What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2026-03-19 compared with 2025-03-14 · 376 added, 462 removed, 1130 unchanged (43% of the section changed)

49 unchanged sentences

3.3 Articles of Supplementary of Terra Property Trust, Inc.

Designating 12.5% Services A Redeemable Cumulative Preferred Stock (incorporated by reference to Exhibit 3.3 to the Registration Statement on Amendment No.1 to Form 10 (File No.

Designating 12.5% Series A Redeemable Cumulative Preferred Stock (incorporated by reference to Exhibit 3.3 to the Registration Statement on Amendment No.1 to Form 10 (File No.

000-56117) filed with the SEC on December 16, 2019).

15 unchanged sentences

000-56117) filed with the SEC on November 6, 2019).

Description and Method of Filing

10.2 Amendment to Amended and Restated Management Agreement, dated March 11, 2024, between Terra Property Trust, Inc., and Terra REIT Advisors, LLC (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on May 13, 2024).

10.3 Second Amendment to Amended and Restated Management Agreement, dated May 8, 2025, between Terra Property Trust, Inc.

and Terra REIT Advisors, LLC (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on August 18, 2025).

10.4 Amended and Restated Voting Agreement by and among Terra Property Trust, Inc., Terra Secured Income Fund 5, LLC, Terra JV, LLC and Terra REIT Advisors, LLC, dated March 2, 2020 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed with the SEC on May 15, 2020).

3 unchanged sentences

000-56117) filed with the SEC on May 15, 2020).

10.5 Indenture and Credit Agreement, dated as of September 3, 2020, by and among Terra Mortgage Capital I, LLC, as Issuer, Goldman Sachs Bank USA, as initial Class A lender, and Wells Fargo Bank, National Association, as trustee, custodian, collateral agent, loan agent and note administrator (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K (File No.

000-56117) filed with the SEC on September 17, 2020).

Description and Method of Filing

10.6 Guaranty, dated as of September 3, 2020, by and among Terra Property Trust, Inc., as guarantor, for the benefit of Goldman Sachs Bank USA (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K (File No.

000-56117) filed with the SEC on September 17, 2020).

10.7 Business Loan and Security Agreement, dated as of March 12, 2021, by and among Terra Mortgage Portfolio II, LLC, as the Borrower, and Western Alliance Bank, as the Lender (incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K filed with the SEC on March 18, 2021).

10.8 Limited Guaranty, dated as of March 12, 2021, by and among Terra Property Trust, Inc., as Guarantor, for the benefit of Western Alliance Bank (incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K filed with the SEC on March 18, 2021).

10.9 First Amendment to Loan Documents dated as of June 9, 2021, by and among Terra Mortgage Portfolio II, LLC, as Borrower, Terra Property Trust, Inc., as Guarantor, and Western Alliance Bank, as Lender (incorporated by reference to Exhibit 10.10 to the Annual Report on Form 10-K filed with the SEC on March 11, 2022).

10.7 Uncommitted Master Repurchase Agreement dated as of November 8, 2021, by and between Terra Mortgage Capital III, LLC, as Seller, UBS AG, as Buyer (incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K filed with the SEC on March 11, 2022).

6 unchanged sentences

2 to Guarantee Agreement, dated as of November 14, 2023, between Terra Property Trust, Inc., as Guarantor, and UBS AG, as Buyer (incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K filed with the SEC on March 15, 2024).

10.15 Second Amendment to Loan Documents dated as of January 4, 2022, by and among Terra Mortgage Portfolio II, LLC, as Borrower, Terra Property Trust, Inc., as Guarantor, and Western Alliance Bank, as Lender (incorporated by reference to Exhibit 10.13 to the Annual Report on Form 10-K filed with the SEC on March 11, 2022).

10.16 Uncommitted Master Repurchase and Securities Contract Agreement dated as of February 18, 2022, by and between Terra Mortgage Capital I, LLC, as Seller, Goldman Sachs Bank USA, as Buyer (incorporated by reference to Exhibit 10.14 to the Annual Report on Form 10-K filed with the SEC on March 11, 2022).

10.17 Guarantee Agreement dated as of February 18, 2022, by and between Terra Property Trust, Inc., as Guarantor, in favor of Goldman Sachs Bank USA, as Buyer (incorporated by reference to Exhibit 10.15 to the Annual Report on Form 10-K filed with the SEC on March 11, 2022).

10.18 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No.

001-40496) filed with the SEC on October 3, 2022).

10.19 Amendment to Amended and Restated Management Agreement, dated March 11, 2024, between Terra Property Trust, Inc., and Terra REIT Advisors, LLC (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on May 13, 2024).

10.20 Fifth Amendment to Loan Documents and Waiver, dated as of March 7, 2024, between Terra Mortgage Portfolio II, LLC, as Borrower, and Terra Property Trust, Inc., as Guarantor, and Western Alliance Bank, as Lender (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on May 13 2024).

10.21 Continuing Guaranty, dated as of March 7, 2024, by Terra Property Trust, Inc., as Guarantor, in favor of Western Alliance Bank (incorporated by reference to Exhibit 10.

3 to the Quarterly Report on Form 10-Q filed with the SEC on May 13, 2024).

10.22 First Amendment to Uncommitted Master Repurchase and Securities Contract Agreement and Other Transaction Documents, dated as of March 7, 2024, among Terra Mortgage Capital I, LLC, as Seller, Terra Property Trust, Inc., as Guarantor, and Goldman Sachs Bank USA, as Buyer (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed with the SEC on May 13, 2024).

Description and Method of Filing

10.12 Amendment No.

1 unchanged sentence

10.13 Waiver Letter, dated as of March 7, 2024, from UBS AG, as Buyer, to Terra Mortgage Capital III, LLC, as Seller, and Terra Property Trust, Inc., as Guarantor (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed with the SEC on May 13, 2024).

10.25 Sixth Amendment to Loan Documents, dated as of June 26, 2024, between Terra Mortgage Portfolio II, LLC, as Borrower, and Terra Property Trust, Inc., as Guarantor, and Western Alliance Bank, as Lender (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on August 9, 2024).

10.26 Security Agreement, Dated as of June 26, 2024, between Terra Mortgage Portfolio II, LLC as Assignor, and Western Alliance Bank, As Lender (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on August 9, 2024).

10.14 Form of Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No.

001-40496) filed with the SEC on October 3, 2022).

14* Code of Business Conduct and Ethics.

19.1 Terra Property Trust, Inc.

Insider Trading Policy.

Insider Trading Policy (incorporated by reference to Exhibit 19 to the Annual Report on Form 10-K filed with the SEC on March 14, 2025).

21.1 * Subsidiaries

Description and Method of Filing

31.1* Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

19 unchanged sentences

Consolidated Balance Sheets as of December 31, 2025 and 2024

Consolidated Statements of Operations for the years ended December 31, 202 4 and 202 3

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024

Consolidated Statements of Cash Flows for the years ended December 31, 2025 and 2024

9 unchanged sentences

We have audited the accompanying consolidated balance sheets of Terra Property Trust, Inc.

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive (loss) income, changes in equity, and cash flows for the years then ended, and the related notes and financial statement schedules III and IV (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, changes in equity, and cash flows for the years then ended, and the related notes and financial statement schedules III and IV (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.

generally accepted accounting principles.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for credit losses as of January 1, 2023 due to the adoption of FASB Accounting Standard Update 2016-13, Financial Instruments -Credit Losses (Topic 326):

Measurement of Credit losses on Financial Instruments.

Basis for Opinion

10 unchanged sentences

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and

significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

6 unchanged sentences

Restricted cash 1,202,134 2,937,959

Cash held in escrow by lender 7,448,611 4,907,316

Marketable securities 963,178 4,961,879

Cash held in escrow 3,519,393 7,448,611

Available-for-sale debt securities — 963,178

Loans held for investment, net of allowance for credit losses of $ 58,950,552 and $ 45,381,465

15 unchanged sentences

Obligations under participation agreements ( Note 8 )

18,197,981 18,177,106

Interest reserve and other deposits held on investments 1,202,134 2,937,959

11 unchanged sentences

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

issued, as of both December 31, 2024 and December 31, 2023

issued, as of both December 31, 2025 and 2024

Class B Common Stock, $ 0.01 par value, 450,000,000 shares authorized and 24,339,891

and 24,337,952 shares issued and outstanding as of December 31, 2025 and 2024,

December 31, 2023, respectively

243,399 243,380

1 unchanged sentence

Accumulated deficit ( 298,275,399 ) ( 258,810,775 )

Accumulated other comprehensive loss ( 185,475 ) —

Accumulated other comprehensive income (loss) — ( 185,475 )

Total equity 146,464,228 185,726,066

2 unchanged sentences

Terra Property Trust, Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income

Consolidated Statements of Operations and Comprehensive Loss

Years Ended December 31,

12 unchanged sentences

Professional fees 2,812,876 3,012,046

Impairment charge on real estate assets 3,399,684 —

Directors’ fees 303,022 356,886

Other 551,713 558,638

Impairment charge — 11,765,540

36,755,866 45,751,554

Operating income (loss) 3,937,940 ( 24,484,250 )

Operating (loss) income ( 1,316,846 ) 3,937,940

Other income and expenses

2 unchanged sentences

Interest expense on obligations under participation agreements ( 3,648,329 ) ( 2,971,924 )

Unrealized gain (loss) on investments, net 100,149 ( 316,573 )

Income (loss) from equity interest in unconsolidated investments 2,738,410 ( 2,383,938 )

Income from equity interest in unconsolidated investments 3,283,274 2,738,410

Gain on extinguishment of debt 548,625 —

Loss on sale of real estate, net ( 2,880,545 ) —

Unrealized gain on investments, net 39,290 100,149

Loss on repayment of loan — ( 5,629,510 )

Loss on disposal of real estate — ( 4,211,153 )

Gain on extinguishment of participation liability — 14,079,379

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

( 26,076,398 ) ( 41,097,895 )

Net loss before income taxes ( 27,393,244 ) ( 37,159,955 )

Provision for income tax ( 432,602 ) —

Net loss $ ( 27,825,846 ) $ ( 37,159,955 )

Series A preferred stock dividend declared $ — $ ( 3,907 )

Net loss allocable to common stock $ ( 37,159,955 ) $ ( 56,889,946 )

Other comprehensive loss

Unrealized loss on available-for-sale debt securities ( 185,475 ) —

Other comprehensive income (loss)

Unrealized gain (loss) on available-for-sale debt securities 185,475 ( 185,475 )

185,475 ( 185,475 )

21 unchanged sentences

Other comprehensive loss:

Unrealized loss on available-for-sale debt securities — — — — — — — ( 185,475 ) ( 185,475 )

Unrealized gain on available-for-sale debt securities — — — — — — — 185,475 185,475

Balance at December 31, 2025

$ — — $ — 24,339,891 $ 243,399 $ 444,496,228 $ ( 298,275,399 ) $ — $ 146,464,228

Preferred Stock 12.5 % Series A Cumulative Non-Voting Preferred Stock

Class A Common Stock Class B Common Stock Additional

Capital Accumulated Deficit

Preferred Stock Class A Common Stock Class B Common Stock Additional

Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss)

$ 0.01 Par Value

Shares Amount Shares Amount Shares Amount Total equity

Shares Amount Shares Amount Total Equity

Balance at January 1, 2024 $ — — $ — 24,336,033 $ 243,360 $ 444,458,206 $ ( 203,047,758 ) $ — $ 241,653,808

Cumulative effect of credit loss accounting standard

effective January 1, 2023 ( Note 2 )

— — — — — — — — ( 4,619,723 ) ( 4,619,723 )

Shares issued from reinvestment of shareholder distributions — — — — — 663 6 8,393 — 8,399

Redemption of Series A Preferred Stock — ( 125 ) ( 125,000 ) — — — — — — ( 125,000 )

— — — — — — — — ( 18,602,096 ) ( 18,602,096 )

Shares issued from reinvestment of shareholder

distributions — — — 1,919 20 20,730 — — 20,750

Distributions declared on common shares ($ 0.76 per share)

1 unchanged sentence

Net loss — — — — — — ( 37,159,955 ) — ( 37,159,955 )

Other comprehensive loss:

Unrealized loss on available-for-sale debt securities — — — — — — — ( 185,475 ) ( 185,475 )

Balance at December 31, 2024

$ — — $ — 24,337,952 $ 243,380 $ 444,478,936 $ ( 258,810,775 ) $ ( 185,475 ) $ 185,726,066

See notes to consolidated financial statements .

4 unchanged sentences

Net loss $ ( 27,825,846 ) $ ( 37,159,955 )

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

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

Depreciation and amortization 3,841,661 7,357,295

Provision for credit losses 12,767,592 16,627,739

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

Loss on sale of real estate, net 2,880,545 —

Loss on repayment of loan — 5,629,510

Gain on extinguishment of debt ( 548,625 ) —

Amortization of net purchase premiums on loans 6,913 155,727

4 unchanged sentences

Amortization and accretion of investment-related fees, net 532,517 ( 578,756 )

Amortization of above-market rent ground lease — ( 103,017 )

Impairment charge — 11,765,540

Loss on repayment of loan 5,629,510 —

Loss on disposal of real estate — 4,211,153

Gain on extinguishment of participation liability — ( 14,079,379 )

Realized loss on investments, net — 446,009

Unrealized (gain) loss on investments, net ( 100,149 ) 316,573

Unrealized gain on investments, net ( 39,290 ) ( 100,149 )

Distributions received from equity interest in unconsolidated investments 12,291,711 5,633,878

(Income) loss from equity interest in unconsolidated investments ( 2,738,410 ) 4,188,976

Income from equity interest in unconsolidated investments ( 3,283,274 ) ( 2,738,410 )

Changes in operating assets and liabilities:

Deal deposits — 4,241,892

Interest receivable ( 2,811,614 ) 1,096,748

6 unchanged sentences

Other liabilities 213,073 ( 62,894 )

Net cash (used in) provided by operating activities ( 3,258,119 ) 8,609,998

See notes to consolidated financial statements.

Terra Property Trust, Inc.

Consolidated Statements of Cash Flows (Continued)

Years Ended December 31,

Net cash provided by (used in) operating activities 1,913,799 ( 3,258,119 )

Cash flows from investing activities:

1 unchanged sentence

Origination, purchase and funding of loans ( 29,632,403 ) ( 57,163,870 )

Purchase of equity interests in unconsolidated investments ( 65,617,196 ) ( 7,307,806 )

Distributions received in excess of equity income 3,076,908 —

Proceeds from sale of real estate 69,123,333 —

Real estate capital expenditures ( 118,189 ) —

Capital contributions to and purchase of equity interests in unconsolidated

investments ( 1,914,977 ) ( 65,617,196 )

Distributions in excess of income 5,503,845 3,076,908

Repayments of promissory note receivable 1,182,759 9,624,408

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

Proceeds from sale of marketable securities 3,551,098 2,422,095

Purchase of marketable securities — ( 7,905,211 )

Purchase of equity securities — ( 2,002,353 )

Purchase of held-to-maturity securities — ( 20,025,024 )

Proceeds from redemption of held-to-maturity securities — 20,000,000

Purchase of real estate properties — ( 52,508,252 )

Cash acquired in purchase of real estate — 712,608

Capital expenditures on real estate — ( 132,506 )

Return of capital on equity interests in unconsolidated investments — 11,287,839

Net cash provided by (used in) investing activities 101,644,156 ( 10,041,784 )

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

Net cash provided by investing activities 180,589,455 101,644,156

See notes to consolidated financial statements .

Terra Property Trust, Inc.

Consolidated Statements of Cash Flows (Continued)

Years Ended December 31,

Cash flows from financing activities:

Principal repayments on secured financing ( 177,525,167 ) ( 205,265,764 )

Repayments on secured financing ( 170,854,544 ) ( 177,525,167 )

Proceeds from secured financing 24,805,321 81,284,441

Proceeds from obligations under participation agreements 2,611,678 18,000,000

Repayments on obligations under participation agreements ( 2,591,102 ) —

Repayments on unsecured notes payable ( 4,188,000 ) —

Distributions paid ( 11,621,467 ) ( 18,582,312 )

1 unchanged sentence

Change in interest reserve and other deposits held on investments ( 1,735,825 ) ( 1,017,027 )

Redemption of Series A Preferred Stock — ( 125,000 )

Net cash used in financing activities ( 163,573,939 ) ( 98,957,788 )

Net decrease in cash, cash equivalents and restricted cash ( 571,751 ) ( 16,932,815 )

Cash, cash equivalents and restricted cash at beginning of year 19,536,777 36,469,592

Cash, cash equivalents and restricted cash at end of year ( Note 2 )

Net increase (decrease) in cash, cash equivalents and restricted cash 18,929,315 ( 571,751 )

Cash, cash equivalents and restricted cash at beginning of period 18,965,026 19,536,777

Cash, cash equivalents and restricted cash at end of period ( Note 2 )

$ 37,894,341 $ 18,965,026

Years Ended December 31,

Supplemental Disclosure of Cash Flows Information:

Supplemental disclosure of cash flow information:

Cash paid for interest $ 24,069,122 $ 33,610,601

1 unchanged sentence

Reinvestment of shareholder distributions $ 17,311 $ 20,750

See notes to consolidated financial statements.

Terra Property Trust, Inc.

Consolidated Statements of Cash Flows (Continued)

Supplemental non-cash investing and financing information:

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 equity investment in exchange for the satisfaction of the remaining funding commitment ( Note 4 , Note 8 ).

2023 — In May 2023, the Company acquired five industrial buildings for a $ 3.5 million cash payment and the settlement of a mezzanine loan that was accounted for as an equity investment and five senior loans that were held for investment.

The following table presents a summary of the total capitalized costs and the values of the net assets acquired:

Total Capitalized Costs:

Cash and cash equivalents $ 3,515,466

Loans held for investment 68,737,877

Equity interest in unconsolidated investment 10,149,642

Interest receivable 456,650

Other assets 429,326

Net Assets Acquired

Cash and cash equivalents $ 712,608

Other assets 33,802

Land 14,457,149

Buildings and Improvements 65,365,376

Intangible asset and liability:

In-please lease 8,403,667

Below-market rent ( 4,770,870 )

Accounts payable and accrued expenses ( 912,771 )

See notes to consolidated financial statements .

3 unchanged sentences

Terra Property Trust, Inc.

( and, together with its consolidated subsidiaries, the “Company” or “Terra Property Trust”) is a real estate investment trust (“REIT”) that originates, invests in and manages a diverse portfolio of real estate and real estate-related assets.

( “Terra Property Trust”) ( and, together with its consolidated subsidiaries, the “Company” is a real estate investment trust (“REIT”) that originates, invests in and manages a diverse portfolio of real estate and real estate-related assets.

The Company was incorporated under the Maryland General Corporation Law on December 31, 2015.

9 unchanged sentences

The Company also operates its business in a manner that permits it to maintain its exemption from registration as an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”).

The Company’s investment activities are externally managed by Terra REIT Advisors, LLC (the “Manager”), a subsidiary of the Company’s sponsor, Terra Capital Partners, LLC (“Terra Capital Partners”), pursuant to a management agreement (the “Management Agreement”), under the oversight of the Company’s board of directors (the “Board”) ( Note 7 ).

The Company’s investment activities are externally managed by Terra REIT Advisors, LLC (the “Manager”), a subsidiary of the Company’s sponsor, Terra Capital Partners, LLC (“Terra Capital Partners”), pursuant to a management agreement (as amended, the “Management Agreement”), under the oversight of the Company’s board of directors (the “Board”) ( Note 7 ).

The Company does not currently have any employees and does not expect to have any employees.

2 unchanged sentences

(“Terra BDC”), merged with and into Terra Income Fund 6, LLC (“Terra LLC”), a wholly owned subsidiary of the Company, with Terra LLC continuing as the surviving entity of the merger (the “BDC Merger”) and as a wholly owned subsidiary of the Company.

Pursuant to the terms of the transactions described in the Merger Agreement, approximately 4,847,910 shares of the Company’s Class B Common Stock, $ 0.01 par value per share (“Class B Common Stock”), were issued to former Terra BDC stockholders in connection with the BDC Merger, based on the number of outstanding shares of Terra BDC Common Stock as of October 1, 2022.

On June 28, 2023, the Company announced it entered into an Agreement and Plan of Merger, dated as of June 27, 2023 (the “WMC Merger Agreement”), with Western Asset Mortgage Capital Corporation, a Delaware corporation (“WMC”).

On July 27, 2023, WMC notified the Company that its board of directors determined that a proposal from AG Mortgage Investment Trust, Inc.

(“MITT”) to acquire WMC was a “Parent Superior Proposal” under the WMC Merger Agreement and that WMC’s board of directors intended to terminate the WMC Merger Agreement unless WMC received a revised proposal from the Company by a specified deadline such that WMC’s board of directors determined that MITT’s proposal was no longer a “Parent Superior Proposal.”

Notes to Consolidated Financial Statements

On August 8, 2023, WMC terminated the WMC Merger Agreement pursuant to its terms (the “Termination”), and the Company was paid a termination fee of $ 3.0 million.

The termination fee was used to pay the professional fees incurred in connection with contemplated merger.

Upon the Termination, the amended and restated management agreement the Company entered into with WMC and the Manager on June 27, 2023, terminated in accordance with its terms.

The Company continues to be managed by the Manager pursuant to the terms of the existing Management Agreement between the Company and the Manager.

Pursuant to the terms of the transactions described in the Merger Agreement, 4,847,910 shares of the Company’s Class B Common Stock, $ 0.01 par value per share (“Class B Common Stock”), were issued to former Terra BDC stockholders in connection with the BDC Merger, based on the number of outstanding shares of Terra BDC Common Stock as of October 1, 2022.

On December 20, 2023, Terra Fund 5 announced that effective December 29, 2023 (the “Distribution Date”), Terra Fund 5 would distribute all of its shares of the Company’s Class B Common Stock to its members as part of the winding up of Terra Fund 5.

1 unchanged sentence

Because Terra Fund 5 previously owned its interests in the shares of Class B Common Stock indirectly through its ownership of interests in Terra JV, LLC (“Terra JV”), prior to the Distribution Date, Terra JV first distributed the shares of Class B Common Stock to Terra Fund 5 and Terra Secured Income Fund 7, LLC (“Terra Fund 7”), and Terra Fund 5 then distributed those shares to its members on the Distribution Date and Terra Fund 7 became a direct stockholder of the Company’s Class B Common Stock.

Notes to Consolidated Financial Statements

As of December 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.

5 unchanged sentences

Certain prior period amounts have been reclassified to conform to the current period presentation.

These consolidated financial statements have been prepared in accordance with U.S.

GAAP assuming the Company will continue as a going concern.

The Company has significant debt obligations of approximately $ 118.8 million coming due, including $ 38.4 million of 7.00 % unsecured senior notes maturing on March 31, 2026 issued by Terra LLC and $ 80.4 million of 6.00 % unsecured senior notes maturing on June 30, 2026 issued by Terra Property Trust ( Note 8 ).

As of December 31, 2025, the Company had cash and cash equivalents of $ 33.2 million.

As of the date of issuance, the Company does not have sufficient liquidity to satisfy these obligations.

The Company intends to refinance or repay, or cause Terra LLC to refinance or repay, the unsecured senior notes through ordinary course loan repayments, real estate owned and loan sales, receipt of distributions from equity interests in unconsolidated investments, the deferral of asset management fee payments and operating expenses reimbursed to the Manager and may also use debt or equity capital sources or facilities, including exchange offers.

Consolidation

9 unchanged sentences

Generally, the primary beneficiary of a VIE is a reporting entity that has (a) the power to direct the activities that most significantly affect the VIE’s economic performance, and (b) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

Notes to Consolidated Financial Statements

Loans Held for Investment

1 unchanged sentence

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

Notes to Consolidated Financial Statements

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.

1 unchanged sentence

Allowance for Credit Losses

On January 1, 2023, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses .

ASC 326 mandates the use of a current expected credit loss (“CECL”) methodology for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” methodology previously required under United States generally accepted accounting principles (“U.S.

The Company follows the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses to estimate potential credit losses related to its loans .

The CECL methodology requires the consideration of possible credit losses over the life of an instrument as opposed to estimating credit losses upon the occurrence of an actual loss event under the previous “incurred loss” methodology.

As permitted by ASC 326, the Company elected not to measure an allowance for credit losses on accrued interest receivable (which is presented separately on the consolidated balance sheet), but rather write off in a timely manner by reversing interest income that would likely be uncollectible.

The Company’s adoption of the ASC 326 resulted in a $ 4.6 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to member’s capital as of January 1, 2023.

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

As permitted by ASC 326, the Company elected not to measure an allowance for credit losses on accrued interest receivable (which is presented separately on the consolidated balance sheets), but rather write off in a timely manner by reversing interest income that would likely be uncollectible.

Performing Loans

14 unchanged sentences

The determination of the performing loans credit loss estimate considers historical loss information and current economic conditions for each loan, reversion period and reasonable and supportable forecasts about the future.

The reasonable and supportable forecast period is determined based on the Company’s assessment of the most likely scenario of assumptions and

Notes to Consolidated Financial Statements

plausible outcomes for the U.S.

The reasonable and supportable forecast period is determined based on the Company’s assessment of the most likely scenario of assumptions and plausible outcomes for the U.S.

The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed.

2 unchanged sentences

The Company also evaluates the contractual life of its loans to determine if changes are needed for certain contractual extension options, renewals, modifications, and prepayments.

Notes to Consolidated Financial Statements

Unfunded Commitments

7 unchanged sentences

Loans Not Secured by Real Estate

As of December 31, 2024 and 2023, the Company had one loan and two loans, respectively, that were not secured by real estate.

These loans, which are included in other assets on the consolidated balance sheets, are recorded at amortized cost.

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

As of December 31, 2024 and 2023, the Company did not record any allowance for credit losses on these loans because the Company believes that it will be able to collect all outstanding interest and principal on or before the maturity date of each loan.

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 December 31, 2025.

Equity Interest in Unconsolidated Investments

7 unchanged sentences

The Company accounts for its equity securities without readily determinable fair value at cost, which is included in other assets on the consolidated balance sheets.

The Company has elected the measurement alternative and therefore will evaluate

Notes to Consolidated Financial Statements

whether the security continues to qualify for the alternative at each reporting period.

The Company has elected the measurement alternative and therefore will evaluate whether the security continues to qualify for the alternative at each reporting period.

The Company evaluates its equity security without readily determinable fair value on a periodic basis to determine if there is an observable price change in an orderly transaction for similar investments or if there are any indicators that the value of its equity security may be impaired.

The Company will make fair value adjustments, if any, or reductions for any impairment to derive the carrying value of the investment.

Marketable Securities

From time to time, the Company may invest in short-term debt securities.

These securities are classified as available-for-sale securities and are carried at fair value.

Changes in the fair value of debt securities are reported in other comprehensive income until a gain or loss on the securities is realized.

The Company may also invest in short-term equity securities classified as held for trading.

Changes in the fair value of equity securities are recognized in earnings.

Notes to Consolidated Financial Statements

Available-For-Sale Debt Securities

From time to time, the Company may invest in marketable debt securities.

These securities are classified as available-for-sale debt securities and are carried at fair value.

Changes in the fair value of the available-for-sale debt securities are reported in other comprehensive income or loss until a gain or loss on the securities is realized.

Real Estate Owned, Net

12 unchanged sentences

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

The Company determines if an arrangement is a lease at inception.

Operating leases in which the Company is the lessee are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

As the Company’s lease typically does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The Company uses the implicit rate when readily determinable.

The operating lease ROU asset also includes any lease payments made in advance and excludes lease incentives if there were any.

The Company’s lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option.

Lease expense is recognized on a straight-line basis over the lease term.

The Company previously owned an office building that was subject to a ground lease whereby the Company was the lessee (or a tenant) to the ground lease.

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

Notes to Consolidated Financial Statements

Revenue Recognition

16 unchanged sentences

These intangible assets and liabilities are amortized to lease revenue over the remaining contractual lease term.

Notes to Consolidated Financial Statements

Other Revenues:

8 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.

2 unchanged sentences

Restricted cash 1,202,134 2,937,959

Cash held in escrow by lender 7,448,611 4,907,316

Cash held in escrow 3,519,393 7,448,611

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

statements of cash flows $ 37,894,341 $ 18,965,026

Notes to Consolidated Financial Statements

Participation Interests

4 unchanged sentences

Secured Financing Agreements, Net

The Company's secured financing agreements include two master repurchase agreements, a revolving line of credit, non-recourse property mortgages, note-on-note financing arrangements, secured borrowing and a term loan.

The Company ’ s secured financing agreements include non-recourse property mortgages, note-on-note financing arrangements, secured borrowings and a term loan.

The Company ’ s secured financing agreements as of December 31, 2024 also included a repurchase agreement and a revolving line of credit which were repaid in full and terminated in June 2025 and July 2025, respectively.

The Company accounts for borrowings under these financing arrangements as secured transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees.

See “ Secured Financing Arrangements ” in Note 8 for additional information.

Repurchase of Unsecured Notes Payable

From time to time, the Company may repurchase certain of its 6.00 % Senior Notes Due 2026 and 7.00 % Senior Notes Due 2026.

These purchases are recorded as a reduction to unsecured notes payable on the consolidated balance sheets, and the difference between the purchase price and the par value is reported as gain or loss on extinguishment of debt.

Fair Value Measurements

GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs.

The Company has not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, obligations under participation agreements, secured borrowing, unsecured notes, mortgage loan payable, term loan payable, repurchase agreement payment and revolving line of credit.

The Company has not elected the fair value option for its

Notes to Consolidated Financial Statements

financial instruments, including loans held for investment, loans held for investment acquired through participation, obligations under participation agreements, secured borrowings, unsecured notes, mortgage loan payable, and term loan payable.

Such financial instruments are carried at amortized cost, less impairment, where applicable.

Marketable securities are financial instruments that are reported at fair value.

Available-for-sale securities are financial instruments that are reported at fair value.

Deferred Financing Costs

Deferred financing costs represent fees and expenses incurred in connection with obtaining financing for investments.

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

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

These costs are amortized using the effective interest method and are included in interest expense on the applicable borrowings in the consolidated statements of operations over the life of the borrowings.

12 unchanged sentences

The Company’s 2022-2025 federal tax returns remain subject to examination by the Internal Revenue Service.

Notes to Consolidated Financial Statements

The Company may hold certain investments through a consolidated taxable REIT subsidiary (“TRS”).

Such TRS may be subject to U.S.

federal and state corporate- level income taxes.

The TRS recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between the tax basis of certain assets and liabilities and the reported amounts are included in the accompanying consolidated statement of assets and liabilities using the applicable statutory tax rates in effect for the year in which any such temporary differences are expected to reverse.

On December 31, 2025, the Company elected the TRS status for a wholly own subsidiary that holds a non-real estate-related investment.

In connection with this election, the Company recorded a deferred income tax expense and deferred income tax liability of $ 0.4 million related to an unrealized gain on the investment.

Deferred tax liabilities are included in Other liabilities on the Company’s consolidated balance sheets as of December 31, 2025.

Earnings Per Share

The Company has a simple equity capital structure with only common stock outstanding as of December 31, 2024 and 2023, and common stock and preferred stock outstanding prior to March 31, 2023.

The Company has a simple equity capital structure with only common stock outstanding.

As a result, earnings per share, as presented, represents both basic and dilutive per-share amounts for the periods presented in the consolidated financial statements.

4 unchanged sentences

Actual results may ultimately differ from those estimates, and those differences could be material.

Notes to Consolidated Financial Statements

Segment Information

15 unchanged sentences

ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provide new segment disclosure requirements for entities with a single reportable segment.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods with fiscal years beginning after December 15, 2024.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

ASU 2023-07 is to be adopted retrospectively to all prior periods presented.

4 unchanged sentences

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively.

The Company is currently assessing the impact of this guidance;

however, it does not expect the adoption of this standard to have a material impact to its consolidated financial statements.

Notes to Consolidated Financial Statements

The Company adopted this ASU on December 31, 2025.

The adoption of this standard did not have a material impact to its consolidated financial statements.

Loans Held for Investment

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

As of December 31, 2024 and 2023, accrued interest receivable of $ 5.4 million and $ 6.5 million, respectively, is included in interest receivable on the consolidated balance sheets, and is excluded from the amortized cost of loans held for investment.

As of December 31, 2025 and December 31, 2024, accrued interest receivable of $ 8.3 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.

Notes to Consolidated Financial Statements

Portfolio Summary

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

The table below provides a summary of the Company’s loan portfolio.

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

December 31, 2025 December 31, 2024

16 unchanged sentences

(2) As of December 31, 2025 and 2024, amount included $ 63.6 million and $ 208.0 million of senior mortgages used as collateral for $ 31.3 million and $ 123.2 million of borrowings under secured financing agreements, respectively ( Note 8 ).

(3) As of December 31, 2024 and 2023, 10 and 14 loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.

(4) Excludes nonperforming loans for which recovery of interest income was not probable.

(5) Represents current effective maturity as of December 31, 2024 and 2023, exclusive of any extension available.

