Terra Property Trust, Inc 8-K, filed Aug 26, 2024
Terra Property Trust, Inc. (TPTS)
About this 8-K
Terra Property Trust, Inc filed this 8-K on August 26, 2024.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e- 4(c)) |
Securities registered pursuant to Section 12(b) of the Exchange Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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.
Item 2.02 – Results of Operations and Financial Condition
Webcast and Investor Update Conference Call
Management of Terra Property Trust, Inc. (the “Company”) will host a webcast and investor update conference call on August 26, 2024 at 11:00 a.m. Eastern Time to provide financial and operational details of the Company’s performance for the quarter ended June 30, 2024, and to discuss the Company’s liquidity plans. A copy of the presentation deck is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
The Company encourages use of the webcast due to potential extended wait times to access the conference call via dial-in. To listen to the live broadcast, please follow the instructions below.
To Access the Webcast:
Navigate to the following website on your web browser and complete the online registration form: https://edge.media-server.com/mmc/p/tn886qmh.
To Dial-In to the Telephone Conference Call:
Navigate to the following website on your web browser and complete the online registration form: https://register.vevent.com/register/BI558778632dd74449a3c6f13f2613ba90.
Upon registering you will receive the dial-in information and a unique PIN code to join the call as well as an email confirmation. Dial in at least five minutes prior to start time.
Webcast Playback Information:
Navigate to the following website on your web browser: https://edge.media-server.com/mmc/p/tn886qmh.
The webcast playback can be accessed through September 9, 2024.
The information in Item 2.02 of this Current Report, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.
Item 9.01 – Financial Statements and Exhibits.
| Exhibit | Description | |
| 99.1 | Presentation | |
| 104 | The cover page of this Current Report on Form 8-K, formatted in Inline XBRL. | |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TERRA PROPERTY TRUST, INC. | ||
| Date: August 26, 2024 | By: | /s/ Gregory Pinkus |
| Name: | Gregory Pinkus | |
| Title: | Chief Financial Officer | |
Exhibit 99.1
STRICTLY CONFIDENTIAL TERRA PROPERTY TRUST QUARTERLY INVESTOR CALL – Q2 2024 AUGUST 26, 2024
STRICTLY CONFIDENTIAL DISCLAIMER THESE MATERIALS AND ANY PRESENTATION OF WHICH THEY FORM A PART A RE NOT INTENDED AS AN OFFER TO SELL, OR THE SOLICITATION OF AN O FFER TO PURCHASE, ANY SECURITY, THE OFFER AND/OR SALE OF WHICH CAN ONLY BE MADE BY DEFINITIVE OFFERING DOC UMENTATION. ANY OFFER OR SOLICITATION WITH RESPECT TO ANY SECURI TIES THAT MAY BE ISSUED BY TERRA PROPERTY TRUST, INC. (“ TPT ”) WILL BE MADE ONLY BE MEANS OF DEFINITIVE OFFERING MEMORANDA O R PROSPECTUS, WHICH WILL BE PROVIDED TO PROSPECTIVE INVESTORS AN D WILL CONTAIN MATERIAL INFORMATION THAT IS NOT SET FORTH HEREIN, INCLUDING RISK FACTORS RELATING TO ANY SUCH INVESTMENT. FIGURES PROVIDED HEREIN ARE UN AUDITED AND AS OF JUNE 30, 2024, UNLESS OTHERWISE NOTED, AND MAY EXCLUDE DISCLOSURES REQUIRED IN AUDITED FINANCIAL STATEMENTS. THIS PRESENTATION INCLUDES CERTAIN NON - GA AP FINANCIAL MEASURES. THESE NON - GAAP FINANCIAL MEASURES SHOULD BE CONSIDERED ONLY AS SUPPLEMENTAL TO, AND NOT AS SUPERIOR TO, FINANCIAL MEASURES IN ACCORDANCE WITH G AAP. PLEASE REFER TO OUR MOST RECENT QUARTERLY REPORT ON FORM 10 - Q FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION FOR THE MOST RECENT GAAP INFORMATION. THIS PRESENTATION ALSO CONTAINS MARKET STATISTICS AND INDUSTRY DATA WHICH ARE SUBJECT TO UNCERTAINTY AN D ARE NOT NECESSARILY REFLECTIVE OF MARKET CONDITIONS. THESE HAV E BEEN DERIVED FROM THIRD PARTY SOURCES AND HAVE NOT BEEN INDEPENDENTLY VERIFIED BY TPT OR ITS AFFILIATES. ALL MATERIAL PRESENTED IS COMPILED FROM SOUR CES BELIEVED TO BE RELIABLE AND CURRENT, BUT ACCURACY CANNOT BE GUARANTEED. NEITHER TPT NOR ANY OF ITS REPRESENTATIVES OR AFFILIATES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN, AND TPT AND IT S REPRESENTATIVES DISCLAIM ALL LIABILITY RELATING TO, OR RESULTI NG FROM, THE USE OF THIS INFORMATION. NOTHING CONTAINED IN THIS PRESENTATION IS, OR SHALL BE RELIED UP ON AS, A PROMISE OR REPRESENTATION AS TO THE PAST, CURRENT OR FU TURE PERFORMANCE OF TPT. FORWARD - LOOKING STATEMENTS THIS PRESENTATION INCLUDES “FORWARD - LOOKING STATEMENTS,” AS SUCH TERM IS DEFINED IN SECTION 27A OF THE U.S. SECURITIES ACT OF 19 33, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND SUCH STATEMENTS ARE INTENDED TO BE COVERED BY THE SAFE HARBORS PROVIDED BY THE SAME. THESE FORWARD - LOOKING STATEMENTS ARE BASED ON CURRENT ASSUMPTIONS, EXPECTATIONS AND BELIEFS OF TP T ARE SUBJECT TO A NUMBER OF TRENDS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD - LOOKING STATEMENT S. TPT CANNOT GIVE ANY ASSURANCE THAT THESE FORWARD - LOOKING STAT EMENTS WILL BE ACCURATE. THESE FORWARD - LOOKING STATEMENTS GENERALLY CAN BE IDENTIFIED BY USE OF FORWARD - LOOKING TERMINOLOGY SUCH AS “MAY,” “WILL,” “TARGET,” “S HOULD,” “EXPECT,” “ATTEMPT,” “ANTICIPATE,” “PROJECT,” “ESTIMATE,” “INTEND,” “SEEK,” “CONTINUE,” OR “BELIEVE ,” OR THE NEGATIVES THEREOF OR OTHER VARIATIONS THEREON OR COMPA RABLE TERMINOLOGY. SIMILARLY, STATEMENTS HEREIN THAT DESCRIBE CERTAIN PLANS, EXPECTATIONS, GOALS, PROJECT IONS AND STATEMENTS, AND OTHER STATEMENTS OF MANAGEMENT’S BELIEF S, INTENTIONS OR GOALS ALSO ARE FORWARD - LOOKING STATEMENTS. IT IS UNCERTAIN WHETHER ANY OF THE E VENTS ANTICIPATED BY THE FORWARD - LOOKING STATEMENTS WILL TRANSPI RE OR OCCUR, OR IF ANY OF THEM DO, WHAT IMPACT THEY WILL HAVE ON TPT’S RESULTS OF OPERATIONS AND FINANCI AL CONDITION. THERE ARE A NUMBER OF RISKS AND UNCERTAINTIES, MAN Y OF WHICH ARE BEYOND TPT’S CONTROL, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD - LOOKING STATEMENTS INCLUDED HEREIN, INCLUDING, BUT NOT LIMITED TO, THE ABILITY TO RETAIN KEY PERSONNEL; CONDITIONS IN THE MARKET FOR MORTGAGE - RELATED INVESTMENTS; AVAIL ABILITY OF SUITABLE INVESTMENT OPPORTUNITIES; CHANGES IN INTERES T RATES; CHANGES IN THE YIELD CURVE; CHANGES IN PREPAYMENT RATES; THE AVAILABILITY AND TERMS OF FINAN CING; FUTURE LIQUIDITY, INCLUDING CASH FLOW, AND LIQUIDITY EVENTS; RISKS RELATED TO POTENTIAL STRATEGIC TRANSACTIONS, INCLUDING BUT NOT LIMITED TO UNCERTAINTIES REGARDI NG SUCCESSFUL COMPLETION AND INTEGRATION , AND REALIZATION OF ANTICIPATED BENEFITS FROM ANY SUCH TRANSACTIONS; GENERAL ECONOMIC CONDITIONS; MARKET CONDITIONS; INFLATIONARY PRE SSURES ON THE CAPITAL MARKETS AND THE GENERAL ECONOMY; CONDITION S IN THE MARKET FOR COMMERCIAL AND RESIDENTIAL LOANS, SECURITIES AND OTHER INVESTMEN TS; LEGISLATIVE AND REGULATORY CHANGES THAT COULD ADVERSELY AFFE CT THE BUSINESS OF TPT; RISKS RELATED TO THE ORIGINATION AND OWNERSHIP OF LOANS AND OTHER ASSETS, WHICH A RE TYPICALLY SHORT - TERM LOANS THAT ARE SUBJECT TO HIGHER INTERES T RATES, TRANSACTION COSTS AND UNCERTAINTY ON LOAN REPAYMENTS; RISKS RELATING TO ANY FUTURE IMP ACT OF THE COVID - 19 PANDEMIC, INCLUDING THE RESPONSES OF GOVERNM ENTS AND INDUSTRIES, ON THE REAL ESTATE SECTOR; CREDIT RISKS; SERVICING - RELATED RISKS, INCLUDING