Terra Property Trust, Inc 10-Q for FY2021 Q2

Terra Property Trust, Inc. (TPTS)

10-Q 2021-08-12 For: 2021-06-30

Added on April 09, 2026

About this 10-Q

Terra Property Trust, Inc filed this 10-Q on August 12, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $11.26M; down 6.7% from $12.06M a year earlier
Net loss: $104.77K; compared with net income of $2.65M a year earlier

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Maryland						81-0963486
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	þ	Smaller reporting company	☑
		Emerging growth company	☑


		Page

PART I	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements:

	Consolidated Balance Sheets as of June 30 , 2021 (unaudited) and December 31, 2020	2

	Consolidated Statements of Operations for the three and six months ended June 30 , 2021 and 2020 (unaudited)	3

	Consolidated Statements of Comprehensive Income for the three and six months ended June 30 , 2021 and 2020 (unaudited)	4

	Consolidated Statements of Changes in Equity for the three and six months ended June 30 , 2021 and 2020 (unaudited)	5

	Consolidated Statements of Cash Flows for the six months ended June 30 , 2021 and 2020 (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57

Item 4.	Controls and Procedures	59

PART II	OTHER INFORMATION	59

Item 1.	Legal Proceedings	60

Item 1A.	Risk Factors	60

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 3.	Defaults upon Senior Securities	60

Item 4.	Mine Safety Disclosures	60

Item 5.	Other Information	60

Item 6.	Exhibits	60

Signatures		62


	June 30, 2021		December 31, 2020
	(unaudited)
Assets
Cash and cash equivalents	$	88,293,082	$	18,607,952
Restricted cash	12,826,145		12,145,616
Cash held in escrow by lender	3,617,787		2,166,755
Marketable securities	8,000,914		1,287,500
Loans held for investment, net	459,324,373		417,986,462
Loans held for investment acquired through participation, net	—		4,294,053
Equity investment in a limited partnership, net	53,063,823		36,259,959
Real estate owned, net (Note 6)
Land, building and building improvements, net	62,552,918		63,385,339
Lease intangible assets, net	8,753,795		9,793,600
Operating lease right-of-use assets	27,402,564		16,105,888
Interest receivable	2,948,171		2,509,589
Other assets	3,472,120		3,934,468
Total assets	$	730,255,692	$	588,477,181
Liabilities and Equity
Liabilities:
Term loan payable, net of deferred financing fees	$	104,925,595	$	105,245,801
Unsecured notes payable, net of debt issuance cost	81,622,637		—
Obligations under participation agreements (Note 8 )	115,021,242		71,581,897
Mortgage loan payable, net of deferred financing fees and other	40,567,219		44,117,293
Revolving line of credit payable, net of deferred financing fees	8,668,567		—
Secured borrowing	25,844,928		18,187,663
Interest reserve and other deposits held on investments	12,826,145		12,145,616
Operating lease liabilities	27,402,564		16,105,888
Lease intangible liabilities, net (Note 6)	10,006,713		10,249,776
Due to Manager (Note 8)	1,618,598		1,257,098
Interest payable	2,242,006		1,185,502
Accounts payable and accrued expenses	1,480,180		3,968,603
Unearned income	688,226		677,856
Other liabilities	975,441		429,123
Total liabilities	433,890,061		285,152,116
Commitments and contingencies (Note 10)
Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized and none issued	—		—
12.5% Series A Cumulative Non-Voting Preferred Stock at liquidation preference, 125 shares authorized and 125 shares issued and outstanding at both June 30, 2021 and December 31, 2020	125,000		125,000
Common stock, $0.01 par value, 450,000,000 shares authorized and 19,487,460 shares issued and outstanding at both June 30, 2021 and December 31, 2020, respectively	194,875		194,875
Additional paid-in capital	373,443,672		373,443,672
Accumulated deficit	(77,397,916)		(70,438,482)
Total equity	296,365,631		303,325,065
Total liabilities and equity	$	730,255,692	$	588,477,181


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues
Interest income	$	8,750,466	$	9,585,175	$	16,871,415	$	19,237,040
Real estate operating revenue	2,265,700		2,251,095		4,277,341		4,564,146
Other operating income	240,131		228,359		396,793		341,014
	11,256,297		12,064,629		21,545,549		24,142,200
Operating expenses
Operating expenses reimbursed to Manager	2,007,069		1,694,875		3,349,827		3,062,064
Asset management fee	1,156,696		1,140,426		2,313,239		2,169,959
Asset servicing fee	276,990		253,316		550,197		487,524
Provision for loan losses	573,061		169,300		849,081		1,314,294
Real estate operating expenses	1,516,105		871,207		2,487,420		1,815,725
Depreciation and amortization	931,723		946,494		1,863,448		1,892,988
Professional fees	469,932		373,098		990,351		667,859
Directors fees	36,249		33,750		72,499		117,500
Other	132,697		267,702		204,185		332,651
	7,100,522		5,750,168		12,680,247		11,860,564
Operating income	4,155,775		6,314,461		8,865,302		12,281,636
Other income and expenses
Interest expense from obligations under participation agreements	(2,772,801)		(1,823,121)		(4,652,882)		(4,383,388)
Interest expense on repurchase agreement payable	—		(1,469,669)		—		(3,020,939)
Interest expense on mortgage loan payable	(656,859)		(749,753)		(1,343,009)		(1,500,389)
Interest expense on revolving line of credit	(162,651)		(599,989)		(180,497)		(774,978)
Interest expense on term loan payable	(1,646,182)		—		(3,318,950)		—
Interest expense on unsecured notes payable	(336,861)		—		(336,861)		—
Interest expense on secured borrowing	(334,905)		(169,622)		(634,710)		(210,113)
Net loss on extinguishment of obligations under participation agreements	—		—		—		(319,453)
Net change in unrealized gains on marketable securities	248,874		67,522		234,266		67,522
Income from equity investment in a limited partnership	1,400,839		—		2,738,666		—
Realized gains on marketable securities	—		1,076,213		—		1,085,107
	(4,260,546)		(3,668,419)		(7,493,977)		(9,056,631)
Net (loss) income	$	(104,771)	$	2,646,042	$	1,371,325	$	3,225,005
Series A preferred stock dividend declared	(3,906)		(3,906)		(7,812)		(7,812)
Net (loss) income allocable to common stock	$	(108,677)	$	2,642,136	$	1,363,513	$	3,217,193

(Loss) earnings per share — basic and diluted	$	(0.01)	$	0.14	$	0.07	$	0.18

Weighted-average shares — basic and diluted	19,487,460		19,555,241		19,487,460		18,131,260

Distributions declared per common share	$	0.23	$	0.23	$	0.43	$	0.76


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


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


	Preferred Stock		12.5% Series A Cumulative Non-Voting Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income
						$0.01 Par Value
			Shares	Amount		Shares	Amount								Total equity
Balance at January 1, 2021	$	—	125	$	125,000	19,487,460	$	194,875	$	373,443,672	$	(70,438,482)	$	—	$	303,325,065
Distributions declared on common shares ($0.20 per share)	—		—	—		—	—		—		(3,893,595)		—		(3,893,595)
Distributions declared on preferred shares	—		—	—		—	—		—		(3,906)		—		(3,906)
Comprehensive income:
Net income	—		—	—		—	—		—		1,476,096		—		1,476,096
Balance at March 31, 2021	—		125	125,000		19,487,460	194,875		373,443,672		(72,859,887)		—		300,903,660
Distributions declared on common shares ($0.23 per share)	—		—	—		—	—		—		(4,429,352)		—		(4,429,352)
Distributions declared on preferred shares	—		—	—		—	—		—		(3,906)		—		(3,906)
Comprehensive loss:
Net loss	—		—	—		—	—		—		(104,771)		—		(104,771)
Balance at June 30, 2021	$	—	125	$	125,000	19,487,460	$	194,875	$	373,443,672	$	(77,397,916)	$	—	$	296,365,631


Repayment of borrowings under repurchase agreement	—		(3,395,740)
Payment for repurchase of common stock	—		(3,620,000)
Proceeds from borrowings under repurchase agreement	—		17,617,665
Proceeds from issuance of common stock in the Merger	—		16,897,074
Proceeds from issuance of common stock to Terra Offshore REIT	—		8,600,000
Net cash provided by financing activities	127,988,731		81,856,714
Net increase in cash, cash equivalents and restricted cash	71,816,691		52,395,600
Cash, cash equivalents and restricted cash at beginning of period	32,920,323		50,549,700
Cash, cash equivalents and restricted cash at end of period (Note 2)	$	104,737,014	$	102,945,300


Total Consideration
Equity issued in the Merger	$	34,630,615
Proceeds from equity issued in the Merger	16,897,074
	$	17,733,541
Net assets exchanged
Settlement of obligations under participation agreements	$	17,688,741
Interest receivable	134,543
Other assets	18,384
Accounts payable and accrued expenses	(57,433)
Due to Manager	(50,694)
	$	17,733,541


Total Consideration
Equity issued to Terra Offshore REIT	$	40,749,378
Proceeds from equity issued to Terra Offshore REIT	8,600,000
	$	32,149,378
Net Assets exchanged
Settlement of obligations under participation agreements	$	32,112,257
Interest receivable	270,947
Due to Manager	(233,826)
Net assets acquired excluding cash and cash equivalents	$	32,149,378


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


	June 30,
	2021		2020
Cash and cash equivalents	$	88,293,082	$	82,553,933
Restricted cash	12,826,145		18,459,391
Cash held in escrow by lender	3,617,787		1,931,976
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	104,737,014	$	102,945,300


	June 30, 2021									December 31, 2020
	Fixed Rate			Floating Rate (1)(2)(3)			Total			Fixed Rate			Floating Rate (1)(2)(3)			Total
Number of loans	7			12			19			6			14			20
Principal balance	$	111,619,413		$	349,648,476		$	461,267,889		$	56,335,792		$	367,838,966		$	424,174,758
Carrying value	$	111,699,524		$	347,624,849		$	459,324,373		$	56,464,310		$	365,816,205		$	422,280,515
Fair value	$	111,412,219		$	347,426,451		$	458,838,670		$	56,284,334		$	363,122,860		$	419,407,194
Weighted-average coupon rate	13.44		%	7.47		%	8.92		%	12.17		%	7.95		%	8.51		%
Weighted-average remaining term (years)	1.14			1.20			1.19			1.78			1.44			1.48


	Loans Held for Investment		Loans Held for Investment through Participation Interests		Total
Balance, January 1, 2021	$	417,986,462	$	4,294,053	$	422,280,515
New loans made	82,136,763		—		82,136,763
Principal repayments received	(42,131,804)		(4,250,000)		(46,381,804)
PIK interest (1)	1,338,170		—		1,338,170
Net amortization of premiums on loans	(30,696)		—		(30,696)
Accrual, payment and accretion of investment-related fees and other, net	874,559		(44,053)		830,506
Provision for loan losses	(849,081)		—		(849,081)
Balance, June 30, 2021	$	459,324,373	$	—	$	459,324,373


	June 30, 2021						December 31, 2020
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
First mortgages	$	328,228,189	$	330,236,098	71.9	%	$	254,042,847	$	255,093,989	60.5	%
Preferred equity investments	108,248,355		108,572,807		23.6	%	141,590,632		142,002,144		33.6	%
Mezzanine loans	24,791,345		25,103,307		5.5	%	28,541,279		28,923,140		6.8	%
Allowance for loan losses	—		(4,587,839)		(1.0)	%	—		(3,738,758)		(0.9)	%
Total	$	461,267,889	$	459,324,373	100.0	%	$	424,174,758	$	422,280,515	100.0	%


	June 30, 2021						December 31, 2020
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Office	$	200,071,536	$	200,677,807	43.7	%	$	182,698,225	$	183,053,751	43.3	%
Multifamily	121,160,887		122,010,069		26.5	%	150,873,173		151,768,347		35.9	%
Infill land	66,355,092		66,936,752		14.6	%	10,442,567		10,537,512		2.5	%
Hotel - full/select service	47,112,521		47,544,871		10.4	%	49,142,809		49,393,251		11.7	%
Mixed use	16,567,853		16,567,853		3.6	%	16,767,984		16,767,984		4.0	%
Industrial	7,000,000		7,000,000		1.5	%	7,000,000		7,000,000		1.7	%
Student housing	3,000,000		3,174,860		0.7	%	3,000,000		3,204,375		0.8	%
Hotel - extended stay	—		—		—	%	4,250,000		4,294,053		1.0	%
Allowance for loan losses	—		(4,587,839)		(1.0)	%	—		(3,738,758)		(0.9)	%
Total	$	461,267,889	$	459,324,373	100.0	%	$	424,174,758	$	422,280,515	100.0	%


	June 30, 2021						December 31, 2020
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	174,807,272	$	175,838,430	38.3	%	$	200,279,688	$	200,990,328	47.6	%
New York	84,748,355		84,879,403		18.5	%	79,187,004		79,310,276		18.8	%
Georgia	75,167,030		75,556,746		16.4	%	74,116,787		74,505,752		17.6	%
Pennsylvania	52,000,000		52,447,064		11.4	%	—		—		—	%
North Carolina	37,155,092		37,395,640		8.1	%	33,242,567		33,438,806		7.9	%
Washington	23,500,000		23,693,404		5.2	%	23,500,000		23,682,536		5.6	%
Massachusetts	7,000,000		7,000,000		1.5	%	7,000,000		7,000,000		1.7	%
Texas	3,890,140		3,926,665		0.9	%	3,848,712		3,887,200		0.9	%
South Carolina	3,000,000		3,174,860		0.7	%	3,000,000		3,204,375		0.8	%
Allowance for loan losses	—		(4,587,839)		(1.0)	%	—		(3,738,758)		(0.9)	%
Total	$	461,267,889	$	459,324,373	100.0	%	$	424,174,758	$	422,280,515	100.0	%


	June 30, 2021		December 31, 2020
Investments at fair value (cost of $74,388,622 and $44,174,031, respectively)	$	75,074,280	$	44,715,979
Other assets	7,832,357		5,331,840
Total assets	82,906,637		50,047,819
Obligations under participation agreement (proceeds of $6,295,100 and $6,295,100, respectively)	6,345,282		6,347,478
Other liabilities	2,736,950		4,204,147
Total liabilities	$	9,082,232	$	10,551,625
Partners’ capital	$	73,824,405	$	39,496,194


	June 30, 2021							December 31, 2020
Loan Risk Rating	Number of Loans	Principal Balance		Carrying Value		% of Total		Number of Loans	Principal Balance		Carrying Value		% of Total
1	—	$	—	$	—	—	%	—	$	—	$	—	—	%
2	2	25,000,000		25,040,209		5.4	%	1	7,000,000		7,000,000		1.6	%
3	11	333,274,302		335,576,247		72.3	%	14	323,696,475		325,284,285		76.4	%
4	1	56,852,434		56,871,362		12.3	%	3	72,861,587		73,079,804		17.2	%
5	—	—		—		—	%	1	3,848,712		3,887,200		0.9	%
Other (1)	5	46,141,153		46,424,394		10.0	%	1	16,767,984		16,767,984		3.9	%
	19	$	461,267,889	463,912,212		100.0	%	20	$	424,174,758	426,019,273		100.0	%
Allowance for loan losses				(4,587,839)							(3,738,758)
Total, net of allowance for loan losses				$	459,324,373						$	422,280,515


	June 30, 2021						December 31, 2020
	Cost		Accumulated Depreciation/Amortization		Net		Cost		Accumulated Depreciation/Amortization		Net
Real estate:
Land	$	13,395,430	$	—	$	13,395,430	$	13,395,430	$	—	$	13,395,430
Building and building improvements	51,725,969		(3,771,724)		47,954,245		51,725,969		(3,125,143)		48,600,826
Tenant improvements	1,854,640		(808,730)		1,045,910		1,854,640		(670,090)		1,184,550
Furniture and fixtures	236,000		(78,667)		157,333		236,000		(31,467)		204,533
Total real estate	67,212,039		(4,659,121)		62,552,918		67,212,039		(3,826,700)		63,385,339
Lease intangible assets:
In-place lease	14,982,538		(6,334,080)		8,648,458		15,852,232		(6,172,747)		9,679,485
Above-market rent	156,542		(51,205)		105,337		156,542		(42,427)		114,115
Total intangible assets	15,139,080		(6,385,285)		8,753,795		16,008,774		(6,215,174)		9,793,600
Lease intangible liabilities:
Below-market rent	(2,754,922)		1,264,296		(1,490,626)		(3,371,314)		1,702,800		(1,668,514)
Above-market ground lease	(8,896,270)		380,183		(8,516,087)		(8,896,270)		315,008		(8,581,262)
Total intangible liabilities	(11,651,192)		1,644,479		(10,006,713)		(12,267,584)		2,017,808		(10,249,776)
Total real estate	$	70,699,927	$	(9,399,927)	$	61,300,000	$	70,953,229	$	(8,024,066)	$	62,929,163


Years Ending December 31,	Total
2021 (July 1 through December 31)	$	3,209,106
2022	7,132,812
2023	7,363,647
2024	7,600,861
2025	4,111,257
Thereafter	1,199,623
Total	$	30,617,306


Years Ending December 31,	Net Decrease in Real Estate Operating Revenue (1)		Increase in Depreciation and Amortization (1)		Decrease in Rent Expense (1)		Total
2021 (July 1 through December 31)	$	(169,110)	$	1,031,030	$	(65,174)	$	796,746
2022	(338,220)		2,062,060		(130,348)		1,593,492
2023	(338,220)		2,062,060		(130,348)		1,593,492
2024	(338,220)		2,062,060		(130,348)		1,593,492
2025	(181,608)		1,431,248		(130,348)		1,119,292
Thereafter	(19,911)		—		(7,929,521)		(7,949,432)
Total	$	(1,385,289)	$	8,648,458	$	(8,516,087)	$	(1,252,918)


	June 30, 2021			December 31, 2020
Operating lease
Operating lease right-of-use assets (1)	$	27,402,564		$	16,105,888
Operating lease liabilities	$	27,402,564		$	16,105,888

Weighted average remaining lease term — operating lease (years)	65.3			65.8

Weighted average discount rate — operating lease	7.6		%	7.9		%


	June 30, 2021
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable Securities:
Equity securities	$	8,000,914	$	—	$	—	$	8,000,914
Debt securities	—		—		—		—
Total	$	8,000,914	$	—	$	—	$	8,000,914


		June 30, 2021						December 31, 2020
	Level	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Loans:
Loans held for investment, net	3	$	461,267,889	$	463,912,212	$	458,838,670	$	419,924,758	$	421,725,220	$	415,113,225
Loans held for investment acquired through participation, net	3	—		—		—		4,250,000		4,294,053		4,293,969
Allowance for loan losses		—		(4,587,839)		—		—		(3,738,758)		—
Total loans		$	461,267,889	$	459,324,373	$	458,838,670	$	424,174,758	$	422,280,515	$	419,407,194
Liabilities:
Term loan payable	3	$	107,016,023	$	104,925,595	$	106,681,890	$	107,584,451	$	105,245,801	$	107,248,555
Unsecured notes payable	1	85,125,000		81,622,637		84,512,100		—		—		—
Obligations under participation agreements	3	114,329,732		115,021,242		115,586,592		71,266,303		71,581,897		70,693,207
Mortgage loan payable	3	40,401,127		40,567,219		40,681,863		44,020,225		44,117,293		44,348,689
Secured borrowing	3	25,850,983		25,844,928		25,511,739		18,281,848		18,187,663		17,037,032
Revolving line of credit payable	3	9,213,759		8,668,567		9,213,759		—		—		—
Total liabilities		$	381,936,624	$	376,650,188	$	382,187,943	$	241,152,827	$	239,132,654	$	239,327,483


	Fair Value at June 30, 2021		Primary Valuation Technique	Unobservable Inputs	June 30, 2021
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	458,838,670	Discounted cash flow	Discount rate	4.17	%	15.25	%	9.12	%
Loans held for investment acquired through participation, net	—		Discounted cash flow	Discount rate	0.00	%	0.00	%	0.00	%
Total Level 3 Assets	$	458,838,670
Liabilities:
Term loan payable	$	106,681,890	Discounted cash flow	Discount rate	5.25	%	5.25	%	5.25	%
Obligations under Participation Agreements	115,586,592		Discounted cash flow	Discount rate	4.62	%	15.25	%	10.95	%
Mortgage loan payable	40,681,863		Discounted cash flow	Discount rate	6.08	%	6.08	%	6.08	%
Secured borrowing	25,511,739		Discounted cash flow	Discount rate	7.12	%	7.12	%	7.12	%
Revolving line of credit	9,213,759		Discounted cash flow	Discount rate	4.00	%	4.00	%	4.00	%
Total Level 3 Liabilities	$	297,675,843


	Fair Value at December 31, 2020		Primary Valuation Technique	Unobservable Inputs	December 31, 2020
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	415,113,225	Discounted cash flow	Discount rate	5.29	%	20.05	%	10.38	%
Loans held for investment acquired through participation, net	4,293,969		Discounted cash flow	Discount rate	12.89	%	12.89	%	12.89	%
Total Level 3 Assets	$	419,407,194
Liabilities:
Term loan payable	$	107,248,555	Discounted cash flow	Discount rate	5.25	%	5.25	%	5.25	%
Obligations under Participation Agreements	70,693,207		Discounted cash flow	Discount rate	9.75	%	20.05	%	12.58	%
Mortgage loan payable	44,348,689		Discounted cash flow	Discount rate	6.08	%	6.08	%	6.08	%
Secured borrowing	17,037,032		Discounted cash flow	Discount rate	11.25	%	11.25	%	11.25	%
Total Level 3 Liabilities	$	239,327,483


	December 31, 2020
	Participating Interests	Principal Balance		Carrying Value

LD Milpitas Mezz, LP (1)	25.00%	$	4,250,000	$	4,294,053


					Transfers Treated as Obligations Under Participation Agreements as of June 30, 2021
	Principal Balance		Carrying Value		% Transferred		Principal Balance		Carrying Value
14th & Alice Street Owner, LLC (1)	$	37,955,691	$	38,215,959	80.00	%	$	30,364,852	$	30,495,745
370 Lex Part Deux, LLC (2)	56,852,434		56,871,362		35.00	%	19,898,352		19,898,352
BW Property Owner LLC and BW 2 Property Owner LLC (1)(2)(3)	52,000,000		52,447,064		90.38	%	47,000,000		47,404,077
RS JZ Driggs, LLC (2)	11,328,068		11,440,188		50.00	%	5,750,288		5,807,202
Stonewall Station Mezz LLC (2)	10,901,205		11,001,782		44.00	%	4,796,530		4,840,038
Stonewall Station Investments LLC (2)(3)	3,453,887		3,487,906		44.00	%	1,519,710		1,534,678
The Bristol at Southport, LLC (1)	23,500,000		23,693,404		21.28	%	5,000,000		5,041,150
	$	195,991,285	$	197,157,665			$	114,329,732	$	115,021,242


					Transfers Treated as Secured Borrowing as of June 30, 2021
	Principal Balance		Carrying Value		% Transferred		Principal Balance		Carrying Value
Windy Hill PV Five CM, LLC	$	37,407,893	$	37,553,206	69.11	%	$	25,850,983	$	25,844,928
	$	37,407,893	$	37,553,206			$	25,850,983	$	25,844,928


	June 30, 2021
	Principal Balance		Carrying Value (1)		Fair Value
Unsecured notes payable	$	85,125,000	$	81,622,637	$	84,512,100


	June 30, 2021
	Borrowing Base						Borrowings Under the Revolving Line of Credit
	Principal Amount		Carrying Value		Fair Value
870 Santa Cruz, LLC	$	13,152,513	$	13,182,479	$	13,262,020	$	9,213,759
	$	13,152,513	$	13,182,479	$	13,262,020	$	9,213,759


	June 30, 2021
	Mortgage Assets						Borrowings Under the Term Loan (1)(2)
	Principal Amount		Carrying Value		Fair Value
330 Tryon DE LLC	$	22,800,000	$	22,905,952	$	22,932,214	$	13,680,000
1389 Peachtree St, LP; 1401 Peachtree St, LP; and 1409 Peachtree St, LP	51,858,696		52,124,599		51,381,532		30,989,489
AGRE DCP Palm Springs, LLC	43,222,381		43,618,206		43,547,093		23,009,836
MSC Fields Peachtree Retreat, LLC	23,308,334		23,432,147		23,448,095		13,985,001
Patrick Henry Recovery Acquisition, LLC	18,000,000		18,040,209		18,051,236		10,800,000
University Park Berkeley, LLC	25,068,794		25,228,371		25,299,652		14,551,697
	$	184,258,205	$	185,349,484	$	184,659,822	$	107,016,023


					June 30, 2021				December 31, 2020
Lender	Current Interest Rate	Maturity Date	Principal Amount		Carrying Value		Carrying Value of Collateral		Carrying Value		Carrying Value of Collateral
Centennial Bank	LIBOR + 3.85% (LIBOR Floor of 2.23%)	September 27, 2022	$	40,401,127	$	40,567,219	$	47,904,570	$	44,117,293	$	49,533,733


	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)		Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)
Total portfolio
Gross loans	$	425,407,786	8.5	%	$	403,107,647	9.3	%
Obligations under participation agreements and secured borrowing	(112,631,277)		10.6	%	(73,120,692)		10.9	%
Repurchase agreement payable	—		—	%	(94,768,307)		3.8	%
Term loan payable	(106,775,203)		5.3	%	—		—	%
Revolving line of credit	(8,383,662)		4.0	%	—		—	%
Net loans (3)	$	197,617,644	9.3	%	$	235,218,648	11.0	%
Senior loans
Gross loans	264,362,137		6.5	%	212,859,783		6.7	%
Obligations under participation agreements and secured borrowing	(51,663,536)		8.5	%	(27,807,684)		9.1	%
Repurchase agreement payable	—		—	%	(94,768,307)		3.8	%
Term loan payable	(106,775,203)		5.3	%	—		—	%
Revolving line of credit	(8,383,662)		4.0	%	—		—	%
Net loans (3)	$	97,539,736	7.0	%	$	90,283,792	9.1	%
Subordinated loans (4)
Gross loans	161,045,649		12.0	%	190,247,864		12.2	%
Obligations under participation agreements	(60,967,741)		12.6	%	(45,313,008)		12.0	%
Net loans (3)	$	100,077,908	11.6	%	$	144,934,856	12.2	%