(3) As of December 31, 2025 and 2024, five 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 December 31, 2025 and 2024, exclusive of any extension available.

Lending Activities

5 unchanged sentences

Origination, purchase and funding of loans 23,537,271 6,095,132 29,632,403

Loss on repayment of loan (1)

( 5,629,510 ) — ( 5,629,510 )

Net amortization of premiums on loans ( 6,913 ) — ( 6,913 )

1 unchanged sentence

net ( 1,314,241 ) ( 246,253 ) ( 1,560,494 )

Provision for credit losses ( 16,271,158 ) ( 533,464 ) ( 16,804,622 )

(Provision for) reversal of provision for credit losses ( 13,569,088 ) 687,447 ( 12,881,641 )

Balance, December 31, 2025

$ 134,644,098 $ 18,743,315 $ 153,387,413

_______________

(1) In August 2024, a $ 65.0 million senior loan was repaid, resulting in a loss on repayment of $ 5.6 million, which included the write-off of interest receivable of $ 4.8 million.

Notes to Consolidated Financial Statements

1 unchanged sentence

Balance, January 1, 2024 $ 417,913,773 $ 38,558,485 $ 456,472,258

Cumulative effect of credit loss accounting standard effective

January 1, 2023 ( Note 2 )

( 4,123,143 ) ( 126,909 ) ( 4,250,052 )

Origination, purchase and funding of loans 78,883,295 — 78,883,295

Principal repayments received ( 216,137,530 ) — ( 216,137,530 )

Net amortization of premiums on loans ( 1,124,157 ) — ( 1,124,157 )

Settlement of loans in exchange for real estate properties (1)(2) ( Note 5 )

Origination, purchase and funding of loans 54,155,680 3,008,190 57,163,870

Loss on repayment of loan (1)

( 5,629,510 ) — ( 5,629,510 )

Net amortization of premiums on loans ( 155,727 ) — ( 155,727 )

Accrual, payment and accretion of investment-related fees and other,

net ( 304,112 ) 44,518 ( 259,594 )

Provision for credit losses ( 45,491,949 ) ( 99,618 ) ( 45,591,567 )

(Provision for) reversal of provision for credit losses ( 16,271,158 ) ( 533,464 ) ( 16,804,622 )

Balance, December 31, 2024 $ 233,571,416 $ 41,077,729 $ 274,649,145

_______________

(1) In May 2023, the Company settled $ 68.7 million of senior loans in exchange for ownership interest in the underlying real estate properties ( Note 5 ).

(2) In November 2023, the Company settled a $ 20.8 million mezzanine loan and wrote off the related allowance for credit losses of $ 18.3 million in exchange for a $ 2.5 million note from the sponsor.

On the date of closing, the sponsor made a payment of $ 0.5 million.

The remaining $ 2.0 million is included in Other assets on the consolidated balance sheets.

(1) In August 2024, a $ 65.0 million senior loan was repaid, resulting in a loss on repayment of $ 5.6 million, which included the write-off of interest receivable of $ 4.8 million.

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.

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

Percentages of total represented below are calculated as a percentage of the total carrying value.

December 31, 2025 December 31, 2024

7 unchanged sentences

Office $ 101,711,046 $ 43,696,575 28.4 % $ 116,539,650 $ 72,991,791 26.6 %

Multifamily 60,969,051 60,662,514 22.1 % 85,660,082 84,417,184 18.5 %

Infill land 40,609,561 41,821,242 27.3 % 56,307,815 57,050,952 20.8 %

Multifamily 37,855,514 37,389,999 24.4 % 60,969,051 60,662,514 22.1 %

Mixed-use 22,292,750 22,512,213 14.7 % 48,438,507 48,067,655 17.5 %

Student housing 28,000,000 28,910,000 10.5 % 31,000,000 31,758,493 7.0 %

Industrial 7,000,000 6,993,917 4.6 % 7,000,000 6,966,233 2.5 %

Hotel - full/select service — — — % 43,222,382 43,460,206 9.5 %

Infrastructure — — — % 21,250,000 21,443,089 4.7 %

Retail 973,467 973,467 0.6 % — — — %

Student housing — — — % 28,000,000 28,910,000 10.5 %

Total $ 210,442,338 $ 153,387,413 100.0 % $ 317,255,023 $ 274,649,145 100.0 %

4 unchanged sentences

California $ 54,109,304 $ 54,643,252 35.6 % $ 71,006,023 $ 71,273,115 26.0 %

Georgia 31,734,254 31,878,019 20.8 % 30,562,858 30,586,450 11.1 %

New Jersey 22,906,090 24,051,394 15.7 % 22,900,000 24,045,000 8.8 %

Arizona 17,703,471 17,769,848 11.6 % 33,407,815 33,005,952 12.0 %

New York 76,015,752 17,077,516 11.1 % 75,657,255 31,536,808 11.5 %

Georgia 30,562,858 30,586,450 11.1 % 74,335,828 62,564,770 13.7 %

Utah 28,000,000 28,910,000 10.5 % 49,250,000 50,293,850 11.0 %

Massachusetts 7,000,000 6,993,917 4.6 % 7,000,000 6,966,233 2.5 %

Illinois 973,467 973,467 0.6 % — — — %

Washington — — — % 26,894,593 26,907,157 9.8 %

New Jersey 22,900,000 24,045,000 8.8 % 82,419,378 83,485,543 18.4 %

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

Massachusetts 7,000,000 6,966,233 2.5 % 7,000,000 6,930,932 1.5 %

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

Total $ 210,442,338 $ 153,387,413 100.0 % $ 317,255,023 $ 274,649,145 100.0 %

Allowance for Credit Losses

As described in Note 2 , on January 1, 2023, the Company adopted the provisions of Accounting Standards Updates (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses.

The adoption of ASU 2016-13 resulted in a $ 4.6 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to accumulated deficits as of January 1, 2023.

As described in Note 2 , the Company follows the provisions of ASC 326, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses.

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 $ 18.7 million and $ 35.7 million as of December 31, 2024 and 2023, respectively.

These unfunded commitments amounted to $ 8.8 million and $ 18.7 million as of December 31, 2025 and 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 December 31, 2024 and 2023, the Company had four and six non-performing loans with total carrying value, excluding specific allowance, of $ 99.7 million and $ 209.3 million, respectively.

As of December 31, 2025 and 2024, the Company had five and four non-performing loans with total amortized cost of $ 154.7 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 $ 58.9 million and $ 44.1 million as of December 31, 2025 and 2024, respectively.

7 unchanged sentences

Provision for (reversal of provision for) credit losses 14,817,787 ( 1,936,146 ) ( 114,049 ) 12,767,592

Charge-offs ( 27,639,192 ) — — ( 27,639,192 )

Allowance for credit losses, end of period $ 58,938,234 $ 84,862 $ 35,975 $ 59,059,071

Notes to Consolidated Financial Statements

Year Ended December 31, 2024

2 unchanged sentences

Allowance for credit losses, beginning of period $ 54,642,777 $ 2,333,248 $ 326,907 $ 57,302,932

Cumulative effect of credit loss accounting

standard effective January 1, 2023 ( Note 2 )

— 4,250,052 369,671 4,619,723

Provision for (reversal of provision for) credit losses 47,508,371 ( 1,916,804 ) ( 42,764 ) 45,548,803

Provision for credit losses 17,116,862 ( 312,240 ) ( 176,883 ) 16,627,739

Charge-offs ( 27,639,192 ) — — ( 27,639,192 )

Allowance for credit losses, end of period $ 44,120,447 $ 2,021,008 $ 150,024 $ 46,291,479

Notes to Consolidated Financial Statements

Accrued Interest Receivable

1 unchanged sentence

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 year ended December 31, 2024, the Company reversed $ 0.7 million of accrued interest income because such income was deemed uncollectible.

For the year ended December 31, 2025, the Company did no t reverse any interest income accrual because all accrued interest income was deemed collectible.

For the years ended December 31, 2024 and 2023, the Company suspended interest income accrual of $ 21.4 million and $ 18.4 million on five and five loans, respectively, because recovery of such income was not probable.

As of December 31, 2024 and 2023, interest receivable recognized on these loans was zero and $ 3.4 million, respectively.

For the year ended December 31, 2024, the Company reversed $ 0.7 million of accrued interest income because such income was deemed uncollectible.

For the years ended December 31, 2025 and 2024, the Company suspended interest income accrual of $ 14.4 million and $ 21.4 million on two and five loans, respectively, because recovery of such income was not probable.

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

In August 2024, in connection with the repayment of a $ 65.0 million senior loan, the Company wrote off the related interest receivable of $ 4.8 million.

12 unchanged sentences

Additionally, as discussed in Note 2 , during the loan review process, if the Company determines that it is not able to collect all amounts due for both principal and interest according to the contractual terms of a loan, or if a loan is in maturity default, the Company considers that loan non-performing.

Notes to Consolidated Financial Statements

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

13 unchanged sentences

_______________

(1) Amount included two loans that are in maturity default with total amortized costs of $ 53.0 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.

(1) Amount includes three loans that are in maturity default with total amortized costs of $ 78.7 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.

Notes to Consolidated Financial Statements

December 31, 2024

8 unchanged sentences

4 128,612,255 40.1 % — — 24,045,000 28,910,000 — 75,657,255

13 320,790,600 100.0 % $ 30,812,857 $ 27,121,997 $ 76,539,051 $ 58,945,052 $ 28,674,651 $ 98,696,992

Allowance for credit losses ( 46,141,455 )

Total carrying value, net $ 274,649,145

_______________

(1) Amount includes two loans that were in maturity default with total amortized costs of $ 53.0 million.

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

Equity Interest in Unconsolidated Investments

1 unchanged sentence

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

Equity Interest in a Limited Partnership

Equity Interest in Limited Partnerships

Mavik Real Estate Special Opportunities Fund, LP

On August 3, 2020, the Company entered into a subscription agreement with Mavik Real Estate Special Opportunities Fund, LP (“RESOF”) whereby the Company committed to fund up to $ 50.0 million to purchase a limited partnership interest in RESOF.

4 unchanged sentences

Accordingly, the equity interest in RESOF is accounted for as an equity method investment.

Notes to Consolidated Financial Statements

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

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

December 31, 2025 December 31, 2024

4 unchanged sentences

Distributions received from RESOF $ 16,639,724 $ 5,633,878

Notes to Consolidated Financial Statements

The following tables present summarized financial information of the Company’s equity interest in RESOF.

15 unchanged sentences

Net investment income 48,819,653 39,919,690

Unrealized appreciation on investments 3,469,865 1,137,701

Provision for income tax — ( 138,944 )

Net change in unrealized appreciation on investments 3,696,457 3,469,865

Net increase in partners’ capital resulting from operations $ 52,516,110 $ 43,389,555

Mavik Real Estate Special Opportunities VS2, LP

On December 23, 2025, the Company entered into a subscription agreement with Mavik Real Estate Special Opportunities VS2, LP (“VS2”) whereby the Company committed to fund up to $ 8.4 million to purchase a limited partnership interest in VS2.

VS2 invests in stressed, distressed, and special situations investments, including the origination of first mortgage loans, mezzanine loans, preferred equity, and structured equity investments, as well as the acquisition of performing and non-performing notes, and public market real estate debt and equity securities.

The general partner of VS2 is Mavik Real Estate Special Opportunities VS2 GP, L LC , which is a subsidiary of the Company’s sponsor, Terra Capital Partners.

The Company evaluated its equity interest in VS2 and determined it does not have a controlling financial interest and is not the primary beneficiary.

Accordingly, the equity interest in VS2 is accounted for as an equity method investment.

The following tables present a summary of information regarding the Company’s equity interest in VS2:

December 31, 2025

Ownership Interest Carrying Value Unfunded Commitment

Equity interest in VS2 1.5 % 316,072 $ 8,369,755

Year Ended December 31, 2025

Income from equity interest in VS2 $ 316,072

Distributions received from VS2 $ —

Notes to Consolidated Financial Statements

The following tables present summarized financial information of the Company’s equity interest in VS2.

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

December 31, 2025

Investments at fair value (cost of $ 372,843,060 )

$ 383,462,787

Other assets 19,534,617

Total assets 402,997,404

Secured financing agreements, net of financing costs 301,843,692

Obligations under participation agreement (proceeds of $ 75,783,803 )

Other liabilities 5,579,792

Total liabilities 383,449,449

Partners’ capital $ 19,547,955

Year Ended December 31, 2025

Total investment income $ 26,833,898

Total expenses 17,933,457

Net investment income 8,900,441

Net change in unrealized appreciation on investments 10,016,218

Net increase in partners’ capital resulting from operations $ 18,916,659

Equity Interest in Joint Ventures

The Company beneficially owns 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.

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

The Company evaluated its equity interests in these entities and determined it does not have a controlling financial interest and is not the primary beneficiary.

Accordingly, the equity interests in the joint ventures are accounted for as equity method investments.

Notes to Consolidated Financial Statements

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

2 unchanged sentences

LEL Arlington JV LLC Third party/Affiliate 27.2 % $ 4,566,783 27.2 % $ 5,761,522

LEL NW 49th JV LLC (1)

Third party/Affiliate — % — 27.2 % 1,619,157

TCG Corinthian FL Portfolio

JV LLV Third party/Affiliate 30.6 % 5,694,696 30.6 % 5,590,427

JV LLC Third party/Affiliate 30.6 % 4,272,442 30.6 % 5,694,696

610 Walnut Investors LLC Third party 22.8 % 1,278,434 33.6 % 2,672,379

5 unchanged sentences

Third parties 46.0 % 2,124,011 46.0 % 7,599,187

VASPEN MS LLC (4)

Affiliates 1.2 % 154,340 — % —

$ 35,151,492 $ 42,747,932

_______________

(1) In June 2024, this joint venture sold its underlying real estate property and distributed proceeds to the members.

The Company’s portion of the distribution was $ 2.8 million.

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

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

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

This entity is jointly owned with a related party 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 commitment was funded.

Through November 2024, $ 10.0 million of the

Notes to Consolidated Financial Statements

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.

The decrease in carrying value was primarily due to a loss recognized in 2025 in connection with a loss incurred on a portfolio investment.

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

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

Years Ended December 31,

10 unchanged sentences

Members’ capital $ 96,490,866 $ 77,237,953

Notes to Consolidated Financial Statements

Years Ended December 31,

3 unchanged sentences

Interest expense ( 17,579,278 ) ( 15,465,374 )

One time charge off ( 9,433,416 ) —

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

Unrealized loss ( 1,653,894 ) ( 3,835,179 )

Unrealized gain (loss) 9,696,063 ( 1,653,894 )

Net loss $ ( 14,451,593 ) $ ( 15,027,310 )

4 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 December 31, 2024, the Company's investment had a carrying value of $ 15.9 million.

For the year ended December 31, 2024, the Company recorded $ 1.2 million in equity income from TCC Boundary Partners LLC and did not receive any distributions.

As of December 31, 2025 and 2024, the Company's investment had a carrying value of $ 18.6 million and $ 15.9 million, respectively.

Notes to Consolidated Financial Statements

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

Years Ended December 31,

Income from other equity investment $ 2,598,344 $ 1,245,021

Distributions received from other equity investment 175,000 —

Real Estate Owned, Net

Real Estate Activities

Real Estate Owned Activities

2025 — During the year ended December 31, 2025, the Company sold four industrial buildings for total net proceeds of $ 69.1 million and recognized a net loss on sale of $ 2.9 million, excluding an impairment charge of $ 3.4 million to reduce the carrying value of two industrial buildings to their estimated selling price less the cost of the sale.

In connection with the sale, cash proceeds were used to repay the related mortgage loans payable ( Note 8 ).

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.

1 unchanged sentence

Subsequent to the lease termination, the Company entered into a new lease with another tenant for the same space.

2023 — During the year ended December 31, 2023, the Company recorded an impairment charge of $ 11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value.

In October 2023, the Company conveyed its interest in the office building to the lender by deed-in-lieu of foreclosure and recognized a loss on disposal of real estate of $ 4.2 million.

Accordingly, the Company no longer owns the multi-tenant office building.

Additionally, during the year ended December 31, 2023, the Company made the following investments:

Location Number of

Properties Date of

Acquisition Property Type Total Capitalized

Texas, United States 3 3/24/2023 Industrial $ 48,798,273

Texas, United States 5 5/25/2023 Industrial 83,288,961

$ 132,087,234

Notes to Consolidated Financial Statements

These acquisitions were deemed to be real estate asset acquisitions, and therefore total transaction costs were capitalized to the cost basis of the assets.

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

Total Capitalized Costs:

Cash and cash equivalents $ 52,313,739

Loans held for investment 68,737,877

Equity interest in unconsolidated investment 10,149,642

Interest receivable 456,650

Other assets 429,326

$ 132,087,234

Net Assets Acquired

Cash and cash equivalents $ 712,608

Other assets 33,802

Land 23,785,004

Buildings and Improvements 104,613,728

Intangible assets and liabilities:

In-place lease (weighted-average expected life of 3.95 years)

Below-market rent (weighted-average expected life of 3.98 years)

( 8,864,137 )

Accounts payable and accrued expenses ( 912,771 )

$ 132,087,234

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:

Operating Real Estate Owned, Net

Real estate owned is comprised of four and eight industrial buildings located in Texas with lease intangible assets and liabilities as of December 31, 2025 and 2024, respectively.

The following table presents the components, net as of:

December 31, 2025 December 31, 2024

11 unchanged sentences

Total intangible liabilities ( 3,850,707 ) 2,296,991 ( 1,553,716 ) ( 8,649,073 ) 4,746,657 ( 3,902,416 )

Total real estate $ 132,150,992 $ ( 6,814,589 ) $ 125,336,403 $ 132,580,612 $ ( 2,825,790 ) $ 129,754,822

Total operating real estate $ 52,149,486 $ ( 4,789,725 ) $ 47,359,761 $ 132,150,992 $ ( 6,814,589 ) $ 125,336,403

Notes to Consolidated Financial Statements

11 unchanged sentences

Management fees 214,673 253,133

Lease expense, including amortization of above-market ground lease — 1,542,858

Other operating expenses 1,146,509 924,871

34 unchanged sentences

and amortization of in-place lease intangibles is included in depreciation and amortization.

Supplemental Ground Lease Disclosures

The Company previously owned an office building that was subject to a ground lease whereby the Company was the lessee (or a tenant) to the ground lease.

On October 19, 2023, the Company conveyed its interest in the office building to a subsidiary of Centennial Bank by deed in lieu of foreclosure.

Accordingly, the Company is no longer a party to the ground lease.

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

Year Ended December 31, 2023

Operating lease cost $ 1,645,875

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

Year Ended December 31, 2023

Amounts included in the measurement of lease liability:

Operating cash flows from an operating lease $ 1,645,875

Right-of-use asset obtained in exchange for lease obligations:

Operating lease $ 1,645,875

Fair Value Measurements

5 unchanged sentences

Investments measured and reported at fair value are classified and disclosed into one of the following categories based on the inputs as follows:

Notes to Consolidated Financial Statements

Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access.

6 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 December 31, 2024 and 2023, the Company had not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, equity securities, secured financing agreements, unsecured notes payable and obligations under participation agreements.

As of December 31, 2025 and 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

Notes to Consolidated Financial Statements

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.

1 unchanged sentence

Financial Instruments Carried at Fair Value on a Recurring Basis

From time to time, the Company may invest in short-term equity securities, which are considered trading securities, and which are presented at fair value and included in Other assets in the consolidated balance sheets.

The Company may also invest in short term debt securities, which are classified as available-for sale securities, which are presented at fair value and included in Marketable securities in the consolidated balance sheets.

Changes in the fair value of equity securities are recognized in earnings.

Changes in the fair value of debt securities are reported in other comprehensive income until the securities are realized.

From time to time, the Company may invest in debt securities.

These securities are classified as available-for-sale debt securities and are carried at fair value.

Changes in the fair value of the available-for-sale debt securities are reported in other comprehensive income or loss until a gain or loss on the securities is realized.

In 2024, the Company owned certain trading equity securities that were carried at fair value.

Changes in the fair value of the trading equity securities were reported in earnings.

The trading equity securities were sold by April 2024.

Additionally, the Company may invest in short-term money market funds.

These funds are included in cash and cash equivalents on the consolidated balance sheet due to their short-term nature and can be easily converted to cash.

As discussed in Note 8 , in March 2023, the Company entered into a loan agreement with a lender to provide financing for the acquisition of real estate properties ( Note 5 ).

1 unchanged sentence

The interest rate cap met all the criteria of a derivative under ASC 815, but it did not meet the criteria under ASC 815-20-25 to qualify for hedging accounting.

As such, the interest rate cap is reported at fair value and is included in other assets in the consolidated balance sheet, and the change in the fair value of the interest rate cap is reported in Unrealized gain (loss) on investments, net on the consolidated statements of operations.

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:

4 unchanged sentences

$ 28,928,772 $ — $ — $ 28,928,772

Marketable securities - debt securities 963,178 — — 963,178

Derivative - interest rate cap (2)

Available-for-sale debt securities — — — —

Total $ 28,928,772 $ — $ — $ 28,928,772

Notes to Consolidated Financial Statements

December 31, 2024

3 unchanged sentences

$ 2,360,936 $ — $ — $ 2,360,936

Marketable securities - debt securities 1,148,653 — — 1,148,653

Marketable securities - equity securities 3,813,226 — — 3,813,226

Available-for-sale debt securities 963,178 — — 963,178

Derivative - interest rate cap (2)

— 83,807 — 83,807

Total $ 3,324,114 $ 75 $ — $ 3,324,189

2 unchanged sentences

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

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

Years Ended December 31,

Marketable Securities Derivatives Marketable Securities Derivatives

Beginning balance $ 4,961,879 $ 83,807 $ 147,960 $ —

Purchases — — 7,905,211 258,500

Proceeds from sale ( 3,551,098 ) — ( 2,422,095 ) —

Reclassification of net realized loss on marketable securities

into earnings ( 446,009 ) — ( 434,254 ) —

Unrealized loss on marketable securities and derivatives ( 1,594 ) ( 83,732 ) ( 234,943 ) ( 174,693 )

Ending balance $ 963,178 $ 75 $ 4,961,879 $ 83,807

The interest rate cap matured in May 2025.

Notes to 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:

The following table presents the carrying value, which represents the amortized cost of loans, 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:

December 31, 2025 December 31, 2024

4 unchanged sentences

participation 3 18,676,938 18,743,315 18,555,149 41,452,547 41,077,729 41,871,690

3 41,452,547 41,077,729 41,871,690 38,444,357 38,558,485 38,881,033

Total loans 210,442,338 153,387,413 152,940,882 317,255,023 274,649,145 276,537,218

Equity securities (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.

Notes to Consolidated Financial Statements

The Company estimated that its other financial assets and liabilities, not included in the tables above, had fair values that approximated their carrying values at both December 31, 2025 and 2024 due to their short-term nature.

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

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 were no impairment charges for the year ended December 31, 2024.

There was no impairment charge for the year ended December 31, 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 year ended December 31, 2025:

December 31, 2023

Fair Value Impairment Charges

Impairment Charges

Year Ended December 31, 2025

Level Fair Value Impairment Charge

Real estate assets held for sale

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

During the year ended December 31, 2023, the Company recorded an impairment charge of $ 11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value.

The fair value measurement was determined by estimating discounted cash flows using two significant unobservable inputs, which were the cash flow discount rate ( 8.50 %) and terminal capitalization rate ( 7.50 %).

In October 2023, the Company conveyed its interest in the office building to the lender by deed in lieu of foreclosure.

Accordingly, the Company no longer owns the multi-tenant office building.

During the year ended December 31, 2025, the Company recorded an impairment charge of $ 3.4 million to reduce the carrying value of the industrial buildings to their estimated fair value, which was determined to be the selling price less the cost of the sale.

Valuation Process for Fair Value Measurement

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

Market quotations are not readily available for the Company’s real estate-related loan investments, all of which are included in Level 3 of the fair value hierarchy, and therefore these investments are valued utilizing a yield approach, i.e., a discounted cash flow methodology to arrive at an estimate of the fair value of each respective investment in the portfolio using an estimated market yield.

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

Notes to Consolidated Financial Statements

discounted cash flow methodology to arrive at an estimate of the fair value of each respective investment in the portfolio using an estimated market yield.

In following this methodology, investments are evaluated individually, and management takes into account, in determining the risk-adjusted discount rate for each of the Company’s investments, relevant factors, which may include available current market data on applicable yields of comparable debt/preferred equity instruments;

11 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).

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

Notes to Consolidated Financial Statements

The fair values of the Company’s secured financing agreements, which include mortgage loans payable, secured borrowings and a term loan, 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 December 31, 2025 and 2024.

3 unchanged sentences

Asset Category Minimum Maximum Weighted Average

Loans held for investment, net (1)

$ 234,665,528 Discounted cash flow Discount rate 8.85 % 14.78 % 9.99 %

Loans held for investment, net $ 134,385,733 Discounted cash flow Discount rate 6.75 % 18.79 % 11.32 %

Discounted cash flow Terminal capitalization rate 5.75 % 5.75 % 5.75 %

Loans held for investment acquired through

6 unchanged sentences

Total Level 3 Liabilities $ 80,064,761

Notes to Consolidated Financial Statements

Fair Value at December 31, 2024

1 unchanged sentence

Asset Category Minimum Maximum Weighted Average

Loans held for investment, net (1)

$ 418,458,916 Discounted cash flow Discount rate 9.58 % 16.95 % 7.02 %

Loans held for investment, net $ 234,665,528 Discounted cash flow Discount rate 6.75 % 16.48 % 9.63 %

Discounted cash flow Terminal capitalization rate 5.75 % 5.75 % 5.75 %

Loans held for investment acquired through

participation, net 41,871,690 Discounted cash flow Discount rate 15.07 % 17.03 % 16.65 %

Equity securities (1)

2,000,000 N/A N/A N/A N/A N/A

Total Level 3 Assets $ 278,537,218

Secured financing agreements $ 206,731,436 Discounted cash flow Discount rate 6.33 % 11.28 % 8.30 %

Obligation under participation agreement 18,254,853 Discounted cash flow Discount rate 14.78 % 14.78 % 14.78 %

Total Level 3 Liabilities $ 224,986,289

_______________

(1) Amount includes $ 84.5 million and $ 154.6 million of non-performing loans ( Note 3 ) as of December 31, 2024 and 2023, respectively.

The fair market value estimates of these non-performing loans were determined primarily using discounted cash flow models and Level 3 inputs, which include estimates of property-specific cash flows over a specific holding period, a discount rate range of 6.75 % to 7.00 % and a terminal capitalization rate range of 5.75 % to 6.00 % as of both December 31, 2024 and 2023.

These inputs are based on the location, type and nature of the property, current sales and lease comparables, anticipated real estate and capital market conditions, and management’s knowledge, experience and judgment.

Additionally, the Company may use sales comparables, purchase price and appraisals to corroborate the estimated value of a loan’s collateral or may use sponsor’s guarantee to estimate the value of a non-performing loan.

(1) Fair market value is based on purchase price.

12 unchanged sentences

Total $ 12,853,938 $ 17,406,970

Notes to Consolidated Financial Statements

_______________

(1) Origination and extension fee expense is generally offset with origination and extension fee income.

1 unchanged sentence

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

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

The Management Agreement may be terminated by the Company during the Initial Term or any Renewal Term upon a finding by either (i) at least two-thirds of the independent directors on the Board or (ii) the holders of a majority of the outstanding shares of the Company’s common stock (other than those shares held by members of the Company’s senior management team or affiliates of the Manager) that either (a) there has been unsatisfactory performance by the Manager that is materially detrimental to the Company, or (b) the compensation payable to the Manager pursuant to the Management Agreement is unfair;

provided, however, that the Company will not have the right to terminate the Management Agreement on the basis of unfair compensation to the Manager if the Manager agrees to continue to provide its services under the Management Agreement in exchange for reduced fees that at least two-thirds of the independent directors on the Board determine to be fair pursuant to the procedures set forth in the Management Agreement.

The Company must deliver prior written notice of any such termination to the Manager at least 180 days prior to the last calendar day of the Initial Term or the

Notes to Consolidated Financial Statements

then-current Renewal Term, as applicable, and the Management Agreement will terminate effective as of the last calendar day of the Initial Term or the then-current Renewal Term, as applicable.

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

The Company may also terminate the Management Agreement, effective upon 30 calendar days’ prior written notice from the Board to the Manager, without payment of any Termination Fees or other penalties, upon (i) the material breach of the Management Agreement by the Manager or its affiliates that continues for 30 days after written notice thereof to the Manager (or 45 days after delivery of written notice thereof if the Manager takes diligent steps to cure such breach within 30 days of delivery of the written notice), (ii) any fraud or other criminal conduct, gross negligence or breach of fiduciary duty by the Manager or its affiliates in connection with the Management Agreement, as determined by a final, non-appealable judgment of a court of competent jurisdiction, (iii) the Manager’s bankruptcy, insolvency or dissolution, or (iv) an Internalization Event (as defined in the Management Agreement).

No Termination Fee or other penalty is payable upon such a termination by the Company.

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

The Company will pay the Manager the Termination Fee upon such termination by the Manager.

Origination and Extension Fee Expense

Pursuant to the Management Agreement, the Manager or its affiliates receives an origination fee in the amount of 1 % of the amount used to originate, fund, acquire or structure real estate-related investments, including any third-party expenses related to such loans.

In the event that the term of any real estate-related loan held by the Company is extended, the Manager also receives an extension fee equal to the lesser of (i) 1 % of the principal amount of the loan being extended or (ii) the amount of fee paid to the Company by the borrower in connection with such extension.

Pursuant to the Management Agreement, the Manager or its affiliates receives an origination fee in the amount of 1.0 % of the amount used to originate, fund, acquire or structure investments, including any third-party expenses related to such investments.

In the event that the term of any loan held by the Company is extended, the Manager also receives an extension 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 to the Company by the borrower in connection with such extension.

Asset Management Fee

Under the terms of the Management Agreement, the Manager or its affiliates provides the Company with certain investment management services in return for a management fee.

The Company pays a monthly asset management fee at an annual rate of 1 % of the aggregate funds under management, which includes the loan origination price or aggregate gross acquisition price, as defined in the Management Agreement, for each real estate related loan and cash held by the Company.

The Company pays a monthly asset management fee at an annual rate of 1.0 % of the aggregate funds under management, which includes the loan origination price or aggregate gross acquisition price, as defined in the Management Agreement, for each investment and cash held by the Company.

Asset Servicing Fee

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

Transaction Breakup Fee

In the event that the Company receives any “breakup fees,” “busted-deal fees,” termination fees, or similar fees or liquidated damages from a third-party in connection with the termination or non-consummation of any loan or disposition transaction, the Manager will be entitled to receive one-half of such amounts, in addition to the reimbursement of all out-of-pocket fees and expenses incurred by the Manager with respect to its evaluation and pursuit of such transactions.

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

1 unchanged sentence

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

Notes to Consolidated Financial Statements

Disposition Fee

Pursuant to the Management Agreement, the Manager or its affiliates receives a disposition fee in the amount of 1 % of the gross sale price received by the Company from the disposition of any real estate-related loan, or any portion of, or interest in, any real estate-related loan.

The disposition fee is paid concurrently with the closing of any such disposition of all or any portion of any real estate-related loan or any interest therein, which is the lesser of (i) 1 % of the principal amount of the loan or debt-related loan prior to such transaction or (ii) the amount of the fee paid by the borrower in connection with such transaction.

Pursuant to the Management Agreement, the Manager or its affiliates receive a disposition fee in the amount of 1.0 % of the gross sale price received by the Company from the disposition of an investment, but not upon the maturity, prepayment, workout, modification or extension of a loan unless there is a corresponding fee paid by the borrower, in which case the disposition fee will be the lesser of (i) 1.0 % of the principal amount of the loan and (ii) the amount of the fee paid by the borrower in connection with such transaction.

If the Company takes ownership of a property as a result of a workout or foreclosure of a loan, the Company will pay a disposition fee upon the sale of such property equal to 1.0 % of the sales price.

Notes to Consolidated Financial Statements

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;

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.

No Termination Fee or other penalty is payable upon such a termination by the Company.

The Company will pay the Manager the Termination Fee upon such termination by the Manager.

Due From Affiliate

On December 1, 2022, the Company entered into a revolving promissory note receivable with Mavik Special Opps Co-Investments, LP, an affiliate of the Company.

The promissory note receivable bears interest at the Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days.

The outstanding balance of the promissory note receivable was repaid in full in July 2024 and had a balance of zero as of December 31, 2025 and 2024.

The promissory note receivable bore interest at the Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days.

In January 2024, the promissory note was amended to (i) extend the maturity date from June 30, 2024 to April 30, 2025 and to (ii) modify the interest rate from Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days, to 15.0 %.

During the years ended December 31, 2024 and 2023, the Company provided funding under the promissory note receivable of $ 5.0 million and $ 3.8 million, respectively, and received repayments of $ 8.8 million and zero , respectively.

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

As of December 31, 2023, amount outstanding under the promissory note receivable was $ 3.8 million, which is included in Other assets on the consolidated balance sheets.

During the year ended December 31, 2024, the Company provided funding under the promissory note receivable of $ 5.0 million and received repayments of $ 8.8 million.

Due from Related Parties

4 unchanged sentences

The promissory note matures on March 31, 2027.

As of December 31, 2024, amount outstanding under this promissory note payable was $ 45.1 million.

As of December 31, 2025 and 2024, amount outstanding under this promissory note payable was $ 48.1 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.

Notes to Consolidated Financial Statements

Cost Sharing and Reimbursement Agreement

2 unchanged sentences

Distributions Paid

For the years ended December 31, 2024 and 2023, the Company made distributions to investors totaling $ 18.6 million and $ 18.6 million, respectively, all of which were returns of capital, respectively ( Note 10 ).

For the years ended December 31, 2025 and 2024, the Company made distributions to related parties totaling $ 2.2 million and $ 3.5 million, respectively, all of which were returns of capital.

Due to Manager

As of December 31, 2024 and 2023, approximately $ 1.6 million and $ 4.2 million, respectively, was due to the Manager, as reflected on the consolidated balance sheets, primarily related to the present value of the disposition fees on individual loans due to the Manager.

Mavik Real Estate Special Opportunities Fund, LP

As of December 31, 2025 and 2024, due to Manager was $ 0.7 million and $ 1.6 million, respectively, 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 and Mavik Real Estate Special Opportunities VS2, LP

On August 3, 2020, the Company entered into a subscription agreement with RESOF whereby the Company committed to fund up to $ 50.0 million to purchase limited partnership interests in RESOF.

For more information on this investment, please see Note 4 .

On December 23, 2025, the Company entered into

Notes to Consolidated Financial Statements

a subscription agreement with VS2 whereby the Company committed to fund up to $ 8.4 million to purchase a limited partnership interest in VS2.

For more information on these investments, please see Note 4 .

Participation Agreements

11 unchanged sentences

Participating Interests Principal Balance Carrying Value

Mesa AZ Industrial Owner, LLC (1)

38.27 % $ 17,703,471 $ 17,769,848

UNJ Sole Member, LLC (1)

12.50 % 973,467 973,467

$ 18,676,938 $ 18,743,315

Notes to 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)

Loan C (1)(3)

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

2 unchanged sentences

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

(2) The loan is held in the name of Mavik Real Estate Special Opportunities VS2 REIT, LLC, a related-party REIT managed by the Manager.

(3) This loan was repaid in January 2025.

Notes to Consolidated Financial Statements

Transfers of Participation Interests by the Company

The following table summarizes the investment that was subject to a participation agreement with an investment partnership affiliated with the Manager as of December 31, 2024.

There was no such investment as of December 31, 2023.

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

December 31, 2025

2 unchanged sentences

Principal Carrying Value % Transferred Principal Carrying Value

Asano Bankers Hill, LLC (1)

$ 22,292,750 $ 22,512,213 80.8 % $ 18,020,576 $ 18,197,981

December 31, 2024

Transfers treated as

obligations under participation agreements

Principal Carrying Value % Transferred Principal Carrying Value

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

________________

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

3 unchanged sentences

The Participant pays any expenses, including any fees to the Manager, only on its pro rata participation interest, subject to the terms of the governing fee arrangements.

In September 2023, a participant who purchased interest in an investment from the Company via a participation agreement conveyed its interest in the obligation under participation agreements to the Company and the Company recognized a gain on debt extinguishment of $ 14.1 million.

Unsecured Notes Payable

13 unchanged sentences

_______________

Notes to Consolidated Financial Statements

(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) From time to time, the Company may repurchase certain of its 6.00 % Senior Notes Due 2026 and 7.00 % Senior Notes Due 2026.

During 2025, the Company repurchased and retired 189,465 units of the 6.00 % Senior Notes Due 2026 for $ 4.2 million and recognized a gain on extinguishment of debt of $ 0.5 million.

(3) 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.

Notes to Consolidated Financial Statements

The 6.00 % Senior Notes Due 2026

On June 10, 2021, the Company issued $ 78.5 million in aggregate principal amount of its 6.00 % notes due 2026, and on June 25, 2021, the underwriters partially exercised their option to purchase an additional $ 6.6 million of the notes (collectively the “ 6.00 % Senior Notes Due 2026”).

The 6.00 % Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after June 10, 2023, at a redemption price equal to 100 % of the outstanding principal amount thereof, plus accrued and unpaid interest.

On June 10, 2021, Terra Property Trust issued $ 78.5 million in aggregate principal amount of its 6.00 % notes due 2026, and on June 25, 2021, the underwriters partially exercised their option to purchase an additional $ 6.6 million of the notes (collectively the “ 6.00 % Senior Notes Due 2026”).

The 6.00 % Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at Terra Property Trust’s option on or after June 10, 2023, at a redemption price equal to 100 % of the outstanding principal amount thereof, plus accrued and unpaid interest.

The 7.00 % Senior Notes Due 2026

5 unchanged sentences

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

Notes to Consolidated Financial Statements

Secured Financing Arrangements

5 unchanged sentences

Goldman Sachs Bank facility (2)

February 2025 February 2027 8.07 % $ 68,013,876 $ 48,188,441 $ 48,188,441 $ 75,455,624

UBS AG facility (2)(4)

November 2024 (5) (4) — — — 18,480,000

(2) (2) (2) $ — $ — $ — $ 48,188,441

Total — — — 48,188,441

1 unchanged sentence

Promissory notes payable (3)

March 2025 - March 2026 March 2026 - March 2027 9.80 % 79,862,157 N/A 40,694,390 63,509,518

(3) (3) (3) — N/A — 40,694,390

Property mortgages - fixed rate June 2028 June 2028 6.25 % 47,359,761 N/A 20,700,000 40,250,000

Property mortgages - variable rate (4)

April 2027 April 2028 7.83 % 46,855,803 N/A 34,100,000 33,256,885

(4) (4) (4) — N/A — 34,100,000

Total 47,359,761 20,700,000 115,044,390

1 unchanged sentence

Revolving line of credit (5)

December 2024 June 2025 7.68 % 33,005,952 16,361,111 16,361,111 47,461,730

(5) (5) (5) — — — 16,361,111

Term loan (6)

December 2027 December 2028 9.00 % 40,193,442 10,000,000 10,000,000 10,000,000

Secured borrowing November 2026 November 2026 9.85 % 28,614,894 18,000,000 18,000,000 —

Secured borrowings (7)

Nov 2026 - Jun 2027 Nov 2026 - Jun 2027 9.54 % 64,009,058 31,250,000 31,250,000 18,000,000

Total 104,202,500 41,250,000 41,250,000 44,361,111

4 unchanged sentences

(1) Amount is calculated using the applicable index rate as of December 31, 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 2.0 % to 5.00 %.

In March 2024, the Company amended the Goldman Sachs Bank facility agreement to extend the maturity date to February 18, 2025 and to reduce the minimum interest coverage ratio covenant.

In February 2025, the Company amended the facility agreement to extend the maturity date to February 18, 2027, to reduce the tangible net worth covenant and to modify the allocation of principal payments and proceeds from asset dispositions.

(4) Interest rate is based on Term SOFR plus a spread of 1.965 %.

In February 2024, the outstanding balance was repaid.

In March 2024, the Company amended the side letter to the UBS AG facility agreement to reduce the maximum amount available under this facility to zero.

In connection with this amendment, UBS AG waived the payment of any fees and the meeting of any representations, warranties or covenants for the period commencing on December 31, 2023 until such time as there are amounts outstanding under the UBS AG facility agreement.

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

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

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

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

In March 2024, the Company amended the facility agreement to extend the maturity date to September 12, 2024 with an option to extend the facility term for an additional 12 -month period, reduce the credit limit to $ 75.0 million and increase the coupon rate.

In June 2024, the Company amended the facility agreement to extend the maturity date to December 31, 2024 and eliminate the ability to make additional revolving borrowings under the facility agreement.

In January 2025, the Company amended the facility agreement to extend the maturity date to June 30, 2025 and require an additional monthly payment of principal.

(9) In March 2024, the $ 15.0 million term loan was repaid in full.

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

(3) In November 2025, the promissory notes were repaid in full.

(4) In August 2025, the pledged asset was sold and the outstanding balance was repaid in full ( Note 5 ).

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

(6) 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 ).

This loan is interest-free until June 30, 2025, after that interest

The term loan payable is collateralized by the Company’s

Notes to Consolidated Financial Statements

is charged at a fixed rate of 9.0 % per annum.

The term loan payable is collateralized by the Company’s equity interest in RESOF and the Company serves as a guarantor under the loan.

equity interest in RESOF and the Company serves as a guarantor under the loan.

Under the terms of the loan agreement, the Company is required to maintain certain loan-to-value ratio and investment rating.

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.

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

These facilities are used to finance the Company’s senior loan investments.

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.

3 unchanged sentences

Proceeds from secured financing $ 24,805,321 $ 81,284,441

Repayments of secured financing $ ( 177,525,167 ) $ ( 205,265,764 )

Repurchase Agreements

The Company seeks to mitigate risks associated with its repurchase agreements by managing risk related to the credit quality of its assets, interest rates, liquidity, the rate of prepayment and market value.

The margin call provisions under the repurchase facilities provide the lender with certain rights in the event of a decline in the credit of the underlying assets purchased.

To monitor credit risk associated with the performance and value of its loans and investments, the Company’s asset management team regularly reviews its investment portfolios and is in regular contact with its borrowers, monitoring performance of the collateral and enforcing its rights as necessary.

The Company further seeks to manage risks associated with the repurchase agreements by matching the maturities and interest rate characteristics of its loans with the related repurchase agreement.

Principal repayments on secured financing $ ( 170,854,544 ) $ ( 177,525,167 )

Covenant Compliance

8 unchanged sentences

2028 20,700,000

2028 40,250,000

Unamortized deferred financing costs and other ( 1,856,205 )

4 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 December 31, 2024, obligations under participation agreements were $ 18.2 million (see “Participation Agreements” in Note 7 ).

The interest rate on the obligations

Notes to Consolidated Financial Statements

under participation agreements was 19.53 %.

There were no such obligations under participation agreements as of December 31, 2023.

As of December 31, 2025 and 2024, obligations under participation agreements were $ 18.2 million and $ 18.2 million, respectively (see “Participation Agreements” in Note 7 ).

The interest rate on the obligations under participation agreements was 18.79 % and 19.53 %, respectively.

Commitments and Contingencies

1 unchanged sentence

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 $ 18.7 million and $ 35.7 million as of December 31, 2024 and 2023, respectively.

The Company expects to maintain sufficient cash on hand to fund such commitments through matching these commitments with principal repayments on outstanding loans or draw downs on credit facilities.

Unfunded Investment Commitment

As discussed in Note 4 , on August 3, 2020, the Company entered into a subscription agreement with RESOF whereby the Company committed to fund up to $ 50.0 million to purchase limited partnership interests in RESOF.

As of December 31, 2024 and 2023, the unfunded investment commitment was $ 10.1 million and $ 37.4 million, respectively.

These fundings amounted to $ 8.8 million and $ 18.7 million as of December 31, 2025 and 2024, respectively.

The Company expects to maintain sufficient cash on hand to fund such

Notes to Consolidated Financial Statements

commitments through matching these commitments with principal repayments on outstanding loans or draw downs on credit facilities.

Unfunded Investment Commitments

As discussed in Note 4 , the Company entered into a subscription agreement with RESOF and VS2 whereby the Company committed to fund up to $ 50.0 million and $ 8.4 million to purchase limited partnership interests in RESOF and VS2, respectively.

As of December 31, 2025 and 2024, the unfunded investment commitments were $ 19.7 million and $ 10.1 million, respectively.

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

2 unchanged sentences

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

Additionally, from time to time, we and individuals employed by us and our Manager may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our borrowers and investees.

While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that such proceedings will have a material effect upon our financial condition or results of operations.

Additionally, from time to time, the Company and individuals employed by the Company and the Company’s Manager may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with borrowers and investees.

While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that such proceedings will have a material effect upon the financial condition or results of operations.

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

3 unchanged sentences

Net loss $ ( 27,825,846 ) $ ( 37,159,955 )

Series A preferred stock dividend declared — ( 3,907 )

Net loss allocable to common stock $ ( 37,159,955 ) $ ( 56,889,946 )

Weighted-average shares outstanding - basic and diluted 24,336,834 24,335,545

Weighted-average shares outstanding - basic and

diluted 24,338,825 24,336,834

Loss per share - basic and diluted $ ( 1.14 ) $ ( 1.53 )

Preferred Stock Classes

Preferred Stock

1 unchanged sentence

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 December 31, 2024 and 2023, there were no shares of Preferred Stock issued or outstanding.

Series A Preferred Stock

On November 30, 2016, the Board classified and designated 125 shares of Preferred Stock as a separate class of Preferred Stock to be known as the 12.5 % Series A Redeemable Cumulative Preferred Stock, $ 1,000 liquidation value per share (“Series A Preferred Stock”).

In December 2016, the Company sold 125 shares of the Series A Preferred Stock for $ 125,000 .

Notes to Consolidated Financial Statements

A Preferred Stock paid dividends at an annual rate of 12.5 % of the liquidation preference.

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

As of December 31, 2024 and 2023, there were no shares of Series A Preferred Stock issued and outstanding.

As of December 31, 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.

2 unchanged sentences

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 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.

7 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 years ended December 31, 2024 and 2023, the Company made distributions to investors totaling $ 18.6 million and $ 18.6 million respectively, all of which all were returns of capital.

Additionally, for the year ended December 31, 2023, the Company made distributions to preferred stockholders of $ 3,907 , respectively.

There were no such distributions for the year ended December 31, 2024.

For the years ended December 31, 2025 and 2024, the Company made distributions to investors totaling $ 11.6 million and $ 18.6 million respectively, all of which were returns of capital.

Distributions paid to stockholders consist of ordinary income, capital gains, return of capital or a combination thereof for income tax purposes.

8 unchanged sentences

For the years ended December 31, 2025 and 2024, the Company issued 1,939 and 1,919 shares of Class B Common Stock for a total of $ 17,311 and $ 20,750 pursuant to the Plan, respectively.

Notes to Consolidated Financial Statements

Subsequent Events

On February 13, 2026, the Company filed a registration statement on Form S-4 (as amended on March 12, 2026, and as may be amended from time to time, the “Registration Statement”) with the Securities and Exchange Commission in connection with registered exchange offers to exchange any and all of the Company’s outstanding 6.00 % Senior Unsecured Notes due 2026 and Terra Income Fund 6 LLC’s 7.00 % Senior Unsecured Notes due 2026 for newly issued Senior Secured Notes due 2029.

In connection with the exchange offer relating to the Company’s 6.00 % Senior Unsecured Notes due 2026, the Company is also soliciting consents to amend the indenture governing such notes to, among other things, eliminate substantially all of the restrictive covenants therein, eliminate certain events of default terms and conditions and eliminate provisions related to the Company’s reporting obligations thereunder.

The exchange offers and consent solicitation were scheduled to expire on March 16, 2026, unless extended.

On March 12, 2026, the Company amended the Registration Statement to reduce the interest rate on the newly issued senior secured notes to be issued in the exchange offers from 9.75 % to 7.00 % and to extend the expiration date of the exchange offers and consent solicitation to March 26, 2026.

For additional information regarding the exchange offers and consent solicitation, including the terms and conditions thereof, please refer to the Registration Statement, including the prospectus contained therein.

On February 24, 2026, the Company entered into a loan purchase agreement with a third party whereby the Company agreed to sell a $ 22.9 million senior loan for $ 15.0 million cash plus profit participation of up to $ 7.0 million upon selling the

Notes to Consolidated Financial Statements

underlying real estate property or selling the loan.

The sale is expected to close in 60 days.

As of December 31, 2025, the senior loan had a carrying value of $ 24.1 million and interest receivable of $ 7.0 million.

Management has evaluated subsequent events through the date the consolidated financial statements were available to be issued.

Management has determined that there are no material events that would require adjustment to, or disclosure in, the Company’s consolidated financial statements.

Management has determined that there are no additional material events that would require adjustment to, or disclosure in, the Company’s consolidated financial statements.

Terra Property Trust, Inc.

5 unchanged sentences

May 2023 30 - 35 years

Industrial buildings in Dallas, TX 34,100,000 9,327,855 39,248,353 197,661 — 9,327,855 39,446,014 48,773,869 1,906,016 1975;

March 2023 35 - 38 years

$ 20,700,000 $ 8,096,412 $ 42,281,677 $ 256,577 $ — $ 8,096,412 $ 42,538,254 $ 50,634,666 $ 3,571,732

8 unchanged sentences

Capital improvements 88,605 Depreciation for the year 2,277,420

Balance, end of year $ 128,739,334 Balance, end of the year $ 5,141,545

Deductions during the year:

Dispositions (1)

( 74,793,589 ) Dispositions (1)

( 3,847,233 )

Impairment charge (1)

( 3,399,684 ) Balance, end of the year $ 3,571,732

Balance, end of year $ 50,634,666

___________________________

(1) During the year ended December 31, 2025, the Company recorded a total impairment charge of $ 3.4 million on two industrial buildings to reduce the carrying value of the buildings to their estimated fair value.

During the year ended December 31, 2025, the Company recognized a net loss on sale of real estate of $ 2.9 million related to the sale of four industrial buildings.

Terra Property Trust, Inc.

7 unchanged sentences

Mezzanine loans individually > 3% of carrying amount of total loans:

Mixed-use/California 15.0 % June 2027 Interest Only — $ 8,044,732 $ 8,071,777 —

Mezzanine loans individually < 3% of carrying amount of total loans:

Mezzanine loan 1 Industrial/Massachusetts 8.5 % September 2027 Interest Only — 7,000,000 6,966,233 —

Land/Arizona 17.0 % June 2027 Interest Only — $ 17,703,471 $ 17,769,848 —

Loan B Industrial/Massachusetts 8.5 % September 2027 Interest Only — 7,000,000 6,993,917 —

24,703,471 24,763,765 —

First mortgages individually > 3% of carrying amount of total loans:

Loan B Office/Georgia 9.3 % July 2027 Interest Only — 30,562,858 30,586,450 —

Office/Georgia 9.7 % January 2026 Interest Only — 31,734,254 31,878,019 —

Land/New Jersey 15.7 % March 2024 Interest Only — 22,906,090 24,051,394 22,906,090

Office/California 7.8 % January 2025 Interest Only — 16,000,000 16,008,996 —

Loan E Mixed-use/North Carolina 12.4 % July 2025 Interest Only — 21,826,479 21,418,430 —

Loan F (5) (8)

Land/Arizona 17.0 % February 2025 Interest Only — 33,407,815 33,005,952 —

Loan G Student housing/Utah 9.3 % March 2024 Interest Only — 28,000,000 28,910,000 28,000,000

Loan H Multifamily/Washington 12.1 % March 2027 Interest Only — 26,894,593 26,907,157 —

Loan I Multifamily/California 13.9 % October 2025 Interest Only — 28,393,995 28,614,894 —

Multifamily/California 13.9 % February 2025 Interest Only — 31,816,554 32,131,039 31,816,554

86,456,898 88,060,452 54,722,644

Preferred equity investments individually > 3% of carrying amount of total loans:

Loan F (7) (9)

Office/New York 12.1 % July 2022 Interest Only — 69,976,792 11,818,556 69,976,792

Loan K (10)(11)

Loan G (7) (10)

Mixed use/California 18.8 % August 2025 Interest Only — 22,292,750 22,512,213 22,292,750

Loan H (7) (11)

Multifamily/New York 12.3 % August 2021 Interest Only — 6,038,960 5,258,960 6,038,960

Preferred equity investments individually < 3% if carrying amount of total loans:

1 unchanged sentence

investment (12)

1 Multifamily/New York 12.3 % August 2021 Interest Only — 5,680,463 5,140,463 5,680,463

1 Retail / Illinois 16.0 % June 2026 Interest Only — 973,467 973,467 —

99,281,969 40,563,196 98,308,502

7 unchanged sentences

(5) Participation interest is with Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party REIT managed by the Manager.

The Company acquired these investments through participation agreements.

The Company acquired the investment through a participation agreement.

See “ Participation Agreements ” in Note 7 in the accompanying notes to the consolidated financial statements.

(6) This loan is currently in maturity default.

The Company initiated a litigation to seek full repayment of the loan from the sponsor.

(7) In February 2025, this loan was repaid in full.

(8) In February 2025, the maturity of this loan was extended to March 2025

(6) Effective January 31, 2026, this loan was amended to extend the maturity date to March 31, 2026.

(7) This loan is currently in maturity default.

The Company recorded an allowance of credit losses of $ 43.6 million on this loan on this loan as a result of a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in funding on the senior loan.

(8) This loan defaulted in October 2025.

In January 2026, the Company foreclosed on the property assigned as collateral under the loan agreement and obtained control of the underlying asset.

(9) As of December 31, 2025, the Company recorded an allowance for credit losses of $ 58.2 million on this loan as a result of a decline in our estimated recoverable amount on a non-performing subordinated loan primarily due to an increase in funding on the senior loan as well as a decrease in the estimated fair value of underlying collateral.

(10) The Company sold a portion of its interest in this loan through a participation agreement to an affiliate managed by the Manager ( Note 7 ).

1 unchanged sentence

See “Obligations under Participation Agreement in Note 8 and “Transfers of Participation Interest by the Company” in Note 7 in the accompanying notes to the consolidated financial statements.

(12) This loan is currently in maturity default.

(11) The Company initiated a litigation to seek full repayment of the loan from the sponsor.

(12) Participation interest is with Mavik Real Estate Special Opportunities VS2 REIT, LLC, a related-party REIT managed by the Manager.

The Company acquired the investment through a participation agreement.

See “ Participation Agreements ” in Note 7 in the accompanying notes to the consolidated financial statements.

In January 2026, the loan was repaid in full.

(13) The aggregate cost for U.S.

14 unchanged sentences

Provision for loan losses ( 12,881,641 )

Loss on repayment of loan ( 5,629,510 )

Balance, end of year $ 153,387,413

20 unchanged sentences

Evans Director March 19, 2026

/s/ Adrienne M.

Everett Director March 13, 2025

/s/ Spencer E.

2 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures