance for credit losses on this loan.

As of March 31, 2025 and December 31, 2024, the Company did not record any allowance for credit losses on this loan because the Company believes that it will be able to collect all outstanding interest and principal on or before the loan’s maturity date.

As of December 31, 2024, the Company had one loan that was not secured by real estate.

This loan, which was included in other assets on the consolidated balance sheets, was recorded at amortized cost.

The Company performed a separate analysis based on recoverability to determine the allowance for credit losses on this loan.

As of December 31, 2024, the Company did not record any allowance for credit losses on this loan because the Company believed that it would be able to collect all outstanding interest and principal on or before the loan’s maturity date.

In June 2025, this loan was repaid in full and had a balance of zero as of June 30, 2025.

Equity Interest in Unconsolidated Investments

29 unchanged sentences

If impaired, the real estate asset will be written down to its estimated fair value.

Real Estate Assets Held for Sale

The Company classifies real estate and related intangibles as held for sale when the six criteria under ASC 360-10-45-9 are met.

Once an asset is held for sale, the Company suspends depreciation and amortization.

Assets held for sale are reported at the lower of their carrying value or fair value less cost to sell beginning in the period the held for sale criteria is met.

The carrying amount of assets held for sale are adjusted each reporting period for subsequent changes in fair value less cost to sell, with losses recognized for any subsequent write-down to fair value less cost to sell, and gains recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized.

When properties are considered held for sale, but do not qualify as a discontinued operation, the Company presents qualifying assets and liabilities as held for sale on the consolidated balance sheet in all periods that the qualifying assets and liabilities meet the held for sale criteria.

The components of the held for sale asset’s net income (loss) is recorded within the consolidated statement of operations and comprehensive income.

Revenue Recognition

19 unchanged sentences

All other income is recognized when earned.

Notes to Unaudited Consolidated Financial Statements

Cash, Cash Equivalents and Restricted Cash

5 unchanged sentences

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 represents amounts funded to an escrow account for debt services and tenant improvements.

From time to time, it may also include proceeds from the repayment of loans that are held by the title company due to timing.

Cash held in escrow is restricted and is not available for general corporate purposes.

Notes to Unaudited Consolidated Financial Statements

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:

1 unchanged sentence

Restricted cash 1,238,731 4,617,208

Cash held in escrow by lender 6,744,251 4,541,731

Cash held in escrow 25,576,658 6,870,038

Total cash, cash equivalents and restricted cash shown in the consolidated

17 unchanged sentences

These costs are presented on the consolidated balance sheets as a direct deduction of the debt liability to which the costs pertain.

Notes to Unaudited Consolidated Financial Statements

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.

6 unchanged sentences

federal and state income taxes at regular corporate rates.

As of March 31, 2025, the Company had satisfied all the requirements for a REIT.

Notes to Unaudited Consolidated Financial Statements

As of June 30, 2025, the Company had 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, 2025 and 2024, the Company did not incur any interest or penalties.

For the three and six months ended June 30, 2025 and 2024, the Company did not incur any interest or penalties.

Although the Company files federal and state tax returns, its major tax jurisdiction is federal.

17 unchanged sentences

The CODM evaluates performance and allocates resources based on consolidated net income (loss), which is also reported as consolidated net income (loss) on the Company’s consolidated statement of operations.

The Company’s consolidated net income (loss) is primarily derived through the difference between the interest income earned on its loans and the cost at which its to finance them.

The Company’s consolidated net income (loss) is primarily derived through the difference between the interest income earned on its loans and the cost at which

Notes to Unaudited Consolidated Financial Statements

its to finance them.

Accordingly, interest expense, as reported on its consolidated statement of operations, is its most significant segment expense.

9 unchanged sentences

The adoption of the standard has not impacted the Company's financial statements but has resulted in incremental disclosures, which are included within “Segment Information” above.

Notes to Unaudited Consolidated Financial Statements

In December 2023, the FASB issued ASU 2023-09 “Improvements to Income Tax Disclosures” (“ASU 2023-09”).

5 unchanged sentences

The Company elected the practical expedient under ASC 326 to exclude accrued interest from amortized cost.

As of March 31, 2025 and December 31, 2024, accrued interest receivable of $ 6.1 million and $ 5.4 million, respectively, is included in interest receivable on the consolidated balance sheets, and is excluded from the amortized cost of loans held for investment.

As of June 30, 2025 and December 31, 2024, accrued interest receivable of $ 6.8 million and $ 5.4 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

1 unchanged sentence

Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Fixed Rate Floating

13 unchanged sentences

(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 average SOFR of 4.33 % and Term SOFR of 4.32 % as of March 31, 2025 and average SOFR of 4.53 % and Term SOFR of 4.33 % as of December 31, 2024.

(2) As of March 31, 2025 and December 31, 2024, amount included $ 169.1 million and $ 208.0 million of senior mortgages used as collateral for $ 82.8 million and $ 123.2 million of borrowings under secured financing agreements, respectively ( Note 8 ).

(3) As of March 31, 2025 and December 31, 2024, 7 and 10 loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.

Coupon rates shown were determined using the average SOFR of 4.32 % and Term SOFR of 4.32 % as of June 30, 2025 and average SOFR of 4.53 % and Term SOFR of 4.33 % as of December 31, 2024.

(2) As of June 30, 2025 and December 31, 2024, amount included $ 119.3 million and $ 208.0 million of senior mortgages used as collateral for $ 58.7 million and $ 123.2 million of borrowings under secured financing agreements, respectively ( Note 8 ).

(3) As of June 30, 2025 and December 31, 2024, six and ten loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.

(4) Excludes non-performing loans for which recovery of interest income was not probable.

(5) Excludes loans that are in maturity default and represents current effective maturity as of March 31, 2025 and December 31, 2024, exclusive of any extension available.

(5) Excludes loans that are in maturity default and represents current effective maturity as of June 30, 2025 and December 31, 2024, exclusive of any extension available.

Notes to Unaudited Consolidated Financial Statements

10 unchanged sentences

(Provision for) reversal of provision for credit losses ( 4,183,150 ) 607,838 ( 3,575,312 )

Balance, March 31, 2025

Balance, June 30, 2025

$ 175,053,810 $ 23,116,267 $ 198,170,077

7 unchanged sentences

Provision for credit losses ( 4,141,777 ) ( 25,195 ) ( 4,166,972 )

Balance, March 31, 2024 $ 377,169,978 $ 38,089,285 $ 415,259,263

Balance, June 30, 2024 $ 345,816,691 $ 38,535,503 $ 384,352,194

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.

Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.

March 31, 2025 December 31, 2024

Carrying value represents the amortized cost of loans, net of applicable allowance for credit losses.

June 30, 2025 December 31, 2024

Loan Structure Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total

4 unchanged sentences

Notes to Unaudited Consolidated Financial Statements

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Property Type Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total

Office $ 101,121,778 $ 52,716,178 26.6 % $ 116,539,650 $ 72,991,791 26.6 %

Multifamily 71,141,165 70,881,300 35.8 % 60,969,051 60,662,514 22.1 %

Infill land 46,010,506 47,167,661 23.8 % 56,307,815 57,050,952 20.8 %

Office 100,819,571 54,785,090 24.3 % 116,539,650 72,991,791 26.6 %

Mixed-use 20,224,740 20,423,739 10.3 % 48,438,507 48,067,655 17.5 %

2 unchanged sentences

Total $ 245,498,189 $ 198,170,077 100.0 % $ 317,255,023 $ 274,649,145 100.0 %

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Geographic Location Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total

United States

New York $ 75,887,463 $ 26,680,637 13.5 % $ 75,657,255 $ 31,536,808 11.5 %

California 50,011,825 50,505,248 25.5 % 71,006,023 71,273,115 26.0 %

Arizona 32,909,916 32,582,673 14.5 % 33,407,815 33,005,952 12.0 %

Washington 35,443,409 35,559,120 17.9 % 26,894,593 26,907,157 9.8 %

Georgia 31,144,986 31,276,212 15.8 % 30,562,858 30,586,450 11.1 %

New York 75,800,670 29,004,553 12.9 % 75,657,255 31,536,808 11.5 %

Arizona 23,104,416 23,116,267 11.7 % 33,407,815 33,005,952 12.0 %

New Jersey 22,906,090 24,051,394 12.1 % 22,900,000 24,045,000 8.8 %

North Carolina 21,826,479 21,479,707 9.5 % 21,826,479 21,418,430 7.8 %

Massachusetts 7,000,000 6,981,199 3.5 % 7,000,000 6,966,233 2.5 %

North Carolina — — — % 21,826,479 21,418,430 7.8 %

Utah — — — % 28,000,000 28,910,000 10.5 %

3 unchanged sentences

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 $ 11.2 million and $ 18.7 million as of March 31, 2025 and December 31, 2024, respectively.

These unfunded commitments amounted to approximately $ 9.4 million and $ 18.7 million as of June 30, 2025 and December 31, 2024, respectively.

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

As discussed in Note 2 , for loans that are considered non-performing, the Company removes them from the model-based approach and analyzes them separately for recoverability.

As of March 31, 2025 and December 31, 2024, the Company had four and four non-performing loans with total amortized cost of $ 119.3 million and $ 128.6 million, respectively.

Accordingly, the Company utilized the estimated fair value of the loan collateral or sponsor’s guarantee to estimate the total specific allowance for credit losses of $ 46.8 million and $ 44.1 million as of March 31, 2025 and December 31, 2024, respectively.

As of June 30, 2025 and December 31, 2024, the Company had five and four non-performing loans with total amortized cost of $ 150.4 million and $ 128.6 million, respectively.

Accordingly, the Company utilized the estimated fair value of the loan collateral or sponsor’s guarantee to estimate the total specific allowance for credit losses of $ 49.2 million and $ 44.1 million as of June 30, 2025 and December 31, 2024, respectively.

Please see “Note 6.

1 unchanged sentence

The following table presents the activity in allowance for credit losses:

Three Months Ended March 31, 2025

Six Months Ended June 30, 2025

Allowance on Non-Performing Loans Allowance on Performing Loans Total

4 unchanged sentences

Notes to Unaudited Consolidated Financial Statements

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

Allowance on Non-Performing Loans Allowance on Performing Loans Total

2 unchanged sentences

Provision for credit losses 2,580,740 1,586,232 282,464 4,449,436

Charge-offs ( 26,237,688 ) — — ( 26,237,688 )

Allowance for credit losses, end of period $ 30,985,827 $ 3,919,482 $ 609,371 $ 35,514,680

2 unchanged sentences

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, 2025 and 2024, the Company did no t reverse any interest income accrual because all accrued interest income was deemed collectible.

For the three months ended March 31, 2025 and 2024, the Company suspended interest income accrual of $ 3.4 million and $ 5.8 million on two and four loans, respectively, because recovery of such income was not probable.

As of both March 31, 2025 and December 31, 2024, there was no interest receivable recognized on these loans.

For the three and six months ended June 30, 2025, the Company did no t reverse any interest income accrual because all accrued interest income was deemed collectible.

For the three and six months ended June 30, 2024, the Company reversed $ 0.7 million of accrued interest income because such income was deemed uncollectible.

For the three months ended June 30, 2025 and 2024, the Company suspended interest income accrual of $ 3.5 million and $ 6.8 million on two and five loans, respectively, because recovery of such income was not probable.

For the six months ended June 30, 2025 and 2024, the Company suspended interest income accrual of $ 6.9 million and $ 12.6 million on two and five loans, respectively, because recovery of such income was not probable.

As of both June 30, 2025 and December 31, 2024, there was no interest receivable recognized on these loans.

Loan Risk Rating

12 unchanged sentences

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

March 31, 2025

June 30, 2025

Loan Risk Rating Number of Loans Amortized Cost % of Total Amortized Cost by Year Originated

11 unchanged sentences

_______________

(1) Amount includes two loans that are in maturity default with total amortized costs of $ 43.5 million.

The Company expects to recover the principal and interest payments in full and therefore, no specific allowance for loan losses was recorded on these two loans.

Notes to Unaudited Consolidated Financial Statements

(1) Amount includes three loans that are in maturity default with total amortized costs of $ 74.6 million.

The Company expects to recover the principal and interest payments in full and therefore, no specific allowance for loan losses was recorded on these three loans.

December 31, 2024

20 unchanged sentences

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 interest in RESOF:

March 31, 2025 December 31, 2024

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

June 30, 2025 December 31, 2024

Ownership Interest Carrying Value Unfunded Commitment Ownership Interest Carrying Value Unfunded Commitment

Equity interest in RESOF 14.9 % $ 48,455,336 $ 11,333,135 14.9 % $ 48,171,168 $ 10,065,613

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Income from equity interest in RESOF $ 2,812,605 $ 1,775,929 $ 5,019,539 $ 2,774,268

3 unchanged sentences

Amounts provided are the total amounts attributable to the investment and do not represent the Company’s proportionate share:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Investments at fair value (cost of $ 458,313,456 and $ 465,401,329 , respectively)

9 unchanged sentences

Partners’ capital $ 318,099,261 $ 315,812,248

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Total investment income $ 21,764,963 $ 14,200,717 $ 40,915,743 $ 25,033,864

9 unchanged sentences

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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Entity Co-owner Beneficial Ownership Interest Carrying Value Beneficial Ownership Interest Carrying Value

1 unchanged sentence

TCG Corinthian FL Portfolio

JV LLV Third party/Affiliate 30.6 % 5,434,194 30.6 % 5,694,696

JV LLC Third party/Affiliate 30.6 % 5,010,162 30.6 % 5,694,696

610 Walnut Investors LLC Third party 30.9 % 1,889,665 33.6 % 2,672,379

5 unchanged sentences

Third parties 46.0 % 7,285,776 46.0 % 7,599,187

VASPEN MS LLC (4)

Affiliates 1.2 % 108,486 — % —

$ 41,685,834 $ 42,747,932

_______________

(1) In May 2024, the Company contributed $ 50,000 to this entity for the purpose of investing in opportunistic equity and debt securities.

(1) This entity invests in opportunistic equity and debt securities.

This entity is jointly owned with two related parties managed by the Manager.

(2) In June 2024, the Company made a $ 20.0 million capital commitment to an entity that has indirectly invested, together with other non-affiliated entities, in a non-real estate operating company.

Through November 2024, $ 10.0 million of the

Notes to Unaudited Consolidated Financial Statements

commitment was funded.

(2) In June 2024, the Company made a $ 20.0 million capital commitment to an entity that has indirectly invested, together with other non-affiliated entities, in a non-real estate operating company.

Through November 2024, $ 10.0 million of the commitment was funded.

In December 2024, through a series of transactions, a wholly owned subsidiary of the Company issued a $ 10.0 million term loan payable to the entity in exchange for the satisfaction of the remaining funding commitment to this entity ( Note 8 ).

3 unchanged sentences

The Company determined it is not a primary beneficiary of the entity and therefore accounts for the investment using the equity method of accounting.

Three Months Ended March 31,

(4) This entity invests in opportunistic equity and debt securities.

This entity is jointly owned with a related party managed by the Manager.

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Loss from equity interest in the joint ventures $ ( 1,177,064 ) $ ( 179,937 ) $ ( 1,427,457 ) $ ( 1,651,663 )

2 unchanged sentences

Amounts provided are the total amounts attributable to the joint ventures and do not represent the Company’s proportionate share.

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Net investments in real estate $ 193,302,687 $ 196,206,089

5 unchanged sentences

Members’ capital $ 97,871,150 $ 77,237,953

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Revenues $ 4,476,099 $ 4,462,447 $ 10,663,250 $ 8,925,318

2 unchanged sentences

Interest expense ( 3,446,954 ) ( 3,534,694 ) ( 7,718,643 ) ( 6,897,252 )

Gain on sale of real estate — 4,816,477 — 4,816,477

Unrealized gain (loss) 1,538,427 ( 731,824 ) 2,318,518 ( 1,584,077 )

Net loss $ ( 2,437,982 ) $ ( 4,179,985 )

Net loss (income) $ ( 1,823,528 ) $ 253,391 $ ( 4,261,510 ) $ ( 3,926,594 )

Other Equity Investments

3 unchanged sentences

Because the Company shares residual profit from the sale of underlying property with the borrower, the Company accounts for the investment using the equity method of accounting.

As of March 31, 2025 and December 31, 2024, the Company's investment had a carrying value of $ 16.5 million and $ 15.9 million, respectively.

For the three months ended March 31, 2025, the Company recorded $ 0.6 million in equity income from TCC Boundary Partners LLC and did not receive any distributions.

There was no such equity income recorded or distributions received during the three months ended March 31, 2024.

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-

As of June 30, 2025 and December 31, 2024, the Company's investment had a carrying value of $ 17.0 million and $ 15.9 million, respectively.

Notes to Unaudited Consolidated Financial Statements

place lease of $ 0.3 million and unamortized below-market rent of $ 0.1 million.

The following table presents a summary of the Company’s equity interest in TCC Boundary Partners LLC.

The Company did not receive any distributions for both the three and six months ended June 30, 2025 and 2024.

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Income from other equity investment $ 630,056 $ 75,978 $ 1,233,625 $ 75,978

Real Estate Owned, Net and Real Estate Assets Held for Sale

Real Estate Owned Activities

2025 — In June 2025, the Company sold an industrial building for net proceeds of $ 13.8 million and recognized a net loss on sale of $ 2.1 million.

In connection with the sale, the Company used the full net proceeds to partially repay a related mortgage loan payable.

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.

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, 2025 December 31, 2024

Operating Real Estate Owned, Net

Real estate owned is comprised of five industrial buildings located in Texas with lease intangible assets and liabilities.

The following table presents the components, net as of:

June 30, 2025 December 31, 2024

Cost Accumulated Depreciation/Amortization Net Cost Accumulated Depreciation/Amortization Net

10 unchanged sentences

Total intangible liabilities ( 4,555,806 ) 2,174,451 ( 2,381,355 ) ( 8,649,073 ) 4,746,657 ( 3,902,416 )

Total real estate $ 132,150,992 $ ( 7,759,072 ) $ 124,391,920 $ 132,150,992 $ ( 6,814,589 ) $ 125,336,403

Total operating real estate $ 83,155,056 $ ( 5,985,682 ) $ 77,169,374 $ 132,150,992 $ ( 6,814,589 ) $ 125,336,403

Real Estate Assets Held for Sale

During the three months ended June 30, 2025, the Company entered into purchase and sale agreements to sell two industrial buildings for a total purchase price of $ 28.5 million.

In connection with the pending sales, the Company recorded an impairment charge of $ 3.4 million to reduce the carrying value of the industrial buildings to their estimated selling price less the cost of the sale.

The Company expects the sales to be completed within the next twelve months, and therefore, these two properties are presented as Real estate assets held for sale on the consolidated balance sheets as of June 30, 2025.

Notes to Unaudited Consolidated Financial Statements

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,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Real estate operating revenues:

10 unchanged sentences

The following table presents the amortization of intangibles that is included in the consolidated statements of operations:

Three Months Ended March 31,

Net amortization of above- and below-market rent intangibles (1)

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net amortization of above- and below-market rent

intangibles (1)

$ ( 354,010 ) $ ( 703,872 ) $ ( 758,255 ) $ ( 1,528,715 )

Amortization of in-place lease intangibles (2)

1 unchanged sentence

_______________

Notes to Unaudited Consolidated Financial Statements

(1) Net amortization of above- and below-market rent intangibles is recorded as an adjustment to real estate operating revenue on the consolidated statements of operations.

9 unchanged sentences

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.

Notes to Unaudited Consolidated Financial Statements

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.

3 unchanged sentences

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, 2025 and December 31, 2024, 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, equity securities without readily determinable fair value, secured financing agreements, unsecured notes payable and obligations under participation agreements.

As of June 30, 2025 and December 31, 2024, 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, equity securities without readily determinable fair value, secured financing agreements, unsecured notes payable and obligations under participation agreements.

Such financial instruments are carried at cost, less impairment or less net deferred costs, where applicable.

11 unchanged sentences

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

Notes to Unaudited Consolidated Financial Statements

815, but it did not meet the criteria under ASC 815-20-25 to qualify for hedging accounting.

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 on the consolidated balance sheets, and the change in the fair value of the interest rate cap is reported in Unrealized gain (loss) on investments, net on 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, 2025

June 30, 2025

Fair Value Measurements

16 unchanged sentences

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

The interest rate cap matures in May 2025.

The interest rate cap matured in May 2025.

Notes to Unaudited Consolidated Financial Statements

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

Three Months Ended March 31,

Six Months Ended June 30,

Available-For-Sale Debt Securities Derivatives Available-For-Sale Debt Securities Trading Equity Securities Derivatives

5 unchanged sentences

Ending balance $ 1,191,299 $ — $ 1,129,263 $ — $ 78,496

Notes to Unaudited Consolidated Financial Statements

Financial Instruments Not Carried at Fair Value

The following table presents the carrying value, which represents the amortized cost of loan, net of applicable allowance for credit losses, 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, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Level Principal Amount Carrying Value Fair Value Principal Amount Carrying Value Fair Value

4 unchanged sentences

Total loans 245,498,189 198,170,077 198,270,289 317,255,023 274,649,145 276,537,218

Equity securities without readily determinable fair value (1)

Equity securities without readily

determinable fair value (1)

3 2,000,000 2,004,168 2,000,000 2,000,000 2,002,353 2,000,000

7 unchanged sentences

(1) Amount is included in Other assets on the consolidated balance sheets.

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, 2025 and 2024 due to their short-term nature.

The Company estimated that its other financial assets and liabilities, not included in the tables above, had fair values that approximated their carrying values at both June 30, 2025 and 2024 due to their short-term nature.

Notes to Unaudited Consolidated Financial Statements

Other Items Measured at Fair Value (Including Impairment Charges)

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

There was no impairment charge for the three and six months ended June 30, 2024.

The following table presents information about assets for which the Company recorded an impairment charge and that were measured at fair value on a non-recurring basis for the three and six months ended June 30, 2025:

Three Months Ended June 30, 2025 Six Months Ended June 30, 2025

Level Fair Value Impairment Charge Fair Value Impairment Charge

Real estate assets held for sale

Real estate and intangibles 3 $ 27,037,500 $ 3,399,684 $ 27,037,500 $ 3,399,684

$ 3,399,684 $ 3,399,684

During the three and six months ended June 30, 2025, the Company recorded an impairment charge of $ 3.4 million to reduce the carrying value of the industrial buildings to their estimated selling price less the cost of the sale.

The fair value measurement was determined by the purchase price.

Valuation Process for Fair Value Measurement

14 unchanged sentences

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).

Notes to Unaudited Consolidated Financial Statements

The fair values of the Company’s secured financing agreements, which includes 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, 2025 and December 31, 2024.

Notes to Unaudited Consolidated Financial Statements

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 loans as of June 30, 2025 and December 31, 2024.

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, 2025

Primary Valuation Technique Unobservable Inputs March 31, 2025

Fair Value at June 30, 2025

Primary Valuation Technique Unobservable Inputs June 30, 2025

Asset Category Minimum Maximum Weighted Average

28 unchanged sentences

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,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Origination and extension fee expense (1)

6 unchanged sentences

Total $ 3,379,623 $ 4,852,129 $ 7,525,844 $ 9,754,632

Notes to Unaudited Consolidated Financial Statements

_______________

1 unchanged sentence

Any excess is deferred and amortized to interest income over the term of the loan on the consolidated statements of operations.

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

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

Notes to Unaudited Consolidated Financial Statements

Origination and Extension Fee Expense

8 unchanged sentences

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 investment 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, 2025 and December 31, 2024, the Company had not received any breakup fees.

As of June 30, 2025 and December 31, 2024, the Company had not received any breakup fees.

Operating Expenses

4 unchanged sentences

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;

Notes to Unaudited Consolidated Financial Statements

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.

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.

12 unchanged sentences

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, 2025 and 2024, the Company provided funding under the promissory note receivable of none and $ 1.2 million, respectively.

In July 2024, the promissory note receivable was repaid in full, and has a balance of zero as of both March 31, 2025 and December 31, 2024.

During the six months ended June 30, 2024, the Company provided funding under the promissory note receivable of $ 5.0 million and received repayments of $ 8.5 million.

In July 2024, the promissory note receivable was repaid in full, and had a balance of zero as of both June 30, 2025 and December 31, 2024.

Due from Related Parties

As of March 31, 2025 and December 31, 2024, amount due from related parties was $ 0.9 million and $ 0.9 million, primarily related to operational cash requirements the Company paid on behalf of its affiliates.

Notes to Unaudited Consolidated Financial Statements

As of June 30, 2025 and December 31, 2024, amount due from related parties was $ 1.2 million and $ 0.9 million, primarily related to operational cash requirements the Company paid on behalf of its affiliates.

Promissory Note Payable

2 unchanged sentences

The promissory note matures on March 31, 2027.

As of March 31, 2025 and December 31, 2024, amount outstanding under this promissory note payable was $ 43.6 million and $ 45.1 million, respectively.

Notes to Unaudited Consolidated Financial Statements

of June 30, 2025 and December 31, 2024, amount outstanding under this promissory note payable was $ 47.2 million and $ 45.1 million, respectively.

The activity associated with this agreement is eliminated in consolidation and therefore has no impact on the Company’s consolidated financial statements.

3 unchanged sentences

Distributions Paid

For the three months ended March 31, 2025 and 2024, the Company made distributions to investors totaling $ 4.7 million and $ 4.7 million, respectively, all of which were returns of capital ( Note 10 ).

For the three months ended June 30, 2025 and 2024, the Company made distributions to investors totaling $ 2.3 million and $ 4.7 million respectively, all of which were returns of capital.

For the six months ended June 30, 2025 and 2024, the Company made distributions to investors totaling $ 7.0 million and $ 9.3 million, respectively, all of which were returns of capital ( Note 10 ).

Due to Manager

As of March 31, 2025 and December 31, 2024, approximately $ 0.8 million and $ 1.6 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.

As of June 30, 2025 and December 31, 2024, approximately $ 1.1 million and $ 1.6 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

11 unchanged sentences

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.

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, 2025

June 30, 2025

Participating Interests Principal Balance Carrying Value

Mesa AZ Industrial Owner, LLC (1)

38.27 % $ 23,104,416 $ 23,116,267

$ 23,104,416 $ 23,116,267

Notes to Unaudited Consolidated Financial Statements

December 31, 2024

Participating Interests Principal Balance Carrying Value

Mesa AZ Industrial Owner, LLC (1)

38.27 % $ 33,407,815 $ 33,005,953

UNJ Sole Member, LLC (1)(2)

Loan B (1)(2)

40.80 % 8,044,732 8,071,776

5 unchanged sentences

The following table summarizes the investment that was subject to a participation agreement with an investment partnership affiliated with the Manager as of:

March 31, 2025

June 30, 2025

Transfers treated as

1 unchanged sentence

Principal Carrying Value % Transferred Principal Carrying Value

Asano Bankers Hill, LLC (1)

$ 20,224,740 $ 20,423,739 96.9 % $ 19,606,804 $ 19,799,722

3 unchanged sentences

Principal Carrying Value % Transferred Principal Carrying Value

Asano Bankers Hill, LLC (1)

$ 18,567,296 $ 18,577,448 96.9 % $ 18,000,000 $ 18,177,106

9 unchanged sentences

Coupon Rate Effective Rate (1)

Maturity Date March 31, 2025 December 31, 2024

Maturity Date June 30, 2025 December 31, 2024

6.00 % Senior Notes Due 2026

10 unchanged sentences

(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.

(2) In connection with the BDC Merger, Terra LLC assumed all the obligations under the 7.00 % Senior Notes Due 2026 (as defined below) 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

7 unchanged sentences

The Company’s unsecured notes payable contain certain financial covenants.

As of March 31, 2025, the Company was in compliance with such covenants.

As of June 30, 2025, the Company was in compliance with such covenants.

Notes Maturities

The Company’s 6.00 % Senior Notes Due 2026 mature on June 30, 2026 and Terra LLC’s 7.00 % Senior Notes Due 2026 mature on March 31, 2026.

The Company intends to repay the 6.00 % Senior Notes Due 2026, and cause Terra LLC to repay the 7.00 % Senior Notes Due 2026, through ordinary course loan repayments, asset sales and distributions, and may also use debt or equity capital sources or facilities.

Notes to Unaudited Consolidated Financial Statements

1 unchanged sentence

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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Current Maturity Extended Maturity Weighted Average Interest Rate (1)

2 unchanged sentences

Goldman Sachs Bank facility (2)(3)

February 2027 February 2027 8.97 % $ 52,414,122 $ 32,027,813 $ 32,027,813 $ 48,188,441

UBS AG facility (2)(4)

November 2024 (5) (4) — — — —

(3) (3) (3) $ — $ — $ — $ 48,188,441

Total — — — 48,188,441

11 unchanged sentences

December 2027 December 2028 (10) 48,455,336 10,000,000 10,000,000 10,000,000

Secured borrowing November 2026 November 2026 9.85 % 29,229,815 13,250,000 13,250,000 18,000,000

Secured borrowing (2)(8)

Nov 2026 - Jun 2027 Nov 2026 - Jun 2027 9.54 % 61,357,722 31,250,000 31,250,000 18,000,000

Total 132,929,325 52,321,390 52,321,390 44,361,111

3 unchanged sentences

_______________

(1) Amount is calculated using the applicable index rate as of March 31, 2025.

(1) Amount is calculated using the applicable index rate as of June 30, 2025.

(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 4.25 % to 5.25 %.

(4) Interest rate is based on Term SOFR plus a spread of 1.97 %.

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.

(3) In June 2025, the outstanding balance was repaid in full and the facility was terminated.

(4) 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 %.

1 unchanged sentence

(6) Interest rate is based on Term SOFR + 3.5 % with a combined floor of 7.0 %.

On July 1, 2025, the outstanding balance was repaid in full and the facility was terminated.

(7) In December 2024, through a series of transactions, a wholly owned subsidiary of the Company issued a $ 10.0 million term loan payable to an entity in which the Company has an equity investment in exchange for the satisfaction of the remaining funding commitment of the Company to that entity ( Note 4 ).

3 unchanged sentences

Additionally, the Company’s interest in RESOF is only available to pay the debt under the term loan and not available to pay the debt under any other financing arrangements.

(8) Interest rate is based on Term SOFR plus a spread of 5.0 % with a combined floor rate ranging from 9.32 % to 9.85 %.

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.

1 unchanged sentence

The following table presents certain information about the Company’s secured financing agreements:

Three Months Ended March 31,

Amortization of deferred financing costs and others $ 526,414 $ 946,148

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Amortization of deferred financing costs

and others $ 191,702 $ 575,236 $ 718,116 $ 1,521,384

Proceeds from secured financing $ 23,383,257 $ 58,246,507

8 unchanged sentences

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, 2025, the Company was in compliance with all such covenants, as amended or waived.

As of June 30, 2025, 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, 2025 are as follows:

Scheduled debt principal payments for each of the five calendar years following June 30, 2025 are as follows:

Years Ending December 31, Total

2025 (April 1 through December 31) $ 15,821,390

2025 (July 1 through December 31) $ 14,321,390

2026 160,982,928

7 unchanged sentences

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, 2025 and December 31, 2024, obligations under participation agreements were $ 18.8 million and $ 18.2 million, respectively.

As of June 30, 2025 and December 31, 2024, obligations under participation agreements were $ 19.8 million and $ 18.2 million, respectively.

(see “Participation Agreements” in Note 7 ).

3 unchanged sentences

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 $ 11.2 million and $ 18.7 million as of March 31, 2025 and December 31, 2024, respectively.

These fundings amounted to approximately $ 9.4 million and $ 18.7 million as of June 30, 2025 and December 31, 2024, respectively.

The Company expects to maintain sufficient cash on

3 unchanged sentences

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, 2025 and December 31, 2024, the unfunded investment commitment was $ 11.3 million and $ 10.1 million, respectively.

As of June 30, 2025 and December 31, 2024, the unfunded investment commitment was $ 11.3 million and $ 10.1 million, respectively.

The Company enters into contracts that contain a variety of indemnification provisions.

7 unchanged sentences

The following table presents earnings per share:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net loss $ ( 9,172,096 ) $ ( 7,539,310 ) $ ( 10,457,160 ) $ ( 13,723,284 )

Weighted-average shares outstanding - basic and diluted 24,338,162 24,336,157

Weighted-average shares outstanding - basic and

diluted 24,338,598 24,336,577 24,338,381 24,336,368

Loss per share - basic and diluted $ ( 0.38 ) $ ( 0.31 ) $ ( 0.43 ) $ ( 0.56 )

2 unchanged sentences

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, 2025 and December 31, 2024, there were no shares of Preferred Stock issued or outstanding.

As of June 30, 2025 and December 31, 2024, there were no shares of Preferred Stock issued or outstanding.

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, 2025, 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.

As of June 30, 2025, 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.

Notes to Unaudited Consolidated Financial Statements

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.

In connection with a listing of shares of Class A Common Stock on a national securities exchange, the outstanding

Notes to Unaudited Consolidated Financial Statements

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.

5 unchanged sentences

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, 2025 and 2024, the Company made distributions to investors totaling $ 4.7 million and $ 4.7 million respectively, all of which all were returns of capital.

For the three months ended June 30, 2025 and 2024, the Company made distributions to investors totaling $ 2.3 million and $ 4.7 million respectively, all of which were returns of capital.

For the six months ended June 30, 2025 and 2024, the Company made distributions to investors totaling $ 7.0 million and $ 9.3 million respectively, all of which were returns of capital.

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, 2025 and 2024, the Company issued 629 and 391 shares of Class B Common Stock for a total of $ 6,165 and $ 4,474 pursuant to the Plan, respectively.

For the six months ended June 30, 2025 and 2024, the Company issued 967 and 838 shares of Class B Common Stock for a total of $ 9,288 and $ 9,524 pursuant to the Plan, respectively.

Subsequent Events

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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, 2025, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of 10 loans in eight states with an aggregate net principal balance of $252.5 million, a weighted average coupon rate of 13.3% and a weighted average remaining term to maturity of 0.8 years.

As of June 30, 2025, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of nine loans in seven states with an aggregate net principal balance of $225.9 million, a weighted average coupon rate of 13.1% and a weighted average remaining term to maturity of 1.5 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, 2025, our portfolio included underlying properties located in 10 markets, across eight states and includes property types such as multifamily housing, student housing, commercial offices, medical offices, mixed-use and infill properties.

As of June 30, 2025, our portfolio included underlying properties located in nine markets, across seven 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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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, 2025, 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 of June 30, 2025, 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.

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Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.

March 31, 2025

June 30, 2025

Fixed Rate Floating

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(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 average SOFR of 4.33% and Term SOFR of 4.32% as of March 31, 2025 and average SOFR of 4.53% and Term SOFR of 4.33% as of December 31, 2024.

(2) As of March 31, 2025 and December 31, 2024, amount included $169.1 million and $208.0 million of senior mortgages used as collateral for $82.8 million and $123.2 million of borrowings under secured financing agreements, respectively ( Note 8 ).

(3) As of March 31, 2025 and December 31, 2024, 7 and 10 loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.

Coupon rates shown were determined using the average SOFR of 4.32% and Term SOFR of 4.32% as of June 30, 2025 and average SOFR of 4.53% and Term SOFR of 4.33% as of December 31, 2024.

(2) As of June 30, 2025 and December 31, 2024, amount included $119.3 million and $208.0 million of senior mortgages used as collateral for $58.7 million and $123.2 million of borrowings under secured financing agreements, respectively ( Note 8 ).

(3) As of June 30, 2025 and December 31, 2024, six and ten loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.

(4) Excludes non-performing loans for which recovery of interest income was not probable.

(5) Excludes loans that are in maturity default and represents current effective maturity as of March 31, 2025 and December 31, 2024, exclusive of any extension available.

Real Estate Ownership

In addition to our net loan portfolio, we own eight industrial buildings.

As of March 31, 2025 and December 31, 2024, the real estate and related lease intangible assets and liabilities had a net carrying value of $124.4 million and $125.3 million, respectively, and the mortgage loans payable encumbering the real estate properties had an outstanding principal amount of $74.4 million and $74.4 million, respectively.

(5) Excludes loans that are in maturity default and represents current effective maturity as of June 30, 2025 and December 31, 2024, exclusive of any extension available.

Real Estate Owned and Real Estate Assets Held for Sale

In addition to our net loan portfolio, we own five industrial buildings.

As of June 30, 2025 and December 31, 2024, the real estate and related lease intangible assets and liabilities had a net carrying value of $77.2 million and $125.3 million, respectively, and the mortgage loans payable encumbering the real estate properties had an outstanding principal amount of $40.3 million and $74.4 million, respectively.

Additionally, as of June 30, 2025, we own two industrial buildings that are classified as held for sale with a net carrying value of $27.0 million, and a mortgage loan payable encumburing the real estate properties with an outstanding principal amount of $20.3 million.

Equity Interest in Unconsolidated Investments

As of both March 31, 2025 and December 31, 2024, we owned 14.9% 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.

As of both June 30, 2025 and December 31, 2024, we owned 14.9% 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 own equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, non-real estate operating companies, as well as a preferred equity investment with residual profit sharing from sale of the underlying property.

These investments are accounted for using the equity method of accounting.

As of March 31, 2025 and December 31, 2024, these equity interests had total carrying value of $108.1 million and $106.8 million, respectively.

As of June 30, 2025 and December 31, 2024, these equity interests had total carrying value of $107.2 million and $106.8 million, respectively.

Book Value Per Share

We calculate our book value per share by dividing our net equity by the number of outstanding shares of our common stock, unless otherwise determined by our Board.

Our book value per share of Class B Stock Common Stock as of March 31, 2025 and December 31, 2024 was $7.39 and $7.63, respectively.

Our book value per share of Class B Common Stock as of June 30, 2025 and December 31, 2024 was $6.92 and $7.63, respectively.

Portfolio Investment Activity

Net Loan Portfolio

For the three months ended March 31, 2025 and 2024, we invested $29.0 million and $11.4 million in new and add-on investments and had $23.7 million and $27.5 million of repayments, resulting in net repayments of $5.3 million and $16.1 million, respectively.

For the three months ended June 30, 2025 and 2024, we invested $5.4 million and $46.3 million in new and add-on investments and had $19.7 million and $54.6 million of repayments, resulting in net repayments of $14.4 million and $8.3 million, respectively.

Amounts are net of obligations under participation agreements and secured financing agreements.

For the six months ended June 30, 2025 and 2024, we invested $10.2 million and $57.7 million in new and add-on investments and had $33.5 million and $82.2 million of repayments, resulting in net repayments of $23.3 million and $24.5 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, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Loan Structure Principal Balance Carrying

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Total $ 225,891,385 $ 178,370,354 100.0 % $ 299,255,023 $ 256,472,038 100.0 %

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Property Type Principal Balance Carrying

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Value % of Total

Office $ 101,121,778 $ 52,716,178 29.6 % $ 116,539,650 $ 72,991,791 28.4 %

Multifamily 71,141,165 70,881,300 39.8 % 60,969,051 60,662,514 23.7 %

Infill land 46,010,506 47,167,661 26.4 % 56,307,815 57,050,952 22.2 %

Office 100,819,571 54,785,090 26.5 % 116,539,650 72,991,791 28.4 %

Mixed-use 22,414,846 22,073,770 10.7 % 30,438,507 29,890,548 11.7 %

Industrial 7,000,000 6,981,199 3.9 % 7,000,000 6,966,233 2.7 %

Mixed-use 617,936 624,016 0.3 % 30,438,507 29,890,548 11.7 %

Student housing — — — % 28,000,000 28,910,000 11.3 %

Total $ 225,891,385 $ 178,370,354 100.0 % $ 299,255,023 $ 256,472,038 100.0 %

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Geographic Location Principal Balance Carrying

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United States

Arizona $ 32,909,916 $ 32,582,673 15.8 % $ 33,407,815 $ 33,005,952 12.9 %

New York $ 75,887,463 $ 26,680,637 15.0 % $ 75,657,255 $ 31,536,808 12.3 %

Washington 35,443,409 35,559,120 19.9 % 26,894,593 26,907,157 10.5 %

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California 30,405,021 30,705,525 17.2 % 53,006,023 53,096,008 20.6 %

New York 75,800,670 29,004,553 14.0 % 75,657,255 31,536,808 12.3 %

Arizona 23,104,416 23,116,267 13.0 % 33,407,815 33,005,952 12.9 %

New Jersey 22,906,090 24,051,394 13.5 % 22,900,000 24,045,000 9.4 %

North Carolina 21,826,479 21,479,707 10.4 % 21,826,479 21,418,430 8.4 %

Massachusetts 7,000,000 6,981,199 3.9 % 7,000,000 6,966,233 2.7 %

North Carolina — — — % 21,826,479 21,418,430 8.4 %

Utah — — — % 28,000,000 28,910,000 11.3 %

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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.

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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);

affected by industry slowdowns and other factors);

local real estate conditions;

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The following table presents the comparative results of our operations:

Three Months Ended March 31,

2025 2024 Change

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 Change 2025 2024 Change

Interest income $ 6,584,137 $ 8,435,024 $ (1,850,887) $ 16,790,034 $ 20,583,759 $ (3,793,725)

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Operating expenses

Operating expenses reimbursed to Manager 1,429,953 2,178,164 (748,211)

Operating expenses reimbursed to

Manager 960,846 2,332,771 (1,371,925) 2,390,799 4,510,935 (2,120,136)

Asset management fee 1,280,666 1,619,971 (339,305) 2,648,455 3,335,013 (686,558)

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Professional fees 759,427 826,080 (66,653) 1,277,781 1,711,649 (433,868)

Impairment charge 3,399,684 — 3,399,684 3,399,684 — 3,399,684

Directors’ fees 81,772 91,560 (9,788) 165,522 175,310 (9,788)

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Other income and expenses

Interest expense on secured financing (4,548,870) (7,289,912) 2,741,042

Interest expense on unsecured notes payable (2,491,537) (2,440,375) (51,162)

Interest expense on obligations under participation agreements (888,904) (618,495) (270,409)

Unrealized loss on investments, net (75) (22,931) 22,856

Income (loss) from equity interest in unconsolidated investments 2,560,110 (473,387) 3,033,497

Interest expense on secured

financing (3,491,187) (6,580,840) 3,089,653 (8,040,057) (13,870,752) 5,830,695

Interest expense on unsecured notes

payable (2,507,507) (2,452,577) (54,930) (4,999,044) (4,892,952) (106,092)

Interest expense on obligations

under participation agreements (940,739) (770,648) (170,091) (1,829,643) (1,389,143) (440,500)

Unrealized gain (loss) on

investments, net — 201,501 (201,501) (75) 178,570 (178,645)

Income from equity interest in

unconsolidated investments 2,265,597 1,671,970 593,627 4,825,707 1,198,583 3,627,124

Loss on sale of real estate, net (2,056,550) — (2,056,550) (2,056,550) — (2,056,550)

Realized loss on investments, net — (310,550) 310,550 — (446,009) 446,009

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

Three Months Ended March 31, 2025 Three Months Ended March 31, 2024

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

Weighted Average Principal Amount (1)

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Gross loans $ 189,558,292 14.1 % $ 353,025,921 12.9 %

Secured borrowing (13,447,802) 9.5 % — — %

Promissory notes payable (26,742,722) 9.3 % (80,585,255) 10.9 %

Repurchase agreements payable (29,997,689) 9.0 % (74,175,716) 8.6 %

Revolving line of credit payable (11,582,379) 7.7 % (34,761,111) 8.7 %

Net loans (3)

$ 107,787,700 17.9 % $ 163,503,839 16.7 %

Subordinated loans (4)

Gross loans $ 82,846,620 12.3 % $ 107,898,816 14.0 %

Obligations under participation agreements (19,239,044) 19.3 % (15,000,000) 20.3 %

Net loans (3)

$ 63,607,576 10.2 % $ 92,898,816 13.0 %

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

Weighted Average Principal Amount (1)

Weighted Average Coupon Rate (2)

Weighted Average Principal Amount (1)

Weighted Average Coupon Rate (2)

Total portfolio

Gross loans $ 286,239,248 13.2 % $ 473,466,860 13.1 %

Obligations under participation agreements (18,670,880) 18.7 % (13,516,484) 18.3 %

Secured borrowing (14,897,791) 9.5 % — — %

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$ 179,569,329 14.7 % $ 268,058,273 15.4 %

Gross loans $ 202,168,972 13.5 % $ 365,553,392 12.9 %

Secured borrowing (14,897,791) 9.5 % — — %

Promissory notes payable (25,256,492) 9.3 % (73,572,677) 10.9 %

Repurchase agreements payable (34,667,838) 9.0 % (77,498,307) 8.6 %

Revolving line of credit payable (13,176,918) 7.7 % (40,821,119) 8.7 %

Net loans (3)

$ 114,169,933 17.0 % $ 173,661,289 16.7 %

Subordinated loans (4)

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Interest Income

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, interest income decreased by $1.9 million, primarily due to a decrease in contractual interest income as a result of a decrease in the weighted average principal balance of performing loans.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, interest income decreased by $1.9 million and $3.8 million, respectively, primarily due to a decrease in contractual interest income as a result of a decrease in the weighted average principal balance of performing loans.

Real Estate Operating Revenue

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, real estate operating revenue decreased by $0.5 million, primarily due to the write off of the unamortized below-market rent intangible in connection with a least termination in January 2024.

Other Operating Income

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, other operating income decreased by $0.1 million, primarily due to dividend income earned on our trading equity securities in 2024 (there was no such dividend income earned in 2025).

For the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, real estate operating revenue decreased by $0.8 million, primarily due to the sale of an industrial building in June 2025 as well as the expiration of a lease in December 2024.

For the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, real estate operating revenue decreased by $1.3 million, primarily due to the sale of an industrial building in June 2025, the expiration of a lease in December 2025, and the write off of an unamortized below-market rent intangible in January 2024 in connection with a lease termination.

Operating Expenses Reimbursed to Manager

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

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, operating expenses reimbursed to our Manager decreased by $0.7 million, primarily due to a decrease in the allocation ratio as a result of a decrease in our total funds under management.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, operating expenses reimbursed to our Manager decreased by $1.4 million and $2.1 million, respectively, primarily due to a decrease in the allocation ratio as a result of a decrease in our total funds under management.

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 investment and cash held by us.

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, asset management fees decreased by $0.3 million, primarily due to a decrease in total assets under management resulting from repayment of loans.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, asset management fees decreased by $0.3 million and $0.7 million, respectively, primarily due to a decrease in total assets under management 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 investment held by us.

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, asset servicing fees decreased by $0.1 million, primarily due to a decrease in total assets under management resulting from the repayment of loans.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, asset servicing fees decreased by $0.1 million and $0.2 million, respectively, primarily due to a decrease in total assets under management resulting from the repayment of loans.

Provision for Credit Losses

We follow the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses , 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, 2025 and 2024, provision for credit losses was $2.1 million and $1.9 million, respectively , primarily related to a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in senior funding.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, provision for credit losses decreased by $1.2 million and $1.0 million, respectively, primarily due to the repayment of loans as well as loans approaching maturity, which decreased the allowance for credit losses, partially offset by a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in senior funding.

Real Estate Operating Expenses

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, real estate operating expenses increased by $0.3 million, primarily due to an increase in repairs and maintenance as well as other expenses, partially offset by a decrease in real estate taxes.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, real estate operating expenses increased by $0.8 million and $1.1 million, respectively, primarily due to an increase in real estate taxes.

The real estate operating expenses for the six-month period also increased due to an increase in repairs and maintenance.

Depreciation and Amortization

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, depreciation and amortization decreased by $0.8 million, primarily due to a decrease in amortization of in-place lease intangibles related to the termination of a lease for a space in one of the industrial properties in January 2024, resulting in a write off of the related unamortized in-place lease.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, depreciation and amortization decreased by $0.5 million and $1.3 million, respectively, primarily due to the sale of an industrial building in June 2025 as well as the write off of the unamortized in-place lease intangibles in January 2024 in connection with a lease termination.

Professional Fees

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, professional fees decreased by $0.4 million, primarily due to legal fees incurred in connection with a review of strategic alternatives for our company in 2024.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, professional fees decreased by $0.1 million and $0.4 million, respectively, primarily due to legal fees incurred in connection with a review of strategic alternatives for our company in 2024.

Impairment Charge

For both the three and six months ended June 30, 2025, in connection with the pending sale of two industrial buildings, we recorded an impairment charge of $3.4 million to reduce the carrying value of these industrial buildings to their estimated selling price less the costs to sell.

There was no such impairment charge for the three and six months ended June 30, 2024.

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, 2025 as compared to the three months ended March 31, 2024, interest expense on secured financing decreased by $2.7 million, as a result of a decrease in the weighted average principal amount outstanding.

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

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, interest expense on secured financing decreased by $3.1 million and $5.8 million, respectively, as a result of a decrease in the weighted average principal amount outstanding.

Interest Expense on Unsecured Notes Payable

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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, 2025 as compared to the three months ended March 31, 2024, interest expense on unsecured notes payable increased by $0.1 million, primarily due to an increase in the amortization of financing costs using the effective interest rate method.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, interest expense on unsecured notes payable increased by $0.05 million and $0.1 million, respectively, primarily due to an increase in the amortization of financing costs using the effective interest rate method.

Interest from Obligations under Participation Agreements

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, interest expense from obligations under participation agreements increased by $0.3 million, primarily as a result of an increase in the weighted average principal amount outstanding, partially offset by a decrease in the weighted average interest rate on the obligations under participation agreements.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, interest expense from obligations under participation agreements increased by $0.2 million and $0.4 million, respectively, primarily as a result of an increase in the weighted average principal amount outstanding, partially offset by a decrease in the weighted average interest rate on the obligations under participation agreements.

Unrealized Gain (Loss) on Investments, Net

For both the three and six months ended June 30, 2024, we recorded an unrealized gain on investments of $0.2 million, primarily due to an increase in the fair value of our marketable securities at the period end.

There was no such unrealized gain or loss for the three and six months ended June 30, 2025.

Income (Loss) from Equity Interest in Unconsolidated Investments

As of both March 31, 2025 and December 31, 2024, we owned a 14.9% equity interest in RESOF, an affiliated limited partnership that invests primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets.

As of both June 30, 2025 and December 31, 2024, we owned a 14.9% equity interest in RESOF, an affiliated limited partnership that invests primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets.

W e also beneficially owned equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, non-real estate operating companies, and a preferred equity investment with residual profit-sharing.

Our income (loss) from equity interest in unconsolidated investments are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Income from equity interest in RESOF $ 2,812,605 $ 1,775,929 $ 5,019,539 $ 2,774,268

2 unchanged sentences

$ 2,265,597 $ 1,671,970 $ 4,825,707 $ 1,198,583

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, equity income from RESOF increased as a result of an increase in RESOF’s net income associated with increased investments.

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, equity loss from the joint ventures decreased primarily due to equity income recognized from our new investments in non-real estate operating companies as well as a decrease in the net loss of the real estate joint ventures resulting from the sale of a property in 2024.

Other equity investment relates to a preferred equity agreement in which we also share residual profit from the sale of underlying property with the borrower.

There was no such investment during the three months ended March 31, 2024.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, equity income from RESOF increased as a result of an increase in RESOF’s net income associated with increased investments.

For the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, equity loss from the joint ventures increased primarily due to a gain recognized by a joint venture in connection with a sale of a property in 2024.

For the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, equity loss from the joint ventures decreased primarily due to equity income recognized from our new investments in non-real estate operating companies as well as a decrease in the net loss of the real estate joint ventures resulting from the sale of a property in 2024, partially offset by a gain recognized by the joint venture in connection with the sale of the property in 2024.

Other equity investment relates to a preferred equity agreement we acquired in June 2024 in which we also share residual profit from the sale of underlying property with the borrower.

The increase in income from other equity investment is due to holding the investment for a longer period of time in the current period.

Loss on Sale of Real Estate, Net

In June 2025, we sold an industrial building and recognized a net loss on sale of $2.1 million for both the three and six months ended June 30, 2025.

There was no such loss for the three and six months ended June 30, 2024.

Realized Loss On Investments, Net

For the three months ended March 31, 2024, we sold a portion of our investments in trading securities and recognized a net loss on sale of $0.1 million.

There was no such realized loss for the three months ended March 31, 2025.

For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, the resulting net loss decreased by $4.9 million.

For the three and six months ended June 30, 2024, we sold a portion of our investments in trading securities and recognized a net loss on sale of $0.3 million and $0.4 million, respectively.

There was no such realized loss for the six months ended June 30, 2025.

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, the resulting net loss increased by $1.6 million and decreased by $3.3 million.

Financial Condition, Liquidity and Capital Resources

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We will use the proceeds from the repayment of the corresponding investment to repay the participation obligations.

Our revolving line of credit with outstanding principal balance of $12.6 million is scheduled to mature on June 30, 2025.

We expect to use proceeds from repayment of the underlying loan to repay the outstanding principal or refinance with another lender.

Our revolving line of credit with outstanding principal balance of $11.1 million matured on June 30, 2025.

The outstanding balance was repaid in full on July 1, 2025.

Additionally, two promissory notes payable with a total outstanding principal balance of $27.5 million that are collateralized by senior loans with an aggregate principal balance of $58.3 million will mature within the next twelve months.

We expect to use proceeds from the repayment of the underlying loans to repay the promissory notes payable.

Finally, our 7.00% Senior Notes Due 2026 with an outstanding principal balance of $38.4 million are scheduled to mature on March 31, 2026.

We intend to refinance or repay the 7.00% Senior Notes Due 2026 through debt or equity capital sources or facilities.

No assurance can be given about the availability of such financings on acceptable terms or at all.

Finally, Terra LLC’s 7.00% unsecured senior notes due 2026 (the “7.00% Senior Notes Due 2026”) and our 6.00% unsecured senior notes due 2026 (the “6.00% Senior Notes Due 2026”) with an outstanding principal balance of $38.4 million and $85.1 million, respectively, are scheduled to mature on March 31, 2026 and June 30, 2026, respectively.

We intend to repay the 6.00% Senior Notes Due 2026, and intend to cause Terra LLC, our wholly owned subsidiary, to repay the 7.00% Senior Notes Due 2026, through ordinary course loan repayments, asset sales and distributions and may also use debt or equity capital sources or facilities.

However, no assurance can be given that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all.

Summary of Financing

The table below summarizes our debt financing as of March 31, 2025:

The table below summarizes our debt financing as of June 30, 2025:

Type of Financing Maximum Amount Available Outstanding Balance Amount Remaining Available Interest Rate Maturity Date

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Promissory notes payable N/A 27,482,928 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% September 2025 - March 2026

Secured borrowing N/A 13,250,000 N/A Term SOFR + 5%, (combined floor rate of 9.85% November 2026

Secured borrowing N/A 31,250,000 N/A Term SOFR + 5%, (combined floor rate ranging from 9.32% to 9.85%) Nov 2026 - Jun 2027

Revolving line of

credit 12,571,390 12,571,390 — Term SOFR + 3.5% (combined floor rate of 7.0%) June 2025

Goldman Sachs Bank

repurchase agreement 32,027,813 32,027,813 — Term SOFR (subject to underlying loan floors on a case-by-case basis) plus a spread ranging from 4.25% to 5.25%)

February 2027

11,071,390 11,071,390 — Term SOFR + 3.5% (combined floor rate of 7.0%) June 2025

$ 11,071,390 $ 90,073,290

_______________

(1) The outstanding balance was repaid on July 1, 2025.

Cash Flows Provided by (Used in) Operating Activities

For the three months ended March 31, 2025, cash flow provided by operating activities was $0.9 million, compared to cash flow used in operating activities of $4.2 million for the three months ended March 31, 2024.

The increase in operating cash flows was primarily due to a decrease in interest expense on secured financing resulting from a decrease in the weighted average principal amount outstanding, a decrease in asset management fees resulting from the repayment of loans, as well as an increase in equity income distributions from RESOF resulting from an increase in income associated with increased investments.

For the six months ended June 30, 2025, cash flows provided by operating activities were $2.0 million, compared to cash flows used in operating activities of $7.3 million for the six months ended June 30, 2024.

The increase in operating cash flow was primarily due to a decrease in contractual interest expense, partially offset by a decrease in contractual interest income.

Cash Flows Provided by Investing Activities

For the three months ended March 31, 2025, cash flows provided by investing activities were $46.2 million, primarily related to proceeds from repayment of loans of $54.0 million, partially offset by origination.

purchase and funding of loans of $7.9 million.

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, purchase and funding of loans of $7.2 million and purchase of equity interests in unconsolidated investments of $6.5 million.

For the six months ended June 30, 2025, cash flows provided by investing activities were $86.5 million, primarily related to proceeds from repayment of loans of $87.0 million and proceeds from sale of real estate of $13.8 million, partially offset by origination, purchase and funding of loans of $15.3 million and capital contributions to and purchase of equity interests in unconsolidated investments of $0.7 million.

For the six months ended June 30, 2024, cash flows provided by investing activities were $39.4 million, primarily related to proceeds from repayment of loans of $110.4 million and promissory note receivable of $9.0 million, partially offset by origination and funding of loans of $42.6 million and capital contributions to and purchase of equity interests in unconsolidated investments of $36.6 million.

Cash Flows Used in Financing Activities

For the three months ended March 31, 2025, cash flows used in financing activities were $45.9 million, primarily related to principal repayments on secured financing of $43.7 million, distributions paid of $4.6 million and a decrease in interest reserve and other deposits held on investments of $1.4 million, partially offset by proceeds from secured financing of $3.3 million and proceeds from obligations under participation agreements of $0.7 million.

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 six months ended June 30, 2025, cash flows used in financing activities were $74.7 million, primarily related to principal repayments on secured financing of $91.1 million, distributions paid of $7.0 million and a decrease in interest reserve and other deposits held on investments of $1.7 million, partially offset by proceeds from secured financing of $23.4 million and proceeds from obligations under participation agreements of $1.6 million.

For the six months ended June 30, 2024, cash flows used in financing activities were $21.2 million, primarily related to principal repayments on secured financing of $84.8 million, distributions paid of $9.3 million and payment for financing costs of $1.1 million, partially offset by proceeds from secured financing of $58.2 million and proceeds from obligations under participation agreements of $15.0 million.

Distribution Reinvestment Plan

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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.

Our consolidated financial statements are prepared in conformity with United States generally accepted accounting principles, which require 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.

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An origination fee in the amount of 1.0% of the amount used to originate, acquire, fund or structure investments, including any third-party expenses related to such investments.

In the event that the term of any 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.

In the event that the term of any 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 the fee paid by the borrower in connection with such extension.

Asset Management Fee .

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Origination and extension fee expense (1)

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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;

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 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.

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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).

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The promissory note matures on March 31, 2027.

As of March 31, 2025 and December 31, 2024, amount outstanding under the promissory note payable was $43.6 million and $45.1 million, respectively.

As of June 30, 2025 and December 31, 2024, amount outstanding under the promissory note payable was $47.2 million and $45.1 million, respectively.

The activity associated with this agreement is eliminated in consolidation and therefore has no impact on our consolidated financial statements.

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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, 2025, the principal balance of our participation obligation was $18.7 million, which was a participation obligation to a related-party managed by the Manager.

As of June 30, 2025, the principal balance of our participation obligation was $19.6 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.

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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, 2025 and 2024, the weighted average outstanding principal balance on obligations under participation agreements was approximately $18.3 million and $12.0 million, respectively, and the weighted average interest rate was approximately 19.3% and 20.3%, respectively.

For the six months ended June 30, 2025 and 2024, the weighted average outstanding principal balance on obligations under participation agreements was approximately $18.7 million and $13.5 million, respectively, and the weighted average interest rate was approximately 18.7% and 18.3%, respectively.

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-Q

Item 1. Financial Statements