# EDGAR Filing Document

**Accession Number:** 0001674356
**File Stem:** 0001674356-26-000014
**Filing Date:** 2026-5
**Character Count:** 245168
**Document Hash:** 9d5d1477c2c7f75794632f8e13b9252c
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001674356-26-000014.hdr.sgml**: 20260514

**ACCESSION NUMBER**: 0001674356-26-000014

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 89

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260514

**DATE AS OF CHANGE**: 20260514

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Terra Property Trust, Inc.
- **CENTRAL INDEX KEY:** 0001674356
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE INVESTMENT TRUSTS [6798]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 000000000
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40496
- **FILM NUMBER:** 26979978

**BUSINESS ADDRESS:**
- **STREET 1:** 805 THIRD AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10022
- **BUSINESS PHONE:** 212-754-5100

**MAIL ADDRESS:**
- **STREET 1:** 805 THIRD AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10022

?xml version='1.0' encoding='ASCII'? tpt-20260331

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q** 

---

| | |
|:---|:---|
| ☑ | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

---

**For the Quarterly Period Ended March 31, 2026**

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the Transition Period from to**

**Commission File Number: 001-40496** 

**Terra Property Trust, Inc.** 

**(Exact name of registrant as specified in its charter)**

---

| | |
|:---|:---|
| **Maryland** | **81-0963486** |
| **(State or other jurisdiction of<br>incorporation or organization)** | **(I.R.S. Employer<br>Identification No.)** |

---

**205 West 28th Street, 12**<sup>th</sup> **Floor** 

**New York, New York 10001** 

**(Address of principal executive offices)**

**(212) 753-5100** 

**(Registrant's telephone number, including area code)**

**Securities registered pursuant to section 12(b) of the Securities Exchange Act of 1934:** 

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of exchange on <br>which registered** |
| **6.00% Notes due 2026** | **TPTA** | **New York Stock Exchange** |

---

**Securities registered pursuant to section 12(g) of the Securities Exchange Act of 1934:** 

**Class B Common Stock, $0.01 par value per share**

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 🗹No □

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes 🗹 No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ◻ | Accelerated filer | ◻ |
| Non-accelerated filer | 🗹 | Smaller reporting company | ☑ |
| | | Emerging growth company | ☑ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of May 14, 2026, the registrant had 24,340,114 shares of Class B Common Stock, $0.01 par value, outstanding. No market value has been computed based upon the fact that no active trading market had been established as of the date of this document.

------

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| | | **Page** |
| **PART I** | <u>[FINANCIAL INFORMATION](#i3706ce2a1db54e55985fa66960192fda_16)</u> |  |
| Item 1. | <u>[Consolidated Financial Statements:](#i3706ce2a1db54e55985fa66960192fda_130)</u> |  |
|  | <u>[Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025](#i3706ce2a1db54e55985fa66960192fda_136)</u> | <u>[2](#i3706ce2a1db54e55985fa66960192fda_136)</u> |
|  | <u>[Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2026 and 2025 (unaudited)](#i3706ce2a1db54e55985fa66960192fda_142)</u> | <u>[3](#i3706ce2a1db54e55985fa66960192fda_142)</u> |
|  | <u>[Consolidated Statements of Changes in Equity for the three months ended March 31, 2026 and 2025 (unaudited)](#i3706ce2a1db54e55985fa66960192fda_145)</u> | <u>[4](#i3706ce2a1db54e55985fa66960192fda_145)</u> |
|  | <u>[Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (unaudited)](#i3706ce2a1db54e55985fa66960192fda_151)</u> | <u>[5](#i3706ce2a1db54e55985fa66960192fda_151)</u> |
|  | <u>[Notes to Consolidated Financial Statements (unaudited)](#i3706ce2a1db54e55985fa66960192fda_154)</u> | <u>[7](#i3706ce2a1db54e55985fa66960192fda_154)</u> |
| Item 2. | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i3706ce2a1db54e55985fa66960192fda_52)</u> | <u>[37](#i3706ce2a1db54e55985fa66960192fda_52)</u> |
| Item 3. | <u>[Quantitative and Qualitative Disclosures About Market Risk](#i3706ce2a1db54e55985fa66960192fda_70)</u> | <u>[53](#i3706ce2a1db54e55985fa66960192fda_70)</u> |
| Item 4. | <u>[Controls and Procedures](#i3706ce2a1db54e55985fa66960192fda_79)</u> | <u>[54](#i3706ce2a1db54e55985fa66960192fda_79)</u> |
| PART II | <u>[OTHER INFORMATION](#i3706ce2a1db54e55985fa66960192fda_43)</u> |  |
| Item 1. | <u>[Legal Proceedings](#i3706ce2a1db54e55985fa66960192fda_34)</u> | <u>[54](#i3706ce2a1db54e55985fa66960192fda_34)</u> |
| Item 1A. | <u>[Risk Factors](#i3706ce2a1db54e55985fa66960192fda_88)</u> | <u>[54](#i3706ce2a1db54e55985fa66960192fda_88)</u> |
| Item 2. | <u>[Unregistered Sales of Equity Securities and Use of Proceeds](#i3706ce2a1db54e55985fa66960192fda_91)</u> | <u>[54](#i3706ce2a1db54e55985fa66960192fda_88)</u> |
| Item 3. | <u>[Defaults Upon Senior Securities](#i3706ce2a1db54e55985fa66960192fda_94)</u> | <u>[55](#i3706ce2a1db54e55985fa66960192fda_91)</u> |
| Item 4. | <u>[Mine Safety Disclosures](#i3706ce2a1db54e55985fa66960192fda_37)</u> | <u>[55](#i3706ce2a1db54e55985fa66960192fda_37)</u> |
| Item 5. | <u>[Other Information](#i3706ce2a1db54e55985fa66960192fda_82)</u> | <u>[55](#i3706ce2a1db54e55985fa66960192fda_82)</u> |
| Item 6. | <u>[Exhibits](#i3706ce2a1db54e55985fa66960192fda_40)</u> | <u>[55](#i3706ce2a1db54e55985fa66960192fda_121)</u> |
| <u>[Signatures](#i3706ce2a1db54e55985fa66960192fda_220)</u> | <u>[Signatures](#i3706ce2a1db54e55985fa66960192fda_220)</u> | <u>[57](#i3706ce2a1db54e55985fa66960192fda_220)</u> |

---

------

**PART I - FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**Terra Property Trust, Inc.** 

**Consolidated Balance Sheets**

---

| | | |
|:---|:---|:---|
| | **March 31, 2026** | **December 31, 2025** |
| | **(Unaudited)** | |
| **Assets** | | |
| Cash and cash equivalents | $4970512 | $33172814 |
| Restricted cash | 569080 | 1202134 |
| Cash held in escrow | 3290787 | 3519393 |
| Real estate asset held for sale | 9788999 |  |
| Loans held for investment, net of allowance for credit losses of $65,901,219 and $58,950,552 | 94832555 | 134644098 |
| Loans held for investment acquired through participation, net of allowance for credit losses<br>&nbsp;&nbsp;&nbsp;&nbsp;of $59,570 and $72,544 | 18575489 | 18743315 |
| Equity interest in unconsolidated investments | 90044039 | 94218842 |
| Real estate owned, net (<u>[Note 5](#i3706ce2a1db54e55985fa66960192fda_172)</u>) |  |  |
| &nbsp;&nbsp;&nbsp;Land, building and building improvements, net | 46609305 | 47062934 |
| &nbsp;&nbsp;&nbsp;Lease intangible assets, net | 622556 | 1850543 |
| Interest receivable | 8969875 | 8252234 |
| Due from related parties | 1728015 | 1743577 |
| Other assets | 3998403 | 7130874 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total assets** | $283999615 | $351540758 |
| **Liabilities and Equity** |  |  |
| **Liabilities:** |  |  |
| Unsecured notes payable, net | $56148203 | $117949074 |
| Secured financing agreements, net | 71527031 | 60908096 |
| Obligations under participation agreements (<u>[Note 8](#i3706ce2a1db54e55985fa66960192fda_184)</u>) | 18200782 | 18197981 |
| Interest reserve and other deposits held on investments | 569080 | 1202134 |
| Lease intangible liabilities, net (<u>[Note 5](#i3706ce2a1db54e55985fa66960192fda_172)</u>) | 329191 | 1553716 |
| Due to Manager (<u>[Note 7](#i3706ce2a1db54e55985fa66960192fda_178)</u>) | 194105 | 728212 |
| Interest payable | 1625532 | 654465 |
| Accounts payable and accrued expenses | 3102947 | 2964488 |
| Unearned income | 96614 | 151622 |
| Other liabilities | 1758025 | 766742 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities** | 153551510 | 205076530 |
| **Commitments and contingencies (<u>[Note 9](#i3706ce2a1db54e55985fa66960192fda_190)</u>)** |  |  |
| **Equity:** |  |  |
| Preferred stock, $0.01 par value, 50,000,000 shares authorized and none issued |  |  |
| Class A Common Stock, $0.01 par value, 450,000,000 shares authorized and no shares<br>&nbsp;&nbsp;&nbsp;&nbsp;issued, as of both March 31, 2026 and December 31, 2025 |  |  |
| Class B Common Stock, $0.01 par value, 450,000,000 shares authorized and 24,340,114<br>&nbsp;&nbsp;&nbsp;&nbsp;and 24,339,891 shares issued and outstanding as of March 31, 2026 and <br>&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2025, respectively | 243401 | 243399 |
| Additional paid-in capital | 444497891 | 444496228 |
| Accumulated deficit | (314293187) | (298275399) |
| Accumulated other comprehensive income (loss) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total equity** | 130448105 | 146464228 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total liabilities and equity** | $283999615 | $351540758 |

---

*See notes to unaudited consolidated financial statements*.

------

**Terra Property Trust, Inc.**

**Consolidated Statements of Operations and Comprehensive Loss** 

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| **Revenues** |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | $1623636 | $10205897 |
| &nbsp;&nbsp;&nbsp;Real estate operating revenue | 1338189 | 2184195 |
| &nbsp;&nbsp;&nbsp;Other operating income | 252025 | 66657 |
|  | 3213850 | 12456749 |
| **Operating expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Operating expenses reimbursed to Manager | 673467 | 1429953 |
| &nbsp;&nbsp;&nbsp;Asset management fee | 935071 | 1367789 |
| &nbsp;&nbsp;&nbsp;Asset servicing fee | 211211 | 329600 |
| &nbsp;&nbsp;&nbsp;Provision for credit losses | 6927419 | 2119736 |
| &nbsp;&nbsp;&nbsp;Real estate operating expenses | 784950 | 975228 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 854622 | 1345937 |
| &nbsp;&nbsp;&nbsp;Professional fees | 2072080 | 518354 |
| &nbsp;&nbsp;&nbsp;Impairment charge on real estate asset | 595984 |  |
| &nbsp;&nbsp;&nbsp;Directors' fees | 68750 | 83750 |
| &nbsp;&nbsp;&nbsp;Other | 102650 | 202190 |
|  | 13226204 | 8372537 |
| **Operating (loss) income** | (10012354) | 4084212 |
| **Other income and expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense on secured financing | (1806153) | (4548870) |
| &nbsp;&nbsp;&nbsp;Interest expense on unsecured notes payable | (2478542) | (2491537) |
| &nbsp;&nbsp;&nbsp;Interest expense on obligations under participation agreements | (844617) | (888904) |
| &nbsp;&nbsp;&nbsp;Income from equity interest in unconsolidated investments | 660007 | 2560110 |
| &nbsp;&nbsp;Loss on sale of real estate, net | (560634) |  |
| &nbsp;&nbsp;Unrealized loss on investments, net |  | (75) |
|  | (5029939) | (5369276) |
| **Net loss before income taxes** | (15042293) | (1285064) |
| &nbsp;&nbsp;Provision for income tax | (6690) |  |
| **Net loss** | $(15048983) | $(1285064) |
| **Other comprehensive income** |  |  |
| &nbsp;&nbsp;Unrealized gain on available-for-sale debt securities |  | 145744 |
|  |  | 145744 |
| **Comprehensive loss** | $(15048983) | $(1139320) |
| **Per share data** |  |  |
| &nbsp;&nbsp;Loss per share — basic and diluted | $(0.62) | $(0.05) |
| &nbsp;&nbsp;Weighted-average shares — basic and diluted | 24339892 | 24338162 |
| &nbsp;&nbsp;Distributions declared per common share | $0.04 | $0.19 |

---

*See notes to unaudited consolidated financial statements*.

------

**Terra Property Trust, Inc.**

**Consolidated Statements of Changes in Equity**

**(Unaudited)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Preferred Stock** | **Class A Common Stock** | **Class A Common Stock** | **Class B Common Stock** | **Class B Common Stock** | **Additional <br>Paid-in <br>Capital** | **Accumulated Deficit** | **Accumulated Other Comprehensive Income (Loss)** | |
| | **Preferred Stock** | **$0.01 Par Value** | **$0.01 Par Value** | **$0.01 Par Value** | **$0.01 Par Value** | **Additional <br>Paid-in <br>Capital** | **Accumulated Deficit** | **Accumulated Other Comprehensive Income (Loss)** | |
| | **Preferred Stock** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional <br>Paid-in <br>Capital** | **Accumulated Deficit** | **Accumulated Other Comprehensive Income (Loss)** |<br>**Total Equity** |
| **Balance at January 1, 2026** | $— |  | $— | 24339891 | $243399 | $444496228 | $(298275399) | $— | $146464228 |
| Shares issued from reinvestment of shareholder <br> distributions |  |  |  | 223 | 2 | 1663 |  |  | 1665 |
| Distributions declared on common shares ($0.04 per share) |  |  |  |  |  |  | (968805) |  | (968805) |
| Net loss |  |  |  |  |  |  | (15048983) |  | (15048983) |
| **Balance at March 31, 2026** | $— |  | $— | 24340114 | $243401 | $444497891 | $(314293187) | $— | $130448105 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Preferred Stock** | **Class A Common Stock** | **Class A Common Stock** | **Class B Common Stock** | **Class B Common Stock** | **Additional <br>Paid-in <br>Capital** | **Accumulated Deficit** | **Accumulated Other Comprehensive Income (Loss)** | |
| | **Preferred Stock** | **$0.01 Par Value** | **$0.01 Par Value** | **$0.01 Par Value** | **$0.01 Par Value** | **Additional <br>Paid-in <br>Capital** | **Accumulated Deficit** | **Accumulated Other Comprehensive Income (Loss)** | |
| | **Preferred Stock** | **Shares** | **Amount** | **Shares** | **Amount** | **Additional <br>Paid-in <br>Capital** | **Accumulated Deficit** | **Accumulated Other Comprehensive Income (Loss)** |<br>**Total Equity** |
| **Balance at January 1, 2025** | $— |  | $— | 24337952 | $243380 | $444478936 | $(258810775) | $(185475) | $185726066 |
| Shares issued from reinvestment of shareholder <br> distributions |  |  |  | 629 | 6 | 6159 |  |  | 6165 |
| Distributions declared on common shares ($0.19 per share) |  |  |  |  |  |  | (4651019) |  | (4651019) |
| Net loss |  |  |  |  |  |  | (1285064) |  | (1285064) |
| Other comprehensive income: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Unrealized gain on available-for-sale debt securities |  |  |  |  |  |  |  | 145744 | 145744 |
| **Balance at March 31, 2025** | $— |  | $— | 24338581 | $243386 | $444485095 | $(264746858) | $(39731) | $179941892 |

---

*See notes to unaudited consolidated financial statements*.

------

**Terra Property Trust, Inc.**

**Consolidated Statements of Cash Flows**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(15048983) | $(1285064) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 854622 | 1345937 |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses | 6927419 | 2119736 |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment charge on real estate asset held for sale | 595984 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on sale of real estate, net | 560634 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of net purchase premiums on loans |  | 6913 |
| &nbsp;&nbsp;&nbsp;&nbsp;Straight-line rent adjustments | 2198 | (34409) |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of deferred financing costs | 418560 | 527134 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of discount on unsecured notes payable | 546239 | 492612 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of above- and below-market rent intangibles | (190883) | (404245) |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization and accretion of investment-related fees, net | 1170305 | (562336) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized loss on investments, net |  | 75 |
| &nbsp;&nbsp;&nbsp;&nbsp;Distributions received from equity interest in unconsolidated investments | 1040987 | 1267522 |
| &nbsp;&nbsp;&nbsp;&nbsp;Income from equity interest in unconsolidated investments | (660007) | (2560110) |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest receivable | (717641) | (667113) |
| &nbsp;&nbsp;&nbsp;&nbsp;Due from related parties | 15562 | (71309) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets | 2875374 | 321481 |
| &nbsp;&nbsp;&nbsp;&nbsp;Due to Manager | (232748) | 634068 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unearned income | (55008) | 198867 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest payable | 971067 | (26655) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | (1552443) | (510856) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 1001481 | 69313 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash (used in) provided by operating activities** | (1477281) | 861561 |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from repayments of loans | 1556257 | 53958313 |
| &nbsp;&nbsp;&nbsp;Origination, purchase and funding of loans | (1428627) | (7883421) |
| &nbsp;&nbsp;&nbsp;Proceeds from sale of real estate | 20599454 |  |
| &nbsp;&nbsp;&nbsp;Capital contributions to and purchase of equity interests in unconsolidated <br> investments | (1125129) | (263387) |
| &nbsp;&nbsp;&nbsp;Distributions in excess of income | 4867391 | 239154 |
| &nbsp;&nbsp;&nbsp;Repayments of promissory note receivable |  | 168966 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by investing activities** | 24469346 | 46219625 |

---

*See notes to unaudited consolidated financial statements*.

------

**Terra Property Trust, Inc.**

**Consolidated Statements of Cash Flows (Continued)**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Repayments on secured financing | (13282500) | (43700349) |
| &nbsp;&nbsp;&nbsp;Proceeds from secured financing |  | 3254091 |
| &nbsp;&nbsp;&nbsp;Proceeds from obligations under participation agreements |  | 668574 |
| &nbsp;&nbsp;&nbsp;Repayments on unsecured notes payable | (36824025) |  |
| &nbsp;&nbsp;&nbsp;Distributions paid | (967140) | (4644854) |
| &nbsp;&nbsp;&nbsp;Payment of deferred financing costs | (349308) |  |
| &nbsp;&nbsp;&nbsp;Change in interest reserve and other deposits held on investments | (633054) | (1447180) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in financing activities** | (52056027) | (45869718) |
| **Net (decrease) increase in cash, cash equivalents and restricted cash** | (29063962) | 1211468 |
| **Cash, cash equivalents and restricted cash at beginning of period** | 37894341 | 18965026 |
| **Cash, cash equivalents and restricted cash at end of period (<u>[Note 2](#i3706ce2a1db54e55985fa66960192fda_160)</u>)** | $8830379 | $20176494 |

---

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| **Supplemental disclosure of cash flow information:** |  |  |
| Cash paid for interest | $3193446 | $6936220 |
| **Supplemental non-cash information:** |  |  |
| Reinvestment of shareholder distributions | $1665 | $6165 |

---

**Supplemental Non-Cash Investing and Financing Activities:**

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 (<u>[Note](#i3706ce2a1db54e55985fa66960192fda_172)[5](#i3706ce2a1db54e55985fa66960192fda_172)</u>). The following table summarizes the carrying value of the first mortgage and the fair value of assets acquired and liabilities assumed in the transaction:

---

| | |
|:---|:---|
| **Total Capitalized Costs:** | |
| Loans held for investment | $31445183 |
| Other assets | 27099 |
|  | $31472282 |
| **Net Assets Acquired** |  |
| Land | $12263796 |
| Buildings and Improvements | 18973000 |
| In-place lease intangibles | 363000 |
| Other liabilities | (127514) |
|  | $31472282 |

---

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 (<u>[Note 8](#i3706ce2a1db54e55985fa66960192fda_184)</u>).

*See notes to unaudited consolidated financial statements*.

------

**Terra Property Trust, Inc.** 

**Notes to Consolidated Financial Statements (Unaudited)**

**March 31, 2026** 

**Note 1. Business**

&nbsp;&nbsp;&nbsp;&nbsp;Terra Property Trust, Inc. ("Terra Property Trust" and, together with its consolidated subsidiaries, the "Company" is a real estate investment trust ("REIT") that originates, invests in and manages a diverse portfolio of real estate and real estate-related assets. The Company was incorporated under the Maryland General Corporation Law on December 31, 2015. The Company focuses primarily on commercial real estate credit investments, including first mortgage loans, subordinated loans (including B-notes, mezzanine and preferred equity) and credit facilities throughout the United States. The Company's loans finance the acquisition, development or recapitalization of high-quality commercial real estate in the United States. The Company focuses on middle market loans in the approximately $10 million to $50 million range, which in the Company's experience have been subject to less competition, offer higher risk-adjusted returns than larger loans with similar risk metrics and facilitate portfolio diversification. The Company may also make strategic real estate equity and non-real estate-related investments that align with its investment objectives and criteria.

&nbsp;&nbsp;&nbsp;&nbsp;On January 1, 2016, Terra Secured Income Fund 5, LLC ("Terra Fund 5"), the Company's then parent, contributed its consolidated portfolio of net assets to the Company pursuant to a contribution agreement in exchange for shares of the Company's common stock. Upon receipt of the contribution of the consolidated portfolio of net assets from Terra Fund 5, the Company commenced its operations on January 1, 2016. On March 2, 2020, the Company engaged in a series of transactions pursuant to which the Company issued an aggregate of 4,574,470.35 shares of its common stock in exchange for the settlement of an aggregate of $49.8 million of participation interests in loans held by the Company, cash of $25.5 million and other working capital.

&nbsp;&nbsp;&nbsp;&nbsp;The Company has elected to be taxed, and to qualify annually thereafter, as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), commencing with the taxable year ended December 31, 2016. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. The Company also operates its business in a manner that permits it to maintain its exemption from registration as an "investment company" under the Investment Company Act of 1940, as amended (the "1940 Act").

&nbsp;&nbsp;&nbsp;&nbsp;The Company's investment activities are externally managed by Terra REIT Advisors, LLC (the "Manager"), a subsidiary of the Company's sponsor, Terra Capital Partners, LLC ("Terra Capital Partners"), pursuant to a management agreement (as amended, the "Management Agreement"), under the oversight of the Company's board of directors (the "Board") (<u>[Note 7](#i3706ce2a1db54e55985fa66960192fda_178)</u>). The Company does not currently have any employees and does not expect to have any employees. Services necessary for the Company's business are provided by individuals who are employees of the Manager or by individuals who were contracted by the Company or by the Manager to work on behalf of the Company pursuant to the terms of the Management Agreement.

On October 1, 2022, pursuant to the Agreement and Plan of Merger, dated as of May 2, 2022 (the "Merger Agreement"), Terra Income Fund 6, Inc. ("Terra BDC"), merged with and into Terra Income Fund 6, LLC ("Terra LLC"), a wholly owned subsidiary of the Company, with Terra LLC continuing as the surviving entity of the merger (the "BDC Merger") and as a wholly owned subsidiary of the Company. Pursuant to the terms of the transactions described in the Merger Agreement, 4,847,910 shares of the Company's Class B Common Stock, $0.01 par value per share ("Class B Common Stock"), were issued to former Terra BDC stockholders in connection with the BDC Merger, based on the number of outstanding shares of Terra BDC Common Stock as of October 1, 2022.

On December 20, 2023, Terra Fund 5 announced that effective December 29, 2023 (the "Distribution Date"), Terra Fund 5 would distribute all of its shares of the Company's Class B Common Stock to its members as part of the winding up of Terra Fund 5. On the Distribution Date, each member of Terra Fund 5 received 2,252.02 shares of the Company's Class B Common Stock for each unit of membership interest in Terra Fund 5 held by such member. Because Terra Fund 5 previously owned its interests in the shares of Class B Common Stock indirectly through its ownership of interests in Terra JV, LLC ("Terra JV"), prior to the Distribution Date, Terra JV first distributed the shares of Class B Common Stock to Terra Fund 5 and Terra Secured Income Fund 7, LLC ("Terra Fund 7"), and Terra Fund 5 then distributed those shares to its members on the Distribution Date and Terra Fund 7 became a direct stockholder of the Company's Class B Common Stock.

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**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.

**Note 2. Summary of Significant Accounting Policies**

***Basis of Presentation***

The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and include the accounts of the Company and its consolidated subsidiaries. The accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. Certain prior period amounts have been reclassified to conform to the current period presentation.

*Liquidity*

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 (<u>[Note 8](#i3706ce2a1db54e55985fa66960192fda_184)</u>). 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<u>[Note 1](#i3706ce2a1db54e55985fa66960192fda_157)</u> 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. Therefore, substantial doubt about the Company's ability to continue as a going concern exists. The consolidated financial statements have been prepared in accordance with U.S. GAAP assuming the Company will continue as a going concern. The consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.

***Consolidation*** 

*&nbsp;&nbsp;&nbsp;&nbsp;*The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity ("VIE") or voting interest model. The Company is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. If the Company determines it does not hold a variable interest in a VIE, it then applies the voting interest model. Under the voting interest model, the Company consolidates an entity when it holds a majority voting interest in an entity.

The Company accounts for investments in which it has significant influence but not a controlling financial interest using the equity method of accounting (see <u>[Note 4](#i3706ce2a1db54e55985fa66960192fda_169)</u>).

*VIE Model* 

An entity is considered to be a VIE if any of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) the holders of the equity investment at risk, as a group, lack either the direct or indirect ability through voting rights or similar rights to make decisions that have a significant effect on the success of the entity or the obligation to absorb the entity's expected losses or right to receive the entity's expected residual returns, or (c) the voting rights of some equity investors are disproportionate to their obligation to absorb losses of the entity, their rights to receive returns from an entity, or both and substantially all of the entity's activities either involve or are conducted on behalf of an investor with disproportionately few voting rights.

Under the VIE model, limited partnerships are considered VIEs unless a limited partner holds substantive kick-out or participating rights over a general partner. 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

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**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.

***Loans Held for Investment***

&nbsp;&nbsp;&nbsp;&nbsp;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. 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. Loans are carried at amortized cost less allowance for credit losses. Amortized cost is the amount at which a financing receivable or a loan is originated or acquired, adjusted for accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash and write-offs.

***Allowance for Credit Losses***

The Company follows the provisions of Accounting Standards Codification ("ASC") 326, *Financial Instruments – Credit Losses* to estimate potential credit losses related to its loans*.* ASC 326 mandates the use of a current expected credit loss ("CECL") methodology for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the "incurred loss" methodology previously required under U.S. GAAP. The CECL methodology requires the consideration of possible credit losses over the life of an instrument as opposed to estimating credit losses upon the occurrence of an actual loss event under the previous "incurred loss" methodology. As permitted by ASC 326, the Company elected not to measure an allowance for credit losses on accrued interest receivable (which is presented separately on the consolidated balance sheets), but rather write off in a timely manner by reversing interest income that would likely be uncollectible.

*Performing Loans*

The Company uses a model-based approach for estimating the allowance for credit losses on performing loans on a collective basis, including future funding commitments for which the Company does not have the unconditional right to cancel, as these loans share similar risk characteristics. The Company utilizes information obtained from internal and external sources relating to past events, current economic conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. The Company utilizes a commercial mortgage-based, third-party loan loss model and because the Company does not have a meaningful history of realized credit losses on its loan portfolio, it subscribes to a database service to provide historical proxy loan loss information. The Company employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. The Company has chosen to incorporate a weighted average macroeconomic forecast that encompasses baseline, upside and downside scenarios, into its allowance for credit losses on performing loans estimate during the reasonable and supportable forecast period which is currently eight quarters. The Company selects 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. Based on the inputs, the loan loss model determines a loan loss rate through the generation of a probability of default (PD) and loss given default (LGD) for each loan. The allowance for credit losses on performing loans is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. A significant amount of judgment is applied in selecting inputs and analyzing results produced by the models to determine the allowance for credit losses on performing loans. Changes in such estimates can significantly affect the expected credit losses.

Beyond the Company's reasonable and supportable forecast period, the Company reverts to historical loss information on a straight-line basis over the remaining contractual loan term, taken from a period that most accurately reflects the expectation of conditions expected to exist during the period of reversion. The Company may adjust historical loss information for differences in risk that may not reflect the characteristics of its current portfolio, including but not limited to, loan-to-value and debt service coverage ratios, among other relevant factors. The method of reversion selected represents the best estimate of the collectability of the investments and is reevaluated each reporting period.

The determination of the performing loans credit loss estimate considers historical loss information and current economic conditions for each loan, reversion period and reasonable and supportable forecasts about the future. The reasonable and supportable forecast period is determined based on the Company's assessment of the most likely scenario of assumptions and plausible outcomes for the U.S. economy. The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed.

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**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. The Company's qualitative analysis includes a review of data that may directly impact its estimates including internal and external information about the loan or property including current market conditions, asset specific conditions, property operations or borrower/sponsor details (i.e., refinance, sale, bankruptcy) which allows the Company to determine the amount of the expected loss more accurately and reasonably for these investments. 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.

*Unfunded Commitments*

Some of the Company's performing loans include commitments to fund incremental proceeds to the borrowers over the life of the loan and these unfunded commitments are also subject to the CECL methodology because the Company does not have an unconditional right to cancel such commitments. The allowance for credit losses related to unfunded commitments is recorded as a component of other liabilities on the Company's consolidated balance sheets. This allowance for credit losses is estimated using the same method outlined above for the Company's outstanding performing loan balances and increases or decreases are also recorded in earnings on the consolidated statements of operations.

*Non-Performing Loans*

During the loan review process, all non-performing loans are evaluated for collectability, which includes both loans in default and loans where we do not expect to collect all amounts due for both principal and interest according to the contractual terms of the loan. The Company removes these loans from the model-based approach described above and analyzes them separately. The credit loss reserve for these loans is calculated as any excess of the amortized cost of the loan over (i) the present value of expected future cash flows discounted at the appropriate discount rate or (ii) the fair value of collateral, if repayment is expected solely from the collateral.

***Equity Interest in Unconsolidated Investments***

The Company accounts for its equity interests in unconsolidated investments under the equity method of accounting, i.e., at cost, increased or decreased by its share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting.

The Company classifies distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor's cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceed cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities.

The Company evaluates its equity interest in unconsolidated investments on a periodic basis to determine if there are any indicators that the value of its equity investments may be impaired and whether or not that impairment is other-than-temporary. To the extent an impairment has occurred and is determined to be other-than-temporary, the Company measures the charge as the excess of the carrying value of its investment over its estimated fair value, which is determined by calculating its share of the estimated fair market value of the underlying net assets based on the terms of the applicable partnership or joint venture agreements.

***Equity Securities Without Readily Determinable Fair Value***

The Company accounts for its equity securities without readily determinable fair value at cost, which is included in other assets on the consolidated balance sheets. The Company has elected the measurement alternative and therefore will evaluate whether the security continues to qualify for the alternative at each reporting period. The Company evaluates its equity security without readily determinable fair value on a periodic basis to determine if there is an observable price change in an orderly transaction for similar investments or if there are any indicators that the value of its equity security may be impaired. The Company will make fair value adjustments, if any, or reductions for any impairment to derive the carrying value of the investment.

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**Notes to Unaudited Consolidated Financial Statements** 

***Available-For-Sale Debt Securities***

From time to time, the Company may invest in marketable debt securities. These securities are classified as available-for-sale debt securities and are carried at fair value. Changes in the fair value of the available-for-sale debt securities are reported in other comprehensive income or loss until a gain or loss on the securities is realized.

***&nbsp;&nbsp;&nbsp;&nbsp;***

***Real Estate Owned, Net***

&nbsp;&nbsp;&nbsp;&nbsp;Real estate acquired is recorded at its estimated fair value at acquisition and is shown net of accumulated depreciation and impairment charges.

&nbsp;&nbsp;&nbsp;&nbsp;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. 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. The Company amortizes the value allocated to in-place leases over the remaining lease term, which is reported in depreciation and amortization expense on its consolidated statements of operations. The value allocated to above or below market leases are amortized over the remaining lease term as an adjustment to rental income.

&nbsp;&nbsp;&nbsp;&nbsp;Real estate assets are depreciated using the straight-line method over their estimated useful lives: buildings and improvements - not to exceed 40 years, and tenant improvements - shorter of the lease term or life of the asset. Ordinary repairs and maintenance which are not reimbursed by the tenants are expensed as incurred. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their estimated useful life.

&nbsp;&nbsp;&nbsp;&nbsp;Management reviews the Company's real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate assets. If impaired, the real estate asset will be written down to its estimated fair value.

***Real Estate Asset Held for Sale***

&nbsp;&nbsp;&nbsp;&nbsp;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.

&nbsp;&nbsp;&nbsp;&nbsp;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***

&nbsp;&nbsp;&nbsp;&nbsp;Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

*&nbsp;&nbsp;&nbsp;&nbsp;Interest Income:* Interest income is accrued based upon the outstanding principal amount and contractual terms of the loans and preferred equity investments that the Company expects to collect, and it is accrued and recorded on a daily basis. Discounts and premiums on investments purchased are accreted or amortized over the expected life of the respective loan using the effective yield method, and are included in interest income in the consolidated statements of operations. Loan origination fees and exit fees, net of portions attributable to obligations under participation agreements, are capitalized and amortized or accreted to interest income over the life of the investment using the effective yield method. Outstanding interest receivable is assessed for recoverability. 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.

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**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. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management's judgment regarding collectability.

&nbsp;&nbsp;&nbsp;&nbsp;The Company holds loans in its portfolio that may contain paid-in-kind ("PIK") interest provisions. The PIK interest, which represents contractually deferred interest that is added to the principal balance that is due at maturity, is recorded on the accrual basis.

*&nbsp;&nbsp;&nbsp;&nbsp;Real Estate Operating Revenues:* Real estate operating revenue is derived from leasing of space to various types of tenants. The leases are for fixed terms of varying length and generally provide for annual rent increases and expense reimbursements to be paid in monthly installments. Lease revenue, or rental income from leases, is recognized on a straight-line basis over the term of the respective leases. Additionally, the Company recorded above- and below-market lease intangibles, which are included in real estate owned, net, in connection with the acquisition of the real estate properties. These intangible assets and liabilities are amortized to lease revenue over the remaining contractual lease term.

*&nbsp;&nbsp;&nbsp;&nbsp;*

*&nbsp;&nbsp;&nbsp;&nbsp;Other Revenues:* Prepayment fee income is recognized as prepayments occur. All other income is recognized when earned.

***Cash, Cash Equivalents and Restricted Cash*** 

The Company considers all highly liquid investments, with original maturities of ninety days or less when purchased, as cash equivalents. Cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains all of its cash at financial institutions which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;Restricted cash represents cash held as additional collateral by the Company on behalf of the borrowers related to the investments in loans or preferred equity instruments for the purpose of such borrowers making interest and property-related operating payments. Restricted cash is not available for general corporate purposes. The related liability is recorded in "*Interest reserve and other deposits held on investments*" on the consolidated balance sheets.

***&nbsp;&nbsp;&nbsp;&nbsp;***Cash held in escrow represents amounts funded to an escrow account for debt services and tenant improvements. From time to time, it may also include proceeds from the repayment of loans that are held by the title company due to timing. Cash held in escrow is restricted and is not available for general corporate purposes.

&nbsp;&nbsp;&nbsp;&nbsp;The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company's consolidated balance sheets to the total amount shown in its consolidated statements of cash flows as of:

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| | | |
|:---|:---|:---|
| | **March 31,** | **March 31,** |
| | **2026** | **2025** |
| Cash and cash equivalents | $4970512 | $11941464 |
| Restricted cash | 569080 | 1490779 |
| Cash held in escrow | 3290787 | 6744251 |
| Total cash, cash equivalents and restricted cash shown in the consolidated <br> statements of cash flows | $8830379 | $20176494 |

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***Participation Interests***

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. For the investments for which participation has been granted, the 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. Interest expense from obligations under participation agreement is reversed when recovery of interest income on the related loan becomes not probable. See "*Obligations Under Participation Agreements*" in <u>[Note 8](#i3706ce2a1db54e55985fa66960192fda_184)</u> for additional information.

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**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 accounts for borrowings under these financing arrangements as secured transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees. See "*Secured Financing Arrangements*" in <u>[Note 8](#i3706ce2a1db54e55985fa66960192fda_184)</u> for additional information.

***Fair Value Measurements***

&nbsp;&nbsp;&nbsp;&nbsp;U.S. 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. Available-for-sale securities are financial instruments that are reported at fair value.

***Deferred Financing Costs***

&nbsp;&nbsp;&nbsp;&nbsp;Deferred financing costs represent fees and expenses incurred in connection with obtaining financing for investments. These costs are presented on the consolidated balance sheets as a direct deduction of the debt liability to which the costs pertain. These costs are amortized using the effective interest method and are included in interest expense on the applicable borrowings in the consolidated statements of operations over the life of the borrowings.

***Income Taxes*** 

&nbsp;&nbsp;&nbsp;&nbsp;The Company has elected to be taxed as a REIT under the Internal Revenue Code commencing with the taxable year ended December 31, 2016. In order to qualify as a REIT, the Company is required, among other things, to distribute dividends equal to at least 90% of its REIT net taxable income to the stockholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. 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. 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.

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. Although the Company files federal and state tax returns, its major tax jurisdiction is federal. The Company's 2022-2025 federal tax returns remain subject to examination by the Internal Revenue Service.

The Company may hold certain investments through a consolidated taxable REIT subsidiary ("TRS"). Such TRS may be subject to U.S. federal and state corporate- level income taxes. The TRS recognizes deferred tax assets and liabilities for the estimated future tax effects attributable to temporary differences between the tax basis of certain assets and liabilities and the reported amounts are included in the accompanying consolidated statement of assets and liabilities using the applicable statutory tax rates in effect for the year in which any such temporary differences are expected to reverse. On December 31, 2025, the Company elected the TRS status for a wholly own subsidiary that holds a non-real estate-related investment. In connection with this election, the Company recorded a deferred income tax expense and deferred income tax liability of $0.4 million 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. Deferred tax liabilities are included in Other liabilities on the Company's consolidated balance sheets.

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**Notes to Unaudited Consolidated Financial Statements** 

***Earnings Per Share***

&nbsp;&nbsp;&nbsp;&nbsp;The Company has a simple equity capital structure with only common stock outstanding. As a result, earnings per share, as presented, represents both basic and dilutive per-share amounts for the periods presented in the consolidated financial statements. Income per basic share of common stock is calculated by dividing net income allocable to common stock by the weighted-average number of shares of common stock issued and outstanding during such period.

***Use of Estimates***

&nbsp;&nbsp;&nbsp;&nbsp;The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately differ from those estimates, and those differences could be material.

***Segment Information***

&nbsp;&nbsp;&nbsp;&nbsp;The Company's primary business is originating, acquiring and structuring real estate-related loans related to high quality commercial real estate. From time to time, the Company may assume control of properties acquired in connection with foreclosures or deed in lieu of foreclosure, or it may acquire operating real estate properties that meet its investment criteria.

The Company operates as one segment, which is also its sole reportable segment, focused on mezzanine loans, senior loans and preferred equity investments, and to a lesser extent, owning and managing real estate. The Company's chief operating decision maker ("CODM") is its senior management team, comprised of its chief executive officer who is also the chief investment officer, chief operating officer, chief financial officer, chief originations officer and the head of asset management of the Manager.

The Company generates its revenue primarily from originating, acquiring, investing in, and managing real estate-related debt investments. 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.

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. Accordingly, interest expense, as reported on its consolidated statement of operations, is its most significant segment expense. Additionally, the measure of segment assets is reflected on the balance sheet as total consolidated assets.

The CODM uses consolidated net income (loss) to make key operating decisions, such as identifying attractive investment opportunities, evaluating underwriting standards, determining the appropriate level of leverage to enhance returns on equity and deciding on the sources of financing.

***Recent Accounting Pronouncements***

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2023-09 "Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 intends to improve the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. The Company adopted this ASU on December 31, 2025. The adoption of this standard did not have a material impact to its consolidated financial statements.

**Note 3. Loans Held for Investment**

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.

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**Notes to Unaudited Consolidated Financial Statements** 

***Portfolio Summary***

The table below provides a summary of the Company's loan portfolio. Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Fixed Rate** | **Floating <br>Rate** <sup>(1)(2)(3)</sup> | **Total** | **Fixed Rate** | **Floating <br>Rate** <sup>(1)(2)(3)</sup> | **Total** |
| Number of loans | 2 | 5 | 7 | 3 | 6 | 9 |
| Principal balance | $13082598 | $165786925 | $178869523 | $14012427 | $196429911 | $210442338 |
| Carrying value | $12297784 | $101110260 | $113408044 | $13226342 | $140161071 | $153387413 |
| Fair value | $12369788 | $100774466 | $113144254 | $13133944 | $139806938 | $152940882 |
| Weighted-average coupon<br>&nbsp;&nbsp;&nbsp;&nbsp;rate <sup>(4)</sup> | 8.50% | 14.27% | 13.77% | 9.42% | 14.46% | 14.16% |
| Weighted-average remaining <br> term (years) <sup>(5)</sup> | 1.44 | 0.56 | 0.67 | 1.48 | 0.59 | 0.71 |

---

_______________

(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 (<u>[Note 8](#i3706ce2a1db54e55985fa66960192fda_184)</u>).

(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.

(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.

***Lending Activities***

The following tables present the activities of the Company's loan portfolio:

---

| | | | |
|:---|:---|:---|:---|
| | **Loans Held for Investment, Net** | **Loans Held for Investment through Participation Interests, Net** | **Total** |
| Balance, January 1, 2026 | $134644098 | $18743315 | $153387413 |
| Principal repayments received | (569378) | (986879) | (1556257) |
| Origination, purchase and funding of loans | 635010 | 793617 | 1428627 |
| Foreclosure of collateral <sup>(1)</sup> | (31445183) |  | (31445183) |
| Accrual, payment and accretion of investment-related fees and other, <br> net | (1481325) | 12462 | (1468863) |
| (Provision for) reversal of provision for credit losses | (6950667) | 12974 | (6937693) |
| Balance, March 31, 2026 | $94832555 | $18575489 | $113408044 |

---

______________

(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 (<u>[Note 5](#i3706ce2a1db54e55985fa66960192fda_172)</u>).

------

**Notes to Unaudited Consolidated Financial Statements** 

---

| | | | |
|:---|:---|:---|:---|
| | **Loans Held for Investment, Net** | **Loans Held for Investment through Participation Interests, Net** | **Total** |
| Balance, January 1, 2025 | $233571416 | $41077729 | $274649145 |
| Principal repayments received | (44000000) | (9958313) | (53958313) |
| Origination, purchase and funding of loans | 6467740 | 1415681 | 7883421 |
| Net amortization of premiums on loans | (6913) |  | (6913) |
| Accrual, payment and accretion of investment-related fees and other, <br> net | (868516) | (65337) | (933853) |
| (Provision for) reversal of provision for credit losses | (2297180) | 112913 | (2184267) |
| Balance, March 31, 2025 | $192866547 | $32582673 | $225449220 |

---

***Portfolio Information***

&nbsp;&nbsp;&nbsp;&nbsp;The tables below detail the types of loans in the Company's loan portfolio, as well as the property type and geographic location of the properties securing these loans. Carrying value represents the amortized cost of loans, net of applicable allowance for credit losses. Percentages of total represented below are calculated as a percentage of the total carrying value.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|<br>**Loan Structure** | **Principal Balance** | **Carrying Value** | **% of Total** | **Principal Balance** | **Carrying Value** | **% of Total** |
| First mortgages | $55033707 | $55152276 | 48.7% | $86456898 | $88060452 | 57.5% |
| Preferred equity investments | 98352140 | 32685092 | 28.8% | 99281969 | 40563196 | 26.4% |
| Mezzanine loans | 25483676 | 25570676 | 22.5% | 24703471 | 24763765 | 16.1% |
| Total | $178869523 | $113408044 | 100.0% | $210442338 | $153387413 | 100.0% |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|<br>**Property Type** | **Principal Balance** | **Carrying Value** | **% of Total** | **Principal Balance** | **Carrying Value** | **% of Total** |
| Office | $102104409 | $37113002 | 32.6% | $101711046 | $43696575 | 28.4% |
| Infill land | 41389766 | 41481579 | 36.6% | 40609561 | 41821242 | 27.3% |
| Multifamily | 6082598 | 5302598 | 4.7% | 37855514 | 37389999 | 24.4% |
| Mixed-use | 22292750 | 22515678 | 19.9% | 22292750 | 22512213 | 14.7% |
| Industrial | 7000000 | 6995187 | 6.2% | 7000000 | 6993917 | 4.6% |
| Retail |  |  | —% | 973467 | 973467 | 0.6% |
| Total | $178869523 | $113408044 | 100.0% | $210442338 | $153387413 | 100.0% |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|<br>**Geographic Location** | **Principal Balance** | **Carrying Value** | **% of Total** | **Principal Balance** | **Carrying Value** | **% of Total** |
| **United States** | | | | | | |
| California | $22292750 | $22515678 | 19.9% | $54109304 | $54643252 | 35.6% |
| Georgia | 32127617 | 32246186 | 28.3% | 31734254 | 31878019 | 20.8% |
| New Jersey | 22906090 | 22906090 | 20.2% | 22906090 | 24051394 | 15.7% |
| Arizona | 18483676 | 18575489 | 16.4% | 17703471 | 17769848 | 11.6% |
| New York | 76059390 | 10169414 | 9.0% | 76015752 | 17077516 | 11.1% |
| Massachusetts | 7000000 | 6995187 | 6.2% | 7000000 | 6993917 | 4.6% |
| Illinois |  |  | —% | 973467 | 973467 | 0.6% |
| Total | $178869523 | $113408044 | 100.0% | $210442338 | $153387413 | 100.0% |

---

------

**Notes to Unaudited Consolidated Financial Statements** 

***Allowance for Credit Losses***

As described in <u>[Note 2](#i3706ce2a1db54e55985fa66960192fda_160)</u>, the Company follows the provisions of ASC 326, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses.

Certain of the Company's performing loans contain provisions for future funding commitments, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. These unfunded commitments amounted to $8.0 million and $8.8 million as of March 31, 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 <u>[Note 2](#i3706ce2a1db54e55985fa66960192fda_160)</u>, 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. 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.

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** |
| | **Allowance on Non-Performing Loans** | **Allowance on Performing Loans** | **Allowance on Performing Loans** | **Total** |
| | **Allowance on Non-Performing Loans** | **Funded** | **Unfunded** | **Total** |
| Allowance for credit losses, beginning of period | $58938234 | $84862 | $35975 | $59059071 |
| Provision for (reversal of provision for) credit losses | 6951742 | (14049) | (10274) | 6927419 |
| Allowance for credit losses, end of period | $65889976 | $70813 | $25701 | $65986490 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
| | **Allowance on Non-Performing Loans** | **Allowance on Performing Loans** | **Allowance on Performing Loans** | **Total** |
| | **Allowance on Non-Performing Loans** | **Funded** | **Unfunded** | **Total** |
| Allowance for credit losses, beginning of period | $44120447 | $2021008 | $150024 | $46291479 |
| Provision for (reversal of provision for) credit losses | 2675670 | (491403) | (64531) | 2119736 |
| Allowance for credit losses, end of period | $46796117 | $1529605 | $85493 | $48411215 |

---

***Accrued Interest Receivable***

The Company elected not to measure a CECL reserve on accrued interest receivable due to the Company's policy of writing off uncollectible accrued interest receivable balances in a timely manner. 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 not 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.

***Loan Risk Rating***

The Company assesses the risk factors of each performing loan and assigns each performing loan a risk rating between 1 and 5, which is an average of the numerical ratings in the following categories: (i) sponsor capability and financial condition; (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** 

balances; and (iv) loan to value. Based on a 5-point scale, the Company's performing loans are rated "1" through "5", from less risk to greater risk, as follows:

---

| | |
|:---|:---|
| **Risk Rating** | **Description** |
| 1 | Very low risk |
| 2 | Low risk |
| 3 | Moderate/average risk |
| 4 | Higher risk |
| 5 | Highest risk |

---

Additionally, as discussed in <u>[Note 2](#i3706ce2a1db54e55985fa66960192fda_160)</u>, 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.

&nbsp;&nbsp;&nbsp;&nbsp;The following tables present the amortized cost of the Company's loan portfolio by year of origination and loan risk rating:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| **Loan Risk Rating** | **Number of Loans** | **Amortized Cost** | **% of Total** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** |
| **Loan Risk Rating** | **Number of Loans** | **Amortized Cost** | **% of Total** | **2026** | **2025** | **2024** | **2023** | **2022** | **Prior** |
| 1 |  | $— | —% | $— | $— | $— | $— | $— | $— |
| 2 | 1 | 7000000 | 3.9% |  |  |  |  |  | 7000000 |
| 3  | 2 | 50887676 | 28.4% |  |  | 32252617 |  | 18635059 |  |
| 4 |  |  | —% |  |  |  |  |  |  |
| 5 |  |  | —% |  |  |  |  |  |  |
| Non-performing <sup>(1)</sup> | 4 | 121481157 | 67.7% |  |  |  |  | 45421768 | 76059389 |
|  | 7 | 179368833 | 100.0% | $— | $— | $32252617 | $— | $64056827 | $83059389 |
| Allowance for credit losses | Allowance for credit losses | (65960789) |  |  |  |  |  |  |  |
| Total carrying value, net | Total carrying value, net | $113408044 |  |  |  |  |  |  |  |

---

_______________

(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.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| **Loan Risk Rating** | **Number of Loans** | **Amortized Cost** | **% of Total** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** | **Amortized Cost by Year Originated** |
| **Loan Risk Rating** | **Number of Loans** | **Amortized Cost** | **% of Total** | **2025** | **2024** | **2023** | **2022** | **2021** | **Prior** |
| 1 |  | $— | —% | $— | $— | $— | $— | $— | $— |
| 2 | 2 | 7973467 | 3.8% | 973467 |  |  |  |  | 7000000 |
| 3 | 2 | 49726646 | 23.4% |  | 31884254 |  | 17842392 |  |  |
| 4 |  |  | —% |  |  |  |  |  |  |
| 5 |  |  | —% |  |  |  |  |  |  |
| Non-performing <sup>(1)</sup>  | 5 | 154710396 | 72.8% |  |  |  | 46563605 |  | 108146791 |
|  | 9 | 212410509 | 100.0% | $973467 | $31884254 | $— | $64405997 | $— | $115146791 |
| Allowance for credit losses | Allowance for credit losses | (59023096) |  |  |  |  |  |  |  |
| Total carrying value, net | Total carrying value, net | $153387413 |  |  |  |  |  |  |  |

---

_______________

(1)Amount includes three loans that were in maturity default with total amortized costs of $78.7 million. The Company expected to recover the principal and interest payments in full and therefore, no specific allowance for loan losses was recorded on these three loans.

**Note 4. Equity Interest in Unconsolidated Investments**

The Company owns interests in a limited partnership, joint ventures and a preferred equity investment with profit-sharing feature. The Company accounts for its interests in these investments under the equity method of accounting (<u>[Note 2](#i3706ce2a1db54e55985fa66960192fda_160)</u>).

------

**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** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Ownership Interest** | **Carrying Value** | **Unfunded Commitment** | **Ownership Interest** | **Carrying Value** | **Unfunded Commitment** |
| Equity interest in RESOF | 14.9% | $35813168 | $11333135 | 14.9% | $40193442 | $11333135 |

---

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Income from equity interest in RESOF | $1020307 | $2206934 |
| Distributions received from RESOF | $5400581 | $1267522 |

---

The following tables present summarized financial information of the Company's equity interest in RESOF. 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** |
| Investments at fair value (cost of $340,866,123 and $386,743,426, respectively) | $340958214 | $393861482 |
| Other assets | 7089300 | 51534275 |
| Total assets | 348047514 | 445395757 |
| Secured financing agreements, net of financing costs | 82586659 | 116985111 |
| Obligations under participation agreement (proceeds of $29,489,720 and <br>&nbsp;&nbsp;&nbsp;&nbsp;$28,566,506, respectively) | 29766848 | 28819472 |
| Other liabilities | 6249974 | 38977816 |
| Total liabilities | 118603481 | 184782399 |
| Partners' capital | $229444033 | $260613358 |

---

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Total investment income | $18804916 | $19150780 |
| Total expenses | 6081847 | 6820394 |
| Net investment income | 12723069 | 12330386 |
| Net change in unrealized appreciation on investments | (7015293) | 1038111 |
| Net increase in partners' capital resulting from operations | $5707776 | $13368497 |

---

------

**Notes to Unaudited Consolidated Financial Statements** 

*Mavik Real Estate Special Opportunities VS2, LP*

On December 23, 2025, the Company entered into a subscription agreement with Mavik Real Estate Special Opportunities VS2, LP ("VS2") whereby the Company committed to fund up to $8.4 million to purchase limited partnership interests in VS2. VS2 invests in stressed, distressed, and special situations investments, including the origination of first mortgage loans, mezzanine loans, preferred equity, and structured equity investments, as well as the acquisition of performing and non-performing notes, and public market real estate debt and equity securities. The general partner of VS2 is Mavik Real Estate Special Opportunities VS2 GP, 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.

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

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Ownership Interest** | **Carrying Value** | **Unfunded Commitment** | **Ownership Interest** | **Carrying Value** | **Unfunded Commitment** |
| Equity interest in VS2 | 1.5% | 1346556 | 7484925 | 1.5% | 316072 | $8369755 |

---

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Income from equity interest in VS2 | $136805 | $— |
| Distributions received from VS2 | $— | $— |

---

The following tables present summarized financial information of the Company's equity interest in VS2. Amounts provided are the total amounts attributable to the investment and do not represent the Company's proportionate share:

---

| | | |
|:---|:---|:---|
| | **March 31, 2026** | **December 31, 2025** |
| Investments at fair value (cost of $457,475,912 and $372,843,060) | $465600745 | $383462787 |
| Other assets | 19161647 | 19534617 |
| Total assets | 484762392 | 402997404 |
| Secured financing agreements, net of financing costs | 320313071 | 301843692 |
| Obligations under participation agreement (proceeds of $71,286,429 and $75,783,803) | 71851966 | 76025965 |
| Other liabilities | 7134425 | 5579792 |
| Total liabilities | 399299462 | 383449449 |
| Partners' capital | $85462930 | $19547955 |

---

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Total investment income | $19811388 | $— |
| Total expenses | 10193237 |  |
| Net investment income | 9618151 |  |
| Net change in unrealized appreciation on investments | (1379499) |  |
| Net increase in partners' capital resulting from operations | $8238652 | $— |

---

***Equity Interest in Joint Ventures***

The Company beneficially owns equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities, and indirectly, together with other non-affiliated entities, non-real estate operating companies. Non-real estate-related investments may take various forms, including preferred and common equity interests in private companies and other financial assets. The Company evaluated its equity interests in these entities and determined it does not have a controlling

------

**Notes to Unaudited Consolidated Financial Statements** 

financial interest and is not the primary beneficiary. Accordingly, the equity interests in the joint ventures are accounted for as equity method investments.

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

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** |
|<br>**Entity** |<br>**Co-owner** | **Beneficial Ownership Interest** | **Carrying Value** | **Beneficial Ownership Interest** | **Carrying Value** |
| LEL Arlington JV LLC | Third party/Affiliate | 27.2% | $4312893 | 27.2% | $4566783 |
| TCG Corinthian FL Portfolio<br>&nbsp;&nbsp;&nbsp;&nbsp;JV LLC | Third party/Affiliate | 30.6% | 4030078 | 30.6% | 4272442 |
| 610 Walnut Investors LLC | Third party | 22.8% | 1020030 | 22.8% | 1278434 |
| MASPEN MS I LLC <sup>(1)</sup> | Affiliates | 2.4% | 222878 | 2.4% | 648581 |
| Axar Special Opportunity Fund <br> VI-B LLC | N/A | 100.0% | 22034390 | 100.0% | 22106901 |
| XS Acquisition Holdco LLC | Third parties | 46.0% | 1949095 | 46.0% | 2124011 |
| VASPEN MS LLC <sup>(2)</sup> | Affiliates | 1.2% | 51565 | 1.2% | 154340 |
|  |  |  | $33620929 |  | $35151492 |

---

_______________

(1)This entity invests in opportunistic equity and debt securities. This entity is jointly owned with a related party managed by the Manager.

(2)This entity invests in opportunistic equity and debt securities. This entity is jointly owned with a related party managed by the Manager.

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Loss from equity interest in the joint ventures | $(1202653) | $(250393) |
| Distributions received from the joint ventures | $771700 | $239154 |

---

The following tables present estimated combined summarized financial information of the Company's equity interest in the joint ventures. 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** |
| Net investments in real estate | $192235547 | $194450383 |
| Other assets | 97788561 | 129185361 |
| Total assets | 290024108 | 323635744 |
| Secured financing agreements | 216201497 | 220573866 |
| Other liabilities | 5373535 | 6571012 |
| Total liabilities | 221575032 | 227144878 |
| Members' capital | $68449076 | $96490866 |

---

------

**Notes to Unaudited Consolidated Financial Statements** 

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Revenues | $5976204 | $6187151 |
| Operating expenses | (3071480) | (3172006) |
| Depreciation and amortization expense | (1941216) | (1961529) |
| Interest expense | (4181111) | (4271689) |
| One time charge off | (41651) |  |
| Unrealized gain (loss) | (1374782) | 780091 |
| Net loss | $(4634036) | $(2437982) |

---

***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. 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.

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 March 31,** |
| | **2026** | **2025** |
| Income from other equity investment | $705548 | $603569 |
| Distributions received from other equity investment |  |  |

---

**Note 5. Real Estate Owned, Net**

***Real Estate Owned Activities***

&nbsp;&nbsp;&nbsp;&nbsp;On January 22, 2026, the Company foreclosed on one multifamily property in full satisfaction of a first mortgage and related fees and expenses. The following table summarizes the carrying value of the first mortgage prior to the foreclosure and the allocation of the estimated fair value of the real estate acquired:

---

| | |
|:---|:---|
| **Carrying Value of First Mortgage:** | |
| Loans held for investment | $31445183 |
| Other assets | 27099 |
|  | $31472282 |
| **Net Assets Acquired:** |  |
| Land | $12263796 |
| Buildings and Improvements | 18973000 |
| In-place lease intangibles | 363000 |
| Other liabilities | (127514) |
|  | $31472282 |

---

&nbsp;&nbsp;&nbsp;&nbsp;In March 2026, the Company sold two industrial buildings for net proceeds of $20.6 million and recognized a net loss on sale of $0.6 million. 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*

&nbsp;&nbsp;&nbsp;&nbsp;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.

***Operating Real Estate Owned, Net***

&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;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. The following table presents the components as of:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Cost** | **Accumulated Depreciation/Amortization** | **Net** | **Cost** | **Accumulated Depreciation/Amortization** | **Net** |
| **Real estate:** | | | | | | |
| Land | $13979051 | $— | $13979051 | $8096412 | $— | $8096412 |
| Building and building <br> improvements | 34179918 | (1549664) | 32630254 | 42420065 | (3571732) | 38848333 |
| Tenant improvements |  |  |  | 118189 |  | 118189 |
| &nbsp;&nbsp;Total real estate | 48158969 | (1549664) | 46609305 | 50634666 | (3571732) | 47062934 |
| **Lease intangible assets:** |  |  |  |  |  |  |
| In-place lease | 2143869 | (1521313) | 622556 | 5365527 | (3514984) | 1850543 |
| &nbsp;&nbsp;Total intangible assets | 2143869 | (1521313) | 622556 | 5365527 | (3514984) | 1850543 |
| **Lease intangible liabilities:** | **Lease intangible liabilities:** |  |  |  |  |  |
| Below-market rent | (1448394) | 1119203 | (329191) | (3850707) | 2296991 | (1553716) |
| &nbsp;&nbsp;Total intangible liabilities | (1448394) | 1119203 | (329191) | (3850707) | 2296991 | (1553716) |
| **Total operating real estate** | $48854444 | $(1951774) | $46902670 | $52149486 | $(4789725) | $47359761 |

---

***Real Estate Operating Revenues and Expenses***

&nbsp;&nbsp;&nbsp;&nbsp;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 March 31,** |
| | **2026** | **2025** |
| **Real estate operating revenues:** |  |  |
| &nbsp;&nbsp;&nbsp;Lease revenue | $1084198 | $1659881 |
| &nbsp;&nbsp;&nbsp;Other operating income | 253992 | 524314 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $1338190 | $2184195 |
| **Real estate operating expenses:** |  |  |
| &nbsp;&nbsp;&nbsp;Utilities | $5889 | $27444 |
| &nbsp;&nbsp;&nbsp;Real estate taxes | 250663 | 298742 |
| &nbsp;&nbsp;&nbsp;Repairs and maintenances | 119612 | 280961 |
| &nbsp;&nbsp;&nbsp;Management fees | 125225 | 63873 |
| &nbsp;&nbsp;&nbsp;Other operating expenses | 283560 | 304208 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $784949 | $975228 |

---

------

**Notes to Unaudited Consolidated Financial Statements** 

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

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| &nbsp;&nbsp;Net amortization of above- and below-market rent intangibles <sup>(1)</sup> | $(190883) | $(404245) |
| &nbsp;&nbsp;Amortization of in-place lease intangibles <sup>(2)</sup> | $389509 | $561420 |

---

_______________

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

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

**Note 6. Fair Value Measurements**

&nbsp;&nbsp;&nbsp;&nbsp;The Company follows the provisions of ASC 820, *Fair Value Measurement* ("ASC 820"), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 established a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the state of the marketplace (including the existence and transparency of transactions between market participants). Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments measured and reported at fair value are classified and disclosed into one of the following categories based on the inputs as follows:

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

*Level 2* — Pricing inputs are other than quoted prices in active markets, including, but not limited to, quoted prices for similar assets and liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, rate of prepayment, loss severities, credit risks and default rates) or other market corroborated inputs.

&nbsp;&nbsp;&nbsp;&nbsp; *Level 3* — Significant unobservable inputs are based on the best information available in the circumstances, to the extent observable inputs are not available, including the Company's own assumptions used in determining the fair value of investments. Fair value for these investments is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment.

&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp; In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. 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. Such financial instruments are carried at cost, less impairment or less net deferred costs, where applicable. Marketable securities and derivatives are financial instruments that are reported at fair value.

***Financial Instruments Carried at Fair Value on a Recurring Basis***

From time to time, the Company may invest in debt securities. These securities are classified as available-for-sale debt securities and are carried at fair value. Changes in the fair value of the available-for-sale debt securities are reported in other comprehensive income or loss until a gain or loss on the securities is realized. In 2024, the Company owned certain trading

------

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

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** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Fair Value Measurements** | **Fair Value Measurements** | **Fair Value Measurements** | **Fair Value Measurements** |
| | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Money market fund <sup>(1)</sup> | $757317 | $— | $— | $757317 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $757317 | $— | $— | $757317 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Fair Value Measurements** | **Fair Value Measurements** | **Fair Value Measurements** | **Fair Value Measurements** |
| | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Money market fund <sup>(1)</sup> | $28928772 | $— | $— | $28928772 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $28928772 | $— | $— | $28928772 |

---

______________

(1)Amount is included in cash and cash equivalents on the consolidated balance sheets.

***Financial Instruments Not Carried at Fair Value***

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** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| |<br>**Level** | **Principal Amount** | **Carrying Value** | **Fair Value** | **Principal Amount** | **Carrying Value** | **Fair Value** |
| **Assets:** | | | | | | | |
| Loans |  |  |  |  |  |  |  |
| Loans held for investment | 3 | $160385847 | $94832555 | $94732651 | $191765400 | $134644098 | $134385733 |
| Loans held for investment <br> acquired through <br> participation | 3 | 18483676 | 18575489 | 18411603 | 18676938 | 18743315 | 18555149 |
| Total loans |  | 178869523 | 113408044 | 113144254 | 210442338 | 153387413 | 152940882 |
| Equity securities without readily<br>&nbsp;&nbsp;&nbsp;&nbsp;determinable fair value <sup>(1)</sup> | 3 | 2000000 | 2004168 | 2000000 | 2000000 | 2004168 | 2000000 |
| Total assets |  | $180869523 | $115412212 | $115144254 | $212442338 | $155391581 | $154940882 |
| **Liabilities:** |  |  |  |  |  |  |  |
| Unsecured notes payable | 1 | $56361350 | $56148203 | $39407856 | $118763375 | $117949074 | $114366824 |
| Secured financing agreements | 3 | 74245500 | 71527031 | 74234687 | 61950000 | 60908096 | 61866780 |
| Obligations under participation <br> agreements | 3 | 18020576 | 18200782 | 18200782 | 18020576 | 18197981 | 18197981 |
| Total liabilities |  | $148627426 | $145876016 | $131843325 | $198733951 | $197055151 | $194431585 |

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_____________

(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** 

***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 (<u>[Note 2](#i3706ce2a1db54e55985fa66960192fda_67)</u>). 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** | **Three Months Ended March 31, 2026** |
| |<br>**Level** | **Fair Value** | **Impairment Charge** |
| **Real estate asset held for sale** | | | |
| Real estate and intangibles | 3 | $9788999 | $595984 |
|  |  |  | $595984 |

---

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.

***Valuation Process for Fair Value Measurement***

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

&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;Market quotations are not readily available for the Company's real estate-related loan investments, all of which are included in Level 3 of the fair value hierarchy, and therefore these investments are valued utilizing a yield approach, *i.e.,* a discounted cash flow methodology to arrive at an estimate of the fair value of each respective investment in the portfolio using an estimated market yield. In following this methodology, investments are evaluated individually, and management takes into account, in determining the risk-adjusted discount rate for each of the Company's investments, relevant factors, which may include available current market data on applicable yields of comparable debt/preferred equity instruments; market credit spreads and yield curves; the investment's yield; covenants of the investment, including prepayment provisions; the ability of our borrowers and investees to make payments and their net operating income and debt-service coverage ratio; construction progress reports and construction budget analysis; the nature, quality and realizable value of any collateral (and loan-to-value ratio); the forces that influence the local markets in which the asset (the collateral) is purchased and sold, such as capitalization rates, occupancy rates, rental rates and replacement costs; and the anticipated duration of each real estate-related loan investment.

The Manager designates a valuation committee to oversee the entire valuation process of the Company's Level 3 investments. The valuation committee is comprised of members of the Manager's senior management, deal and portfolio management teams, who meet on a quarterly basis, or more frequently as needed, to review the Company investments being valued as well as the inputs used in the proprietary valuation model. Valuations determined by the valuation committee are supported by pertinent data and, in addition to a proprietary valuation model, are based on market data, industry accepted third-party valuation models and discount rates or other methods the valuation committee deems to be appropriate. 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.

------

**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 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** | **March 31, 2026** | **March 31, 2026** |
|<br>**Asset Category** | **Fair Value at March 31, 2026** | **Primary Valuation Technique** | **Unobservable Inputs** | **Minimum** | **Maximum** | **Weighted Average** |
| **Assets:** | | | | | | |
| Loans held for investment, net | $94732651 | Discounted cash flow | Discount rate | 6.75% | 18.65% | 10.76% |
|  |  | Discounted cash flow | Terminal capitalization rate | 5.75% | 5.75% | 5.75% |
| Loans held for investment acquired through <br> participation, net | 18411603 | Discounted cash flow | Discount rate | 18.30% | 18.30% | 18.30% |
| Equity securities <sup>(1)</sup> | 2000000 | N/A | N/A | N/A | N/A | N/A |
| **Total Level 3 Assets** | $115144254 |  |  |  |  |  |
| **Liabilities:** |  |  |  |  |  |  |
| Secured financing agreements | $74234687 | Discounted cash flow | Discount rate | 6.43% | 9.53% | 8.03% |
| Obligation under participation agreement | 18200782 | Discounted cash flow | Discount rate | 18.65% | 18.65% | 18.65% |
| **Total Level 3 Liabilities** | $92435469 |  |  |  |  |  |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Fair Value at December 31, 2025** | **Primary Valuation Technique** | **Unobservable Inputs** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|<br>**Asset Category** | **Fair Value at December 31, 2025** | **Primary Valuation Technique** | **Unobservable Inputs** | **Minimum** | **Maximum** | **Weighted Average** |
| **Assets:** | | | | | | |
| Loans held for investment, net | $134385733 | Discounted cash flow | Discount rate | 6.75% | 18.79% | 11.32% |
|  |  | Discounted cash flow | Terminal capitalization rate | 5.75% | 5.75% | 5.75% |
| Loans held for investment acquired through <br> participation, net | 18555149 | Discounted cash flow | Discount rate | 16.00% | 18.30% | 18.18% |
| Equity securities <sup>(1)</sup> | 2000000 | N/A | N/A | N/A | N/A | N/A |
| **Total Level 3 Assets** | $154940882 |  |  |  |  |  |
| **Liabilities:** |  |  |  |  |  |  |
| Secured financing agreements | $61866780 | Discounted cash flow | Discount rate | 6.51% | 9.85% | 8.20% |
| Obligation under participation agreement | 18197981 | Discounted cash flow | Discount rate | 18.79% | 18.79% | 18.79% |
| **Total Level 3 Liabilities** | $80064761 |  |  |  |  |  |

---

_______________

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

**Note 7. Related Party Transactions**

***Management Agreement***

The Company entered into the Management Agreement with the Manager whereby the Manager is responsible for its day-to-day operations. 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 March 31,** |
| | **2026** | **2025** |
| Origination and extension fee expense <sup>(1)</sup> | $60282 | $698879 |
| Asset management fee | 935071 | 1367789 |
| Asset servicing fee | 211211 | 329600 |
| Operating expenses reimbursed to Manager | 673467 | 1429953 |
| Disposition fee <sup>(2)</sup> | 231100 | 320000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $2111131 | $4146221 |

---

_______________

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

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

The Management Agreement may be terminated by the Company during the Initial Term or any Renewal Term upon a finding by either (i) at least two-thirds of the independent directors on the Board or (ii) the holders of a majority of the outstanding shares of the Company's common stock (other than those shares held by members of the Company's senior management team or affiliates of the Manager) that either (a) there has been unsatisfactory performance by the Manager that is materially detrimental to the Company, or (b) the compensation payable to the Manager pursuant to the Management Agreement is unfair; provided, however, that the Company will not have the right to terminate the Management Agreement on the basis of unfair compensation to the Manager if the Manager agrees to continue to provide its services under the Management Agreement in exchange for reduced fees that at least two-thirds of the independent directors on the Board determine to be fair pursuant to the procedures set forth in the Management Agreement. The Company must deliver prior written notice of any such termination to the Manager at least 180 days prior to the last calendar day of the Initial Term or the then-current Renewal Term, as applicable, and the Management Agreement will terminate effective as of the last calendar day of the Initial Term or the then-current Renewal Term, as applicable.

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

The Company may also terminate the Management Agreement, effective upon 30 calendar days' prior written notice from the Board to the Manager, without payment of any Termination Fees or other penalties, upon (i) the material breach of the Management Agreement by the Manager or its affiliates that continues for 30 days after written notice thereof to the Manager (or 45 days after delivery of written notice thereof if the Manager takes diligent steps to cure such breach within 30 days of delivery of the written notice), (ii) any fraud or other criminal conduct, gross negligence or breach of fiduciary duty by the Manager or its affiliates in connection with the Management Agreement, as determined by a final, non-appealable judgment of a court of competent jurisdiction, (iii) the Manager's bankruptcy, insolvency or dissolution, or (iv) an Internalization Event (as defined in the Management Agreement). No Termination Fee or other penalty is payable upon such a termination by the Company.

The Manager may terminate the Management Agreement, effective upon 60 days' prior written from the Manager to the Company, if the Company breaches the Management Agreement and such breach continues for 30 days after written notice thereof. The Company will pay the Manager the Termination Fee upon such termination by the Manager.

*Origination and Extension Fee Expense*

Pursuant to the Management Agreement, the Manager or its affiliates receives an origination fee in the amount of 1.0% of the amount used to originate, fund, acquire or structure investments, including any third-party expenses related to such investments. In the event that the term of any loan held by the Company is extended, the Manager also receives an extension fee equal to the lesser of (i) 1.0% of the principal amount of the loan being extended or (ii) the amount of fee paid to the Company by the borrower in connection with such extension.

*Asset Management Fee*

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

------

**Notes to Unaudited Consolidated Financial Statements** 

*Asset Servicing Fee*

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

*Transaction Breakup Fee*

&nbsp;&nbsp;&nbsp;&nbsp;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.

*Operating Expenses*

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

*Disposition Fee*

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

***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.

***Promissory Note Payable***

On January 24, 2024, the Company, as borrower, entered into a revolving promissory note payable with Terra LLC. The promissory note payable bears interest at the Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days. The 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. The activity associated with this agreement is eliminated in consolidation and therefore has no impact on the Company's consolidated financial statements.

***Cost Sharing and Reimbursement Agreement***

The Company and Terra LLC have entered into a cost sharing and reimbursement agreement effective October 1, 2022, pursuant to which Terra LLC is responsible for its allocable share of the Company's expenses, including fees paid by the Company to the Manager based on relative assets under management. These fees are eliminated in consolidation and therefore have no impact on the Company's consolidated financial statements.

***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.

------

**Notes to Unaudited Consolidated Financial Statements** 

***Due to Manager***

&nbsp;&nbsp;&nbsp;&nbsp;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.

***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 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. For more information on these investments, please see <u>[Note 4](#i3706ce2a1db54e55985fa66960192fda_169)</u>.

***Participation Agreements***

In the normal course of business, the Company may enter into participation agreements with related parties, primarily other affiliated funds managed by the Manager, and to a lesser extent, unrelated parties (the "Participants"). The purpose of the participation agreements is to allow the Company and an affiliate to originate a specified loan when, individually, the Company does not have the liquidity to do so or to achieve a certain level of portfolio diversification. The Company may transfer portions of its investments to other Participants or it may be a Participant to a loan held by another entity.

ASC 860, *Transfers and Servicing* ("ASC 860")*,* establishes accounting and reporting standards for transfers of financial assets. ASC 860-10 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The Company has determined that the participation agreements it enters into are accounted for as secured borrowings under ASC 860 (see "*Participation Interests*" in <u>[Note 2](#i3706ce2a1db54e55985fa66960192fda_160)</u> and "*Obligations Under Participation Agreements*" in <u>[Note 8](#i3706ce2a1db54e55985fa66960192fda_184)</u>).

*Participation Interests Purchased by the Company*

From time to time, the Company may purchase investments from affiliates pursuant to participation agreements. In accordance with the terms of each participation agreement, each Participant's rights and obligations, as well as the proceeds received from the related borrower/issuer of the loan, are based upon their respective pro rata participation interest in the loan.

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

---

| | | | |
|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Participating Interests** | **Principal Balance** | **Carrying Value** |
| | **Participating Interests** | **Principal Balance** | **Carrying Value** |
| Loan A <sup>(1)</sup> | 38.27% | $18483676 | $18575489 |
|  |  | $18483676 | $18575489 |

---

---

| | | | |
|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Participating Interests** | **Principal Balance** | **Carrying Value** |
| | **Participating Interests** | **Principal Balance** | **Carrying Value** |
| Loan A <sup>(1)</sup> | 38.27% | $17703471 | $17769848 |
| Loan B <sup>(1)(2)</sup> | 12.50% | 973467 | 973467 |
|  |  | $18676938 | $18743315 |

---

________________

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

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

------

**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** | **March 31, 2026** | **March 31, 2026** |
| | | | **Transfers treated as<br>obligations under participation agreements** | **Transfers treated as<br>obligations under participation agreements** | **Transfers treated as<br>obligations under participation agreements** |
| |<br>**Principal** |<br>**Carrying Value** | **% Transferred** | **Principal** | **Carrying Value** |
| Loan C <sup>(1)</sup> | $22292750 | $22515678 | 80.8% | $18020576 | $18200782 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**December 31, 2025** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**December 31, 2025** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**December 31, 2025** |
| | | | **Transfers treated as<br>obligations under participation agreements** | **Transfers treated as<br>obligations under participation agreements** | **Transfers treated as<br>obligations under participation agreements** |
| |<br>**Principal** |<br>**Carrying Value** | **% Transferred** | **Principal** | **Carrying Value** |
| Loan C <sup>(1)</sup> | $22292750 | $22512213 | 80.8% | $18020576 | $18197981 |

---

________________

(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.

**Note 8. Debt**

***Unsecured Notes Payable***

The following table presents a summary of the Company's unsecured notes payable outstanding as of:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Coupon Rate** | **Effective Rate** <sup>(1)</sup> | **Maturity Date** | **March 31, 2026** | **December 31, 2025** |
| 6.00% Senior Notes Due 2026 <sup>(2)</sup> | 6.00% | 6.68% | 6/30/2026 | $56361350 | $80388375 |
| 7.00% Senior Notes Due 2026 <sup>(2) (3)(4)</sup> | 7.00% | 11.16% | 3/31/2026 |  | 38375000 |
| &nbsp;&nbsp;Total principal amount |  |  |  | 56361350 | 118763375 |
| Unamortized issue discount |  |  |  | (157310) | (312026) |
| Unamortized purchase discount <sup>(4)</sup> |  |  |  |  | (391525) |
| Unamortized deferred financing costs |  |  |  | (55837) | (110750) |
| &nbsp;&nbsp;Unsecured notes payable, net |  |  |  | $56148203 | $117949074 |

---

_______________

(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.

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

(4)In connection with the BDC Merger, Terra LLC assumed all the obligations under the 7.00% Senior Notes Due 2026 (as defined below) and recorded a purchase discount of $4.6 million, representing the difference between the carrying value and the fair value of the notes on the date of the merger.

------

**Notes to Unaudited Consolidated Financial Statements** 

*The 6.00% Senior Notes Due 2026*

On June 10, 2021, Terra Property Trust issued $78.5 million in aggregate principal amount of its 6.00% notes due 2026, and on June 25, 2021, the underwriters partially exercised their option to purchase an additional $6.6 million of the notes (collectively the "6.00% Senior Notes Due 2026"). The 6.00% Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at Terra Property Trust's option on or after June 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest.

*The 7.00% Senior Notes Due 2026*

On February 10, 2021, Terra BDC issued $34.8 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, and on February 26, 2021, the underwriters exercised the option to purchase an additional $3.6 million of the notes (collectively the "7.00% Senior Notes Due 2026"). 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.

***Secured Financing Arrangements***

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

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** |
| | **Current Maturity** | **Extended Maturity** | **Weighted Average Interest Rate** <sup>(1)</sup> | **Pledged Asset Carrying Value** | **Maximum Facility Size** | **Principal Amount** | **Principal <br> Amount** |
| **Non-Recourse Financing:** | | | | | | | |
| Property mortgages - variable rate <sup>(2)</sup> | January 2027 | January 2027 | 9.85% | 31341140 | N/A | 13250000 |  |
| Property mortgages - fixed rate | June 2028 | June 2028 | 6.25% | 15561530 | N/A | 7417500 | 20700000 |
| &nbsp;&nbsp;**Total** |  |  |  | 46902670 |  | 20667500 | 20700000 |
| **Other Secured Financing:** |  |  |  |  |  |  |  |
| Term loan <sup>(3)</sup> | December 2027 | December 2028 | 9.00% | 35813168 | 10000000 | 10000000 | 10000000 |
| Secured borrowings <sup>(4)</sup> | June 2027 | June 2027 | 9.32% | 32246186 | 18000000 | 18000000 | 31250000 |
| Secured notes payable <sup>(5)</sup> | March 2029 | March 2029 | 7.00% | 149650767 | 25578000 | 25578000 |  |
| &nbsp;&nbsp;**Total** |  |  |  | 217710121 | 53578000 | 53578000 | 41250000 |
|  |  |  |  | $264612791 | $53578000 | 74245500 | 61950000 |
| Unamortized deferred financing costs and other | Unamortized deferred financing costs and other | Unamortized deferred financing costs and other |  |  |  | (2718469) | (1041904) |
| Secured financing agreements, net |  |  |  |  |  | $71527031 | $60908096 |

---

_______________

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

(2)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 (<u>[Note 5](#i3706ce2a1db54e55985fa66960192fda_172)</u>), 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. 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.

(4)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.

------

**Notes to Unaudited Consolidated Financial Statements** 

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,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Amortization of deferred financing costs and others | $418559 | $526414 |
| Proceeds from secured financing | $— | $3254091 |
| Principal repayments on secured financing | $(13282500) | $(43700349) |

---

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

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

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.

*Covenant Compliance*

The Company's secured financing agreements contain certain financial tests and covenants. 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** 

***Scheduled Debt Principal Payments***

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

---

| | |
|:---|:---|
| **Years Ending December 31,** | **Total** |
| 2026 (April 1 through December 31) | 56361350 |
| 2027 | 41250000 |
| 2028 | 7417500 |
| 2029 | 25578000 |
| 2030 |  |
|  | 130606850 |
| Unamortized deferred financing costs and other | (2931616) |
| Total | $127675234 |

---

***Obligations Under Participation Agreements***

As discussed in <u>[Note 2](#i3706ce2a1db54e55985fa66960192fda_160)</u>, the Company follows the guidance in ASC 860 when accounting for loan participations. Such guidance requires the transferred interests meet certain criteria in order for the transaction to be recorded as a sale. 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 <u>[Note 7](#i3706ce2a1db54e55985fa66960192fda_178)</u>). The interest rate on the obligations under participation agreements was 18.65% and 18.79%, respectively.

**Note 9. Commitments and Contingencies**

***Unfunded Commitments on Loans Held for Investment***

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. 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 <u>[Note 4](#i3706ce2a1db54e55985fa66960192fda_169)</u>, 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.

***Other***

The Company enters into contracts that contain a variety of indemnification provisions. The Company's maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. The Manager has reviewed the Company's existing contracts and expects the risk of loss to the Company to be remote.

Additionally, from time to time, the Company and individuals employed by the Company and the Company's Manager may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company's rights under contracts with borrowers and investees. While the outcome of these legal proceedings cannot be predicted with certainty, the Company does not expect that such proceedings will have a material effect upon the financial condition or results of operations.

See <u>[Note 7](#i3706ce2a1db54e55985fa66960192fda_178)</u> for a discussion of the Company's commitments to the Manager.

------

**Notes to Unaudited Consolidated Financial Statements** 

**Note 10. Equity** 

***Earnings Per Share***

The following table presents earnings per share:

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Net loss | $(15048983) | $(1285064) |
| Weighted-average shares outstanding - basic and<br> diluted | 24339892 | 24338162 |
| Loss per share - basic and diluted | $(0.62) | $(0.05) |

---

***Preferred Stock***

&nbsp;&nbsp;&nbsp;&nbsp;The Company's charter gives it authority to issue 50,000,000 shares of preferred stock, $0.01 par value per share ("Preferred Stock"). 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.

***Common Stock***

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.

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.

In connection with the potential liquidity transactions discussed in <u>[Note 1](#i3706ce2a1db54e55985fa66960192fda_157)</u>, on December 1, 2023, the Company amended its articles of amendment and restatement (the "A&R Articles") to provide the Board with greater flexibility to pursue a direct listing. In connection with a listing of shares of Class A Common Stock on a national securities exchange, the outstanding shares of Class B Common Stock will be convertible on a one-for-one basis into listed shares of Class A Common Stock, subject to certain conversion terms and holding periods. Currently, there are no outstanding shares of Class A Common Stock.

The A&R Articles also incorporate the provisions generally required by state regulators in order to become a non-traded REIT and publicly sell shares of the Company's stock not listed on an exchange. These non-traded REIT provisions will spring into effect and become operative if the Company ultimately decides to register and sell shares in a non-traded REIT format.

***Distributions***

&nbsp;&nbsp;&nbsp;&nbsp;The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with U.S. GAAP, to its stockholders each year to comply with the REIT provisions of the Internal Revenue Code. 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.

***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.

**Note 11. Subsequent Events**

Management has evaluated subsequent events through the date the consolidated financial statements were available to be issued. Management has determined that there are no material events that would require adjustment to, or disclosure in, the Company's consolidated financial statements.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

**Item 2. Management**'**s Discussion and Analysis of Financial Condition and Results of Operations.**

&nbsp;&nbsp;&nbsp;&nbsp;

The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto and other financial information included elsewhere in this quarterly report on Form 10-Q. In this report, "we," "us" and "our" refer to Terra Property Trust, Inc. (and, together with its consolidated subsidiaries, the "Company" or "Terra Property Trust").

**FORWARD-LOOKING STATEMENTS**

&nbsp;&nbsp;&nbsp;&nbsp;We make forward-looking statements in this quarterly report on Form 10-Q within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections. The forward-looking statements contained in this quarterly report on Form 10-Q may include, but are not limited to, statements as to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expected financial performance, operating results and our ability to make distributions to our stockholders in the future;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the availability of attractive risk-adjusted investment opportunities in our target asset class and other real estate-related investments that satisfy our objectives and strategies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the origination or acquisition of our targeted assets, including the timing of originations or acquisitions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• volatility in our industry, interest rates and spreads, the debt or equity markets, the general economy or the real estate market specifically, whether the results of market events or otherwise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in our investment objectives and business strategy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the availability of financing on acceptable terms or at all;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to fund our liquidity needs and upcoming debt maturities through ordinary course loan repayments, asset sales and distributions and debt or equity capital sources or facilities, including exchange offers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to continue as a going concern;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the performance and financial condition of our borrowers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in interest rates and the market value of our assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• borrower defaults or decreased recovery rates from our borrowers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in prepayment rates on our loans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our use of financial leverage;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual and potential conflicts of interest with any of the following affiliated entities: Terra Fund Advisors, LLC, Terra REIT Advisors, LLC (our "Manager"); Terra Capital Partners, LLC ("Terra Capital Partners"), our sponsor; Terra Secured Income Fund 5 International; Terra Income Fund International; Terra Secured Income Fund 7, LLC ("Terra Fund 7"); Terra Offshore Funds REIT, LLC ("Terra Offshore REIT"); Mavik Real Estate Special Opportunities Fund, LP ("RESOF"); Mavik Real Estate Special Opportunities VS2, LP ("VS2"); or any of their affiliates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our dependence on our Manager or its affiliates and the availability of its senior management team and other personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• liquidity transactions that may be available to us in the future, including a liquidation of our assets, a sale of our company, a listing of our shares of common stock on a national securities exchange, an amendment of our charter to incorporate certain provisions generally required by state securities regulators to allow us to publicly sell unlisted shares (provided that such provisions would only take effect when a registration statement related to the publicly offered unlisted shares is declared effective), an adoption of a share repurchase plan or a strategic business

------

combination, in each case, which may include the distribution of our common stock indirectly owned by certain of our affiliate funds (the "Terra Funds") to the ultimate investors in the Terra Funds, and the timing of any such transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actions and initiatives of the U.S. 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;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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. federal income tax purposes; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the degree and nature of our competition.

In addition, words such as "anticipate," "believe," "expect" and "intend" indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in "Part I — Item 1A. Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2025. Other factors that could cause actual results to differ materially include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the economy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• tariffs imposed by the current presidential administration and the threat of such tariffs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the availability of financing on acceptable terms or at all;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• future changes in laws or regulations and conditions in our operating areas.

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders are advised to consult any additional disclosures that we may make directly to stockholders or through reports that we may file in the future with the Securities and Exchange Commission (the "SEC"), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Overview**

&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;We are a real estate investment trust that originates, invests in and manages a diverse portfolio of real estate and real estate-related assets. We focus primarily on commercial real estate credit investments, including first mortgage loans, subordinated loans (including B-notes, mezzanine and preferred equity) and credit facilities throughout the United States, which we collectively refer to as our targeted assets. Our loans finance the acquisition, development or recapitalization of high-quality commercial real estate in the United States. We focus on middle market loans in the approximately $10 million to $50 million range, which we believe are subject to less competition, offer higher risk-adjusted returns than larger loans with similar risk metrics and facilitate portfolio diversification. Our investment objective is to provide attractive risk-adjusted returns to our stockholders, primarily by earning high current income that allows for regular distributions, and, in certain instances, benefiting from potential capital appreciation. There can be no assurances that we will be successful in meeting our investment objective. We may also make strategic real estate equity and non-real estate-related investments that align with our investment objectives and criteria.

&nbsp;&nbsp;&nbsp;&nbsp;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.

&nbsp;&nbsp;&nbsp;&nbsp;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. The profile of these properties ranges from stabilized and value-added properties to pre-development and construction. Our loans are structured across mezzanine debt, first mortgages, preferred equity investments and credit facilities.

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&nbsp;&nbsp;&nbsp;&nbsp;We were incorporated under the Maryland General Corporation Law on December 31, 2015. Through December 31, 2015, our business was conducted through a series of predecessor private partnerships. At the beginning of 2016, we completed the merger of these private partnerships into a single entity as part of our plan to reorganize our business as a REIT for federal income tax purposes (the "REIT Formation Transaction"). Following the REIT Formation Transaction, Terra Secured Income Fund 5, LLC ("Terra Fund 5") contributed the consolidated portfolio of net assets of certain Terra Funds to our company in exchange for all of the shares of our common stock. On March 2, 2020, we engaged in a series of transactions pursuant to which we issued an aggregate of 4,574,470.35 shares of common stock in exchange for the settlement of an aggregate of $49.8 million of participation interests in loans held by us, cash of $25.5 million and other working capital.

On October 1, 2022, pursuant to that certain Agreement and Plan of Merger, dated as of May 2, 2022 (the "Merger Agreement"), Terra Income Fund 6, Inc. ("Terra BDC") merged with and into Terra Income Fund 6, LLC ("Terra LLC"), our wholly owned subsidiary, with Terra LLC continuing as the surviving entity of the merger (the "BDC Merger") and as our wholly owned subsidiary. 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. Therefore, substantial doubt about our ability to continue as a going concern exists. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements, and it is likely that our investors will lose all or a part of their investment. In addition, if there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms, or at all.

As previously disclosed, we continue to explore alternative liquidity transactions on an opportunistic basis to maximize stockholder value. Examples of the alternative liquidity transactions that, depending on market conditions, may be available to us include a listing of our shares of common stock on a national securities exchange, adoption of a share repurchase plan, a liquidation of our assets, a sale of our company or a strategic business combination, in each case, which may include the further in-kind distribution of our shares of common stock indirectly owned by certain of our affiliate funds to the ultimate investors in such affiliate funds. We cannot provide any assurance that any alternative liquidity transaction will be available or, if available, that we will pursue or be successful in completing any such alternative liquidity transaction.

One of the potential future liquidity transactions that we continue to evaluate is a "direct listing" of our Class A Common Stock, $0.01 par value per share ("Class A Common Stock"), on a national securities exchange (i.e., a listing not involving a concurrent public offering of newly issued shares). If market conditions are not supportive of a direct listing that would in our view lead to a constructive trading environment for the Class A Common Stock, we will explore alternative paths to pursue our investment strategy and provide liquidity to our investors, including converting our company into a traditional "non-traded REIT." As part of a potential conversion to a non-traded REIT, we would adopt a customary share repurchase plan pursuant to which our investors could request to have their shares of our common stock redeemed for cash.

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We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2016. So long as we qualify as a REIT, we generally are not subject to U.S. federal income tax on our net taxable income to the extent that we annually distribute all of our net taxable income to our stockholders.

**Portfolio Summary**

***Net Loan Portfolio***

The following tables provide a summary of our net loan portfolio. Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** |
| | **Fixed Rate** | **Floating <br>Rate** <sup>(1)(2)(3)</sup> | **Total Gross Loans** | **Obligations under Participation Agreements** | **Total Net Loans** |
| Number of loans | 2 | 5 | 7 | 1 | 7 |
| Principal balance | $13082598 | $165786925 | $178869523 | $18020576 | $160848947 |
| Carrying value | 12297784 | 101110260 | 113408044 | 18200782 | 95207262 |
| Fair value | 12369788 | 100774466 | 113144254 | 18200782 | 94943472 |
| Weighted average coupon rate <sup>(4)</sup> | 8.50% | 14.27% | 13.77% | 18.65% | 12.34% |
| Weighted-average remaining term (years) <sup>(5)</sup> | 1.44 | 0.56 | 0.67 |  | 0.67 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
| | **Fixed Rate** | **Floating <br>Rate** <sup>(1)(2)(3)</sup> | **Total Gross Loans** | **Obligations under Participation Agreements** | **Total Net Loans** |
| Number of loans | 3 | 6 | 9 | 1 | 9 |
| Principal balance | $14012427 | $196429911 | $210442338 | $18020576 | $192421762 |
| Carrying value | 13226342 | 140161071 | 153387413 | 18197981 | 135189432 |
| Fair value | 13133944 | 139806938 | 152940882 | 18197981 | 134742901 |
| Weighted average coupon rate <sup>(4)</sup> | 9.42% | 14.46% | 14.16% | 18.79% | 13.44% |
| Weighted-average remaining term (years) <sup>(5)</sup> | 1.48 | 0.59 | 0.71 |  | 0.71 |

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_______________

(1)These loans pay a coupon rate of Secured Overnight Financing Rate ("SOFR") or forward-looking term rate based on SOFR ("Term SOFR"), as applicable, plus a fixed spread. Coupon rates shown were determined using the average SOFR of 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 (<u>[Note 8](#i3706ce2a1db54e55985fa66960192fda_184)</u>).

(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.

(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.

***Real Estate Owned***

&nbsp;&nbsp;&nbsp;&nbsp;

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.

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***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. 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.

**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.

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

**Net Loan Portfolio Information**

&nbsp;&nbsp;&nbsp;&nbsp;The tables below set forth the types of loans in our loan portfolio, as well as the property type and geographic location of the properties securing these loans, on a net loan basis, which represents our proportionate share of the loans, based on our economic ownership of these loans. Percentages of total represented below are calculated as a percentage of the total carrying value.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|<br>**Loan Structure** | **Principal Balance** | **Carrying <br>Value** | **% of Total** | **Principal Balance** | **Carrying <br>Value** | **% of Total** |
| First mortgages | $55033707 | $55152276 | 57.9% | $86456898 | $88060452 | 65.2% |
| Mezzanine loans | 25483676 | 25570676 | 26.9% | 24703471 | 24763765 | 18.3% |
| Preferred equity investments | 80331564 | 14484310 | 15.2% | 81261393 | 22365215 | 16.5% |
| Total | $160848947 | $95207262 | 100.0% | $192421762 | $135189432 | 100.0% |

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---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|<br>**Property Type** | **Principal Balance** | **Carrying <br>Value** | **% of Total** | **Principal Balance** | **Carrying <br>Value** | **% of Total** |
| Office | $102104409 | $37113002 | 39.0% | $101711046 | $43696575 | 32.3% |
| Infill land | 41389766 | 41481579 | 43.6% | 40609561 | 41821242 | 30.9% |
| Multifamily | 6082598 | 5302599 | 5.6% | 37855514 | 37390000 | 27.7% |
| Industrial | 7000000 | 6995187 | 7.3% | 7000000 | 6993917 | 5.2% |
| Mixed-use | 4272174 | 4314895 | 4.5% | 4272174 | 4314231 | 3.2% |
| Retail |  |  | —% | 973467 | 973467 | 0.7% |
| Total | $160848947 | $95207262 | 100.0% | $192421762 | $135189432 | 100.0% |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **March 31, 2026** | **March 31, 2026** | **March 31, 2026** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|<br>**Geographic Location** | **Principal Balance** | **Carrying <br>Value** | **% of Total** | **Principal Balance** | **Carrying <br>Value** | **% of Total** |
| **United States** | | | | | | |
| California | $4272174 | $4314896 | 4.5% | $36088728 | $36445271 | 27.0% |
| Georgia | 32127617 | 32246186 | 33.9% | 31734254 | 31878019 | 23.6% |
| New Jersey | 22906090 | 22906090 | 24.1% | 22906090 | 24051394 | 17.8% |
| Arizona | 18483676 | 18575489 | 19.5% | 17703471 | 17769848 | 13.1% |
| New York | 76059390 | 10169414 | 10.7% | 76015752 | 17077516 | 12.6% |
| Massachusetts | 7000000 | 6995187 | 7.3% | 7000000 | 6993917 | 5.2% |
| Illinois |  |  | —% | 973467 | 973467 | 0.7% |
| Total | $160848947 | $95207262 | 100.0% | $192421762 | $135189432 | 100.0% |

---

**Factors Impacting Operating Results**

&nbsp;&nbsp;&nbsp;&nbsp;Our results of operations are affected by a number of factors and primarily depend on, among other things, the level of the interest income from targeted assets, the market value of our assets and the supply of, and demand for, real estate-related loans, including mezzanine loans, first mortgage loans, subordinated mortgage loans, preferred equity investments and other loans related to high quality commercial real estate in the United States, and the financing and other costs associated with our business. Interest income and borrowing costs may vary as a result of changes in interest rates, which could impact the net interest we receive on our assets. Our operating results may also be impacted by conditions in the financial markets and unanticipated credit events experienced by borrowers under our loan assets.

***Credit Risk***

Our loans and investments are subject to credit risk. The performance and value of our loans and investments depend upon the owners' ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our asset management team reviews our investment portfolios and is in regular contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

&nbsp;&nbsp;&nbsp;&nbsp;In addition, we are exposed to the risks generally associated with the commercial real estate market, including variances in occupancy rates, capitalization rates, absorption rates, and other macroeconomic factors beyond our control. We seek to manage these risks through our Manager's underwriting and asset management processes.

&nbsp;&nbsp;&nbsp;&nbsp;We maintain all of our cash at financial institutions which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation.

***Concentration Risk***

&nbsp;&nbsp;&nbsp;&nbsp;We hold real estate and real estate-related loans. Thus, our investment portfolio may be subject to a more rapid change in value than would be the case if it were required to maintain a wide diversification among industries, companies and types of loans. The result of such concentration in real estate assets is that a loss in such investments could materially reduce our capital.

***Interest Rate Risk***

&nbsp;&nbsp;&nbsp;&nbsp;Interest rate risk represents the effect from a change in interest rates, which could result in an adverse change in the fair value of our interest-bearing financial instruments. With respect to our business operations, increases in interest rates, in general, may over time cause: (i) the interest expense associated with variable rate borrowings to increase; (ii) the value of real estate and real estate-related loans to decline; (iii) coupons on variable rate loans to reset, although on a delayed basis, to higher interest rates; (iv) to the extent applicable under the terms of our investments, prepayments on real estate-related loans to slow; and (v) to the extent we enter into interest rate swap agreements as part of our hedging strategy, the value of these agreements to increase.

&nbsp;&nbsp;&nbsp;&nbsp;Conversely, decreases in interest rates, in general, may over time cause: (i) the interest expense associated with variable rate borrowings to decrease; (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

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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.

***Prepayment Risk***

&nbsp;&nbsp;&nbsp;&nbsp;Prepayments can either positively or adversely affect the yields on our loans. Prepayments on debt instruments, where permitted under the debt documents, are influenced by changes in current interest rates and a variety of economic, geographic and other factors beyond our control, and consequently, such prepayment rates cannot be predicted with certainty. If we do not collect a prepayment fee in connection with a prepayment or are unable to invest the proceeds of such prepayments received, the yield on the portfolio will decline. In addition, we may acquire assets at a discount or premium and if the asset does not repay when expected, the anticipated yield may be impacted. Under certain interest rate and prepayment scenarios we may fail to recoup fully our cost of acquisition of certain loans.

***Extension Risk***

&nbsp;&nbsp;&nbsp;&nbsp;Extension risk is the risk that our assets will be repaid at a slower rate than anticipated and generally increases when interest rates rise. In which case, to the extent we have financed the acquisition of an asset, we may have to finance our asset at potentially higher costs without the ability to reinvest principal into higher yielding securities because borrowers prepay their mortgages at a slower pace than originally expected, adversely impacting our net interest spread, and thus our net interest income.

***Real Estate Risk***

&nbsp;&nbsp;&nbsp;&nbsp;The market values of commercial and residential mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; retroactive changes to building or similar codes; pandemics; natural disasters; and other Acts of God. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses.

***Use of Leverage***

&nbsp;&nbsp;&nbsp;&nbsp;We deploy moderate amounts of leverage as part of our operating strategy, which may consist of borrowings under first mortgage financings, warehouse facilities, term loans, repurchase agreements and other credit facilities. While borrowing and leverage present opportunities for increasing total return, they may have the effect of potentially creating or increasing losses.

***Market Risk***

&nbsp;&nbsp;&nbsp;&nbsp;Our loans are highly illiquid, and there is no assurance that we will achieve our investment objectives, including targeted returns. Due to the illiquidity of the loans, valuation of our loans may be difficult, as there generally will be no established markets for these loans.

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**Results of Operations**

&nbsp;&nbsp;&nbsp;&nbsp;The following table presents the comparative results of our operations:

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| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** | **Change** |
| **Revenues** |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | $1623636 | $10205897 | $(8582261) |
| &nbsp;&nbsp;&nbsp;Real estate operating revenue | 1338189 | 2184195 | (846006) |
| &nbsp;&nbsp;&nbsp;Other operating income | 252025 | 66657 | 185368 |
|  | 3213850 | 12456749 | (9242899) |
| **Operating expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating expenses reimbursed to Manager | 673467 | 1429953 | (756486) |
| &nbsp;&nbsp;&nbsp;Asset management fee | 935071 | 1367789 | (432718) |
| &nbsp;&nbsp;&nbsp;Asset servicing fee | 211211 | 329600 | (118389) |
| &nbsp;&nbsp;&nbsp;Provision for credit losses | 6927419 | 2119736 | 4807683 |
| &nbsp;&nbsp;&nbsp;Real estate operating expenses | 784950 | 975228 | (190278) |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 854622 | 1345937 | (491315) |
| &nbsp;&nbsp;&nbsp;Professional fees | 2072080 | 518354 | 1553726 |
| &nbsp;&nbsp;&nbsp;Impairment charge on real estate asset | 595984 |  | 595984 |
| &nbsp;&nbsp;&nbsp;Directors' fees | 68750 | 83750 | (15000) |
| &nbsp;&nbsp;&nbsp;Other | 102650 | 202190 | (99540) |
|  | 13226204 | 8372537 | 4853667 |
| **Operating (loss) income** | (10012354) | 4084212 | (14096566) |
| **Other income and expenses** |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense on secured financing | (1806153) | (4548870) | 2742717 |
| &nbsp;&nbsp;&nbsp;Interest expense on unsecured notes payable | (2478542) | (2491537) | 12995 |
| &nbsp;&nbsp;&nbsp;Interest expense on obligations under participation agreements | (844617) | (888904) | 44287 |
| &nbsp;&nbsp;&nbsp;Income from equity interest in unconsolidated investments | 660007 | 2560110 | (1900103) |
| &nbsp;&nbsp;&nbsp;Loss on sale of real estate, net | (560634) |  | (560634) |
| &nbsp;&nbsp;&nbsp;Unrealized gain on investments, net |  | (75) | 75 |
|  | (5029939) | (5369276) | 339337 |
| **Net loss before income taxes** | (15042293) | (1285064) | (13757229) |
| &nbsp;&nbsp;&nbsp;Provision for income tax | (6690) |  | $(6690) |
| **Net loss** | $(15048983) | $(1285064) | $(13763919) |

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***Net Loan Portfolio***

&nbsp;&nbsp;&nbsp;&nbsp;In assessing the performance of our loans, we believe it is appropriate to evaluate the loans on an economic basis, that is, gross loans net of obligations under participation agreements and secured financing agreements.

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

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2026** | **Three Months Ended March 31, 2025** | **Three Months Ended March 31, 2025** |
| | **Weighted Average Principal Amount** <sup>(1)</sup> | **Weighted Average Coupon Rate** <sup>(2)</sup> | **Weighted Average Principal Amount** <sup>(1)</sup> | **Weighted Average Coupon Rate** <sup>(2)</sup> |
| **<u>Total portfolio</u>** | | | | |
| Gross loans | $198982324 | 13.3% | $301186692 | 13.0% |
| Obligations under participation agreements | (18020576) | 18.8% | (18349524) | 19.3% |
| Secured borrowing | (22563889) | 9.3% | (16363889) | 9.9% |
| Promissory notes payable |  | —% | (23753749) | 9.4% |
| Repurchase agreements payable |  | —% | (39389877) | 9.0% |
| Revolving line of credit payable |  | —% | (14789174) | 7.7% |
| Net loans <sup>(3)</sup> | $158397859 | 13.2% | $188540479 | 14.4% |
| **<u>Senior loans</u>** |  |  |  |  |
| Gross loans | $75111625 | 12.7% | $215794304 | 13.2% |
| Secured borrowing | (22563889) | 9.3% | (16363889) | 9.9% |
| Promissory notes payable |  | —% | (23753749) | 9.4% |
| Repurchase agreements payable |  | —% | (39389877) | 9.0% |
| Revolving line of credit payable |  | —% | (14789174) | 7.7% |
| Net loans <sup>(3)</sup> | $52547736 | 14.2% | $121497615 | 16.4% |
| **<u>Subordinated loans</u>** <sup>(4)</sup> |  |  |  |  |
| Gross loans | $123870699 | 13.8% | $85392388 | 12.4% |
| Obligations under participation agreements | (18020576) | 18.8% | (18349524) | 19.3% |
| Net loans <sup>(3)</sup> | $105850123 | 12.9% | $67042864 | 10.5% |

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_______________

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

(2)Amount is calculated based on the underlying principal amount of each loan.

(3)The weighted average coupon rate represents net interest income over the period calculated using the weighted average coupon rate and weighted average principal amount shown on the table (interest income on the loans less interest expense) divided by the weighted average principal amount of the net loans during the period.

(4)Subordinated loans include mezzanine loans, preferred equity investments and credit facilities.

***Interest Income***

&nbsp;&nbsp;&nbsp;&nbsp;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.

***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.

***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.

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***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.

***Asset Management Fee***

&nbsp;&nbsp;&nbsp;&nbsp;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.

&nbsp;&nbsp;&nbsp;&nbsp;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.

***Asset Servicing Fee***

&nbsp;&nbsp;&nbsp;&nbsp;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.

&nbsp;&nbsp;&nbsp;&nbsp;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.

***Provision for Credit Losses***

&nbsp;&nbsp;&nbsp;&nbsp;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.

&nbsp;&nbsp;&nbsp;&nbsp;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.

***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.

***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.

***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.

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***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.

***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. 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.

&nbsp;&nbsp;&nbsp;&nbsp;

***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 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.

***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, we 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:

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| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Income from equity interest in RESOF | $1020307 | $2206934 |
| Income from equity interest in VS2 | 136805 |  |
| Loss from equity interest in the joint ventures | (1202653) | (250393) |
| Income from other equity investment | 705548 | 603569 |
|  | $660007 | $2560110 |

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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.

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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.

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.

***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.

***Net Loss***

&nbsp;&nbsp;&nbsp;&nbsp;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.&nbsp;&nbsp;&nbsp;&nbsp;

**Financial Condition, Liquidity and Capital Resources**

&nbsp;&nbsp;&nbsp;&nbsp;Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, funding and maintaining our assets and operations, making distributions to our stockholders and other general business needs. 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. We may use other sources to finance our target assets, including bank financing and arranged financing facilities with domestic or international financing providers. In addition, we may divide the loans we originate into senior and junior tranches and dispose of the more senior tranches as an additional means of providing financing to our business.

&nbsp;&nbsp;&nbsp;&nbsp;We may also issue additional equity, equity-related and debt securities to fund our investment strategies. We may issue these securities to unaffiliated third parties or to vehicles advised by affiliates of Terra Capital Partners or third parties. As part of our capital raising transactions, we may grant to one or more of these vehicles certain control rights over our activities including rights to approve major decisions we take as part of our business. In order to qualify as a REIT, we must distribute to our stockholders, each calendar year, dividends equal to at least 90% of our REIT taxable income (including certain items of non-cash income), determined without regard to the deduction for dividends paid and excluding net capital gain. These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital for our business.

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

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***Summary of Financing***

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

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| | | | |
|:---|:---|:---|:---|
| **Type of Financing** | **Outstanding Balance** | **Interest Rate** | **Maturity Date** |
| **Fixed Rate:** | | | |
| &nbsp;&nbsp;Unsecured notes payable | $56361350 | 6.00% | June 2026 |
| &nbsp;&nbsp;Secured note payable | 25578000 | 7.00% | March 2029 |
| &nbsp;&nbsp;Property mortgages | 7417500 | 6.25% | June 2028 |
| &nbsp;&nbsp;Term loan payable | 10000000 | 9.00% | December 2027 |
|  | $99356850 |  |  |
| **Variable Rate:** |  |  |  |
| &nbsp;&nbsp;Property mortgage | 13250000 | Term SOFR + 5%, (combined floor rate ranging from 9.85%) | January 2027 |
| &nbsp;&nbsp;Secured borrowing | 18000000 | Term SOFR + 5%, (combined floor rate ranging from 9.32%) | June 2027 |
|  | $31250000 |  |  |

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*Cash Flows (Used in) Provided by Operating Activities*

&nbsp;&nbsp;&nbsp;&nbsp;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. 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*

*&nbsp;&nbsp;&nbsp;&nbsp;*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.

*&nbsp;&nbsp;&nbsp;&nbsp;*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.

*Cash Flows Used in Financing Activities*

*&nbsp;&nbsp;&nbsp;&nbsp;*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.

*&nbsp;&nbsp;&nbsp;&nbsp;*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.

**Distribution Reinvestment Plan**

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

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**Critical Accounting Policies and Use of Estimates**

&nbsp;&nbsp;&nbsp;&nbsp;Our consolidated financial statements are prepared in conformity with United States generally accepted accounting principles, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management's most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the consolidated financial statements, management has utilized available information, including industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. As we execute our expected operating plans, we will describe additional critical accounting policies in the notes to our future consolidated financial statements in addition to those discussed below.

***Allowance for Credit Losses***

We follow the provisions of ASC 326, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses ("CECL"). The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to estimating credit losses upon the occurrence of an actual loss event under the previous "incurred loss" methodology.

We use a model-based approach for estimating the allowance for credit losses on performing loans on a collective basis, including future funding commitments for which we do not have the unconditional right to cancel, as these loans share similar risk characteristics. We utilize information obtained from internal and external sources relating to past events, current economic conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for our loan portfolio. We utilize a commercial mortgage-based, third-party loan loss model and because we do not have a meaningful history of realized credit losses on our loan portfolio, we subscribe to a database service to provide historical proxy loan loss information. We employ logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. 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. 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. Based on the inputs, the loan loss model determines a loan loss rate through the generation of a probability of default (PD) and loss given default (LGD) for each loan. The allowance for credit losses on performing loans is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. These results require a significant amount of judgment applied in selecting inputs and analyzing the results produced by the models to determine the allowance for credit losses. Changes in such estimates can significantly affect the expected credit losses.

**Management Agreement with our Manager**

&nbsp;&nbsp;&nbsp;&nbsp;We currently pay the following fees to our Manager pursuant to the Management Agreement:

*&nbsp;&nbsp;&nbsp;&nbsp;Origination and Extension Fee*. An origination fee in the amount of 1.0% of the amount used to originate, acquire, fund or structure investments, including any third-party expenses related to such investments. In the event that the term of any loan is extended, our Manager also receives an origination fee equal to the lesser of (i) 1.0% of the principal amount of the loan being extended or (ii) the amount of the fee paid by the borrower in connection with such extension.

*&nbsp;&nbsp;&nbsp;&nbsp;Asset Management Fee*. A monthly asset management fee at an annual rate equal to 1.0% of the aggregate funds under management, which includes the loan origination amount or aggregate gross acquisition cost, as applicable, for each investment and cash held by us.

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*&nbsp;&nbsp;&nbsp;&nbsp;Asset Servicing Fee*. A monthly asset servicing fee at an annual rate equal to 0.25% of the aggregate gross origination price or aggregate gross acquisition price for each investment then held by us (inclusive of closing costs and expenses).

*&nbsp;&nbsp;&nbsp;&nbsp;Disposition Fee*. A disposition fee in the amount of 1.0% of the gross sale price received by our company from the disposition of an investment, but not upon the maturity, prepayment, workout, modification or extension of a loan unless there is a corresponding fee paid by the borrower, in which case the disposition fee will be the lesser of (i) 1.0% of the principal amount of the loan and (ii) the amount of the fee paid by the borrower in connection with such transaction. If we take ownership of a property as a result of a workout or foreclosure of a loan, we will pay a disposition fee upon the sale of such property equal to 1.0% of the sales price.

*&nbsp;&nbsp;&nbsp;&nbsp;Transaction Breakup Fee*. In the event that we receive 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, our 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 our Manager with respect to its evaluation and pursuit of such transactions.

&nbsp;&nbsp;&nbsp;&nbsp;In addition to the fees described above, we reimburse our Manager for operating expenses incurred in connection with services provided to the operations of our company, including our allocable share of our Manager's overhead, such as rent, employee costs, utilities, and technology costs.

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

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| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| Origination and extension fee expense <sup>(1)</sup> | $60282 | $698879 |
| Asset management fee | 935071 | 1367789 |
| Asset servicing fee | 211211 | 329600 |
| Operating expenses reimbursed to Manager | 673467 | 1429953 |
| Disposition fee <sup>(2)</sup> | 231100 | 320000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $2111131 | $4146221 |

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(1)Origination and extension fee expense is generally offset with origination and extension fee income. Any excess is deferred and amortized to interest income over the term of the loan.

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

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

The Management Agreement may be terminated by us during the Initial Term or any Renewal Term upon a finding by either (i) at least two-thirds of the independent directors on our Board or (ii) the holders of a majority of the outstanding shares of our common stock (other than those shares held by members of our senior management team or affiliates of our Manager) that either (a) there has been unsatisfactory performance by our Manager that is materially detrimental to us, or (b) the compensation payable to our Manager pursuant to the Management Agreement is unfair; provided, however, that we will not have the right to terminate the Management Agreement on the basis of unfair compensation to our Manager if our Manager agrees to continue to provide its services under the Management Agreement in exchange for reduced fees that at least two-thirds of the independent directors on our Board determine to be fair pursuant to the procedures set forth in the Management Agreement. We must deliver prior written notice of any such termination to our 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 us as discussed above, we will pay our Manager, on the date on which such termination is effective, a termination fee in an amount equal to three times the average annual fees of all types and expense reimbursements received by or owed to our Manager pursuant to the Management Agreement during the 24-month

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period immediately preceding such termination (the "Termination Fee"), calculated as of the end of the most recently completed month prior to the date of such termination.

We may also terminate the Management Agreement, effective upon 30 calendar days' prior written notice from our Board to our Manager, without payment of any Termination Fees or other penalties, upon (i) the material breach of the Management Agreement by our Manager or its affiliates that continues for 30 days after written notice thereof to our Manager (or 45 days after delivery of written notice thereof if our Manager takes diligent steps to cure such breach within 30 days of delivery of the written notice), (ii) any fraud or other criminal conduct, gross negligence or breach of fiduciary duty by our Manager or its affiliates in connection with the Management Agreement, as determined by a final, non-appealable judgment of a court of competent jurisdiction, (iii) our Manager's bankruptcy, insolvency or dissolution, or (iv) an Internalization Event (as defined in the Management Agreement). No Termination Fee or other penalty is payable upon such a termination by us.

Our Manager may terminate the Management Agreement, effective upon 60 days' prior written from our Manager to us, if we breach the Management Agreement and such breach continues for 30 days after written notice thereof. We will pay our Manager the Termination Fee upon such termination by our Manager.

**Promissory Note Payable with Terra LLC**

On January 24, 2024, we, as borrower, entered into a revolving promissory note payable with Terra LLC. The promissory note payable bears interest at the Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days. The 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. The activity associated with this agreement is eliminated in consolidation and therefore has no impact on our consolidated financial statements.

**Cost Sharing and Reimbursement Agreement with Terra LLC**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into a cost sharing and reimbursement agreement with Terra LLC, effective October 1, 2022 pursuant to which Terra LLC will be responsible for its allocable share of our expenses, including fees paid by us to our Manager based on relative assets under management. These fees are eliminated in consolidation and therefore have no impact on our consolidated financial statements.

**Participation Agreements** 

&nbsp;&nbsp;&nbsp;&nbsp;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.

&nbsp;&nbsp;&nbsp;&nbsp;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.

&nbsp;&nbsp;&nbsp;&nbsp;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).

&nbsp;&nbsp;&nbsp;&nbsp;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.

&nbsp;&nbsp;&nbsp;&nbsp;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.

------

&nbsp;&nbsp;&nbsp;&nbsp;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.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk.**

&nbsp;&nbsp;&nbsp;&nbsp;We may be subject to financial market risks, including changes in interest rates. To the extent that we borrow money to make investments, our net investment income will be dependent upon the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of rising interest rates, our cost of funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the aggregate principal balance of variable rate investments and indebtedness as of:

---

| | |
|:---|:---|
| | **March 31, 2026** |
| Variable rate investments | $146766099 |
| Variable rate debt | $31250000 |

---

&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes estimated changes in net investment income on our variable rate investments and indebtedness as of March 31, 2026 assuming hypothetical increases or decreases in Term SOFR or SOFR:

&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| | **1.00% Decrease** | **1.00% Increase** |
| Increase (decrease) in investment income from variable rate investments | $(1282824) | $1350260 |
| Decrease (increase) in interest expense from variable rate debt <sup>(1)</sup> |  | (62071) |
| &nbsp;&nbsp;Net increase (decrease) in investment income from variable rate instruments | $(1282824) | $1288189 |

---

_______________

(1)A 1.00% decrease in Term SOFR or SOFR had no impact on interest expense because the interest rate on the debt is subject to a floor.

&nbsp;&nbsp;&nbsp;&nbsp;We may hedge against interest rate fluctuations by using standard hedging instruments, such as futures, options and forward contracts. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in benefits of lower interest rates with respect to our portfolio of investments with fixed interest rates. For the three months ended March 31, 2026 and 2025, we did not engage in interest rate hedging activities that qualify for hedge accounting.

***Prepayment Risks***

&nbsp;&nbsp;&nbsp;&nbsp;Prepayments can either positively or adversely affect the yields on our loans. Prepayments on debt instruments, where permitted under the debt documents, are influenced by changes in current interest rates and a variety of economic, geographic and other factors beyond our control, and consequently, such prepayment rates cannot be predicted with certainty. If we do not collect a prepayment fee in connection with a prepayment or are unable to invest the proceeds of such prepayments received, the yield on the portfolio will decline. In addition, we may acquire assets at a discount or premium and if the asset does not repay when expected, the anticipated yield may be impacted. Under certain interest rate and prepayment scenarios we may fail to recoup fully our cost of acquisition of certain loans.

***Extension Risk***

&nbsp;&nbsp;&nbsp;&nbsp;Extension risk is the risk that our assets will be repaid at a slower rate than anticipated and generally increases when interest rates rise. In which case, to the extent we have financed the acquisition of an asset, we may have to finance our asset at potentially higher costs without the ability to reinvest principal into higher yielding securities because borrowers prepay their mortgages at a slower pace than originally expected, adversely impacting our net interest spread, and thus our net interest income.

------

***Real Estate Risk***

&nbsp;&nbsp;&nbsp;&nbsp;The market values of commercial and residential mortgage assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; retroactive changes to building or similar codes; pandemics; natural disasters; and other Acts of God. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses.

***Credit Risk***

&nbsp;&nbsp;&nbsp;&nbsp;We are subject to varying degrees of credit risk in connection with holding a portfolio of our target assets. With respect to our loan portfolio, we seek to manage credit risk by limiting exposure to any one individual borrower and any one asset class.

&nbsp;&nbsp;&nbsp;&nbsp;Additionally, our Manager employs an asset management approach and monitors the portfolio of investments through, at a minimum, quarterly financial review of property performance including net operating income, loan-to-value, debt service coverage ratio and the debt yield. Our Manager also requires certain borrowers to establish a cash reserve, as a form of additional collateral, for the purpose of providing for future interest or property-related operating payments.

**Item 4. Controls and Procedures.**

***Evaluation of Disclosure Controls and Procedures***

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in our periodic reports.

***Changes in Internal Control Over Financial Reporting***

&nbsp;&nbsp;&nbsp;&nbsp;During the most recent fiscal quarter, there was no change in our internal controls over financial reporting, as defined under Rule 13a-15(f) under the Exchange Act, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

**PART II - OTHER INFORMATION**

**Item 1. Legal Proceedings.** 

From time to time, we and individuals employed by us and our Manager may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our borrowers and investees. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that such proceedings will have a material effect upon our financial condition or results of operations.

**Item 1A. Risk Factors.**

Our business, reputation, results of operations and financial condition can be materially and adversely affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2025 under the heading "Risk Factors." Except as set forth below, there have been no material changes to our risk factors since the filing of our annual report on Form 10-K for the year ended December 31, 2025.

***Limited participation in the Exchange Offer (as defined in Item 2 hereof) could result in us defaulting on the 6.00% Senior Notes Due 2026 that remain outstanding after such Exchange Offer is completed.***

Participation in the Exchange Offer may be limited. If only a small portion of the 6.00% Senior Notes Due 2026 are exchanged pursuant to the Exchange Offer, a significant amount of the 6.00% Senior Notes Due 2026 could remain outstanding after such Exchange Offer is completed. 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, deferral of asset management fees and operating expenses reimbursement payments to the Manager and may also use debt or equity capital sources or facilities. However, there can be no assurance that we will have sufficient liquidity or be able to obtain additional financing to repay or refinance any 6.00% Senior Notes Due 2026 that remain outstanding at their maturity on June 30, 2026. We had cash and cash equivalents of approximately $5.0 million as of March 31, 2026. Our ability to repay or refinance these notes will depend on a number of factors, including our ability to generate liquidity through ordinary course loan repayments, asset sales and distributions, deferral of management fees and expense reimbursement payments to the Manager, our available liquidity, our ability to access capital markets, the performance and valuation of our assets and general market conditions. If we are unable to obtain additional financing, refinance the 6.00% Senior Notes Due 2026 or otherwise generate sufficient liquidity prior to maturity, we could default on the 6.00% Senior Notes Due 2026, which could materially adversely affect our business, financial condition, results of operations and cash flows. Therefore, substantial doubt about the Company's ability to continue as a going concern exists. The consolidated financial statements have been prepared in accordance with U.S. GAAP assuming the Company will continue as a going concern. The consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements, and it is likely that our investors will lose all or a part of their investment. In addition, if there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms, or at all.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.** 

None.

**Item 3. Defaults Upon Senior Securities.** 

Not applicable.

**Item 4. Mine Safety Disclosures.** 

Not applicable.

**Item 5. Other Information.**

None.

**Item 6. Exhibits** 

&nbsp;&nbsp;&nbsp;&nbsp;The following exhibits are filed with this report. Documents other than those designated as being filed herewith are incorporated herein by reference.

---

| | |
|:---|:---|
| **Exhibit No.** | **Description and Method of Filing** |
| 3.1 | <u>[Amended and Restated Bylaws of Terra Property Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Registration Statement on Amendment No.1 to Form 10 (File No. 000-56117) filed with the SEC on December 16, 2019).](https://www.sec.gov/Archives/edgar/data/1674356/000110465919072997/tm1924432d1_ex3-1.htm)</u> |
| 3.2 | <u>[Second Articles of Amendment and Restatement of Terra Property Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on December 5, 2023).](https://www.sec.gov/Archives/edgar/data/1674356/000110465923123618/tm2332022d1_ex3-1.htm)</u> |
| 3.3 | <u>[Articles of Supplementary of Terra Property Trust, Inc. Designating 12.5% Series A Redeemable Cumulative Preferred Stock (incorporated by reference to Exhibit 3.3 to the Registration Statement on Amendment No.1 to Form 10 (File No. 000-56117) filed with the SEC on December 16, 2019).](https://www.sec.gov/Archives/edgar/data/1674356/000110465919072997/tm1924432d1_ex3-3.htm)</u> |
| 4.1 | <u>[Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K filed with the SEC on March 15, 2024).](https://www.sec.gov/Archives/edgar/data/1674356/000167435624000009/tpt123123ex41.htm)</u> |
| 4.2 | <u>[Indenture, dated June 10, 2021, by and between Terra Property Trust, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form 8-A (File No. 001-40496) filed with the SEC on June 14, 2021).](https://www.sec.gov/Archives/edgar/data/1674356/000110465921080631/tm2119618d1_ex4-1.htm)</u> |
| 4.3 | <u>[First Supplemental Indenture, dated June 10, 2021, by and between Terra Property Trust, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form 8-A (File No. 001-40496) filed with the SEC on June 14, 2021).](https://www.sec.gov/Archives/edgar/data/1674356/000110465921080631/tm2119618d1_ex4-2.htm)</u> |
| 4.4 | <u>[Form of Global Note representing the Company's 6.00% Senior Notes due June 30, 2026 (included in Exhibit 4.2).](https://www.sec.gov/Archives/edgar/data/1674356/000110465921080631/tm2119618d1_ex4-2.htm)</u> |

---

------

---

| | |
|:---|:---|
| **Exhibit No.** | **Description and Method of Filing** |
| 4.5 | <u>[Indenture, dated as of March 30, 2026, by and among Terra Property Trust, Inc., and U.S. Bank Trust Company, National Association (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 1, 2026).](https://www.sec.gov/Archives/edgar/data/1674356/000110465926038710/tm269231d3_ex4-1.htm)</u> |
| 4.6 | <u>[Form of 7.00% Senior Secured Notes due 2029 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on April 1, 2026).](https://www.sec.gov/Archives/edgar/data/1674356/000110465926038710/tm269231d3_ex4-1.htm)</u> |
| 31.1\* | <u>[Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](tpt33126ex311.htm)</u> |
| 31.2\* | <u>[Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](tpt33126ex312.htm)</u> |
| 32\*\* | <u>[Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](tpt33126ex32.htm)</u> |
| 101.INS\*\* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH\*\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\*\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.LAB\*\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\*\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 101.DEF\*\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 104 | Cover Page Interactive Data File Included as Exhibit 101 (embedded within the Inline XBRL document) |

---

______________

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\* Filed herewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;\*\* Furnished herewith.

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 14, 2026

---

| | |
|:---|:---|
| **TERRA PROPERTY TRUST, INC.** | **TERRA PROPERTY TRUST, INC.** |
| By: | /s/ Vikram S. Uppal |
|  | Vikram S. Uppal |
|  | Chief Executive Officer and Chief Investment Officer |
|  | (Principal Executive Officer) |
| By: | /s/ Gregory M. Pinkus |
|  | Gregory M. Pinkus |
|  | Chief Financial Officer, Treasurer and Secretary |
|  | (Principal Financial and Accounting Officer) |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER**

**PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934**

**AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Vikram S. Uppal, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Quarterly Report on Form 10-Q of Terra Property Trust, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | May 14, 2026 | |
| | | /s/ Vikram S. Uppal |
| | | Vikram S. Uppal |
| | | Chief Executive Officer |
| | | (Principal Executive Officer) |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER**

**PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934**

**AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Gregory M. Pinkus, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this Quarterly Report on Form 10-Q of Terra Property Trust, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | May 14, 2026 | |
| | | /s/ Gregory M. Pinkus |
| | | Gregory M. Pinkus |
| | | Chief Financial Officer and Chief Operating Officer |
| | | (Principal Financial and Principal Accounting Officer) |

---

## Ex-32

**Exhibit 32**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report on Form 10-Q of Terra Property Trust, Inc. (the "Company") for the quarter ended March 31, 2026, as filed with the Securities Exchange Commission on the date hereof (the "Report"), I, Vikram S. Uppal, Chief Executive Officer, and I, Gregory M. Pinkus, Chief Financial Officer, each certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: | May 14, 2026 |  |
|  |  | /s/ Vikram S. Uppal |
|  |  | Vikram S. Uppal |
|  |  | Chief Executive Officer |
|  |  | (Principal Executive Officer) |
|  |  | /s/ Gregory M. Pinkus |
|  |  | Gregory M. Pinkus |
|  |  | Chief Financial Officer and Chief Operating Officer |
|  |  | (Principal Financial and Principal Accounting Officer) |

---

Pursuant to the Securities and Exchange Commission Release 33-8238, dated June 5, 2003, this certification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any registration statement of the Company filed under the Securities Act of 1933, as amended.

<br>