	Six Months Ended June 30, 2021				Six Months Ended June 30, 2020
	Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)		Weighted Average Principal Amount (1)		Weighted Average Coupon Rate (2)
Total portfolio
Gross loans	$	417,362,153	8.5	%	$	395,636,304	9.4	%
Obligations under participation agreements and secured borrowing	(100,798,932)		10.4	%	(81,213,576)		11.5	%
Repurchase agreement payable	—		—	%	(94,617,024)		3.9	%
Term loan payable	(107,441,217)		5.3	%	—		—	%
Revolving line of credit	(5,102,351)		4.0	%
Net loans (3)	$	204,019,653	9.4	%	$	219,805,704	11.0	%
Senior loans
Gross loans	259,783,669		6.4	%	201,392,405		6.7	%
Obligations under participation agreements and secured borrowing	(48,600,589)		8.6	%	(23,368,896)		9.7	%
Repurchase agreement payable	—		—	%	(94,617,024)		3.8	%
Term loan payable	(107,441,217)		5.3	%	—		—	%
Revolving line of credit	(5,102,351)		4.0	%	—		—	%
Net loans (3)	$	98,639,512	6.6	%	$	83,406,485	9.2	%
Subordinated loans (4)
Gross loans	157,578,484		11.9	%	194,243,899		12.2	%
Obligations under participation agreements	(52,198,343)		12.2	%	(57,844,680)		12.2	%
Net loans (3)	$	105,380,141	11.8	%	$	136,399,219	12.2	%


	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Obligations under participation agreements — principal (1)	$	114,329,732	$	109,329,732	$	5,000,000	$	—	$	—
Secured borrowing — principal (1)	25,850,983		—		25,850,983		—		—
Mortgage loan payable — principal (2)	40,401,127		813,792		39,587,335		—		—
Term loan payable — principal (3)	107,016,023		—		58,654,490		48,361,533		—
Unsecured notes payable — principal (4)	85,125,000		—		—		85,125,000		—
Revolving Line of Credit payable — principal (5)	9,213,759		—		9,213,759		—		—
Interest on borrowings (6)	62,778,748		27,214,521		23,457,756		12,106,471		—
Unfunded lending commitments (7)	47,978,818		47,106,772		872,046		—		—
Ground lease commitment (8)	135,741,375		2,079,000		4,158,000		4,158,000		125,346,375
	$	628,435,565	$	186,543,817	$	166,794,369	$	149,751,004	$	125,346,375


Exhibit No.						Description and Method of Filing
2.1						Contribution Agreement by and among Terra Secured Income Fund, LLC, Terra Secured Income Fund 2, LLC, Terra Secured Income Fund 3, LLC, Terra Secured Income Fund 4, LLC, the registrant, and Terra Property Trust, Inc., dated January 1, 2016 (incorporated by reference to Exhibit 2.1 to the Registration Statement on Form 10 (File No. 000-56117) filed with the SEC on November 6, 2019).
2.2						Amendment No. 1 to the Contribution Agreement by and among Terra Secured Income Fund, LLC, Terra Secured Income Fund 2, LLC, Terra Secured Income Fund 3, LLC, Terra Secured Income Fund 4, LLC, the registrant, and Terra Property Trust, Inc., dated December 31, 2016 (incorporated by reference to Exhibit 2.2 to the Registration Statement on Form 10 (File No. 000-56117) filed with the SEC on November 6, 2019).
2.3						Agreement and Plan of Merger, dated February 28, 2020, by and among Terra Property Trust, Inc., Terra Property Trust 2, Inc. and Terra Secured Income Fund 7, LLC (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 000-56117) filed with the SEC on March 5, 2020).
3.1						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).
3.2						Articles of Amendment and Restatement of Terra Property Trust, Inc. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Amendment No.1 to Form 10 (File No. 000-56117) filed with the SEC on December 16, 2019).
3.3						Articles of Supplementary of Terra Property Trust, Inc. Designating 12.5% Services A Redeemable Cumulative Preferred Stock (incorporated by reference to Exhibit 3.3 to the Registration Statement on Amendment No.1 to Form 10 (File No. 000-56117) filed with the SEC on December 16, 2019).