THOSE A SSOCIATED WITH FORECLOSURE AND LIQUIDATION; THE STATE OF THE U.S . AND TO A LESSER EXTENT, INTERNATIONAL ECONOMY GENERALLY OR IN SPECIFIC GEOGRAPHIC REGIONS; THE GENERAL VOLATILITY OF THE SECURITIES MARKETS IN WHICH TPT PARTICIPATES; TPT’S ABILITY TO MAINTAIN ITS QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST FOR U.S. FEDERAL INCOME TAX PU RPOSES; AND TPT’S ABILITY TO MAINTAIN ITS EXEMPTION FROM REGISTR ATION UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. ALL SUCH FACTORS ARE DIFFICULT TO PREDICT, INC LUDING THOSE RISKS SET FORTH IN TPT’S ANNUAL REPORTS ON FORM 10 - K, QUARTERLY REPORTS ON FORM 10 - Q, AND CURRENT REPORTS ON FORM 8 - K THAT ARE AVAILABLE ON TPT’S WEBSITE AT HTTP://WWW.TERRAPROPERTYTRUST.COM AND ON THE SEC’S WEBSITE AT HTTP://WWW.SEC.GOV. THE FORWARD - LOOKING STATEMENTS INCLUDED IN THIS PRESENTATION ARE MADE ONLY A S OF THE DATE HEREOF. READERS ARE CAUTIONED NOT TO PLACE UNDUE R ELIANCE ON THESE FORWARD - LOOKING STATEMENTS THAT SPEAK ONLY AS OF THE DATE HEREOF. TPT DOES NOT U NDERTAKE ANY OBLIGATION TO UPDATE THESE FORWARD - LOOKING STATEMEN TS TO REFLECT SUBSEQUENT EVENTS OR CIRCUMSTANCES, EXCEPT AS REQUIRED BY APPLICABLE LAW. 2
STRICTLY CONFIDENTIAL MARKET OVERVIEW • One of steepest and longest Fed tightening cycles in history • > 2 years of higher rates and depressed CRE transaction activity • MREITs in defensive mode as they trade at significant discounts to BV, can’t deploy or raise capital accretively , and cut their dividends 3 - bp +100 bp +200 bp +300 bp +400 bp +500 bp +600 bp +700 bp +800 bp +900 bp +1000 bp +1100 bp 0 mths 11 mths 22 mths 33 mths 44 mths Current Cycle Prior Cycles Fed’s current tightening cycle is one of longest and steepest FED TIGHTENING CYCLES -x 0.2x 0.4x 0.6x 0.8x 1.0x 1.2x 1.4x 1.6x '17-12 '18-12 '19-12 '20-12 '21-12 '22-12 '23-12 Diverse Pure-Play MREIT P / BV Source: Federal Reserve Source: Bloomberg
STRICTLY CONFIDENTIAL MARKET OVERVIEW • Markets have been overly optimistic about the speed and magnitude for rate cuts • Even the most optimistic assumptions for rate cuts may not be enough to save the many CRE bridge loans that were originated when SOFR was much lower 4 SOFR AT MATURITY VS. ORIGINATION ACTUAL SOFR VS. PRIOR PROJECTIONS -% 1% 2% 3% 4% 5% 6% '20 '21 '22 '23 '24 '25 '26 Actual Prior Projections Current Projection Dec '21 Dec '20 Dec '23 Current forward SOFR curve ~100 bp higher than where it was at YE ‘23 Source: Bloomberg Source: MSCI, Bloomberg +356 bp +210 bp +228 bp -% 1% 2% 3% 4% 5% $-b $100b $200b $300b $400b $500b $600b $700b '24 '25 '26 Maturities (L Axis) Est SOFR at Maturity vs. Origination (R Axis) Maturing into much higher rates
STRICTLY CONFIDENTIAL COMPANY OVERVIEW HISTORY • Terra Property Trust, Inc. (and, together with its consolidated subsidiaries, “Terra Property Trust” or “TPT”) is a real estate investment trust (“REIT”) that originates, invests in and manages a diverse portfolio of real estate and real estate - related assets. • Terra Property Trust commenced operations on January 1, 2016, following its creation in connection with the merger of the predecessor private Reg D Terra Secured Income Funds. • In June 2021, Terra Property Trust issued $85.1 million in aggregate principal amount of its 6.00% senior notes due June 2026 • On October 1, 2022, Terra Income Fund 6, Inc. (“Terra BDC”) merged with and into TPT, adding $70+MM of additional equity to TPT. In connection with this merger, TPT assumed $38.4 million in aggregate principal of 7.00% senior notes due March 2026 • As an SEC - registered fund, Terra/Mavik is restricted under Reg F - D in what can be communicated outside of the SEC filings and public statements 5
STRICTLY CONFIDENTIAL COMPANY OVERVIEW (CONTINUED) STRATEGY • Terra Property Trust originates, invests in and manages a diverse portfolio of real estate and real estate - related assets. • TPT aims to direct source investments • We focus primarily on commercial real estate credit investments, with the following characteristics: 6 Loan Size $10MM to $50MM Structure First mortgage loans, subordinated loans (including B - notes, mezzanine and preferred equity) and credit facilities Property Type Commercial Geography United States Duration 2 to 5 years
STRICTLY CONFIDENTIAL COMPANY OVERVIEW (CONTINUED) HIGHLIGHTS • From inception through June 30, 2024, Terra Property Trust has made 102 consecutive monthly distributions. • Total value of cumulative distributions is approximately 70+% of aggregate contributed capital • Low leverage – Debt to Equity of 1.75x • Avg cost of debt 8.15% vs Avg (gross) loan portfolio yield of 13.02% 7
STRICTLY CONFIDENTIAL TERRA PROPERTY TRUST PORTFOLIO 8 TPT PORTFOLIO BY INVESTMENT STRUCTURE TPT PORTFOLIO BY PROPERTY TYPE TPT PORTFOLIO BY INVESTMENT PROFILE TPT PORTFOLIO – MATURITIES OVER NEXT 12 MONTHS BY PROPERTY TYPE • As of June 30, 2024, TPT has a portfolio of 25 real estate assets with the following diversification characteristics:
STRICTLY CONFIDENTIAL TERRA PROPERTY TRUST PORTFOLIO (CONTINUED) 9 Leverage ratio at 1.75 Non - performing loans decreased in Q2 to 6 from 8. The related CECL reserve on NPLs decreased to 16% (vs. 26% at 12/31/2023) $400MM of $415M our loan portfolio (or 96%) is floating rate Weighted average interest rate across the portfolio is: 13.02% gross 15.3% net of leverage Avg remaining term ~10 months As of June 30, 2024:
STRICTLY CONFIDENTIAL RESULTS OF OPERATIONS – Q2 2024 10 GAAP Net loss of $7.5MM or $0.31/share ( basic and fully diluted). The loss was driven primarily by reductions in interest income as a result of non - performing loans, as well as non - cash charges. Depreciation and Amortization (including unconsolidated investments) of $2.4MM or $0.11/share Paid (monthly) cash dividend of $0.19/share in Q1 2024 CECL reserve of $2.6MM or $0.11/share
STRICTLY CONFIDENTIAL LIQUIDITY CONSIDERATIONS • As discussed in both public filings and investor letters: • TPT voluntarily registered its common stock with the SEC, in part to provide its investors with enhanced visibility and transparency and to improve TPT’s ability to efficiently pursue an IPO, direct listing or other potential transactions that w oul d provide liquidity to its stockholders • In 2022, TPT acquired via merger Terra Income Fund 6, to enhance TPT’s diversification and scale, thereby creating more favorable conditions for a successful IPO or direct listing • In June 2023, TPT entered into a merger agreement with Western Asset Mortgage Capital Corporation (“WMC”). In August 2023, WMC terminated the merger agreement to pursue what the WMC board of directors deemed a superior unsolicited acquisition proposal from Angelo Gordon sponsored AG Mortgage Investment Trust, Inc. • Potential future liquidity transactions include: • Direct listing of TPT • IPO • Strategic transactions to add scale and/or pursue a direct listing (e.g., WMC type merger) • Converting TPT into a traditional “non - traded REIT,” including the adoption of a share repurchase plan 11
205 West 28th Street, FL12 New York, NY 10001 (646) 877 – 6336 STRICTLY CONFIDENTIAL Terra Property Trust, Inc. Longacre Square Partners Charlotte Kiaie / Kate Sylvester (646) 386 - 0091 mavikcapital@longacresquare.com 12 For further information: