What changed in this filing

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Item 1. Financial Statements

2026-08-07 compared with 2026-05-14 · 471 added, 345 removed, 1310 unchanged (38% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Cash and cash equivalents $ 9,673,979 $ 33,172,814

1 unchanged sentence

Cash held in escrow 521,451 3,519,393

Real estate asset held for sale 9,788,999 —

Loans held for investment, net of allowance for credit losses of $ 793,657 and $ 58,950,552

12 unchanged sentences

Liabilities and Equity

Unsecured notes payable, net $ 56,148,203 $ 117,949,074

Secured financing agreements, net $ 111,420,891 $ 60,908,096

Unsecured notes payable, net — 117,949,074

Obligations under participation agreements ( Note 8 )

18,200,782 18,197,981

Interest reserve and other deposits held on investments 730,885 1,202,134

11 unchanged sentences

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

issued, as of both March 31, 2026 and December 31, 2025

issued, as of both June 30, 2026 and December 31, 2025

Class B Common Stock, $ 0.01 par value, 450,000,000 shares authorized and 24,340,114

and 24,339,891 shares issued and outstanding as of March 31, 2026 and

and 24,339,891 shares issued and outstanding as of June 30, 2026 and

December 31, 2025, respectively

8 unchanged sentences

Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended March 31,

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

2026 2025 2026 2025

Interest income $ 3,754,046 $ 6,584,137 $ 5,377,682 $ 16,790,034

18 unchanged sentences

Interest expense on unsecured notes payable ( 1,038,545 ) ( 2,507,507 ) ( 3,517,087 ) ( 4,999,044 )

Interest expense on obligations under participation agreements ( 844,617 ) ( 888,904 )

Income from equity interest in unconsolidated investments 660,007 2,560,110

Interest expense on obligations under participation

agreements ( 1,740,470 ) ( 940,739 ) ( 2,585,087 ) ( 1,829,643 )

Income from equity interest in unconsolidated

investments 5,415,041 2,265,597 6,075,048 4,825,707

Gain on extinguishment of debt 119,618 — 119,618 —

Loss on sale of real estate, net ( 25,040 ) ( 2,056,550 ) ( 585,674 ) ( 2,056,550 )

6 unchanged sentences

Unrealized gain on available-for-sale debt securities — 82,377 — 228,121

— 82,377 — 228,121

Comprehensive loss $ ( 3,941,407 ) $ ( 9,089,719 ) $ ( 18,990,390 ) $ ( 10,229,039 )

21 unchanged sentences

— — — 24,340,114 243,401 444,497,891 ( 314,293,109 ) — 130,448,183

Net loss — — — — — — ( 3,941,407 ) — ( 3,941,407 )

Balance at June 30, 2026

$ — — $ — 24,340,114 $ 243,401 $ 444,497,891 $ ( 318,234,516 ) $ — $ 126,506,776

Preferred Stock Class A Common Stock Class B Common Stock Additional

13 unchanged sentences

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

Shares issued from reinvestment of shareholder

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

Distributions declared on common shares ($ 0.10 per share)

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

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

Other comprehensive income:

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

Balance at June 30, 2025 $ — — $ — 24,338,919 $ 243,389 $ 444,488,215 $ ( 276,248,168 ) $ 42,646 $ 168,526,082

See notes to unaudited consolidated financial statements .

1 unchanged sentence

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

5 unchanged sentences

Loss on sale of real estate, net 585,674 2,056,550

Gain on extinguishment of debt ( 119,618 ) —

Amortization of net purchase premiums on loans — 6,913

29 unchanged sentences

Consolidated Statements of Cash Flows (Continued)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from financing activities:

2 unchanged sentences

Proceeds from obligations under participation agreements — 1,606,804

Repayments on obligations under participation agreements ( 18,020,576 ) —

Repayments on unsecured notes payable ( 65,909,507 ) —

7 unchanged sentences

$ 10,926,315 $ 32,744,122

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental disclosure of cash flow information:

13 unchanged sentences

Other liabilities ( 127,514 )

On March 30, 2026, the Company exchanged $ 24.0 million of its 6.00 % unsecured senior notes maturing on June 30, 2026 and $ 1.6 million of Terra Income Fund 6, LLC’s 7.00 % unsecured senior notes maturing on March 31, 2026 for $ 25.6 million of the Company’s 7.00 % secured senior notes due 2029 ( Note 8 ).

On June 30, 2026, the Company exchanged $ 36.2 million of its 6.00 % unsecured senior notes maturing on June 30, 2026 for $ 27.2 million of the Company’s 11.00 % Senior Secured Notes due 2027 (as defined below) and $ 9.0 million cash ( Note 8 ).

See notes to unaudited consolidated financial statements .

1 unchanged sentence

Notes to Consolidated Financial Statements (Unaudited)

March 31, 2026

June 30, 2026

Terra Property Trust, Inc.

21 unchanged sentences

Notes to Unaudited Consolidated Financial Statements

As of March 31, 2026, 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 Class B Common Stock.

On May 7, 2026, the Company filed a registration statement on Form S-4 (as may be amended from time to time, the “Form S-4”) with the Securities and Exchange Commission in connection with a registered exchange offer to exchange any and all of its outstanding 6.00 % Senior Notes Due 2026 (as defined below) for newly issued Senior Secured Notes due 2029 by the Company.

The exchange offer is scheduled to expire on June 7, 2026, unless extended.

For additional information regarding the exchange offer, including the terms and conditions thereof, please refer to the Form S-4, including the prospectus contained therein.

As of June 30, 2026, 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 Class B Common Stock.

Summary of Significant Accounting Policies

4 unchanged sentences

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

The Company has significant debt obligations of approximately $ 69.6 million coming due, including $ 56.4 million of its 6.00 % Senior Notes Due 2026 maturing on June 30, 2026 ( Note 8 ).

As of March 31, 2026, the Company had cash and cash equivalents of $ 5.0 million and did not have sufficient liquidity to satisfy these obligations.

The Company intends to refinance or repay the 6.00 % Senior Notes Due 2026 that are not exchanged in the exchange offer described in Note 1 above 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.

However, there can be no assurance that the Company will be able to obtain the additional liquidity needed to repay the 6.00 % Senior Notes Due 2026.

The Company has debt obligations of approximately $ 57.9 million coming due ( Note 8 ) in the next twelve months following the issuance of the consolidated financial statements.

As of June 30, 2026, the Company had cash and cash equivalents of $ 9.7 million and did not have sufficient liquidity to satisfy these obligations.

The Company intends to repay maturing debt obligations through asset realizations such as loan repayments (including mandatory redemptions required under the Second Indenture (as defined herein) upon certain asset sales and other events described in Note 8), the sale of real estate property, refinancings, debt or equity capital raises and other available capital sources or financing facilities.

However, there can be no assurance that the Company will be able to obtain the additional liquidity needed to repay the maturing debt obligations.

Therefore, substantial doubt about the Company’s ability to continue as a going concern exists.

12 unchanged sentences

The Company consolidates entities that are VIEs when the Company determines it is the primary beneficiary.

Generally, the primary beneficiary of a VIE is a reporting entity that has (a) the power to direct the

Notes to Unaudited Consolidated Financial Statements

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.

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

Loans Held for Investment

The Company originates, acquires, and structures, or acquires through participations, real estate-related loans generally to be held to maturity (collectively the “loans”).

Loans held for investment are carried at the principal amount outstanding, adjusted for the accretion of discounts on investments and exit fees, and the amortization of premiums on investments and origination fees.

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

Notes to Unaudited Consolidated Financial Statements

origination fees.

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

24 unchanged sentences

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

Notes to Unaudited Consolidated Financial Statements

The Company also performs a qualitative assessment and applies qualitative adjustments as necessary, usually due to limitations of the loan loss model.

1 unchanged sentence

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 Unaudited Consolidated Financial Statements

Unfunded Commitments

18 unchanged sentences

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

Notes to Unaudited Consolidated Financial Statements

Available-For-Sale Debt Securities

5 unchanged sentences

Acquisition of properties generally are accounted for as asset acquisitions.

Under asset acquisition accounting, the costs to acquire real estate, including transaction costs, are accumulated and then allocated to individual assets and liabilities acquired based upon their relative fair value.

Under asset acquisition accounting, the costs to acquire real estate, including transaction costs, are accumulated and then allocated to individual assets and liabilities acquired

Notes to Unaudited Consolidated Financial Statements

based upon their relative fair value.

The Company allocates the purchase price of its real estate acquisitions to land, building, tenant improvements, acquired in-place leases, intangibles for the value of any above or below market leases at fair value and to any other identified intangible assets or liabilities.

8 unchanged sentences

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

Real Estate Asset Held for Sale

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

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

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

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

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

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

Revenue Recognition

6 unchanged sentences

The Company generally reverses the accrued and unpaid interest against interest income and no longer accrues for the interest when, in the opinion of the Manager, recovery of interest and principal becomes not probable.

Notes to Unaudited Consolidated Financial Statements

Interest is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated.

18 unchanged sentences

The related liability is recorded in “ Interest reserve and other deposits held on investments ” on the consolidated balance sheets.

Notes to Unaudited Consolidated Financial Statements

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

12 unchanged sentences

See “ Obligations Under Participation Agreements ” in Note 8 for additional information.

Notes to Unaudited Consolidated Financial Statements

Secured Financing Agreements, Net

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 include non-recourse property mortgages, secured borrowings, senior secured notes and term loans.

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.

2 unchanged sentences

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 borrowings, unsecured notes, mortgage loan payable, and term loan payable.

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

8 unchanged sentences

If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S.

federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years.

federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) beginning with the year in which it fails to qualify and may be precluded from being able

Notes to Unaudited Consolidated Financial Statements

to elect to be treated as a REIT for the Company’s four subsequent taxable years.

Any gains from the sale of foreclosed properties within two years are subject to U.S.

federal and state income taxes at regular corporate rates.

As of March 31, 2026, the Company had satisfied all the requirements for a REIT.

As of June 30, 2026, the Company had satisfied all the requirements for a REIT.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes , nor did the Company have any unrecognized tax benefits as of the periods presented herein.

The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in its consolidated statements of operations.

For the three months ended March 31, 2026 and 2025, the Company did not incur any interest or penalties.

For the three and six months ended June 30, 2026 and 2025, the Company did not incur any interest or penalties.

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

3 unchanged sentences

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.

The deferred tax assets and liabilities are included in the accompanying consolidated balance sheets 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 owned 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 as of December 31, 2025, related to an unrealized gain on the investment.

For the three months ended March 31, 2026, the Company recorded additional income tax expense and deferred income tax liability of $ 6,690 , related to an increase in the unrealized gain on investment.

For the three and six months ended June 30, 2026, the Company recorded additional income tax expense and deferred income tax liability of $ 0.8 million and $ 0.8 million, respectively, related to an increase in the unrealized gain on investment.

Deferred tax liabilities are included in Other liabilities on the Company’s consolidated balance sheets.

Notes to Unaudited Consolidated Financial Statements

Earnings Per Share

13 unchanged sentences

The CODM evaluates the performance of any real estate owned assets with that of its real estate-related debt investments.

Additionally, the Company seeks to enhance its returns on equity by utilizing leverage, and generally finance its real estate-related investments with leverage obtained through a variety of sources, including secured and unsecured debt instruments.

Additionally, the Company seeks to enhance its returns on equity by utilizing leverage, and generally finances its real estate-related investments with leverage obtained through a variety of sources, including secured and unsecured debt instruments.

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

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

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

Notes to Unaudited Consolidated Financial Statements

finances them.

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

9 unchanged sentences

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

As of March 31, 2026 and December 31, 2025, accrued interest receivable of $ 9.0 million and $ 8.3 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 Unaudited Consolidated Financial Statements

As of June 30, 2026 and December 31, 2025, accrued interest receivable of $ 7.6 million and $ 8.3 million, respectively, is included in interest receivable on the consolidated balance sheets, and is excluded from the amortized cost of loans held for investment.

Portfolio Summary

1 unchanged sentence

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Fixed Rate Floating

13 unchanged sentences

(1) These loans pay a coupon rate of Secured Overnight Financing Rate (“SOFR”) or forward-looking term rate based on SOFR (“Term SOFR”), as applicable, plus a fixed spread.

Coupon rates shown were determined using the average SOFR of 3.65 % and Term SOFR of 3.66 % as of March 31, 2026 and average SOFR of 3.79 % and Term SOFR of 3.69 % as of December 31, 2025.

(2) As of March 31, 2026 and December 31, 2025, amount included $ 32.1 million and $ 63.6 million of senior mortgages used as collateral for $ 18.0 million and $ 31.3 million of borrowings under secured financing agreements, respectively ( Note 8 ).

(3) As of March 31, 2026 and December 31, 2025, four and five loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.

Coupon rates shown were determined using the average SOFR of 3.63 % and Term SOFR of 3.65 % as of June 30, 2026 and average SOFR of 3.79 % and Term SOFR of 3.69 % as of December 31, 2025.

(2) As of June 30, 2026 and December 31, 2025, amount included $ 32.5 million and $ 63.6 million of senior mortgages used as collateral for $ 17.5 million and $ 31.3 million of borrowings under secured financing agreements, respectively ( Note 8 ).

(3) As of June 30, 2026 and December 31, 2025, two and five loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.

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

(5) Excludes loans that are in maturity default and represents current effective maturity as of March 31, 2026 and December 31, 2025, exclusive of any extension available.

(5) Excludes loans that are in maturity default and represents current effective maturity as of June 30, 2026 and December 31, 2025, exclusive of any extension available.

Notes to Unaudited Consolidated Financial Statements

Lending Activities

9 unchanged sentences

net ( 1,729,249 ) 23,732 ( 1,705,517 )

(Provision for) reversal of provision for credit losses ( 6,950,667 ) 12,974 ( 6,937,693 )

Balance, March 31, 2026

Write-off (2)

( 69,976,793 ) — ( 69,976,793 )

Reversal of provision for credit losses (2)

58,156,895 17,531 58,174,426

Balance, June 30, 2026

$ 67,876,456 $ 19,408,886 $ 87,285,342

______________

(1) On January 22, 2026, the Company foreclosed on one multifamily property encumbering a $ 31.4 million first mortgage in exchange for the relief of the first mortgage and related expenses ( Note 5 ).

Notes to Unaudited Consolidated Financial Statements

(2) In June 2026, a non-performing loan held for investment was restructured, and in connection with the restructuring, the Company surrendered the loan to an unaffiliated third party in exchange for a contingent promote interest in the successor entity.

In connection with the transaction, the Company derecognized the loan and wrote off the related amortized cost and allowance for credit losses.

The Company did not recognize a separate asset for the promote interest because management determined that its fair value was zero.

Loans Held for Investment, Net Loans Held for Investment through Participation Interests, Net Total

6 unchanged sentences

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

Balance, March 31, 2025 $ 192,866,547 $ 32,582,673 $ 225,449,220

Balance, June 30, 2025 $ 175,053,810 $ 23,116,267 $ 198,170,077

Portfolio Information

2 unchanged sentences

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

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

First mortgages $ 55,418,255 $ 55,511,119 63.6 % $ 86,456,898 $ 88,060,452 57.5 %

Preferred equity investments 98,352,140 32,685,092 28.8 % 99,281,969 40,563,196 26.4 %

Mezzanine loans 26,301,246 26,402,366 30.2 % 24,703,471 24,763,765 16.1 %

Preferred equity investments 6,151,857 5,371,857 6.2 % 99,281,969 40,563,196 26.4 %

Total $ 87,871,358 $ 87,285,342 100.0 % $ 210,442,338 $ 153,387,413 100.0 %

March 31, 2026 December 31, 2025

Notes to Unaudited Consolidated Financial Statements

June 30, 2026 December 31, 2025

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

Office $ 102,104,409 $ 37,113,002 32.6 % $ 101,711,046 $ 43,696,575 28.4 %

Infill land $ 42,207,336 $ 42,314,976 48.5 % $ 40,609,561 $ 41,821,242 27.3 %

Office 32,512,165 32,605,029 37.3 % 101,711,046 43,696,575 28.4 %

Industrial 7,000,000 6,993,480 8.0 % 7,000,000 6,993,917 4.6 %

Multifamily 6,151,857 5,371,857 6.2 % 37,855,514 37,389,999 24.4 %

Mixed-use — — — % 22,292,750 22,512,213 14.7 %

Industrial 7,000,000 6,995,187 6.2 % 7,000,000 6,993,917 4.6 %

Retail — — — % 973,467 973,467 0.6 %

Total $ 87,871,358 $ 87,285,342 100.0 % $ 210,442,338 $ 153,387,413 100.0 %

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

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

United States

California $ 22,292,750 $ 22,515,678 19.9 % $ 54,109,304 $ 54,643,252 35.6 %

Georgia $ 32,512,165 $ 32,605,029 37.4 % $ 31,734,254 $ 31,878,019 20.8 %

New Jersey 22,906,090 22,906,090 26.2 % 22,906,090 24,051,394 15.7 %

Massachusetts 7,000,000 6,993,480 8.0 % 7,000,000 6,993,917 4.6 %

Arizona 19,301,246 19,408,886 22.2 % 17,703,471 17,769,848 11.6 %

New York 6,151,857 5,371,857 6.2 % 76,015,752 17,077,516 11.1 %

Massachusetts 7,000,000 6,995,187 6.2 % 7,000,000 6,993,917 4.6 %

California — — — % 54,109,304 54,643,252 35.6 %

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

Total $ 87,871,358 $ 87,285,342 100.0 % $ 210,442,338 $ 153,387,413 100.0 %

Notes to Unaudited Consolidated Financial Statements

Allowance for Credit Losses

1 unchanged sentence

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 $ 8.0 million and $ 8.8 million as of March 31, 2026 and December 31, 2025, respectively.

These unfunded commitments amounted to $ 7.2 million and $ 8.8 million as of June 30, 2026 and December 31, 2025, respectively.

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

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

As of March 31, 2026 and December 31, 2025, the Company had four and five non-performing loans with total amortized cost of $ 121.5 million and $ 154.7 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 $ 65.9 million and $ 58.9 million as of March 31, 2026 and December 31, 2025, respectively.

As of June 30, 2026 and December 31, 2025, the Company had two and five non-performing loans with total amortized cost of $ 29.1 million and $ 154.7 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 $ 0.8 million and $ 58.9 million as of June 30, 2026 and December 31, 2025, respectively.

Please see “Note 6.

Fair Value Measurements – Valuation Process for Fair Value Measurement” for information on how the fair values of these loans were determined.

Notes to Unaudited Consolidated Financial Statements

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

Three Months Ended March 31, 2026

Six Months Ended June 30, 2026

Allowance on Non-Performing Loans Allowance on Performing Loans Total

2 unchanged sentences

Provision for (reversal of provision for) credit losses 11,818,559 ( 16,192 ) ( 15,506 ) 11,786,861

Write-off (1)

$ ( 69,976,793 ) — — ( 69,976,793 )

Allowance for credit losses, end of period $ 780,000 $ 68,670 $ 20,469 $ 869,139

Three Months Ended March 31, 2025

______________

(1) The write-off was primarily related to the derecognition of one non-performing loan in connection with a restructuring transaction in which the Company surrendered its prior investment and received a contingent promote interest.

Six Months Ended June 30, 2025

Allowance on Non-Performing Loans Allowance on Performing Loans Total

6 unchanged sentences

If the Company determines it has uncollectible accrued interest receivable, it generally would reverse the accrued and unpaid interest against interest income and no longer accrue for interest.

For the three months ended March 31, 2026 and 2025, the Company did no t reverse any interest income accrual because all accrued interest income was deemed collectible.

For the three months ended March 31, 2026 and 2025, the Company suspended interest income accrual of $ 4.5 million and $ 3.4 million on three and two loans, respectively, because recovery of such income was not probable.

For the three and six months ended June 30, 2026 and 2025, the Company did no t reverse any interest income accrual because all accrued interest income was deemed collectible.

For the three months ended June 30, 2026 and 2025, the Company suspended interest income accrual of $ 4.8 million and $ 3.5 million on three and two loans, respectively, because recovery of such income was not probable.

For the six months ended June 30, 2026 and 2025, the Company suspended interest income accrual of $ 9.3 million and $ 6.9 million on three and two loans, respectively, because recovery of such income was not probable.

Loan Risk Rating

2 unchanged sentences

(ii) loan and collateral performance relative to underwriting;

(iii) quality and stability of collateral cash flows and/or reserve

Notes to Unaudited Consolidated Financial Statements

(iii) quality and stability of collateral cash flows and/or reserve balances;

and (iv) loan to value.

6 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 Unaudited Consolidated Financial Statements

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

March 31, 2026

June 30, 2026

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

11 unchanged sentences

_______________

(1) Amount includes two loans that are in maturity default with total amortized costs of $ 45.4 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 one loan that is in maturity default with total amortized costs of $ 22.9 million.

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

December 31, 2025

17 unchanged sentences

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

Notes to Unaudited Consolidated Financial Statements

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 limited partnership interests in RESOF.

RESOF ’s primary investment objective is to generate attractive risk-adjusted returns by purchasing performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets.

RESOF may also opportunistically originate high-yield mortgages or loans in real estate special situations including rescue financings, bridge loans, restructurings and bankruptcies (including debtor-in-possession loans).

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

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

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

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

March 31, 2026 December 31, 2025

On August 3, 2020, the Company entered into a subscription agreement with Mavik Real Estate Special Opportunities Fund, LP (“VS1”) whereby the Company committed to fund up to $ 50.0 million to purchase limited partnership interests in VS1.

VS1 ’s primary investment objective is to generate attractive risk-adjusted returns by purchasing performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets.

VS1 may also opportunistically originate high-yield mortgages or loans in real estate special situations including rescue financings, bridge loans, restructurings and bankruptcies (including debtor-in-possession loans).

VS1 completed its investment period in April 2025 and has since entered its harvest period.

The general partner of VS1 is Mavik Real Estate Special Opportunities Fund GP, LLC , which is a subsidiary of the Company’s sponsor, Terra Capital Partners .

The Company evaluated

Notes to Unaudited Consolidated Financial Statements

its equity interest in VS1 and determined it does not have a controlling financial interest and is not the primary beneficiary.

Accordingly, the equity interest in VS1 is accounted for as an equity method investment.

The following tables present a summary of information regarding the Company’s equity interest in VS1:

June 30, 2026 December 31, 2025

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

Equity interest in RESOF 14.9 % $ 35,813,168 $ 11,333,135 14.9 % $ 40,193,442 $ 11,333,135

Three Months Ended March 31,

Income from equity interest in RESOF $ 1,020,307 $ 2,206,934

Distributions received from RESOF $ 5,400,581 $ 1,267,522

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

Equity interest in VS1 14.9 % $ 31,369,864 $ 11,333,135 14.9 % $ 40,193,442 $ 11,333,135

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

2026 2025 2026 2025

Income from equity interest in VS1 $ 1,691,930 $ 2,812,605 $ 2,712,237 $ 5,019,539

Distributions received from VS1 $ 6,135,235 $ 3,467,848 $ 11,535,816 $ 4,735,370

The following tables present summarized financial information of the Company’s equity interest in VS1.

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Investments at fair value (cost of $ 315,410,637 and $ 386,743,426 , respectively)

9 unchanged sentences

Partners’ capital $ 197,541,987 $ 260,613,358

Three Months Ended March 31,

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

2026 2025 2026 2025

Total investment income $ 13,890,745 $ 21,764,963 $ 32,695,661 $ 40,915,743

1 unchanged sentence

Net investment income 8,991,664 15,371,401 21,714,733 27,701,787

Net change in unrealized appreciation on investments ( 7,015,293 ) 1,038,111

Net increase in partners’ capital resulting from operations $ 5,707,776 $ 13,368,497

Notes to Unaudited Consolidated Financial Statements

Net change in unrealized appreciation

on investments 1,360,040 2,054,615 ( 5,655,253 ) 3,092,726

Net increase in partners’ capital

resulting from operations $ 10,351,704 $ 17,426,016 $ 16,059,480 $ 30,794,513

Mavik Real Estate Special Opportunities VS2, LP

1 unchanged sentence

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.

VS2 commenced operations on October 17, 2024, and completed its final fundraising close in December 2025.

The general partner of VS2 is Mavik Real Estate Special Opportunities VS2 GP, LLC , 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.

Notes to Unaudited Consolidated Financial Statements

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

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

Equity interest in VS2 1.5 % 3,380,784 5,858,829 1.5 % 316,072 $ 8,369,755

Three Months Ended March 31,

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

2026 2025 2026 2025

Income from equity interest in VS2 $ 391,871 $ — $ 528,676 $ —

2 unchanged sentences

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Investments at fair value (cost of $ 645,279,623 and $ 372,843,060 )

5 unchanged sentences

$ 75,783,803 )

79,466,584 76,025,965

Other liabilities 8,350,987 5,579,792

1 unchanged sentence

Partners’ capital $ 218,299,862 $ 19,547,955

Three Months Ended March 31,

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

2026 2025 2026 2025

Total investment income $ 20,635,873 $ — $ 40,447,261 $ —

1 unchanged sentence

Net investment income 8,862,946 — 18,481,097 —

Net change in unrealized appreciation on investments ( 1,379,499 ) —

Net increase in partners’ capital resulting from operations $ 8,238,652 $ —

Net change in unrealized appreciation

on investments 16,406,988 — 15,027,489 —

Net increase in partners’ capital

resulting from operations $ 25,269,934 $ — $ 33,508,586 $ —

Equity Interest in Joint Ventures

1 unchanged sentence

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

Notes to Unaudited Consolidated Financial Statements

financial interest and is not the primary beneficiary.

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 Unaudited Consolidated Financial Statements

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

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

16 unchanged sentences

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

Three Months Ended March 31,

Loss from equity interest in the joint ventures $ ( 1,202,653 ) $ ( 250,393 )

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

2026 2025 2026 2025

Income (loss) from equity interest in the joint

ventures $ 2,590,420 $ ( 1,177,064 ) $ 1,387,767 $ ( 1,427,457 )

Distributions received from the joint ventures $ 273,799 $ 242,143 $ 1,045,499 $ 481,297

1 unchanged sentence

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Net investments in real estate $ 187,550,105 $ 194,450,383

5 unchanged sentences

Members’ capital $ 68,912,025 $ 96,490,866

Notes to Unaudited Consolidated Financial Statements

Three Months Ended March 31,

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

2026 2025 2026 2025

Revenues $ 5,417,331 $ 4,476,099 $ 11,393,535 $ 10,663,250

2 unchanged sentences

Interest expense ( 4,123,705 ) ( 3,446,954 ) ( 8,304,816 ) ( 7,718,643 )

One time charge off ( 41,651 ) —

Unrealized gain (loss) ( 1,374,782 ) 780,091

Net loss $ ( 4,634,036 ) $ ( 2,437,982 )

Unrealized gain 4,941,114 1,538,427 3,524,681 2,318,518

Net income (loss) $ 1,641,600 $ ( 1,823,528 ) $ ( 2,992,436 ) $ ( 4,261,510 )

Notes to Unaudited Consolidated Financial Statements

Other Equity Investments

In June 2024, the Company entered into a preferred equity agreement with TCC Boundary Partners LLC.

The investment carries interest at an annual rate of 15.0 % and matures on May 30, 2026.

The investment carries interest at an annual rate of 15.0 % and matures on July 31, 2026.

Additionally, the Company will receive distributions in the event that net proceeds from the sale of underlying property exceed certain internal rate of return thresholds.

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

As of March 31, 2026 and December 31, 2025, the Company's investment had a carrying value of $ 19.3 million and $ 18.6 million, respectively.

As of June 30, 2026 and December 31, 2025, the Company's investment had a carrying value of $ 20.0 million and $ 18.6 million, respectively.

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

Three Months Ended March 31,

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

2026 2025 2026 2025

Income from other equity investment $ 740,820 $ 630,056 $ 1,446,368 $ 1,233,625

Distributions received from other equity investment — —

Distributions received from other equity

investment — — — —

Real Estate Owned, Net

12 unchanged sentences

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

Notes to Unaudited Consolidated Financial Statements

Real Estate Asset Held for Sale

During the three months ended March 31, 2026, the Company entered into a purchase and sale agreement to sell one industrial building for a purchase price of $ 10.0 million.

In connection with the real estate asset held for sale, the Company recorded an impairment charge of $ 0.6 million to reduce the carrying value of the industrial building to its estimated selling price less the cost of the sale as of March 31, 2026.

The sale subsequently closed on April 8, 2026.

In March 2026, the Company entered into a purchase and sale agreement to sell one industrial building for a purchase price of $ 10.0 million.

In connection with the pending sale, the Company recorded an impairment charge of $ 0.6 million to reduce the carrying value of the industrial building to its estimated selling price less the cost of the sale.

The sale subsequently closed on April 8, 2026, resulting in a $ 0.03 million loss on sale of real estate for the three months ended June 30, 2026.

Operating Real Estate Owned, Net

As of December 31, 2025, real estate owned was comprised of four industrial buildings located in Texas with lease intangible assets and liabilities.

During the three months ended March 31, 2026, the Company sold two industrial buildings, acquired one multifamily property through foreclosure, and reclassified one industrial building to held for sale, resulting in one industrial building located in Texas and one multifamily property located in California with lease intangible assets and liabilities as of March 31, 2026.

During the six months ended June 30, 2026, the Company sold three industrial buildings and acquired one multifamily property through foreclosure, resulting in one industrial building located in Texas and one

Notes to Unaudited Consolidated Financial Statements

multifamily property located in California with lease intangible assets and liabilities as of June 30, 2026.

The following table presents the components as of:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

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

13 unchanged sentences

The following table presents the components of real estate operating revenues and expenses that are included in the consolidated statements of operations:

Three Months Ended March 31,

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

2026 2025 2026 2025

Real estate operating revenues:

5 unchanged sentences

Real estate taxes 18,327 1,069,663 268,990 1,368,405

Repairs and maintenances 119,612 280,961

Repairs and maintenance 96,700 44,595 216,312 325,556

Management fees 102,636 66,069 227,861 129,942

1 unchanged sentence

Total $ 392,869 $ 1,561,799 $ 1,177,819 $ 2,537,027

Notes to Unaudited Consolidated Financial Statements

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

Three Months Ended March 31,

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

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

2026 2025 2026 2025

Net amortization of above- and below-market rent

intangibles (1)

$ ( 115,262 ) $ ( 354,010 ) $ ( 306,145 ) $ ( 758,255 )

Amortization of in-place lease intangibles (2)

3 unchanged sentences

(2) Amortization of in-place lease intangibles is included in depreciation and amortization expense on the consolidated statements of operations.

Notes to Unaudited Consolidated Financial Statements

Fair Value Measurements

13 unchanged sentences

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

As of March 31, 2026 and December 31, 2025, the Company had not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, equity securities without readily determinable fair value, secured financing agreements, unsecured notes payable and obligations under participation agreements.

As of June 30, 2026 and December 31, 2025, the Company had not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, equity securities without readily determinable fair value, secured financing agreements, unsecured notes payable and obligations under participation agreements.

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

4 unchanged sentences

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

Notes to Unaudited Consolidated Financial Statements

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.

1 unchanged sentence

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

March 31, 2026

June 30, 2026

Fair Value Measurements

3 unchanged sentences

Total $ 95,304 $ — $ — $ 95,304

Notes to Unaudited Consolidated Financial Statements

December 31, 2025

8 unchanged sentences

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:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

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

10 unchanged sentences

Secured financing agreements 1 25,578,000 23,717,771 20,953,498 — — —

Secured financing agreements 3 92,906,250 87,703,120 92,921,776 61,950,000 60,908,096 61,866,780

Obligations under participation

3 unchanged sentences

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

The Company estimated that its other financial assets and liabilities, not included in the tables above, had fair values that approximated their carrying values at both March 31, 2026 and December 31, 2025 due to their short-term nature.

Notes to Unaudited 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 June 30, 2026 and December 31, 2025 due to their short-term nature.

Other Items Measured at Fair Value (Including Impairment Charges)

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

There was no impairment charge for the three months ended March 31, 2025.

The following table presents information about assets for which the Company recorded an impairment charge and that were measured at fair value on a non-recurring basis for the three months ended March 31, 2026:

Three Months Ended March 31, 2026

Level Fair Value Impairment Charge

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:

Three Months Ended June 30,

Level Fair Value Impairment Charge Fair Value Impairment Charge

Real estate asset held for sale

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

During the three months ended March 31, 2026, the Company recorded an impairment charge of $ 0.6 million to reduce the carrying value of one industrial building to its estimated selling price less the cost of the sale.

The fair value measurement was determined by the selling price.

$ — $ 3,399,684

Notes to Unaudited Consolidated Financial Statements

Six Months Ended June 30,

Level Fair Value Impairment Charge Fair Value Impairment Charge

Real estate asset held for sale

Real estate and intangibles 3 $ 9,788,999 $ 595,984 $ 27,037,500 $ 3,399,684

$ 595,984 $ 3,399,684

During the six months ended June 30, 2026, the Company recorded an impairment charge of $ 0.6 million to reduce the carrying value of one industrial building to its estimated fair value, which was determined to be the selling price less the cost of the sale.

There was no impairment charge for the three months ended June 30, 2026.

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

Valuation Process for Fair Value Measurement

14 unchanged sentences

Because there is no readily available market for these investments, the fair values of these investments are approved in good faith by the Company’s board of directors (which is made up exclusively of independent directors).

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 fair values of the Company’s secured financing agreements, which include mortgage loans payable, secured borrowings, senior secured notes and term loans, 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 Unaudited Consolidated Financial Statements

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 loans as of March 31, 2026 and December 31, 2025.

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 loans as of June 30, 2026 and December 31, 2025.

The tables are not intended to be all-inclusive, but instead identify the significant unobservable inputs relevant to the determination of fair values.

Fair Value at March 31, 2026

Primary Valuation Technique Unobservable Inputs March 31, 2026

Fair Value at June 30, 2026

Primary Valuation Technique Unobservable Inputs June 30, 2026

Asset Category Minimum Maximum Weighted Average

Loans held for investment, net $ 67,742,109 Discounted cash flow Discount rate 9.19 % 15.58 % 11.99 %

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

Loans held for investment acquired through

4 unchanged sentences

Secured financing agreements $ 92,921,776 Discounted cash flow Discount rate 7.00 % 11.00 % 9.34 %

Obligation under participation agreement 18,200,782 Discounted cash flow Discount rate 18.65 % 18.65 % 18.65 %

Total Level 3 Liabilities $ 92,921,776

18 unchanged sentences

The following table presents a summary of fees paid and costs reimbursed to the Manager in connection with providing services to the Company that are included on the consolidated statements of operations:

Three Months Ended March 31,

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

2026 2025 2026 2025

Origination and extension fee expense (1)

9 unchanged sentences

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

Notes to Unaudited Consolidated Financial Statements

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

Notes to Unaudited Consolidated Financial Statements

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).

2 unchanged sentences

The Company must deliver prior written notice of any such termination to the Manager at least 180 days prior to the last calendar day of the Initial Term or the then-current Renewal Term, as applicable, and the Management Agreement will terminate effective as of the last calendar day of the Initial Term or the then-current Renewal Term, as applicable.

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

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

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

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

The Manager may terminate the Management Agreement, effective upon 60 days’ prior written notice 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.

10 unchanged sentences

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

As of March 31, 2026 and December 31, 2025, the Company had not received any breakup fees.

As of June 30, 2026 and December 31, 2025, the Company had not received any breakup fees.

Operating Expenses

4 unchanged sentences

Due from Related Parties

As of March 31, 2026 and December 31, 2025, amount due from related parties was $ 1.7 million and $ 1.7 million, primarily related to operational cash requirements the Company paid on behalf of its affiliates.

As of June 30, 2026 and December 31, 2025, amount due from related parties was $ 1.4 million and $ 1.7 million, primarily representing reimbursements due from affiliates for operational expenses paid by the Company.

Promissory Note Payable

2 unchanged sentences

The promissory note matures on March 31, 2027.

As of March 31, 2026 and December 31, 2025, amount outstanding under this promissory note payable was $ 16.0 million and $ 48.1 million, respectively.

As of June 30, 2026 and December 31, 2025, amount outstanding under this promissory note payable was $ 20.3 million and $ 48.1 million, respectively.

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

3 unchanged sentences

Distributions Paid

For the three months ended March 31, 2026 and 2025, the Company made distributions to related parties totaling $ 0.2 million and $ 0.9 million, respectively, all of which were returns of capital.

For the three months ended June 30, 2025, the Company made distributions to related parties totaling $ 0.4 million, all of which were returns of capital.

There were no such distributions for the three months ended June 30, 2026.

For the six months ended June 30, 2026 and 2025, the Company made distributions to related parties totaling $ 0.2 million and $ 1.3 million, respectively, all of which were returns of capital.

Notes to Unaudited Consolidated Financial Statements

Due to Manager

As of March 31, 2026 and December 31, 2025, due to Manager was $ 0.2 million and $ 0.7 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.

As of June 30, 2026 and December 31, 2025, due to Manager was $ 1.3 million and $ 0.7 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.

On August 3, 2020, the Company entered into a subscription agreement with VS1 whereby the Company committed to fund up to $ 50.0 million to purchase limited partnership interests in VS1.

On December 23, 2025, the Company entered into a subscription agreement with VS2 whereby the Company committed to fund up to $ 8.4 million to purchase limited partnership interests in VS2.

11 unchanged sentences

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

March 31, 2026

June 30, 2026

Participating Interests Principal Balance Carrying Value

4 unchanged sentences

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

Loan B (1)(2)

12.50 % 973,467 973,467

3 unchanged sentences

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

The loan was repaid in January 2026.

Notes to Unaudited 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:

March 31, 2026

Transfers treated as

obligations under participation agreements

Principal Carrying Value % Transferred Principal Carrying Value

$ 22,292,750 $ 22,515,678 80.8 % $ 18,020,576 $ 18,200,782

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.

There are no such participation agreements as of June 30, 2026:

December 31, 2025

4 unchanged sentences

________________

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

This investment is held in the name of the Company, but the Participant’s rights and obligations, including interest income and other income (e.g., exit fee, prepayment income) and related fees/expenses (e.g., disposition fees, asset management and asset servicing fees), are based upon its pro rata participation interest in such participated investment, as specified in the participation agreement.

The Participant’s share of the investment is repayable only from the proceeds received from the related borrower/issuer of the investment and, therefore, the Participant also is subject to credit risk (i.e., risk of default by the underlying borrower/issuer).

Pursuant to the participation agreement with this entity, the Company receives and allocates the interest income and other related investment income to the Participant based on its pro rata participation interest.

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

(1) The Participant was a separately managed account managed by the Manager.

In June 2026, the Company sold its interest in the underlying loan to an affiliated investment vehicle for total consideration of $ 25.8 million, including par value principal, accrued interest, default interest and exit fees.

Concurrent with the sale, the obligations under participation agreements were repaid in full, and no related-party balances remained outstanding as of June 30, 2026.

This investment was held in the name of the Company, but the Participant’s rights and obligations, including interest income and other income (e.g., exit fee, prepayment income) and related fees/expenses (e.g., disposition fees, asset management and asset servicing fees), were based upon its pro rata participation interest in such participated investment, as specified in the participation agreement.

The Participant’s share of the investment was repayable only from the proceeds received from the related borrower/issuer of the investment and, therefore, the Participant also was subject to credit risk (i.e., risk of default by the underlying borrower/issuer).

Pursuant to the participation agreement with this entity, the Company received and allocated the interest income and other related investment income to the Participant based on its pro rata participation interest.

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

Unsecured Notes Payable

1 unchanged sentence

Coupon Rate Effective Rate (1)

Maturity Date March 31, 2026 December 31, 2025

Maturity Date June 30, 2026 December 31, 2025

6.00 % Senior Notes due 2026 (2)(3)

10 unchanged sentences

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

(2) On March 30, 2026, the Company exchanged $ 24.0 million and $ 1.6 million of its 6.00 % Senior Notes Due 2026 and of Terra LLC’s 7.00 % Senior Notes Due 2026, respectively, for $ 25.6 million of the Company’s 7.00 % secured senior notes due 2029.

(2) On March 30, 2026, the Company exchanged $ 24.0 million and $ 1.6 million of its 6.00 % Senior Notes due 2026 and of Terra LLC’s 7.00 % Senior Notes due 2026, respectively, for $ 25.6 million of the Company’s 7.00 % Senior Secured Notes due 2029.

(3) On June 30, 2026, the Company exchanged $ 36.2 million of its 6.00 % Senior Notes due 2026 for $ 27.2 million of the Company’s 11.00 % Senior Secured Notes due 2027 and $ 9.0 million cash.

The remaining outstanding balance was repaid in full on the same day.

(4) On March 31, 2026, Terra LLC repaid the remaining 7.00 % Senior Notes due 2026 in full.

3 unchanged sentences

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.

On June 30, 2026, the 6.00 % Senior Notes due 2026 were repaid in full and the outstanding balance as of June 30, 2026 was zero .

The 7.00 % Senior Notes due 2026

1 unchanged sentence

In connection with the BDC Merger, Terra LLC agreed to take all necessary action to assume the payment of the principal of and interest on all of the outstanding 7.00 % Senior Notes due 2026.

As discussed above, on March 31, 2026, the 7.00 % Senior Notes Due 2026 were repaid in full by Terra LLC and the outstanding balance as of March 31, 2026 was zero .

Covenant Compliance

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

As of March 31, 2026, the Company was in compliance with such covenants.

On March 31, 2026, the 7.00 % Senior Notes due 2026 were repaid in full by Terra LLC and the outstanding balance as of June 30, 2026 was zero .

Secured Financing Arrangements

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Current Maturity Extended Maturity Weighted Average Interest Rate (1)

Pledged Asset Carrying Value Maximum Facility Size Principal Amount Principal

Pledged Asset Carrying Value (2)

Principal Amount Principal

Non-Recourse Financing:

Property mortgages - variable rate (3)

January 2027 January 2027 9.85 % 31,341,140 N/A 13,250,000 —

Property mortgages - fixed rate June 2028 June 2028 6.25 % 15,561,530 N/A 7,417,500 20,700,000

January 2027 January 2027 9.85 % $ 30,971,084 $ 13,250,000 —

Property mortgages - fixed rate June 2028 June 2028 6.25 % 15,412,136 — 20,700,000

Total 13,250,000 20,700,000

2 unchanged sentences

December 2027 December 2028 9.00 % 31,369,864 10,000,000 10,000,000

Secured borrowings (4)

Secured borrowing (5)

June 2027 June 2027 9.32 % 32,605,029 17,500,000 31,250,000

Secured notes payable (5)

7.00 % Senior Secured Notes due 2029 (6)

March 2029 March 2029 7.00 % 158,783,517 25,578,000 —

11.00 % Senior Secured Notes due 2027 (7)

July 2027 July 2027 11.00 % 158,783,517 27,156,250 —

Term loan (8)

December 2027 December 2027 11.00 % 64,720,592 25,000,000 —

Total 105,234,250 41,250,000

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_______________

(1) Amount is calculated using the applicable index rate as of March 31, 2026.

(1) Amount is calculated using the applicable index rate as of June 30, 2026.

(2) To avoid double counting, the Company has not included totals for the Pledged Asset Carrying Value as certain collateral is shared across multiple financings.

(3) Interest rate is based on Term SOFR plus a spread of 5.0 % with a combined floor rate of 9.85 %.

In connection with the foreclosure on one multifamily property in full satisfaction of a first mortgage loan investment and related fees and expenses ( Note 5 ), the Company’s lender converted the related $ 13.2 million in secured borrowings to a property mortgage.

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

(4) The term loan payable is collateralized by the Company’s equity interest in VS1 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.

Additionally, the Company’s interest in VS1 is only available to pay the debt under the term loan and not available to pay the debt under any other financing arrangements.

(5) Interest rate is based on Term SOFR plus a spread of 5.0 % with a combined floor rate of 9.32 %.

The facility is used to finance the Company’s senior loan investment.

(5) See “Secured Notes Payable” below.

(6) Represents the Company’s estimate of the aggregate value of the equity interests in certain of the Company’s subsidiaries pledged to holders of the Company’s 7.00 % Senior Secured Notes due 2029 and 11.00 % Senior Secured Notes due 2027 on a pari passu basis pursuant to the Intercreditor Agreement (as defined below).

The aggregate book value of the shared equity collateral is approximately $ 158.8 million as of June 30, 2026, after reducing for $ 25.0 million for the Term loan indebtedness of a subsidiary of the Company discussed in Footnote 7 and included in the shared collateral pool.

Notes to Unaudited Consolidated Financial Statements

(7) Represents the Company’s estimate of the aggregate value of the equity interests in certain of the Company’s subsidiaries pledged to holders of the 7.00 % Senior Secured Notes due 2029 and the 11.00 % Senior Secured Notes due 2027 on a pari passu basis pursuant to the Intercreditor Agreement.

The aggregate book value of the shared equity collateral is approximately $ 158.8 million as of June 30, 2026, after reducing for $ 25.0 million for Term loan indebtedness of a subsidiary of the Company discussed in Footnote 7 and included in the shared collateral pool.

In addition, the 11.00 % Senior Secured Notes due 2027 are secured by certain asset-level collateral (held by certain entities, or their subsidiaries, whose equity interests are included in the collateral shared on a pari passu basis pursuant to the Intercreditor Agreement), with a book value of approximately $ 64.7 million as of June 30, 2026.

(8) The term loan payable is secured by certain equity interests in the Company’s subsidiaries, and is mandatorily payable, with certain exceptions, to the extent the Company receives net proceeds from such investments resulting from (i) any sale, disposition or transfer of any interest, direct or indirect, therein and (ii) dividends and other distributions.

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.

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

Three Months Ended March 31,

Amortization of deferred financing costs and others $ 418,559 $ 526,414

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

2026 2025 2026 2025

Amortization of deferred

financing costs and others $ 515,214 $ 191,702 $ 933,773 $ 718,116

Proceeds from secured financing $ 37,250,000 $ 23,383,257

Principal repayments on secured financing $ ( 13,282,500 ) $ ( 43,700,349 )

Secured Notes Payable

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 (“SEC”) in connection with registered exchange offers (the “Exchange Offer”) to exchange any and all of the Company’s outstanding 6.00 % Senior Notes due 2026 and Terra Income Fund 6 LLC’s 7.00 % Senior Notes due 2026 for the Company’s newly issued 7.00 % Senior Secured Notes due 2029 (the “Exchange Notes”).

Principal repayments on secured

financing $ ( 34,450,000 ) $ ( 91,059,190 )

7.00 % Senior Secured Notes due 2029

The Registration Statement was declared effective by the SEC on March 26, 2026.

1 unchanged sentence

In connection with the Exchange Offer, $ 24.0 million of the Company’s outstanding 6.00 % Senior Notes due 2026 and $ 1.6 million of Terra LLC’s 7.00 % Senior Notes due 2026 were validly tendered and not withdrawn in the Exchange Offers.

On March 30, 2026 (the “Issue Date”), the Company issued Exchange Notes with an aggregate principal balance of $ 25.6 million.

The Exchange Notes were issued pursuant to an Indenture (the “Indenture”), dated March 30, 2026, by and between the Company and U.S.

Bank Trust Company, National Association,

The Exchange Notes bear interest at 7.00 % per annum, payable monthly beginning April 30, 2026, and mature on March 31, 2029, unless earlier redeemed or repurchased by the Company in accordance with their terms prior to such date .

The Company may redeem the Exchange Notes at 101 % of outstanding principal amount prior to December 31, 2026, and at 100 % thereafter, in each case plus accrued and unpaid interest.

Subject to certain exceptions, the Exchange Notes are secured by perfected liens granted by the Company on certain equity interests in the Company’s subsidiaries held by the Company from time to time, as more fully described in the Registration Statement.

On March 30, 2026, the Company issued the 7.00 % Senior Secured Notes due 2029 with an aggregate principal balance of $ 25.6 million.

The 7.00 % Senior Secured Notes due 2029 were issued pursuant to an Indenture (the “Indenture”), dated March 30, 2026, by and between the Company and U.S.

Bank Trust Company, National Association, in its capacity as trustee and collateral agent.

The 7.00 % Senior Secured Notes due 2029 bear interest at 7.00 % per annum, payable monthly beginning April 30, 2026, and mature on March 31, 2029, unless earlier redeemed or repurchased by the Company in accordance with their terms prior to such date .

The Company may redeem the 7.00 % Senior Secured Notes due 2029 at 101 % of outstanding principal amount prior to December 31, 2026, and at 100 % thereafter, in each case plus accrued and unpaid interest.

Subject to certain exceptions, the 7.00 % Senior Secured Notes due 2029 are secured by perfected liens granted by the Company on certain equity interests in the Company’s subsidiaries held by the Company from time to time (which equity interests also secure the 11.00 % Senior Secured Notes due 2027), as more fully described in the Registration Statement, subject to the terms of the Intercreditor Agreement (as defined in the Indenture).

The Indenture includes customary covenants that restrict, among other things, the incurrence of additional indebtedness, dividend payments, and certain corporate transactions, subject to a minimum collateral coverage ratio of 1.35 to 1.00.

The Indenture also contains customary events of default, including nonpayment, covenant breaches, invalidity of collateral security, and certain bankruptcy or insolvency events, subject to specified cure periods and qualifications.

Notes to Unaudited Consolidated Financial Statements

11.00 % Senior Secured Notes due 2027

On May 7, 2026, the Company filed a second registration statement on Form S-4 (as amended from time to time, the “Second Registration Statement”) with the SEC in connection with a registered exchange offer (the “Second Exchange Offer”) to exchange any and all of the Company’s remaining outstanding 6.00 % Senior Notes due 2026 for the Company’s newly issued 11.00 % Senior Secured Notes Due 2027 (the “ 11.00 % Senior Secured Notes due 2027”) and cash.

The Second Registration Statement was declared effective by the SEC on June 26, 2026.

On June 30, 2026, the Second Exchange Offer was completed and settled.

In connection with the Second Exchange Offer, $ 36.2 million of the Company’s outstanding 6.00 % Senior Notes due 2026 were validly tendered and not withdrawn in the Exchange Offers.

On June 30, 2026, the Company issued the 11.00 % Senior Secured Notes due 2027 with an aggregate principal balance of $ 27.2 million.

The 11.00 % Senior Secured Notes due 2027 were issued pursuant to an Indenture (the “Second Indenture”), dated June 30, 2026, by and between the Company and U.S.

Bank Trust Company, National Association, in its capacity as trustee and collateral agent.

The 11.00 % Senior Secured Notes due 2027 bear interest at 11.00 % per annum, payable monthly on the last day of each month, beginning July 31, 2026, and mature on July 1, 2027, unless earlier redeemed or repurchased by the Company in accordance with their terms prior to such date .

The Company is required to redeem the 11.00 % Senior Secured Notes due 2027 in whole or in part upon the consummation of certain asset sales, upon the receipt of certain extraordinary receipts, upon the Company’s incurrence of certain senior secured indebtedness, with certain Excess Cash Flow (as defined in the Second Indenture) amounts, and upon the receipt of proceeds from the repayment of certain assets that secure the 11.00 % Senior Secured Notes due 2027 at a redemption price equal to 102 % of the outstanding principal amount of the 11.00 % Senior Secured Notes due 2027 to be redeemed plus accrued and unpaid interest payments otherwise payable thereon for the then-current monthly interest period accrued to, but excluding, the date fixed for redemption.

Prior to July 1, 2027, the Company may elect to redeem the 11.00 % Senior Secured Notes due 2027 in whole or in part at any time, or from time to time, at a redemption price equal to 102 % of the outstanding principal amount of the 11.00 % Senior Secured Notes due 2027 to be redeemed plus accrued and unpaid interest payments otherwise payable thereon for the then-current monthly interest period accrued to, but excluding, the date fixed for redemption.

Subject to certain exceptions, the 11.00 % Senior Secured Notes due 2027 are secured by perfected liens granted by the Company on certain equity interests in the Company’s subsidiaries, as more fully described in the Second Indenture .

The Second Indenture contains certain covenants that, among other things, limit the Company’s ability to:

(i) incur certain additional indebtedness;

(ii) pay Dividends (as defined in the Second Indenture) (other than for purposes of maintaining REIT tax status), repurchase Capital Interests (as defined in the Second Indenture) or pay operating expenses in excess of an agreed upon budget;

and (iii) merge or consolidate with another person.

The Second Indenture also contains customary events of default, including nonpayment, covenant breaches, invalidity of collateral security, and certain bankruptcy or insolvency events, subject to specified cure periods and qualifications.

On June 29, 2026, a wholly-owned subsidiary of the Company entered into a term loan agreement (the “Term Loan Agreement”) pursuant to which the Company obtained borrowings of $ 25.0 million (the “Term Loan”).

The proceeds of the Term Loan were used to partially repay the 6.00 % Senior Notes due 2026 and to fund the cash portion of the Second Exchange Offer.

Pursuant to the Term Loan Agreement, the Company has guaranteed certain obligations under the Term Loan Agreement on an unsecured and limited recourse basis.

The Term Loan bears interest at a rate of 11.00 % per annum, payable in cash in arrears on the last business day of each calendar quarter.

In addition, the Company paid a non-refundable upfront fee equal to 4.00 % of the amount of the principal amount of the Term Loan to the lender.

The Term Loan matures on December 29, 2027.

The Term Loan is secured by pledged equity interests held by certain of the Company's subsidiaries.

Pursuant to the Term Loan Agreement, and subject to certain exceptions, the Term Loan is subject to mandatory prepayment from net proceeds received by such subsidiaries from (i) the sale, disposition or other transfer of investments or investment interests held by such subsidiaries, whether directly or indirectly, and (ii) dividends and other distributions received in respect of such investments.

Notes to Unaudited Consolidated Financial Statements

The Term Loan Agreement contains customary covenants applicable to the Company, subject to certain limitations and exceptions, as well as customary events of default, bankruptcy and insolvency provisions, and related remedies.

Covenant Compliance

1 unchanged sentence

In the event of a default or any breach of covenant of a related agreement, the lender has the right to accelerate all amounts due, charge interest at a default rate, retain all cash flow from the loans originated and/or sell such loans in a private sale on terms possibly unfavorable to the Company.

As of March 31, 2026, the Company was in compliance with all such covenants, as amended or waived.

Notes to Unaudited Consolidated Financial Statements

As of June 30, 2026, the Company was in compliance with all such covenants, as amended or waived.

Scheduled Debt Principal Payments

Scheduled debt principal payments for each of the five calendar years following March 31, 2026 are as follows:

Scheduled debt principal payments for each of the five calendar years following June 30, 2026 are as follows:

Years Ending December 31, Total

2026 (April 1 through December 31) 56,361,350

2027 41,250,000

2026 (July 1 through December 31) —

2027 92,906,250

6 unchanged sentences

Loan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements.

As of March 31, 2026 and December 31, 2025, 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 18.65 % and 18.79 %, respectively.

As of December 31, 2025, obligations under participation agreements were $ 18.2 million with an interest rate of 18.79 % (see “Participation Agreements” in Note 7 ).

As of June 30, 2026, there were no such obligations under participation agreements.

For the six months ended June 30, 2026, the Company made a repayment of $ 18.0 million on obligations under participation agreements and did not transfer any loans to affiliates via participation agreements.

There was no such repayment or transfer for the six months ended June 30, 2025 .

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 $ 8.0 million and $ 8.8 million as of March 31, 2026 and December 31, 2025, respectively.

These fundings amounted to $ 7.2 million and $ 8.8 million as of June 30, 2026 and December 31, 2025, 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 Commitments

As discussed in Note 4 , the Company entered into subscription agreements 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 March 31, 2026 and December 31, 2025, the unfunded investment commitments were $ 18.8 million and $ 19.7 million, respectively.

As discussed in Note 4 , the Company entered into subscription agreements with VS1 and VS2 whereby the Company committed to fund up to $ 50.0 million and $ 8.4 million to purchase limited partnership interests in VS1 and VS2, respectively.

As of June 30, 2026 and December 31, 2025, the unfunded investment commitments were $ 17.2 million and $ 19.7 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.

Notes to Unaudited Consolidated Financial Statements

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.

1 unchanged sentence

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

Notes to Unaudited Consolidated Financial Statements

Earnings Per Share

The following table presents earnings per share:

Three Months Ended March 31,

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

2026 2025 2026 2025

Net loss $ ( 3,941,407 ) $ ( 9,172,096 ) $ ( 18,990,390 ) $ ( 10,457,160 )

5 unchanged sentences

The Board may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any series from time to time, into one or more classes or series of stock.

As of March 31, 2026 and December 31, 2025, there were no shares of Preferred Stock issued or outstanding.

As of June 30, 2026 and December 31, 2025, there were no shares of Preferred Stock issued or outstanding.

On October 1, 2022, in connection with the BDC Merger, the Company amended its charter to increase the shares authorized from 500,000,000 to 950,000,000 , consisting of 450,000,000 shares of Class A Common Stock, $ 0.01 par value per share (“Class A Common Stock”), 450,000,000 shares of Class B Common Stock, and 50,000,000 shares of Preferred Stock.

Concurrently, 4,847,910 shares of Class B Common Stock were issued to former Terra BDC stockholders and each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the BDC Merger was automatically changed into one issued and outstanding share of Class B Common Stock.

As of March 31, 2026, Terra Fund 7 and Terra Offshore REIT held 8.7 % and 10.1 %, respectively, of the issued and outstanding shares of the Company’s Class B Common Stock.

As of June 30, 2026, Terra Fund 7 and Terra Offshore REIT held 8.7 % and 10.1 %, respectively, of the issued and outstanding shares of the Company’s Class B Common Stock.

The Class B Common Stock rank equally with and have identical preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption as each other share of the Company’s common stock, except as set forth below with respect to conversion.

8 unchanged sentences

All distributions will be made at the discretion of the Board and will depend upon its taxable income, financial condition, maintenance of REIT status, applicable law, and other factors as the Board deems relevant.

For the three months ended March 31, 2026 and 2025, the Company made distributions to investors totaling $ 1.0 million and $ 4.7 million respectively, all of which were returns of capital.

Notes to Unaudited Consolidated Financial Statements

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

There were no such distributions for the three months ended June 30, 2026.

For the six months ended June 30, 2026 and 2025, the Company made distributions to investors totaling $ 1.0 million and $ 7.0 million respectively, all of which were returns of capital.

Dividend Reinvestment Plan

On January 20, 2023, the Board adopted a distribution reinvestment plan (the “Plan”), pursuant to which the Company’s stockholders may elect to reinvest cash distributions payable by the Company in additional shares of Class A Common Stock and Class B Common Stock, at the price per share determined pursuant to the Plan.

For the three months ended March 31, 2026

Notes to Unaudited Consolidated Financial Statements

and 2025, the Company issued 223 and 629 shares of Class B Common Stock for a total of $ 1,665 and $ 6,165 pursuant to the Plan, respectively.

For the six months ended June 30, 2026 and 2025, the Company issued 223 and 967 shares of Class B Common Stock for a total of $ 1,665 and $ 9,288 pursuant to the Plan, respectively.

Subsequent Events

29 unchanged sentences

Terra Offshore Funds REIT, LLC (“Terra Offshore REIT”);

Mavik Real Estate Special Opportunities Fund, LP (“RESOF”);

Mavik Real Estate Special Opportunities Fund, LP (“VS1”);

Mavik Real Estate Special Opportunities VS2, LP (“VS2”);

5 unchanged sentences

federal, state and local government and changes to the U.S., federal, state and local government policies and the execution and impact of these actions, initiatives and policies;

• limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our exemption exclusion or from registration under the Investment Company Act of 1940, as amended (the “1940 Act”), and to maintain our qualification as a real estate investment trust (“REIT”) for U.S.

• limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our exemption or exclusion from registration under the Investment Company Act of 1940, as amended (the “1940 Act”), and to maintain our qualification as a real estate investment trust (“REIT”) for U.S.

federal income tax purposes;

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

As of March 31, 2026, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of seven loans in six states with an aggregate net principal balance of $160.8 million, a weighted average coupon rate of 12.3% and a weighted average remaining term to maturity of 0.7 years.

As of June 30, 2026, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of five loans in five states with an aggregate net principal balance of $87.9 million, a weighted average coupon rate of 11.9% and a weighted average remaining term to maturity of 0.5 years.

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

Our portfolio is diversified based on location of the underlying properties, loan structure and property type.

As of March 31, 2026, our portfolio included underlying properties located in seven markets, across six states and includes property types such as multifamily housing, commercial offices, industrial, mixed-use and infill properties.

As of June 30, 2026, our portfolio included underlying properties located in five markets, across five states and includes property types such as multifamily housing, commercial offices, industrial and infill properties.

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

8 unchanged sentences

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

As of March 31, 2026, Terra Fund 7 and Terra Offshore REIT held approximately 8.7% and 10.1%, respectively, of our issued and outstanding Class B Common Stock.

On May 7, 2026, we filed a registration statement on Form S-4 (as may be amended from time to time, the “Form S-4”) with the Securities and Exchange Commission in connection with a registered exchange offer (the “Exchange Offer”) to exchange any and all of our outstanding 6.00% unsecured senior notes due 2026 (the “6.00% Senior Notes Due 2026”) for newly issued Senior Secured Notes due 2029 by the Company.

The Exchange Offer is scheduled to expire on June 7, 2026, unless extended.

For additional information regarding the Exchange Offer, including the terms and conditions thereof, please refer to the Form S-4, including the prospectus contained therein.

We have significant debt obligations of approximately $69.6 million coming due, including $56.4 million of the 6.00% Senior Notes Due 2026 maturing on June 30, 2026.

As of March 31, 2026, we had cash and cash equivalents of $5.0 million.

We intend to refinance or repay the 6.00% Senior Notes Due 2026 that are not exchanged in the Exchange Offer 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 our Manager and may also use debt or equity capital sources or facilities.

However, there can be no assurance that we will be able to obtain the additional liquidity needed to repay the 6.00% Senior Notes Due 2026.

As of June 30, 2026, Terra Fund 7 and Terra Offshore REIT held approximately 8.7% and 10.1%, respectively, of our issued and outstanding Class B Common Stock.

We have debt obligations of approximately $57.9 million coming due in the next twelve months following the issuance of the consolidated financial statements.

As of June 30, 2026, we had cash and cash equivalents of $9.7 million.

We intend to repay maturing debt obligations through asset realizations such as loan repayments (including mandatory redemptions required under the Second Indenture (as defined herein) upon certain asset sales and other events described in Note 8), the sale of real estate property, refinancings, debt or equity capital raises and other available capital sources or financing facilities.

However, there can be no assurance that we will be able to obtain the additional liquidity needed to repay the maturing debt obligations.

Therefore, substantial doubt about our ability to continue as a going concern exists.

14 unchanged sentences

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

March 31, 2026

June 30, 2026

Fixed Rate Floating

23 unchanged sentences

(1) These loans pay a coupon rate of Secured Overnight Financing Rate (“SOFR”) or forward-looking term rate based on SOFR (“Term SOFR”), as applicable, plus a fixed spread.

Coupon rates shown were determined using the average SOFR of 3.65% and Term SOFR of 3.66% as of March 31, 2026 and average SOFR of 3.79% and Term SOFR of 3.69% as of December 31, 2025.

(2) As of March 31, 2026 and December 31, 2025, amount included $32.1 million and $63.6 million of senior mortgages used as collateral for $18.0 million and $31.3 million of borrowings under secured financing agreements, respectively ( Note 8 ).

(3) As of March 31, 2026 and December 31, 2025, four and five loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.

Coupon rates shown were determined using the average SOFR of 3.63% and Term SOFR of 3.65% as of June 30, 2026 and average SOFR of 3.79% and Term SOFR of 3.69% as of December 31, 2025.

(2) As of June 30, 2026 and December 31, 2025, amount included $32.5 million and $63.6 million of senior mortgages used as collateral for $17.5 million and $31.3 million of borrowings under secured financing agreements, respectively ( Note 8 ).

(3) As of June 30, 2026 and December 31, 2025, two and five loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.

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

(5) Excludes loans that are in maturity default and represents current effective maturity as of March 31, 2026 and December 31, 2025, exclusive of any extension available.

(5) Excludes loans that are in maturity default and represents current effective maturity as of June 30, 2026 and December 31, 2025, exclusive of any extension available.

Real Estate Owned

In addition to our net loan portfolio, we own one industrial building and one multifamily property as of March 31, 2026 and four industrial buildings as of December 31, 2025.

As of March 31, 2026 and December 31, 2025, the real estate and related lease intangible assets and liabilities had a net carrying value of $46.9 million and $47.4 million, respectively, and the mortgage loans payable encumbering the real estate properties had an outstanding principal amount of $20.7 million and $20.7 million, respectively.

In addition to our net loan portfolio, we own one industrial building and one multifamily property as of June 30, 2026 and four industrial buildings as of December 31, 2025.

As of June 30, 2026 and December 31, 2025, the real estate and related lease intangible assets and liabilities had a net carrying value of $46.4 million and $47.4 million, respectively, and the mortgage loans payable encumbering the real estate properties had an outstanding principal amount of $13.3 million and $20.7 million, respectively.

Equity Interest in Unconsolidated Investments

As of both March 31, 2026 and December 31, 2025, we owned 14.9% of equity interest in a limited partnership that invests primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets.

We also beneficially own equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, non-real estate operating companies, as well as a preferred equity investment with residual profit sharing from sale of the underlying property.

As of both June 30, 2026 and December 31, 2025, we owned 14.9% of equity interest in a limited partnership that invests primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets.

We also beneficially own equity interests in joint ventures that invest in real estate

properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, non-real estate operating companies, as well as a preferred equity investment with residual profit sharing from sale of the underlying property.

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

Additionally, in December 2025, we entered into a subscription agreement with another affiliated limited partnership that 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 for a 1.5% interest in the partnership.

As of March 31, 2026 and December 31, 2025, these equity interests had total carrying value of $90.0 million and $94.2 million, respectively.

As of June 30, 2026 and December 31, 2025, these equity interests had total carrying value of $91.0 million and $94.2 million, respectively.

Book Value Per Share

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

Our book value per share of Class B Common Stock as of March 31, 2026 and December 31, 2025 was $5.36 and $6.02, respectively.

Our book value per share of Class B Common Stock as of June 30, 2026 and December 31, 2025 was $5.20 and $6.02, respectively.

Portfolio Investment Activity

Net Loan Portfolio

For the three months ended March 31, 2026 and 2025, we invested $2.6 million and $29.0 million in new and add-on investments and had $1.6 million and $23.7 million of repayments, resulting in net repayments of $1.0 million and $5.3 million, respectively.

For the three months ended June 30, 2026 and 2025, we invested $2.9 million and $5.4 million in new and add-on investments and had $3.8 million and $19.7 million of repayments, resulting in net investments and net repayments of $0.9 million and $14.4 million, respectively.

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

For the six months ended June 30, 2026 and 2025, we invested $5.5 million and $10.2 million in new and add-on investments and had $5.3 million and $33.5 million of repayments, resulting in net repayments of $0.1 million and $23.3 million, respectively.

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

Additionally, during the second quarter of 2026, in connection with a restructuring transaction, we derecognized a non-performing loan and wrote off the related amortized cost of $70.0 million against the allowance for credit losses.

Net Loan Portfolio Information

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

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Loan Structure Principal Balance Carrying

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Total $ 87,871,358 $ 87,285,342 100.0 % $ 192,421,762 $ 135,189,432 100.0 %

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Property Type Principal Balance Carrying

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Value % of Total

Office $ 102,104,409 $ 37,113,002 39.0 % $ 101,711,046 $ 43,696,575 32.3 %

Infill land $ 42,207,336 $ 42,314,976 48.5 % $ 40,609,561 $ 41,821,242 30.9 %

Multifamily 6,082,598 5,302,599 5.6 % 37,855,514 37,390,000 27.7 %

Office 32,512,165 32,605,029 37.3 % 101,711,046 43,696,575 32.3 %

Industrial 7,000,000 6,993,480 8.0 % 7,000,000 6,993,917 5.2 %

Multifamily 6,151,857 5,371,857 6.2 % 37,855,514 37,390,000 27.7 %

Mixed-use — — — % 4,272,174 4,314,231 3.2 %

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Total $ 87,871,358 $ 87,285,342 100.0 % $ 192,421,762 $ 135,189,432 100.0 %

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Geographic Location Principal Balance Carrying

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United States

California $ 4,272,174 $ 4,314,896 4.5 % $ 36,088,728 $ 36,445,271 27.0 %

Georgia $ 32,512,165 $ 32,605,029 37.4 % $ 31,734,254 $ 31,878,019 23.6 %

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Arizona 19,301,246 19,408,886 22.2 % 17,703,471 17,769,848 13.1 %

New York 76,059,390 10,169,414 10.7 % 76,015,752 17,077,516 12.6 %

Massachusetts 7,000,000 6,993,480 8.0 % 7,000,000 6,993,917 5.2 %

New York 6,151,857 5,371,857 6.2 % 76,015,752 17,077,516 12.6 %

California — — — % 36,088,728 36,445,271 27.0 %

Illinois — — — % 973,467 973,467 0.7 %

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(ii) the value of real estate and real estate-related loans to increase;

(iii) coupons on variable rate real estate-related loans to reset, although on a delayed basis, to lower interest rates;

(iv) to the extent applicable under the terms

of our investments, prepayments on real estate-related loans to increase;

(iii) coupons on variable rate

real estate-related loans to reset, although on a delayed basis, to lower interest rates;

(iv) to the extent applicable under the terms of our investments, prepayments on real estate-related loans to increase;

and (v) to the extent we enter into interest rate swap agreements as part of our hedging strategy, the value of these agreements to decrease.

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The following table presents the comparative results of our operations:

Three Months Ended March 31,

2026 2025 Change

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

2026 2025 Change 2026 2025 Change

Interest income $ 3,754,046 $ 6,584,137 $ (2,830,091) $ 5,377,682 $ 16,790,034 $ (11,412,352)

Real estate operating revenue 1,338,189 2,184,195 (846,006)

Real estate operating

revenue 784,399 1,968,463 $ (1,184,064) 2,122,588 4,152,658 (2,030,070)

Other operating income 43,722 57,511 $ (13,789) 295,747 124,168 171,579

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Operating expenses

Operating expenses reimbursed to Manager 673,467 1,429,953 (756,486)

Operating expenses

reimbursed to Manager 547,564 960,846 (413,282) 1,221,031 2,390,799 (1,169,768)

Asset management fee 751,492 1,280,666 (529,174) 1,686,563 2,648,455 (961,892)

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Provision for credit losses 4,859,442 1,374,181 3,485,261 11,786,861 3,493,917 8,292,944

Real estate operating expenses 784,950 975,228 (190,278)

Depreciation and amortization 854,622 1,345,937 (491,315)

Real estate operating

expenses 392,869 1,561,799 (1,168,930) 1,177,819 2,537,027 (1,359,208)

Depreciation and

amortization 631,404 1,224,996 (593,592) 1,486,026 2,570,933 (1,084,907)

Professional fees 727,066 759,427 (32,361) 2,799,146 1,277,781 1,521,365

Impairment charge on real estate asset 595,984 — 595,984

Impairment charge on real

estate asset — 3,399,684 (3,399,684) 595,984 3,399,684 (2,803,700)

Directors’ fees 68,750 81,772 (13,022) 137,500 165,522 (28,022)

3 unchanged sentences

Other income and expenses

Interest expense on secured financing (1,806,153) (4,548,870) 2,742,717

Interest expense on unsecured notes payable (2,478,542) (2,491,537) 12,995

Interest expense on obligations under participation agreements (844,617) (888,904) 44,287

Income from equity interest in unconsolidated investments 660,007 2,560,110 (1,900,103)

Loss on sale of real estate, net (560,634) — (560,634)

Unrealized gain on investments, net — (75) 75

Interest expense on secured

financing (2,114,694) (3,491,187) 1,376,493 (3,920,847) (8,040,057) 4,119,210

Interest expense on

unsecured notes payable (1,038,545) (2,507,507) 1,468,962 (3,517,087) (4,999,044) 1,481,957

Interest expense on

obligations under

participation agreements (1,740,470) (940,739) (799,731) (2,585,087) (1,829,643) (755,444)

Income from equity interest

in unconsolidated

investments 5,415,041 2,265,597 3,149,444 6,075,048 4,825,707 1,249,341

Gain on extinguishment of

debt 119,618 — 119,618 119,618 — 119,618

Loss on sale of real estate,

net (25,040) (2,056,550) 2,031,510 (585,674) (2,056,550) 1,470,876

Unrealized gain on

investments, net — — — — (75) 75

615,910 (6,730,386) 7,346,296 (4,414,029) (12,099,662) 7,685,633

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

Three Months Ended March 31, 2026 Three Months Ended March 31, 2025

Three Months Ended June 30, 2026 Three Months Ended June 30, 2025

Weighted Average Principal Amount (1)

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$ 86,146,906 13.5 % $ 63,607,576 10.2 %

Six Months Ended June 30, 2026 Six Months Ended June 30, 2025

Weighted Average Principal Amount (1)

Weighted Average Coupon Rate (2)

Weighted Average Principal Amount (1)

Weighted Average Coupon Rate (2)

Total portfolio

Gross loans $ 172,724,743 13.3 % $ 286,239,248 13.2 %

Obligations under participation agreements (18,020,576) 18.8 % (18,670,880) 18.7 %

Secured borrowing (17,917,127) 9.3 % (14,897,791) 9.5 %

Promissory notes payable — — % (25,256,492) 9.3 %

Repurchase agreements payable — — % (34,667,838) 9.0 %

Revolving line of credit payable — — % (13,176,918) 7.7 %

Net loans (3)

$ 136,787,040 13.1 % $ 179,569,329 14.7 %

Gross loans $ 58,760,274 12.3 % $ 202,168,972 13.5 %

Secured borrowing (17,917,127) 9.3 % (14,897,791) 9.5 %

Promissory notes payable — — % (25,256,492) 9.3 %

Repurchase agreements payable — — % (34,667,838) 9.0 %

Revolving line of credit payable — — % (13,176,918) 7.7 %

Net loans (3)

$ 40,843,147 13.6 % $ 114,169,933 17.0 %

Subordinated loans (4)

Gross loans $ 113,964,469 13.9 % $ 84,070,276 12.3 %

Obligations under participation agreements (18,020,576) 18.8 % (18,670,880) 18.7 %

Net loans (3)

$ 95,943,893 13.0 % $ 65,399,396 10.5 %

_______________

(1) Amount is calculated based on the number of days each loan is outstanding.

3 unchanged sentences

Interest Income

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, interest income decreased by $8.6 million, primarily due to a decrease in contractual interest income as a result of a decrease in the weighted average principal balance of performing loans, an increase in suspended interest income accrual on one non-performing loan, and the write off of the exit fee on a non-performing loan.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, interest income decreased by $2.8 million and $11.4 million, respectively, primarily due to a decrease in contractual interest income as a result of a decrease in the weighted average principal balance of performing loans, an increase in suspended interest income accrual on one non-performing loan, and the write off of the exit fee on a non-performing loan in the first quarter of 2026, partially offset by the recognition of default interest in connection with the repayment of a defaulted loan.

Real Estate Operating Revenue

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, real estate operating revenue decreased by $0.8 million, primarily due to the sale of four and two industrial buildings in 2025 and 2026, respectively, partially offset by the acquisition of one multifamily property in 2026.

For the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, real estate operating revenue decreased by $1.2 million, primarily due to the sale of four and three industrial buildings in 2025 and 2026, respectively, partially offset by the acquisition of one multifamily property in 2026.

For the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, real estate operating revenue decreased by $2.0 million, primarily due to the sale of four and three industrial buildings in 2025 and 2026, respectively, partially offset by the acquisition of one multifamily property in 2026.

Other Operating Income

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, other operating income increased by $0.2 million, primarily due to an increase in dividend income earned on our money market account.

For the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, other operating income increased by $0.2 million, primarily due to an increase in dividend income earned on our money market account.

Operating Expenses Reimbursed to Manager

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

For the three months ended March 31, 2026 as compared to the three months March 31, 2025, operating expenses reimbursed to our Manager decreased by $0.8 million, primarily due to a decrease in the allocation ratio as a result of a decrease in our total funds under management.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, operating expenses reimbursed to our Manager decreased by $0.4 million and $1.2 million, respectively, primarily due to a decrease in the allocation ratio as a result of a decrease in our total funds under management.

Asset Management Fee

Under the terms of the Management Agreement with our Manager, we paid our Manager a monthly asset management fee at an annual rate of 1% of the aggregate funds under management, which included the aggregate gross acquisition price, net of participation interest sold to affiliates, for each investment and cash held by us.

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, asset management fees decreased by $0.4 million, primarily due to a decrease in total assets under management resulting from repayment of loans as well as the sale of four and two industrial buildings in 2025 and 2026, respectively.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, asset management fees decreased by $0.5 million and $1.0 million, respectively, primarily due to a decrease in total assets under management resulting from repayment of loans as well as the sale of four and three industrial buildings in 2025 and 2026, respectively.

Asset Servicing Fee

Under the terms of the Management Agreement with our Manager, we paid our Manager a monthly servicing fee at an annual rate of 0.25% of the aggregate gross origination price or acquisition price for each investment held by us.

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, asset servicing fees decreased by $0.1 million, primarily due to a decrease in total assets under management resulting from the repayment of loans as well as the sale of four and two industrial buildings in 2025 and 2026, respectively.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, asset servicing fees decreased by $0.1 million and $0.2 million, respectively, primarily due to a decrease in total assets under management resulting from the repayment of loans as well as the sale of four and three industrial buildings in 2025 and 2026, respectively.

Provision for Credit Losses

We follow the provisions of Accounting Standards Codification 326, Financial Instruments – Credit Losses (“ASC 326”), which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses.

For the three months ended March 31, 2026, provision for credit losses was $6.9 million, primarily due to a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in funding on the senior loan.

For the three months ended March 31, 2025, provision for credit losses was $2.1 million primarily related to a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in funding on the senior loan.

For the three and six months ended June 30, 2026, provision for credit losses was $4.9 million and $11.8 million, respectively, primarily due to a decline in our estimated recoverable amount on a non-performing subordinated loan.

During the second quarter of 2026, the Company completed the restructuring of the non-performing subordinated loan.

Prior to the restructuring, management reassessed the expected recovery associated with the loan and recorded additional credit reserves as appropriate.

Upon closing of the transaction, the amortized cost of the loan was written off against the related allowance for credit losses.

For the three and six months ended June 30, 2025, provision for credit losses was $1.4 million and $3.5 million, respectively, primarily related to a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in funding on the senior loan, partially offset by a decrease in the allowance for credit losses on performing loans driven by repayment and approaching maturities of loans.

Real Estate Operating Expenses

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, real estate operating expenses decreased by $0.2 million, primarily due the sale of four and two industrial buildings in 2025 and 2026, respectively, partially offset by the acquisition of one multifamily property in 2026.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, real estate operating expense decreased by $1.2 million and $1.4 million, respectively, primarily due to the sale of four and three industrial buildings in 2025 and 2026, respectively, partially offset by the acquisition of one multifamily property in 2026.

Depreciation and Amortization

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, depreciation and amortization decreased by $0.5 million, primarily due to the sale of four industrial buildings in 2025 as well as two industrial buildings in 2026, partially offset by the acquisition of one multifamily property in 2026.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, depreciation and amortization decreased by $0.6 million and $1.1 million, respectively, primarily due to the sale of four and three industrial buildings in 2025 and 2026, respectively, partially offset by the acquisition of one multifamily property in 2026.

Professional Fees

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, professional fees increased by $1.6 million, primarily due to fees incurred in 2026 related to strategic financing alternatives.

For the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, professional fees increased by $1.5 million, primarily due to fees incurred in 2026 related to strategic financing alternatives.

Impairment Charge on Real Estate Asset

For the three months ended March 31, 2026, in connection with the pending sale of one industrial building, we recorded an impairment charge of $0.6 million to reduce the carrying value of these industrial building to its estimated selling price less the costs to sell.

There was no such impairment charge for the three months ended March 31, 2025.

For the six months ended June 30, 2026, in connection with the pending sale of one industrial building, we recorded an impairment charge of $0.6 million to reduce the carrying value of the industrial building to its estimated selling price less the costs to sell.

There was no such impairment charge for the three months ended June 30, 2026.

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

Interest Expense on Secured Financing

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

Our secured financing agreements consisted of a repurchase agreement, revolving line of credit, term loans, promissory notes, secured borrowings, senior secured notes, and property mortgages.

The outstanding amounts under the repurchase agreement, the revolving line of credit and the promissory notes were repaid in full and the facilities were terminated in June 2025, July 2025 and November 2025 respectively.

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, interest expense on secured financing decreased by $2.7 million as a result of a decrease in the weighted average principal amount outstanding.

Furthermore, property mortgages encumbering four and three industrial buildings were repaid in full in 2025 and 2026, respectively.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, interest expense on secured financing decreased by $1.4 million and $4.1 million, respectively, as a result of a decrease in the weighted average principal amount outstanding.

Interest Expense on Unsecured Notes Payable

In June 2021, we issued $85.1 million in aggregate principal amount of 6.00% notes due 2026.

In June 2021, we issued $85.1 million in aggregate principal amount of 6.00% notes due in 2026.

In connection with the BDC Merger, we assumed $38.4 million in aggregate principal amount of 7.00% notes due in 2026.

In March 2026, the 7.00% notes due in 2026 were repaid in full.

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, interest expense on unsecured notes payable was substantially the same.

Interest expense increased due to an increase in the amortization of financing costs using the effective interest rate method was substantially offset by a decrease in interest expense driven by the retirement of 189,465 units of the 6.00% Senior Notes Due 2026 in 2025.

In June 2026, the 6.00% notes due in 2026 were repaid in full.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, interest expense on unsecured notes payable decreased by $1.5 million and $1.5 million, respectively, as a result of a decrease in the weighted average principal amount outstanding.

Interest Expense on Obligations Under Participation Agreements

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, interest expense on obligations under participation agreements increased by $0.8 million and $0.8 million, respectively, primarily due to the participant’s share of the default interest recognized in connection with the repayment of the underlying defaulted loan investment.

Income from Equity Interest in Unconsolidated Investments

We owned a 14.9% equity interest in RESOF as of both March 31, 2026 and December 31, 2025, and a 1.5% equity interest in VS2 as of March 31, 2026.

Both RESOF and VS2 are affiliated limited partnerships that invest primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets.

As of both March 31, 2026 and December 31, 2025, w e also beneficially owned equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, non-real estate operating companies, and a preferred equity investment with residual profit-sharing.

We owned a 14.9% equity interest in VS1 as of both June 30, 2026 and December 31, 2025, and a 1.5% equity interest in VS2 as of June 30, 2026.

Both VS1 and VS2 are affiliated limited partnerships that invest primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets.

As of both June 30, 2026 and December 31, 2025, w e also beneficially owned equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, non-real estate operating companies, and a preferred equity investment with residual profit-sharing.

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

Three Months Ended March 31,

Income from equity interest in RESOF $ 1,020,307 $ 2,206,934

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

2026 2025 2026 2025

Income from equity interest in VS1 $ 1,691,930 $ 2,812,605 $ 2,712,237 $ 5,019,539

Loss from equity interest in the joint ventures (1,202,653) (250,393)

Income from equity interest in VS2 391,871 — 528,676 —

Income (loss) from equity interest in the joint

ventures 2,590,420 (1,177,064) 1,387,767 (1,427,457)

Income from other equity investment 740,820 630,056 1,446,368 1,233,625

$ 5,415,041 $ 2,265,597 $ 6,075,048 $ 4,825,707

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, equity income from RESOF decreased as a result of a decrease in RESOF’s net income generated due to a decrease in the amount of invested capital.

For the three months ended March 31, 2026, equity income from VS2 was recorded as a result of VS2’s net income generated by invested capital.

There was no such investment in VS2 or related income for the three months ended March 31, 2025.

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, equity loss from the joint ventures increased primarily due to an unrealized gain on investment recognized in 2025 by a joint venture.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, equity income from VS1 decreased as a result of a decrease in VS1’s net income generated due to a decrease in the amount of invested capital.

For the three and six months ended June 30, 2026, equity income from VS2 was recorded as a result of VS2’s net income generated by invested capital.

There was no such investment in VS2 or related income for the three and six months ended June 30, 2025.

For the three and six months ended June 30, 2026, we recorded equity income from the joint ventures, compared to equity loss recorded for three and six months ended June 30, 2025.

Equity income increased in the current year periods primarily due to an equity investee’s recognition of an unrealized gain on its investment portfolio.

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

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, the increase in income from other equity investment is due an increase in the outstanding principal balance.

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, the increase in income from other equity investment is due to an increase in the outstanding principal balance.

Gain on Extinguishment of Debt

For both the three and six months ended June 30, 2026, in connection with the repurchase and retirement of 6.00% Senior Notes due 2026, we recognized a gain on extinguishment of debt of $0.1 million.

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

Loss on Sale of Real Estate, Net

For the three months ended March 31, 2026, we sold two industrial buildings and recognized a net loss on sale of $0.6 million.

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

For the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, the resulting net loss increased by $13.8 million.

For the three and six months ended June 30, 2026, we sold one and three industrial buildings and recognized a net loss on sale of $0.03 million and $0.6 million, respectively.

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

For the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, the resulting net loss decreased by $5.2 million and increased by $8.5 million, respectively.

Financial Condition, Liquidity and Capital Resources

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We use significant cash to purchase our target assets, repay principal and interest on our borrowings, make distributions to our investors and fund our operations.

Our primary sources of cash generally consist of payments of principal and interest we receive on our portfolio of investments, cash generated from our operating results and unused borrowing capacity under our financing sources.

We deploy moderate amounts of leverage as part of our operating strategy and use a number of sources to finance our target assets, including our senior notes and term loan.

Our primary sources of cash generally consist of payments of principal and interest we receive on our portfolio of investments and cash generated from our operating results.

We deploy moderate amounts of leverage as part of our operating strategy and use a number of sources to finance our target assets, including warehouse lines, repurchase agreements, secured borrowings and term loans.

We may use other sources to finance our target assets, including bank financing and arranged financing facilities with domestic or international financing providers.

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These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital for our business.

We expect to fund approximately $8.0 million of the unfunded commitments to borrowers during the next twelve months.

We have approximately $7.2 million of unfunded commitments to borrowers.

We expect to maintain sufficient liquidity to fund such commitments through matching these commitments with principal repayments on outstanding loans.

Obligations under participation agreements of $18.0 million will mature in the next twelve months.

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

Additionally, a property mortgage with a total outstanding principal balance of $13.3 million that is collateralized by one multifamily property will mature within the next twelve months.

Additionally, a property mortgage with a total outstanding principal balance of $13.3 million that is collateralized by one multifamily property will mature on January 22, 2027.

We expect to use proceeds from the sale of the underlying real estate to repay the property mortgage.

Finally, the 6.00% Senior Notes Due 2026 with an outstanding principal balance of $56.4 million are scheduled to mature on June 30, 2026.

We intend to repay the 6.00% Senior Notes Due 2026 that are not exchanged in the Exchange Offer 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 our Manager and may also use debt or equity capital sources or facilities.

As previously disclosed, we may repurchase certain of our 6.00% Senior Notes Due 2026.

The repurchases may be made directly by us or made indirectly through an affiliated purchaser entity managed by our Manager and co-owned by us and other vehicles managed by our Manager or its affiliates.

Such affiliate purchaser entity may also purchase third-party marketable securities.

The timing and amount of any transactions will be determined by our Manager based on its evaluation of market conditions, prices, legal requirements and other factors, and may be made from time to time on the open market, in privately negotiated transactions or otherwise, in each case subject to compliance with all SEC rules and other legal requirements.

We also have secured borrowings with an outstanding principal balance of $17.5 million that is collateralized by a senior loan investment and scheduled to mature on June 30, 2027.

We expect to repay the secured borrowings using proceeds from repayment of the senior loan.

Finally, our 11.00% Senior Secured Notes due 2027 are scheduled to mature on July 1, 2027.

See Note 8 for a description of the terms of this instrument.

We expect to repay our 11.00% Senior Secured Notes Due 2027 through asset realizations such as loan repayments (including mandatory redemptions required under the Second Indenture upon certain asset sales and other events described in Note 8), the sale of real estate property, refinancings, debt or equity capital raises and other available capital sources or financing facilities.

Summary of Financing

The table below summarizes our debt financing as of March 31, 2026:

The table below summarizes our debt financing as of June 30, 2026:

Type of Financing Outstanding Balance Interest Rate Maturity Date

Unsecured notes payable $ 56,361,350 6.00% June 2026

Secured note payable 25,578,000 7.00% March 2029

Property mortgages 7,417,500 6.25% June 2028

7.00% Senior Secured Notes due 2029 $ 25,578,000 7.00% March 2029

11.00% Senior Secured Notes due 2027 27,156,250 11.00% July 2027

Term loan payable 25,000,000 11.00% December 2027

Term loan payable 10,000,000 9.00% December 2027

Variable Rate:

Property mortgage 13,250,000 Term SOFR + 5%, (combined floor rate ranging from 9.85%) January 2027

Secured borrowing 18,000,000 Term SOFR + 5%, (combined floor rate ranging from 9.32%) June 2027

Property mortgage 13,250,000 Term SOFR + 5.00%, (combined floor rate of 9.85%) January 2027

Secured borrowing 17,500,000 Term SOFR + 5.00%, (combined floor rate of 9.32%) June 2027

Cash Flows (Used in) Provided by Operating Activities

For the three months ended March 31, 2026, cash flows used in operating activities were $1.5 million compared to cash flows provided by operating activities of $0.9 million for the three months ended March 31, 2025.

For the six months ended June 30, 2026, cash flows used in operating activities were $1.1 million compared to cash flows provided by operating activities of $2.0 million for the six months ended June 30, 2025.

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

Cash Flows Provided by Investing Activities

For the three months ended March 31, 2026, cash flows provided by investing activities were $24.5 million, primarily related to proceeds from sale of real estate of $20.6 million, proceeds from repayment of loans of $1.6 million and distributions received in excess of income of $4.9 million, partially offset by origination, purchase and funding of loans of $1.4 million and capital contribution to equity investments of $1.1 million.

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

purchase and funding of loans of $7.9 million.

For the six months ended June 30, 2026, cash flows provided by investing activities were $58.1 million, primarily related to proceeds from sale of real estate of $30.4 million, proceeds from repayment of loans of $23.8 million and distributions received in excess of income of $9.3 million, partially offset by origination, purchase and funding of loans of $2.7 million and capital contribution to equity investments of $2.8 million.

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

Cash Flows Used in Financing Activities

For the three months ended March 31, 2026, cash flows used in financing activities were $52.1 million, primarily related to principal repayments on unsecured notes payable of $36.8 million, repayments on secured financing of $13.3 million, payment for financing costs of $0.3 million, distributions paid to investors of $1.0 million, and a decrease in interest reserve and other deposits held on investments of $0.6 million.

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

For the six months ended June 30, 2026, cash flows used in financing activities were $83.9 million, primarily related to principal repayments on unsecured notes payable of $65.9 million, repayments on secured financing of $34.5 million, repayments on obligations under participation agreements of $18.0 million, payment for financing costs of $1.4 million, distributions paid to investors of $1.0 million, and a decrease in interest reserve and other deposits held on investments of $0.5 million, partially offset by proceeds from secured financing of $37.3 million.

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

Distribution Reinvestment Plan

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We have chosen to incorporate a weighted average macroeconomic forecast that encompasses baseline, upside and downside scenarios, into our allowance for credit losses on performing loans estimate during the reasonable and supportable forecast period which is currently eight quarters.

We select certain economics variables from a group of independent variables such as Commercial Real Estate Price Index, unemployment and interest rate which are included in the model as part of macroeconomic forecast and updated regularly based on current economic trends.

We select certain economic variables from a group of independent variables such as Commercial Real Estate Price Index, unemployment and interest rate which are included in the model as part of macroeconomic forecast and updated regularly based on current economic trends.

The specific loan level information input into the model includes loan-to-value and debt service coverage ratio metrics, as well as principal balances, property type, location, coupon rate, coupon rate type, original or remaining term, expected repayment dates and contractual future funding commitments.

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

Three Months Ended March 31,

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

2026 2025 2026 2025

Origination and extension fee expense (1)

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The promissory note matures on March 31, 2027.

As of March 31, 2026 and December 31, 2025, amount outstanding under the promissory note payable was $16.0 million and $48.1 million, respectively.

As of June 30, 2026 and December 31, 2025, amount outstanding under the promissory note payable was $20.3 million and $48.1 million, respectively.

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

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These fees are eliminated in consolidation and therefore have no impact on our consolidated financial statements.

Participation Agreements

We have further diversified our exposure to loans and borrowers by entering into participation agreements whereby we transferred a portion of certain of our loans on a pari passu basis to related parties, primarily other affiliated funds managed by our Manager or its affiliates, and to a lesser extent, unrelated parties.

As of March 31, 2026, the principal balance of our participation obligation was $18.0 million, which was a participation obligation to a related-party managed by the Manager.

The loans that are subject to participation agreements are held in our name, but each of the participant’s rights and obligations, including with respect to interest income and other income (e.g., exit fee, prepayment income) and related fees/expenses (e.g., disposition fees, asset management and asset servicing fees), are based upon their respective pro rata participation interest in such participated investments, as specified in the respective participation agreements.

We do not have direct liability to a participant with respect to the underlying loan and the participants’ share of the investments is repayable only from the proceeds received from the related borrower/issuer of the investments and, therefore, the participants also are subject to credit risk (i.e., risk of default by the underlying borrower/issuer).

Pursuant to the participation agreement with these entities, we receive and allocate the interest income and other related investment income to the participants based on their respective pro rata participation interest.

The affiliated fund participant pays related expenses also based on their respective pro rata participation interest (i.e., asset management and asset servicing fees, disposition fees) directly to our Manager, as per the terms of each respective affiliate’s management agreement.

Other than for U.S.

federal income tax purposes, our loan participations do not qualify for sale treatment.

As such, the investments remain on our combined consolidated balance sheets and the proceeds are recorded as obligations under participation agreements.

Similarly, interest earned on the entire loan balance is recorded within “Interest income” and the interest related to the participation interest is recorded within “Interest expense from obligations under participation agreements” in the consolidated statements of operations.

For the three months ended March 31, 2026 and 2025, the weighted average outstanding principal balance on obligations under participation agreements was approximately $18.0 million and $18.3 million, respectively, and the weighted average interest rate was approximately 18.8% and 19.3%, respectively.

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

What changed 10-Q

Item 1. Financial Statements