☑ | |||||
ANNUAL 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 |
Maryland | 81-0963486 | |||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||||||||||||
6.00% Notes due 2026 | TPTA | New York Stock Exchange |
Large accelerated filer | ¨ | Accelerated filer | ¨ | ||||||||
Non-accelerated filer | þ | Smaller reporting company | ☑ | ||||||||
Emerging growth company | ☑ |
Page | ||||||||
PART I | ||||||||
PART II | ||||||||
PART III | ||||||||
PART IV | ||||||||
Name | Age | Position(s) Held with the Company | ||||||||||||
Vikram S. Uppal | 40 | Chairman of the Board of Directors, Chief Executive Officer and Chief Investment Officer | ||||||||||||
Sarah Schwarzschild | 43 | Chief Operating Officer | ||||||||||||
Gregory M. Pinkus | 59 | Chief Financial Officer, Treasurer and Secretary | ||||||||||||
Daniel J. Cooperman | 49 | Chief Originations Officer | ||||||||||||
Year Ended December 31, 2019 | ||||
Payment Date | Distributions Per Share of Common Stock | |||
January 31, 2019 | $ | 0.17 | ||
February 28, 2019 | 0.17 | |||
March 27, 2019 | 0.16 | |||
April 26, 2019 | 0.17 | |||
May 23, 2019 | 0.17 | |||
June 25, 2019 | 0.17 | |||
July 24, 2019 | 0.17 | |||
August 22, 2019 | 0.17 | |||
September 24, 2019 | 0.17 | |||
October 29, 2019 | 0.17 | |||
November 22, 2019 | 0.17 | |||
December 26, 2019 | 0.17 | |||
$ | 2.03 |
Year Ended December 31, 2018 | ||||
Payment Date | Distributions Per Share of Common Stock | |||
January 30, 2018 | $ | 0.17 | ||
February 27, 2018 | 0.17 | |||
March 29, 2018 | 0.17 | |||
April 30, 2018 (1) | 0.18 | |||
May 29, 2018 (1) | 0.17 | |||
June 22, 2018 (1) | 0.17 | |||
July 30, 2018 | 0.17 | |||
August 30, 2018 (1) | 0.18 | |||
September 27, 2018 | 0.17 | |||
October 30, 2018 | 0.17 | |||
November 29, 2018 | 0.18 | |||
December 21, 2018 | 0.17 | |||
$ | 2.07 |
Years Ended December 31, | ||||||||
2019 | 2018 | |||||||
Operating Data: | ||||||||
Revenues: | ||||||||
Interest related income | $ | 41,593,018 | $ | 44,644,226 | ||||
Real estate operating revenue (1) | 9,806,507 | 3,724,204 | ||||||
Total revenues | 51,399,525 | 48,368,430 | ||||||
Operating expenses: | ||||||||
Lending operating expenses | 10,929,806 | 9,074,729 | ||||||
Real estate operating expenses (1) | 9,325,888 | 2,874,473 | ||||||
Other operating expenses (2) | 2,351,703 | — | ||||||
Total operating expenses | 22,607,397 | 11,949,202 | ||||||
Other income and (expenses) | (19,749,353 | ) | (13,936,951 | ) | ||||
Net income | $ | 9,042,775 | $ | 22,482,277 | ||||
Net income allocable to common stock | $ | 9,027,151 | $ | 22,466,653 | ||||
Per Share Data: | ||||||||
Net income per share of common stock | ||||||||
Basic and diluted | $ | 0.60 | $ | 1.51 | ||||
Distribution declared per share of common stock | $ | 2.03 | $ | 2.19 |
December 31, | ||||||||
2019 | 2018 | |||||||
Balance Sheet Data: | ||||||||
Loans held for investment, net | $ | 378,612,768 | $ | 388,243,974 | ||||
Real estate owned, net | 77,596,475 | 68,004,577 | ||||||
Other assets | 71,133,835 | 35,306,172 | ||||||
Total assets | 527,343,078 | 491,554,723 | ||||||
Debt | 227,548,397 | 190,687,574 | ||||||
Lease intangible liabilities | 11,424,809 | 12,019,709 | ||||||
Other liabilities | 40,826,139 | 23,555,081 | ||||||
Total liabilities | 279,799,345 | 226,262,364 | ||||||
Equity | $ | 247,543,733 | $ | 265,292,359 |
December 31, 2023 | |||||||||||||||||||||||||||||
Fixed Rate | Floating Rate (1)(2)(3) | Total Gross Loans | Obligations under Participation Agreements | Total Net Loans | |||||||||||||||||||||||||
Number of loans | 5 | 16 | 21 | — | 21 | ||||||||||||||||||||||||
Principal balance | $ | 53,998,648 | $ | 455,462,178 | $ | 509,460,826 | $ | — | $ | 509,460,826 | |||||||||||||||||||
Carrying value | 54,095,173 | 402,377,085 | 456,472,258 | — | 456,472,258 | ||||||||||||||||||||||||
Fair value | 53,435,742 | 403,904,207 | 457,339,949 | — | 457,339,949 | ||||||||||||||||||||||||
Weighted average coupon rate | 12.95 | % | 12.92 | % | 12.93 | % | — | % | 12.93 | % | |||||||||||||||||||
Weighted-average remaining term (years) | 1.18 | 0.70 | 0.77 | — | 0.77 |
December 31, 2022 | |||||||||||||||||||||||||||||
Fixed Rate | Floating Rate (1)(2)(3) | Total Gross Loans | Obligations under Participation Agreements | Total Net Loans | |||||||||||||||||||||||||
Number of loans | 8 | 23 | 31 | 1 | 31 | ||||||||||||||||||||||||
Principal balance | $ | 90,990,183 | $ | 554,805,276 | $ | 645,795,459 | $ | 12,584,958 | $ | 633,210,501 | |||||||||||||||||||
Carrying value | 92,274,998 | 534,215,769 | 626,490,767 | 12,680,594 | 613,810,173 | ||||||||||||||||||||||||
Fair value | 90,729,098 | 532,416,656 | 623,145,754 | 12,680,595 | 610,465,159 | ||||||||||||||||||||||||
Weighted average coupon rate | 13.82 | % | 11.23 | % | 11.59 | % | 16.36 | % | 11.50 | % | |||||||||||||||||||
Weighted-average remaining term (years) | 1.35 | 1.10 | 1.14 | 1.69 | 1.13 |
December 31, 2019 | |||||||||||||||||||
Fixed Rate | Floating Rate (1)(2)(3) | Total Gross Loans | Obligations under Participation Agreements | Total Net Loans | |||||||||||||||
Number of loans | 8 | 15 | 23 | 13 | 23 | ||||||||||||||
Principal balance | $ | 70,692,767 | $ | 306,695,550 | $ | 377,388,317 | $ | 102,564,795 | $ | 274,823,522 | |||||||||
Amortized cost | 71,469,137 | 307,143,631 | 378,612,768 | 103,186,327 | 275,426,441 | ||||||||||||||
Fair value | 71,516,432 | 307,643,983 | 379,160,415 | 103,188,783 | 275,971,632 | ||||||||||||||
Weighted average coupon rate | 11.93 | % | 9.13 | % | 9.65 | % | 11.77 | % | 8.87 | % | |||||||||
Weighted-average remaining term (years) | 2.28 | 2.09 | 2.13 | 1.58 | 2.33 |
December 31, 2018 | ||||||||||||||||||
Fixed Rate | Floating Rate (1)(2)(3) | Total Gross Loans | Obligations under Participation Agreements | Total Net Loans | ||||||||||||||
Number of loans | 20 | 9 | 29 | 18 | 29 | |||||||||||||
Principal balance | $ | 163,486,937 | $ | 221,554,764 | $ | 385,041,701 | 113,458,723 | $ | 271,582,978 | |||||||||
Amortized cost | 164,989,811 | 223,254,163 | 388,243,974 | 114,298,591 | 273,945,383 | |||||||||||||
Fair value | 164,578,464 | 223,291,666 | 387,870,130 | 114,189,654 | 273,680,476 | |||||||||||||
Weighted average coupon rate | 12.54 | % | 11.35 | % | 11.86 | % | 12.22 | % | 11.70 | % | ||||||||
Weighted-average remaining term (years) | 1.84 | 2.05 | 1.96 | 1.84 | 2.01 |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Loan Structure | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||||||||||||||||||
First mortgages | $ | 365,465,500 | $ | 368,918,890 | 80.9 | % | $ | 456,408,889 | $ | 461,299,182 | 75.1 | % | ||||||||||||||||||||||||||
Preferred equity investments | 126,550,969 | 127,105,312 | 27.8 | % | 121,231,434 | 122,132,177 | 19.9 | % | ||||||||||||||||||||||||||||||
Mezzanine loans | 17,444,357 | 17,424,081 | 3.8 | % | 26,767,345 | 26,770,521 | 4.4 | % | ||||||||||||||||||||||||||||||
Credit facility | — | — | — | % | 28,802,833 | 29,080,183 | 4.7 | % | ||||||||||||||||||||||||||||||
Allowance for credit losses | — | (56,976,025) | (12.5) | % | — | (25,471,890) | (4.1) | % | ||||||||||||||||||||||||||||||
Total | $ | 509,460,826 | $ | 456,472,258 | 100.0 | % | $ | 633,210,501 | $ | 613,810,173 | 100.0 | % |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Property Type | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||||||||||||||||||
Office | $ | 144,812,619 | $ | 144,853,769 | 31.7 | % | $ | 171,611,750 | $ | 172,042,063 | 27.9 | % | ||||||||||||||||||||||||||
Multifamily | 85,660,082 | 86,210,868 | 18.9 | % | 104,589,464 | 105,570,432 | 17.2 | % | ||||||||||||||||||||||||||||||
Industrial | 67,579,869 | 67,612,621 | 14.8 | % | 147,796,164 | 148,891,742 | 24.3 | % | ||||||||||||||||||||||||||||||
Mixed-use | 63,096,365 | 63,531,806 | 13.9 | % | 64,880,450 | 65,838,965 | 10.7 | % | ||||||||||||||||||||||||||||||
Infill land | 52,839,509 | 54,172,663 | 11.9 | % | 48,860,291 | 49,565,437 | 8.1 | % | ||||||||||||||||||||||||||||||
Hotel - full/select service | 43,222,382 | 43,801,303 | 9.6 | % | 43,222,382 | 43,758,804 | 7.1 | % | ||||||||||||||||||||||||||||||
Student housing | 31,000,000 | 31,821,832 | 7.0 | % | 31,000,000 | 31,774,261 | 5.2 | % | ||||||||||||||||||||||||||||||
Infrastructure | 21,250,000 | 21,443,421 | 4.7 | % | 21,250,000 | 21,840,359 | 3.6 | % | ||||||||||||||||||||||||||||||
Allowance for credit losses | — | (56,976,025) | (12.5) | % | — | (25,471,890) | (4.1) | % | ||||||||||||||||||||||||||||||
Total | $ | 509,460,826 | $ | 456,472,258 | 100.0 | % | $ | 633,210,501 | $ | 613,810,173 | 100.0 | % |
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||
Loan Structure | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||
First mortgages | $ | 160,984,996 | $ | 160,948,585 | 58.4 | % | $ | 95,141,290 | $ | 96,352,394 | 35.2 | % | ||||||||||
Preferred equity investments | 84,202,144 | 84,485,061 | 30.7 | % | 110,099,644 | 110,540,228 | 40.3 | % | ||||||||||||||
Mezzanine loans | 29,636,382 | 29,992,795 | 10.9 | % | 66,342,044 | 67,052,761 | 24.5 | % | ||||||||||||||
Total | $ | 274,823,522 | $ | 275,426,441 | 100.0 | % | $ | 271,582,978 | $ | 273,945,383 | 100.0 | % |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Geographic Location | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||||||||||||||||||
United States | ||||||||||||||||||||||||||||||||||||||
California | $ | 119,093,246 | $ | 120,296,944 | 26.4 | % | $ | 151,668,387 | $ | 153,158,967 | 24.9 | % | ||||||||||||||||||||||||||
New York | 90,483,672 | 90,483,672 | 19.8 | % | 91,845,479 | 91,877,084 | 14.9 | % | ||||||||||||||||||||||||||||||
New Jersey | 82,419,378 | 83,489,049 | 18.3 | % | 62,228,622 | 62,958,482 | 10.3 | % | ||||||||||||||||||||||||||||||
Georgia | 74,335,828 | 74,602,328 | 16.3 | % | 72,401,718 | 73,101,964 | 11.9 | % | ||||||||||||||||||||||||||||||
Utah | 49,250,000 | 50,329,949 | 11.0 | % | 49,250,000 | 50,698,251 | 8.3 | % | ||||||||||||||||||||||||||||||
Washington | 34,052,223 | 34,020,449 | 7.5 | % | 56,671,267 | 57,027,639 | 9.3 | % | ||||||||||||||||||||||||||||||
Arizona | 31,000,000 | 31,296,235 | 6.9 | % | 31,000,000 | 31,276,468 | 5.1 | % | ||||||||||||||||||||||||||||||
North Carolina | 21,826,479 | 21,929,657 | 4.8 | % | 43,520,028 | 44,041,162 | 7.2 | % | ||||||||||||||||||||||||||||||
Massachusetts | 7,000,000 | 7,000,000 | 1.5 | % | 7,000,000 | 7,000,000 | 1.1 | % | ||||||||||||||||||||||||||||||
Texas | — | — | — | % | 67,625,000 | 68,142,046 | 11.1 | % | ||||||||||||||||||||||||||||||
Allowance for credit losses | — | (56,976,025) | (12.5) | % | — | (25,471,890) | (4.1) | % | ||||||||||||||||||||||||||||||
Total | $ | 509,460,826 | $ | 456,472,258 | 100.0 | % | $ | 633,210,501 | $ | 613,810,173 | 100.0 | % |
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||
Property Type | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||
Office | $ | 119,331,369 | $ | 119,145,879 | 43.3 | % | $ | 32,555,575 | $ | 32,628,200 | 11.9 | % | ||||||||||
Multifamily | 49,017,844 | 49,331,885 | 17.9 | % | 31,099,953 | 31,366,215 | 11.4 | % | ||||||||||||||
Hotel | 41,239,194 | 41,327,772 | 15.0 | % | 69,756,765 | 70,832,816 | 25.9 | % | ||||||||||||||
Infill land | 29,644,375 | 29,756,375 | 10.8 | % | 58,491,314 | 58,726,783 | 21.4 | % | ||||||||||||||
Student housing | 26,470,740 | 26,725,148 | 9.7 | % | 40,450,320 | 40,857,137 | 14.9 | % | ||||||||||||||
Industrial | 7,000,000 | 7,000,000 | 2.5 | % | 7,000,000 | 7,000,000 | 2.6 | % | ||||||||||||||
Condominium | 2,120,000 | 2,139,382 | 0.8 | % | 32,229,051 | 32,534,232 | 11.9 | % | ||||||||||||||
Total | $ | 274,823,522 | $ | 275,426,441 | 100.0 | % | $ | 271,582,978 | $ | 273,945,383 | 100.0 | % |
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||
Geographic Location | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||
United States | ||||||||||||||||||||||
California | $ | 102,774,905 | $ | 102,622,718 | 37.3 | % | $ | 48,459,159 | $ | 48,756,874 | 17.8 | % | ||||||||||
Georgia | 61,772,764 | 61,957,443 | 22.5 | % | 12,346,939 | 12,470,408 | 4.6 | % | ||||||||||||||
New York | 52,909,847 | 53,029,923 | 19.3 | % | 81,504,101 | 81,860,466 | 29.8 | % | ||||||||||||||
North Carolina | 28,283,950 | 28,421,676 | 10.3 | % | 4,787,414 | 4,821,252 | 1.8 | % | ||||||||||||||
Washington | 13,525,556 | 13,618,636 | 4.9 | % | 13,304,278 | 13,386,747 | 4.9 | % | ||||||||||||||
Massachusetts | 7,000,000 | 7,000,000 | 2.5 | % | 7,000,000 | 7,000,000 | 2.6 | % | ||||||||||||||
Texas | 2,450,000 | 2,472,244 | 0.9 | % | 2,450,000 | 2,469,608 | 0.9 | % | ||||||||||||||
Illinois | 2,209,189 | 2,227,593 | 0.8 | % | 11,139,020 | 11,228,212 | 4.1 | % | ||||||||||||||
Florida | — | — | — | % | 61,194,351 | 62,206,934 | 22.6 | % | ||||||||||||||
Ohio | — | % | 5,452,125 | 5,495,781 | 2.0 | % | ||||||||||||||||
Colorado | — | — | — | % | 4,027,736 | 4,068,014 | 1.5 | % | ||||||||||||||
Alabama | — | — | — | % | 3,700,000 | 3,763,796 | 1.4 | % | ||||||||||||||
Pennsylvania | — | — | — | % | 14,325,000 | 14,325,000 | 5.2 | % | ||||||||||||||
Other (1) | 3,897,311 | 4,076,208 | 1.5 | % | 1,892,855 | 2,092,291 | 0.8 | % | ||||||||||||||
Total | $ | 274,823,522 | $ | 275,426,441 | 100.0 | % | $ | 271,582,978 | $ | 273,945,383 | 100.0 | % |
Years Ended December 31, | ||||||||||||||||||||
2023 | 2022 | Change | ||||||||||||||||||
Revenues | ||||||||||||||||||||
Interest income | $ | 56,140,437 | $ | 42,591,972 | $ | 13,548,465 | ||||||||||||||
Real estate operating revenue | 11,050,716 | 11,451,914 | (401,198) | |||||||||||||||||
Prepayment fee income | — | 1,984,061 | (1,984,061) | |||||||||||||||||
Other operating income | 722,881 | 586,499 | 136,382 | |||||||||||||||||
67,914,034 | 56,614,446 | 11,299,588 | ||||||||||||||||||
Operating expenses | ||||||||||||||||||||
Operating expenses reimbursed to Manager | 9,234,357 | 8,076,321 | 1,158,036 | |||||||||||||||||
Asset management fee | 7,807,198 | 6,556,492 | 1,250,706 | |||||||||||||||||
Asset servicing fee | 1,857,765 | 1,560,044 | 297,721 | |||||||||||||||||
Provision for credit losses | 45,548,803 | 11,813,409 | 33,735,394 | |||||||||||||||||
Real estate operating expenses | 4,586,245 | 5,005,551 | (419,306) | |||||||||||||||||
Depreciation and amortization | 6,968,985 | 6,530,595 | 438,390 | |||||||||||||||||
Impairment charge | 11,765,540 | 1,604,989 | 10,160,551 | |||||||||||||||||
Professional fees | 3,741,720 | 3,697,792 | 43,928 | |||||||||||||||||
Directors’ fees | 347,714 | 192,497 | 155,217 | |||||||||||||||||
Other | 539,957 | 747,535 | (207,578) | |||||||||||||||||
92,398,284 | 45,785,225 | 46,613,059 | ||||||||||||||||||
Operating (loss) income | (24,484,250) | 10,829,221 | (35,313,471) | |||||||||||||||||
Other income and expenses | ||||||||||||||||||||
Interest expense on secured financing | (28,113,245) | (14,793,540) | (13,319,705) | |||||||||||||||||
Interest expense on unsecured notes payable | (9,643,974) | (6,682,937) | (2,961,037) | |||||||||||||||||
Interest expense on obligations under participation agreements | (1,353,006) | (3,180,771) | 1,827,765 | |||||||||||||||||
Gain on extinguishment of participation liability | 14,079,379 | 3,435,902 | 10,643,477 | |||||||||||||||||
Unrealized losses on investments, net | (316,573) | (122,299) | (194,274) | |||||||||||||||||
(Loss) income from equity investment in unconsolidated investments | (2,383,938) | 2,731,477 | (5,115,415) | |||||||||||||||||
Gain on sale of interests in unconsolidated investments | — | 799,827 | (799,827) | |||||||||||||||||
Loss on disposal of real estate | (4,211,153) | (51,984) | (4,159,169) | |||||||||||||||||
Realized (losses) gains on investments, net | (459,279) | 83,411 | (542,690) | |||||||||||||||||
(32,401,789) | (17,780,914) | (14,620,875) | ||||||||||||||||||
Net loss | $ | (56,886,039) | $ | (6,951,693) | $ | (49,934,346) |
Years Ended December 31, | ||||||||||||
2019 | 2018 | Change | ||||||||||
Revenues | ||||||||||||
Interest income | $ | 40,888,079 | $ | 42,160,375 | $ | (1,272,296 | ) | |||||
Real estate operating revenue | 9,806,507 | 3,724,204 | 6,082,303 | |||||||||
Prepayment fee income | 285,838 | 2,265,201 | (1,979,363 | ) | ||||||||
Other operating income | 419,101 | 218,650 | 200,451 | |||||||||
51,399,525 | 48,368,430 | 3,031,095 | ||||||||||
Operating expenses | ||||||||||||
Operating expenses reimbursed to Manager | 4,875,153 | 3,684,372 | 1,190,781 | |||||||||
Asset management fee | 3,671,474 | 3,077,442 | 594,032 | |||||||||
Asset servicing fee | 854,096 | 716,693 | 137,403 | |||||||||
Real estate operating expenses | 3,989,911 | 1,296,983 | 2,692,928 | |||||||||
Depreciation and amortization | 3,785,977 | 1,577,490 | 2,208,487 | |||||||||
Impairment charge | 1,550,000 | — | 1,550,000 | |||||||||
Professional fees | 3,373,554 | 891,100 | 2,482,454 | |||||||||
Directors fees | 335,000 | 313,583 | 21,417 | |||||||||
Other | 172,232 | 391,539 | (219,307 | ) | ||||||||
22,607,397 | 11,949,202 | 10,658,195 | ||||||||||
Operating income | 28,792,128 | 36,419,228 | (7,627,100 | ) | ||||||||
Other income and expenses | ||||||||||||
Interest expense from obligations under participation agreements | (11,773,346 | ) | (10,862,646 | ) | (910,700 | ) | ||||||
Interest expense on repurchase agreement payable | (4,713,440 | ) | (164,776 | ) | (4,548,664 | ) | ||||||
Interest expense on mortgage loan payable | (3,093,284 | ) | (2,909,529 | ) | (183,755 | ) | ||||||
Interest expense on revolving credit facility | (169,283 | ) | — | (169,283 | ) | |||||||
(19,749,353 | ) | (13,936,951 | ) | (5,812,402 | ) | |||||||
Net income | $ | 9,042,775 | $ | 22,482,277 | $ | (13,439,502 | ) |
Year Ended December 31, 2019 | Year Ended December 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Principal Amount (1) | Weighted Average Coupon Rate (2) | Weighted Average Principal Amount (1) | Weighted Average Coupon Rate (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2023 | Year Ended December 31, 2023 | Year Ended December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Principal Amount (1) | Weighted Average Principal Amount (1) | Weighted Average Coupon Rate (2) | Weighted Average Principal Amount (1) | Weighted Average Coupon Rate (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total portfolio | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans | $ | 363,970,662 | 10.6% | $ | 346,456,599 | 12.5% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations under participation agreements | (95,809,439 | ) | 12.0% | (85,523,305 | ) | 12.7% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loan payable | — | —% | (19,674,782 | ) | 7.0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase agreement payable | (64,326,187 | ) | 4.3% | (1,873,973 | ) | 5.0% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Revolving credit facility | (504,110 | ) | 6.1% | — | —% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans | $ | 569,511,789 | 12.7 | % | $ | 550,062,087 | 10.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Obligations under participation agreements and secured borrowing | Obligations under participation agreements and secured borrowing | (9,987,566) | 17.4 | % | (59,931,021) | 12.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory notes payable | Promissory notes payable | (13,002,573) | 10.7 | % | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase agreements payable | Repurchase agreements payable | (134,030,835) | 8.3 | % | (167,507,961) | 6.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan payable | Term loan payable | — | — | % | (10,303,678) | 5.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Revolving line of credit payable | Revolving line of credit payable | (87,114,331) | 8.7 | % | (47,383,467) | 7.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net loans (3) | $ | 203,330,926 | 11.9% | $ | 239,384,539 | 13.0% | Net loans (3) | $ | 325,376,484 | 15.5 | 15.5 | % | $ | 264,935,960 | 14.0 | 14.0 | % | ||||||||||||||||||||||||||||||||||||||||
Senior loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans | $ | 133,437,181 | 7.7% | $ | 100,110,289 | 11.3% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Obligations under participation agreements | (8,832,644 | ) | 11.7% | (22,343,472 | ) | 12.0% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage loan payable | — | —% | (19,674,782 | ) | 7.0% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase agreement payable | (64,326,187 | ) | 4.3% | (1,873,973 | ) | 5.0% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans | $ | 443,674,795 | 12.2 | % | $ | 408,607,321 | 9.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Obligations under participation agreements and secured borrowing | Obligations under participation agreements and secured borrowing | (9,987,566) | 17.4 | % | (24,800,580) | 8.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Promissory notes payable | Promissory notes payable | (13,002,573) | 10.7 | % | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase agreements payable | Repurchase agreements payable | (134,030,835) | 8.3 | % | (167,507,962) | 6.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Term loan payable | Term loan payable | — | — | % | (10,303,678) | 5.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Revolving line of credit payable | Revolving line of credit payable | (87,114,331) | 8.7 | % | (47,383,467) | 7.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net loans (3) | $ | 60,278,350 | 10.7% | $ | 56,218,062 | 12.7% | Net loans (3) | $ | 199,539,490 | 16.2 | 16.2 | % | $ | 158,611,634 | 14.6 | 14.6 | % | ||||||||||||||||||||||||||||||||||||||||
Subordinated loans (4) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans | $ | 230,533,481 | 12.3% | $ | 246,346,310 | 13.0% | |||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross loans | $ | 125,836,994 | 14.5 | % | $ | 141,454,766 | 13.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Obligations under participation agreements | (86,976,795 | ) | 12.1% | (63,179,833 | ) | 12.9% | Obligations under participation agreements | — | — | — | % | (35,130,441) | 13.7 | 13.7 | % | ||||||||||||||||||||||||||||||||||||||||||
Revolving credit facility | (504,110 | ) | 6.1% | — | —% | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loans (3) | $ | 143,052,576 | 12.5% | $ | 183,166,477 | 13.1% | Net loans (3) | $ | 125,836,994 | 14.5 | 14.5 | % | $ | 106,324,325 | 13.6 | 13.6 | % |
Type of Financing | Maximum Amount Available | Outstanding Balance | Amount Remaining Available | Interest Rate | Maturity Date | |||||||||||||||||||||||||||
Fixed Rate: | ||||||||||||||||||||||||||||||||
Unsecured notes payable | N/A | $ | 85,125,000 | N/A | 6.00% | June 2026 | ||||||||||||||||||||||||||
Unsecured notes payable | N/A | 38,375,000 | N/A | 7.00% | March 2026 | |||||||||||||||||||||||||||
Property mortgages | N/A | 40,250,000 | N/A | 6.25% | June 2028 | |||||||||||||||||||||||||||
$ | 163,750,000 | |||||||||||||||||||||||||||||||
Variable Rate: | ||||||||||||||||||||||||||||||||
Property mortgages | N/A | $ | 33,256,885 | N/A | Term SOFR +3.5% (Term SOFR Floor of 3.75%) | April 2027 | ||||||||||||||||||||||||||
Term loan | N/A | 15,000,000 | N/A | SOFR + 7.375% (SOFR floor of 5.0%) | March 2024 | |||||||||||||||||||||||||||
Promissory notes payable | N/A | 63,509,518 | N/A | Term SOFR plus a spread ranging from 4.75% to 5.6% with a combined floor rate ranging from 9.0% to 10.9%. | March 2025 - March 2026 | |||||||||||||||||||||||||||
Revolving line of credit (1) | $ | 125,000,000 | 47,461,730 | $ | 77,538,270 | Term SOFR + 3.35% (combined floor rate of 6.0%) | March 2024 | |||||||||||||||||||||||||
UBS AG repurchase agreement (2) | 195,000,000 | 18,480,000 | 176,520,000 | Term SOFR + 1.965% | November 2024 | |||||||||||||||||||||||||||
Goldman Sachs Bank repurchase agreement(3) | 200,000,000 | 75,455,624 | 124,544,376 | Term SOFR (subject to underlying loan floors on a case-by-case basis) plus a spread ranging from 2.0% to 5.00%) | February 2024 | |||||||||||||||||||||||||||
$ | 520,000,000 | $ | 253,163,757 | $ | 378,602,646 |
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||
Obligations under participation agreements — principal (1) | $ | 102,564,795 | $ | 17,952,455 | $ | 83,496,340 | $ | 1,116,000 | $ | — | ||||||||||
Mortgage loan payable — principal (2) | 44,614,480 | 44,614,480 | — | — | — | |||||||||||||||
Repurchase agreement payable — principal (3) | 81,134,436 | 81,134,436 | — | — | — | |||||||||||||||
Interest on borrowings (4) | 24,908,195 | 15,949,734 | 8,797,788 | 160,673 | — | |||||||||||||||
Unfunded lending commitments (5) | 116,662,550 | 89,034,059 | 27,628,491 | — | — | |||||||||||||||
Ground lease commitment (6) | 84,458,063 | 1,264,500 | 2,529,000 | 2,529,000 | 78,135,563 | |||||||||||||||
$ | 454,342,519 | $ | 249,949,664 | $ | 122,451,619 | $ | 3,805,673 | $ | 78,135,563 |
Years Ended December 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Origination and extension fee expense (1) | $ | 2,312,656 | $ | 3,189,291 | ||||||||||
Asset management fee | 7,807,198 | 6,556,492 | ||||||||||||
Asset servicing fee | 1,857,765 | 1,560,044 | ||||||||||||
Operating expenses reimbursed to Manager | 9,234,357 | 8,076,321 | ||||||||||||
Disposition fee (2) | 1,451,063 | 890,194 | ||||||||||||
Total | $ | 22,663,039 | $ | 20,272,342 |
Years Ended December 31, | |||||||||
2019 | 2018 | ||||||||
Origination and extension fee expense (1) | $ | 1,992,492 | $ | 2,520,713 | |||||
Asset management fee | 3,671,474 | 3,077,442 | |||||||
Asset servicing fee | 854,096 | 716,693 | |||||||
Operating expenses reimbursed to Manager | 4,875,153 | 3,684,372 | |||||||
Disposition fee (2) | 1,408,055 | 1,167,941 | |||||||
Total | $ | 12,801,270 | $ | 11,167,161 |
December 31, 2023 | ||||||||
Variable rate investments | $ | 438,839,001 | ||||||
Variable rate debt | $ | 253,163,757 |
1.00% Decrease | 1.00% Increase | |||||||||||||
Investment income from variable rate investments | $ | (4,517,751) | $ | 4,554,622 | ||||||||||
Interest expense from variable rate debt | 1,913,391 | (2,531,638) | ||||||||||||
Net investment income from variable rate instruments | $ | (2,604,360) | $ | 2,022,984 |
Name | Fees Earned or Paid in Cash | All Other Compensation | Total | |||||||||
Jeffrey M. Altman | $ | 70,000 | $ | — | $ | 70,000 | ||||||
Roger H. Beless | $ | 60,000 | $ | — | $ | 60,000 | ||||||
Michael L. Evans | $ | 75,000 | $ | — | $ | 75,000 | ||||||
Spencer E. Goldenberg | $ | 70,000 | $ | — | $ | 70,000 | ||||||
John S. Gregorits | $ | 60,000 | $ | — | $ | 60,000 |
Name | Number of Shares Beneficially Owned | Percentage of All Shares | ||||
Andrew M. Axelrod | — | — | ||||
Vikram S. Uppal | — | — | ||||
Bruce D. Batkin | — | — | ||||
Gregory M. Pinkus | — | — | ||||
Daniel J. Cooperman | — | — | ||||
Jeffrey M. Altman | — | — | ||||
Roger H. Beles | — | — | ||||
Michael L. Evans | — | — | ||||
Spencer E. Goldenberg | — | — | ||||
John S. Gregorits | — | — | ||||
All directors and executive officers as a group (10 persons) | — | — | ||||
5% or Greater Beneficial Owners | ||||||
Terra Fund 5 (1) | 14,912,990.19 | 98.6% |
Years Ended December 31, | ||||||||
2019 | 2018 | |||||||
Audit Fees | $ | 409,500 | $ | 440,000 | ||||
Audit-Related Fees | 50,000 | — | ||||||
Tax Fees | 65,800 | 56,760 | ||||||
All Other Fees | — | — | ||||||
Total | $ | 525,300 | $ | 496,760 |
Exhibit No. | Description and Method of Filing | |||||||
2.1 |
2.3 | ||||||||
2.4 | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1* | ||||||||
4.2 | ||||||||
4.3 |
Exhibit No. | Description and Method of Filing | |||||||
4.4 | ||||||||
4.5 | ||||||||
4.6 | ||||||||
4.7 | ||||||||
10.1 | ||||||||
10.2 | ||||||||
10.3 | ||||||||
10.4 | ||||||||
10.5 | ||||||||
10.6 | ||||||||
10.7 | ||||||||
10.8 | ||||||||
10.9 | ||||||||
10.1 | ||||||||
10.11* | ||||||||
10.12 | ||||||||
10.13* | ||||||||
10.14* | ||||||||
10.15 | ||||||||
Exhibit No. | Description and Method of Filing | |||||||
10.16 | ||||||||
10.17 | ||||||||
10.18 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32** | ||||||||
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) |
Page | ||||||||||||||||||||
KPMG LLP | New York, NY | PCAOB ID: | 185 | F- | ||||||||||||||||
Consolidated Financial Statements: | ||||||||||||||||||||
F- | ||||||||||||||||||||
F- | ||||||||||||||||||||
F-6 | ||||||||||||||||||||
F- | ||||||||||||||||||||
F- | ||||||||||||||||||||
F- | ||||||||||||||||||||
F- |
December 31, | |||||||||||
2023 | 2022 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 10,674,475 | $ | 28,567,825 | |||||||
Restricted cash | 3,954,986 | 4,633,204 | |||||||||
Cash held in escrow by lender | 4,907,316 | 3,268,563 | |||||||||
Marketable securities | 4,961,879 | 147,960 | |||||||||
Loans held for investment, net of allowance for credit losses of $56,749,498 and $25,471,890 | 417,913,773 | 584,417,939 | |||||||||
Loans held for investment acquired through participation, net of allowance for credit losses of $226,527 and none | 38,558,485 | 42,072,828 | |||||||||
Equity investment in unconsolidated investments | 37,171,326 | 62,498,340 | |||||||||
Land, building and building improvements, net | 126,724,333 | 46,660,226 | |||||||||
Lease intangible assets, net | 9,869,364 | 2,568,461 | |||||||||
Operating lease right-of-use asset | — | 27,378,786 | |||||||||
Deal deposit | — | 4,241,892 | |||||||||
Interest receivable | 6,537,368 | 4,100,501 | |||||||||
Other assets | 9,466,846 | 2,780,367 | |||||||||
Total assets | $ | 670,740,151 | $ | 813,336,892 | |||||||
Liabilities and Equity | |||||||||||
Liabilities: | |||||||||||
Unsecured notes payable, net | $ | 118,380,897 | $ | 116,530,673 | |||||||
Secured financing agreements, net | 290,525,313 | 313,600,484 | |||||||||
— | 12,680,594 | ||||||||||
Interest reserve and other deposits held on investments | 3,954,986 | 4,633,204 | |||||||||
Operating lease liability | — | 27,378,786 | |||||||||
6,838,875 | 8,646,840 | ||||||||||
4,183,293 | 3,935,997 | ||||||||||
Interest payable | 1,575,463 | 1,058,001 | |||||||||
Accounts payable and accrued expenses | 2,405,749 | 1,452,236 | |||||||||
Unearned income | 314,260 | 378,018 | |||||||||
Other liabilities | 907,507 | 1,159,885 | |||||||||
Total liabilities | 429,086,343 | 491,454,718 | |||||||||
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 no shares and 125 shares issued and outstanding at December 31, 2023 and 2022, respectively | — | 125,000 | |||||||||
Class A Common Stock, $0.01 par value, 450,000,000 shares authorized and no shares issued, at both December 31, 2023 and 2022 | — | — | |||||||||
Class B Common Stock, $0.01 par value, 450,000,000 shares authorized and 24,336,033 and 24,335,370 shares issued and outstanding at December 31, 2023 and 2022, respectively | 243,360 | 243,354 | |||||||||
Additional paid-in capital | 444,458,206 | 444,449,813 | |||||||||
Accumulated deficit | (203,047,758) | (122,935,993) | |||||||||
Total equity | 241,653,808 | 321,882,174 | |||||||||
Total liabilities and equity | $ | 670,740,151 | $ | 813,336,892 |
December 31, | |||||||
2019 | 2018 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 29,609,484 | $ | 8,918,704 | |||
Restricted cash | 18,542,163 | 17,431,603 | |||||
Cash held in escrow by lender | 2,398,053 | 2,188,546 | |||||
Loans held for investment, net | 375,462,222 | 388,243,974 | |||||
Loans held for investment acquired through participation, net | 3,150,546 | — | |||||
Real estate owned, net (Note 4) | |||||||
Land, building and building improvements, net | 64,751,247 | 52,926,258 | |||||
Lease intangible assets, net | 12,845,228 | 15,078,319 | |||||
Operating lease right-of-use assets | 16,112,925 | — | |||||
Interest receivable | 1,876,799 | 2,915,558 | |||||
Other assets | 2,594,411 | 3,851,761 | |||||
Total assets | $ | 527,343,078 | $ | 491,554,723 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Obligations under participation agreements (Note 6) | $ | 103,186,327 | $ | 114,298,592 | |||
Repurchase agreement payable, net of deferred financing fees | 79,608,437 | 31,514,294 | |||||
Mortgage loan payable, net of deferred financing fees and other | 44,753,633 | 44,874,688 | |||||
Interest reserve and other deposits held on investments | 18,542,163 | 17,431,603 | |||||
Operating lease liabilities | 16,112,925 | — | |||||
Lease intangible liabilities, net (Note 4) | 11,424,809 | 12,019,709 | |||||
Due to Manager (Note 6) | 1,037,168 | 1,813,506 | |||||
Interest payable | 1,076,231 | 1,211,742 | |||||
Accounts payable and accrued expenses | 1,749,525 | 998,444 | |||||
Unearned income | 624,021 | 1,347,229 | |||||
Other liabilities | 1,684,106 | 752,557 | |||||
Total liabilities | 279,799,345 | 226,262,364 | |||||
Commitments and contingencies (Note 8) | |||||||
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 December 31, 2019 and 2018 | 125,000 | 125,000 | |||||
Common stock, $0.01 par value, 450,000,000 shares authorized and 15,125,681 and 14,912,990 shares issued and outstanding at December 31, 2019 and, 2018, respectively | 151,257 | 149,130 | |||||
Additional paid-in capital | 301,727,297 | 298,109,424 | |||||
Accumulated deficit | (54,459,821 | ) | (33,091,195 | ) | |||
Total equity | 247,543,733 | 265,292,359 | |||||
Total liabilities and equity | $ | 527,343,078 | $ | 491,554,723 |
Years Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Revenues | |||||||||||
Interest income | $ | 56,140,437 | $ | 42,591,972 | |||||||
Real estate operating revenue | 11,050,716 | 11,451,914 | |||||||||
Prepayment fee income | — | 1,984,061 | |||||||||
Other operating income | 722,881 | 586,499 | |||||||||
67,914,034 | 56,614,446 | ||||||||||
Operating expenses | |||||||||||
Operating expenses reimbursed to Manager | 9,234,357 | 8,076,321 | |||||||||
Asset management fee | 7,807,198 | 6,556,492 | |||||||||
Asset servicing fee | 1,857,765 | 1,560,044 | |||||||||
Provision for credit losses | 45,548,803 | 11,813,409 | |||||||||
Real estate operating expenses | 4,586,245 | 5,005,551 | |||||||||
Depreciation and amortization | 6,968,985 | 6,530,595 | |||||||||
Impairment charge | 11,765,540 | 1,604,989 | |||||||||
Professional fees | 3,741,720 | 3,697,792 | |||||||||
Directors’ fees | 347,714 | 192,497 | |||||||||
Other | 539,957 | 747,535 | |||||||||
92,398,284 | 45,785,225 | ||||||||||
Operating (loss) income | (24,484,250) | 10,829,221 | |||||||||
Other income and expenses | |||||||||||
Interest expense on secured financing | (28,113,245) | (14,793,540) | |||||||||
Interest expense on unsecured notes payable | (9,643,974) | (6,682,937) | |||||||||
Interest expense on obligations under participation agreements | (1,353,006) | (3,180,771) | |||||||||
Gain on extinguishment of participation liability | 14,079,379 | 3,435,902 | |||||||||
Unrealized losses on investments, net | (316,573) | (122,299) | |||||||||
(Loss) income from equity investment in unconsolidated investments | (2,383,938) | 2,731,477 | |||||||||
Gain on sale of interests in unconsolidated investments | — | 799,827 | |||||||||
Loss on disposal of real estate | (4,211,153) | (51,984) | |||||||||
Realized (losses) gains on investments, net | (459,279) | 83,411 | |||||||||
(32,401,789) | (17,780,914) | ||||||||||
Net loss | $ | (56,886,039) | $ | (6,951,693) | |||||||
Series A preferred stock dividend declared | $ | (3,907) | $ | (15,624) | |||||||
Net loss allocable to common stock | $ | (56,889,946) | $ | (6,967,317) | |||||||
Loss per share — basic and diluted | $ | (2.34) | $ | (0.34) | |||||||
Weighted-average shares — basic and diluted | 24,335,545 | 20,709,400 | |||||||||
Distributions declared per common share | $ | 0.76 | $ | 0.78 |
Years Ended December 31, | |||||||||
2019 | 2018 | ||||||||
Revenues | |||||||||
Interest income | $ | 40,888,079 | $ | 42,160,375 | |||||
Real estate operating revenue | 9,806,507 | 3,724,204 | |||||||
Prepayment fee income | 285,838 | 2,265,201 | |||||||
Other operating income | 419,101 | 218,650 | |||||||
51,399,525 | 48,368,430 | ||||||||
Operating expenses | |||||||||
Operating expenses reimbursed to Manager | 4,875,153 | 3,684,372 | |||||||
Asset management fee | 3,671,474 | 3,077,442 | |||||||
Asset servicing fee | 854,096 | 716,693 | |||||||
Real estate operating expenses | 3,989,911 | 1,296,983 | |||||||
Depreciation and amortization | 3,785,977 | 1,577,490 | |||||||
Impairment charge | 1,550,000 | — | |||||||
Professional fees (1) | 3,373,554 | 891,100 | |||||||
Directors fees | 335,000 | 313,583 | |||||||
Other | 172,232 | 391,539 | |||||||
22,607,397 | 11,949,202 | ||||||||
Operating income | 28,792,128 | 36,419,228 | |||||||
Other income and expenses | |||||||||
Interest expense from obligations under participation agreements | (11,773,346 | ) | (10,862,646 | ) | |||||
Interest expense on repurchase agreement payable | (4,713,440 | ) | (164,776 | ) | |||||
Interest expense on mortgage loan payable | (3,093,284 | ) | (2,909,529 | ) | |||||
Interest expense on revolving credit facility | (169,283 | ) | — | ||||||
(19,749,353 | ) | (13,936,951 | ) | ||||||
Net income | $ | 9,042,775 | $ | 22,482,277 | |||||
Preferred stock dividend declared | (15,624 | ) | (15,624 | ) | |||||
Net income allocable to common stock | $ | 9,027,151 | $ | 22,466,653 | |||||
Earnings per share — basic and diluted | $ | 0.60 | $ | 1.51 | |||||
Weighted-average shares — basic and diluted | 14,967,183 | 14,912,990 | |||||||
Distributions declared per common share | $ | 2.03 | $ | 2.19 |
Preferred Stock | 12.5% Series A Cumulative Non-Voting Preferred Stock | Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$0.01 Par Value | $0.01 Par Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Total equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2023 | $ | — | 125 | $ | 125,000 | — | $ | — | 24,335,370 | $ | 243,354 | $ | 444,449,813 | $ | (122,935,993) | $ | 321,882,174 | ||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of credit loss accounting standard effective | — | — | — | — | — | — | — | — | (4,619,723) | (4,619,723) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued from reinvestment of shareholder distributions | — | — | — | — | — | 663 | 6 | 8,393 | — | 8,399 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redemption of Series A Preferred Stock | — | (125) | (125,000) | — | — | — | — | — | — | (125,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions declared on common shares ($0.76 per share) | — | — | — | — | — | — | — | — | (18,602,096) | (18,602,096) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions declared on preferred shares | — | — | — | — | — | — | — | — | (3,907) | (3,907) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (56,886,039) | (56,886,039) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | — | — | $ | — | — | $ | — | 24,336,033 | $ | 243,360 | $ | 444,458,206 | $ | (203,047,758) | $ | 241,653,808 |
Preferred Stock | 12.5% Series A Cumulative Non-Voting Preferred Stock | Common Stock | Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Accumulated Deficit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$0.01 Par Value | $0.01 Par Value | $0.01 Par Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Total equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2022 | $ | — | 125 | $ | 125,000 | 19,487,460 | $ | 194,875 | — | $ | — | — | $ | — | $ | 373,443,672 | $ | (99,919,969) | $ | 273,843,578 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock converted into newly authorized Class B Common Stock | — | — | — | (19,487,460) | (194,875) | — | — | 19,487,460 | 194,875 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued in connection with the BDC Merger (Note 3) | — | — | — | — | — | — | — | 4,847,910 | 48,479 | 71,006,141 | — | 71,054,620 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions declared on common shares ($0.78 per share) | — | — | — | — | — | — | — | — | — | — | (16,048,707) | (16,048,707) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions declared on preferred shares | — | — | — | — | — | — | — | — | — | — | (15,624) | (15,624) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | — | (6,951,693) | (6,951,693) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | — | 125 | $ | 125,000 | — | $ | — | — | $ | — | 24,335,370 | $ | 243,354 | $ | 444,449,813 | $ | (122,935,993) | $ | 321,882,174 |
Preferred Stock | 12.5% Series A Cumulative Non-Voting Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | ||||||||||||||||||||||||||
$0.01 Par Value | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total equity | ||||||||||||||||||||||||||
Balance at January 1, 2019 | $ | — | 125 | $ | 125,000 | 14,912,990 | $ | 149,130 | $ | 298,109,424 | $ | (33,091,195 | ) | $ | 265,292,359 | |||||||||||||||
Issuance of common stock | — | — | — | 212,691 | 2,127 | 3,617,873 | — | 3,620,000 | ||||||||||||||||||||||
Net income | — | — | — | — | — | — | 9,042,775 | 9,042,775 | ||||||||||||||||||||||
Distributions declared on common share ($2.03 per share) | — | — | — | — | — | — | (30,395,777 | ) | (30,395,777 | ) | ||||||||||||||||||||
Distributions declared on preferred shares | — | — | — | — | — | — | (15,624 | ) | (15,624 | ) | ||||||||||||||||||||
Balance at December 31, 2019 | $ | — | 125 | $ | 125,000 | 15,125,681 | $ | 151,257 | $ | 301,727,297 | $ | (54,459,821 | ) | $ | 247,543,733 |
Preferred Stock | 12.5% Series A Cumulative Non-Voting Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | ||||||||||||||||||||||||||
$0.01 Par Value | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total equity | ||||||||||||||||||||||||||
Balance at January 1, 2018 | $ | — | 125 | $ | 125,000 | 14,912,990 | $ | 149,130 | $ | 298,109,424 | $ | (22,873,848 | ) | $ | 275,509,706 | |||||||||||||||
Net income | — | — | — | — | — | — | 22,482,277 | 22,482,277 | ||||||||||||||||||||||
Distributions declared on common share ($2.19 per share) | — | — | — | — | — | — | (32,684,000 | ) | (32,684,000 | ) | ||||||||||||||||||||
Distributions declared on preferred shares | — | — | — | — | — | — | (15,624 | ) | (15,624 | ) | ||||||||||||||||||||
Balance at December 31, 2018 | $ | — | 125 | $ | 125,000 | 14,912,990 | $ | 149,130 | $ | 298,109,424 | $ | (33,091,195 | ) | $ | 265,292,359 |
Years Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (56,886,039) | $ | (6,951,693) | |||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 6,968,985 | 6,530,595 | |||||||||
Provision for credit losses | 45,548,803 | 11,813,409 | |||||||||
Impairment charges | 11,765,540 | 1,604,989 | |||||||||
Amortization of net purchase premiums on loans | 1,124,157 | 557,012 | |||||||||
Straight-line rent adjustments | (63,974) | 1,357,247 | |||||||||
Amortization of deferred financing costs | 2,485,026 | 2,271,556 | |||||||||
Amortization of discount on unsecured notes payable | 1,672,197 | 738,583 | |||||||||
Amortization of above- and below-market rent intangibles | (2,135,162) | (914,965) | |||||||||
Amortization and accretion of investment-related fees, net | (896,615) | (1,210,524) | |||||||||
Amortization of above-market rent ground lease | (103,017) | (130,348) | |||||||||
Gain on extinguishment of participation liability | (14,079,379) | (3,435,902) | |||||||||
Gain on sale of interests in unconsolidated investments | — | (799,827) | |||||||||
Realized loss (gain) on investments, net | 459,279 | (83,411) | |||||||||
Unrealized losses on investments, net | 316,573 | 122,299 | |||||||||
Loss on sale of real estate | 4,211,153 | 51,984 | |||||||||
Distributions received from equity investment in unconsolidated investments | 7,008,461 | 180,549 | |||||||||
Loss (income) from equity investment in unconsolidated investments | 4,188,976 | (1,271,921) | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Deal deposits | 4,241,892 | (4,241,892) | |||||||||
Interest receivable | (2,893,517) | (323,606) | |||||||||
Due from related party | — | 2,421,388 | |||||||||
Other assets | (6,860,178) | (2,918,189) | |||||||||
Due to Manager | 1,509,673 | — | |||||||||
Unearned income | (63,758) | (71,672) | |||||||||
Interest payable | 517,462 | (821,625) | |||||||||
Accounts payable and accrued expenses | 1,121,931 | (552,728) | |||||||||
Other liabilities | (548,471) | (3,517,540) | |||||||||
Net cash provided by operating activities | 8,609,998 | 403,768 | |||||||||
Cash flows from investing activities: | |||||||||||
Proceeds from repayments of loans | 126,142,565 | 197,484,239 | |||||||||
Origination and purchase of loans | (78,883,295) | (290,005,676) | |||||||||
Purchase of real estate properties | (52,508,252) | — | |||||||||
Purchase of held-to-maturity securities | (20,025,024) | — | |||||||||
Proceeds from redemption of held-to-maturity securities | 20,000,000 | — | |||||||||
Return of capital on equity interests in unconsolidated investments | 11,287,839 | — | |||||||||
Purchase of marketable securities | (7,905,211) | (136,265) | |||||||||
Purchase of equity interests in unconsolidated investments | (7,307,806) | (25,504,979) | |||||||||
Funding for promissory note receivable | (3,844,797) | (386,395) | |||||||||
Proceeds from sale of marketable securities | 2,422,095 | 1,259,417 | |||||||||
Cash acquired in purchase of real estate | 712,608 | — | |||||||||
Capital expenditures on real estate | (132,506) | — | |||||||||
Proceeds from sale of interests in unconsolidated investments | — | 33,688,430 | |||||||||
Cash and restricted cash acquired in connection with the BDC Merger | — | 24,582,565 | |||||||||
Proceeds from sale of real estate | — | 8,585,500 | |||||||||
Distributions in excess of equity income | — | 923,200 | |||||||||
Proceeds from repayment of promissory note receivable | — | 386,395 | |||||||||
Cash paid to stockholders of Terra BDC in connection with the BDC Merger | — | (12,920) | |||||||||
Net cash used in investing activities | (10,041,784) | (49,136,489) |
Years Ended December 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 9,042,775 | $ | 22,482,277 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Paid-in-kind interest income, net | (1,682,721 | ) | (1,826,132 | ) | |||
Depreciation and amortization | 3,785,977 | 1,577,490 | |||||
Impairment charge | 1,550,000 | — | |||||
Amortization of net purchase premiums on loans | 81,642 | 481,177 | |||||
Straight-line rent adjustments | (681,920 | ) | (480,848 | ) | |||
Amortization of deferred financing costs | 1,993,486 | 283,660 | |||||
Amortization of above- and below-market rent intangibles | (446,997 | ) | (186,247 | ) | |||
Amortization and accretion of investment-related fees, net | (85,764 | ) | (165,762 | ) | |||
Amortization of above-market rent ground lease | (130,348 | ) | (54,312 | ) | |||
Changes in operating assets and liabilities: | |||||||
Interest receivable | 575,627 | (1,203,112 | ) | ||||
Other assets | 1,639,202 | (2,074,127 | ) | ||||
Due to Manager | (213,485 | ) | (169,661 | ) | |||
Unearned income | 553,539 | 66,280 | |||||
Interest payable | (135,511 | ) | 359,803 | ||||
Accounts payable and accrued expenses | 725,749 | (185,144 | ) | ||||
Other liabilities | 931,549 | (8,311 | ) | ||||
Net cash provided by operating activities | 17,502,800 | 18,897,031 | |||||
Cash flows from investing activities: | |||||||
Origination and purchase of loans | (185,327,219 | ) | (232,330,036 | ) | |||
Proceeds from repayments of loans | 181,131,959 | 148,640,590 | |||||
Capital expenditure on real estate property | (242,071 | ) | (2,272,533 | ) | |||
Cash acquired upon foreclosure of real estate property | — | 6,733 | |||||
Net cash used in investing activities | (4,437,331 | ) | (85,955,246 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from borrowings under repurchase agreement | 81,134,436 | 34,200,000 | |||||
Repayments of borrowings under repurchase agreement | (34,200,000 | ) | — | ||||
Repayments of obligations under participation agreements | (46,243,595 | ) | (36,843,329 | ) | |||
Distributions paid | (30,411,401 | ) | (32,699,624 | ) | |||
Proceeds from obligations under participation agreements | 34,665,630 | 74,924,793 | |||||
Change in interest reserve and other deposits held on investments | 1,171,501 | 318,232 | |||||
Proceeds from borrowings under revolving credit agreement | 16,000,000 | — | |||||
Repayments of borrowings under revolving credit agreement | (16,000,000 | ) | — | ||||
Proceeds from issuance of common stock | 3,620,000 | — | |||||
Payment of financing costs | (405,673 | ) | (2,951,332 | ) | |||
Repayment of mortgage principal | (385,520 | ) | (177,094 | ) | |||
Proceeds from mortgage financing | — | 11,177,094 | |||||
Net cash provided by financing activities | 8,945,378 | 47,948,740 | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 22,010,847 | (19,109,475 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of year | 28,538,853 | 47,648,328 | |||||
Cash, cash equivalents and restricted cash at end of year (Note 2) | $ | 50,549,700 | $ | 28,538,853 |
Years Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from secured financing | 211,017,859 | 286,577,087 | |||||||||
Principal repayments on secured financing | (205,265,764) | (239,705,071) | |||||||||
Distributions paid | (18,597,604) | (16,064,331) | |||||||||
Payment of financing costs | (3,346,724) | (1,033,097) | |||||||||
Proceeds from obligations under participation agreements | 1,494,422 | 29,607,969 | |||||||||
Change in interest reserve and other deposits held on investments | (678,218) | (3,039,221) | |||||||||
Redemption of Series A Preferred Stock | (125,000) | — | |||||||||
Repayments of obligations under participation agreements | — | (22,239,670) | |||||||||
Net cash (used in) provided by financing activities | (15,501,029) | 34,103,666 | |||||||||
Net decrease in cash, cash equivalents and restricted cash | (16,932,815) | (14,629,055) | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 36,469,592 | 51,098,647 | |||||||||
$ | 19,536,777 | $ | 36,469,592 |
Years Ended December 31, | |||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||
2023 | 2023 | 2022 | |||||||||||||||||||||||||||
Supplemental Disclosure of Cash Flows Information: | |||||||||||||||||||||||||||||
Cash paid for interest | $ | 17,308,592 | $ | 8,793,042 | |||||||||||||||||||||||||
Cash paid for income taxes | $ | — | $ | — | |||||||||||||||||||||||||
Cash paid for interest | |||||||||||||||||||||||||||||
Cash paid for interest | |||||||||||||||||||||||||||||
Supplemental non-cash information: | |||||||||||||||||||||||||||||
Supplemental non-cash information: | |||||||||||||||||||||||||||||
Supplemental non-cash information: | |||||||||||||||||||||||||||||
Reinvestment of shareholder distributions | |||||||||||||||||||||||||||||
Reinvestment of shareholder distributions | |||||||||||||||||||||||||||||
Reinvestment of shareholder distributions |
Total Capitalized Costs: | ||||||||
Cash and cash equivalents | $ | 3,515,466 | ||||||
Loans held for investment | 68,737,877 | |||||||
Equity investment in unconsolidated investment | 10,149,642 | |||||||
Interest receivable | 456,650 | |||||||
Other assets | 429,326 | |||||||
$ | 83,288,961 | |||||||
Net Assets Acquired | ||||||||
Cash and cash equivalents | $ | 712,608 | ||||||
Other assets | 33,802 | |||||||
Land | 14,457,149 | |||||||
Buildings and Improvements | 65,365,376 | |||||||
Intangible asset and liability: | ||||||||
In-please lease | 8,403,667 | |||||||
Below-market rent | (4,770,870) | |||||||
Accounts payable and accrued expenses | (912,771) | |||||||
$ | 83,288,961 |
Carrying Value of First Mortgage | ||||
Loan held for investment | $ | 14,325,000 | ||
Interest receivable | 439,300 | |||
Restricted cash applied against loan principal amount | (60,941 | ) | ||
$ | 14,703,359 | |||
Assets Acquired at Fair Value | ||||
Land | $ | 14,703,359 |
Carrying Value of First Mortgage | ||||
Loans held for investment | $ | 54,000,000 | ||
Interest receivable | 1,368,022 | |||
Restricted cash | (1,711,530 | ) | ||
53,656,492 | ||||
Assets Acquired at Fair Value (Excluding Cash) | ||||
Real estate owned: | ||||
Building and building improvements | 43,828,760 | |||
In-place lease intangible assets | 8,434,405 | |||
Above-market rent intangible assets | 3,228,746 | |||
Below-market rent intangible liabilities | (442,645 | ) | ||
55,049,266 | ||||
Other assets | 126,135 | |||
Liabilities Assumed at Fair Value | ||||
Accounts payable and accrued expense | (657,022 | ) | ||
Unearned income | (560,548 | ) | ||
Other liabilities | (308,072 | ) | ||
Net assets acquired excluding cash | 53,649,759 | |||
Cash acquired upon foreclosure of real estate property | $ | 6,733 |
Total Consideration | ||||||||
Fair value of Terra Property Trust, Inc. shares of common stock issued | $ | 71,054,620 | ||||||
Cash paid for fractional shares | 12,920 | |||||||
Transaction costs | 2,283,785 | |||||||
73,351,325 | ||||||||
Assets Acquired and Liabilities Assumed at Fair Value | ||||||||
Loans held for investment | 77,562,528 | |||||||
Loans held for investment acquired through participation | 36,793,313 | |||||||
Interest receivable | 1,367,044 | |||||||
Other assets | 55,465 | |||||||
Term loan payable | (25,000,000) | |||||||
Unsecured notes payable | (33,770,000) | |||||||
Obligations under participation agreements | (6,114,979) | |||||||
Interest reserve and other deposits held on investments | (260,614) | |||||||
Due to manager | (682,541) | |||||||
Interest payable | (53,186) | |||||||
Accounts payable and accrued expenses | (740,824) | |||||||
Other liabilities | (387,446) | |||||||
Net assets acquired excluding cash and restricted cash | 48,768,760 | |||||||
Cash and restricted cash acquired | $ | 24,582,565 |
Risk Rating | Description | |||||||
1 | ||||||||
Very low risk | ||||||||
2 | Low risk | |||||||
3 | Moderate/average risk | |||||||
4 | Higher risk | |||||||
5 | Highest risk |
December 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash and cash equivalents | $ | 10,674,475 | $ | 28,567,825 | ||||||||||
Restricted cash | 3,954,986 | 4,633,204 | ||||||||||||
Cash held in escrow by lender | 4,907,316 | 3,268,563 | ||||||||||||
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ | 19,536,777 | $ | 36,469,592 |
December 31, 2019 | December 31, 2018 | |||||||
Cash and cash equivalents | $ | 29,609,484 | $ | 8,918,704 | ||||
Restricted cash | 18,542,163 | 17,431,603 | ||||||
Cash held in escrow by lender | 2,398,053 | 2,188,546 | ||||||
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ | 50,549,700 | $ | 28,538,853 |
Total Consideration | ||||||||
Fair value of Terra Property Trust shares of common stock issued | $ | 71,054,620 | ||||||
Cash paid for fractional shares | 12,920 | |||||||
Transaction costs | 2,283,785 | |||||||
$ | 73,351,325 | |||||||
Assets Acquired and Liabilities Assumed at Fair Value | ||||||||
Cash and cash equivalents | $ | 24,321,951 | ||||||
Restricted cash | 260,614 | |||||||
Loans held for investment | 77,562,528 | |||||||
Loans held for investment acquired through participation | 36,793,313 | |||||||
Interest receivable | 1,367,044 | |||||||
Other assets | 55,465 | |||||||
Term loan payable | (25,000,000) | |||||||
Unsecured notes payable | (33,770,000) | |||||||
Obligations under participation agreements | (6,114,979) | |||||||
Interest reserve and other deposits held on investments | (260,614) | |||||||
Due to manager | (682,541) | |||||||
Interest payable | (53,186) | |||||||
Accounts payable and accrued expenses | (740,824) | |||||||
Other liabilities | (387,446) | |||||||
Net assets acquired | $ | 73,351,325 |
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
Fixed Rate | Floating Rate (1)(2)(3) | Total | Fixed Rate | Floating Rate (1)(2)(3) | Total | ||||||||||||||||||||||||||||||
Number of loans | 5 | 16 | 21 | 8 | 23 | 31 | |||||||||||||||||||||||||||||
Principal balance | $ | 53,998,648 | $ | 455,462,178 | $ | 509,460,826 | $ | 90,990,183 | $ | 554,805,276 | $ | 645,795,459 | |||||||||||||||||||||||
Carrying value | $ | 54,095,173 | $ | 402,377,085 | $ | 456,472,258 | $ | 92,274,998 | $ | 534,215,769 | $ | 626,490,767 | |||||||||||||||||||||||
Fair value | $ | 53,435,742 | $ | 403,904,207 | $ | 457,339,949 | $ | 90,729,098 | $ | 532,416,656 | $ | 623,145,754 | |||||||||||||||||||||||
Weighted-average coupon rate | 12.95 | % | 12.92 | % | 12.93 | % | 13.82 | % | 11.23 | % | 11.59 | % | |||||||||||||||||||||||
Weighted-average remaining term (years) | 1.18 | 0.70 | 0.77 | 1.35 | 1.10 | 1.14 |
December 31, 2019 | December 31, 2018 | ||||||||||||||||||||||
Fixed Rate | Floating Rate (1)(2)(3) | Total | Fixed Rate | Floating Rate (1)(2)(3) | Total | ||||||||||||||||||
Number of loans | 8 | 15 | 23 | 20 | 9 | 29 | |||||||||||||||||
Principal balance | $ | 70,692,767 | $ | 306,695,550 | $ | 377,388,317 | $ | 163,486,937 | $ | 221,554,764 | $ | 385,041,701 | |||||||||||
Carrying value | $ | 71,469,137 | $ | 307,143,631 | $ | 378,612,768 | $ | 164,989,811 | $ | 223,254,163 | $ | 388,243,974 | |||||||||||
Fair value | $ | 71,516,432 | $ | 307,643,983 | $ | 379,160,415 | $ | 164,578,464 | $ | 223,291,666 | $ | 387,870,130 | |||||||||||
Weighted-average coupon rate | 11.93 | % | 9.13 | % | 9.65 | % | 12.54 | % | 11.35 | % | 11.86 | % | |||||||||||
Weighted-average remaining term (years) | 2.28 | 2.09 | 2.13 | 1.84 | 2.05 | 1.96 |
Loans Held for Investment | Loans Held for Investment through Participation Interests | Total | |||||||||
Balance, January 1, 2019 | $ | 388,243,974 | $ | — | $ | 388,243,974 | |||||
New loans made | 182,206,332 | 3,120,887 | 185,327,219 | ||||||||
Principal repayments received | (181,131,959 | ) | — | (181,131,959 | ) | ||||||
Deed in lieu of foreclosure of collateral (1) | (14,325,000 | ) | — | (14,325,000 | ) | ||||||
PIK interest (2) | 2,476,355 | — | 2,476,355 | ||||||||
Net amortization of premiums on loans | (104,426 | ) | — | (104,426 | ) | ||||||
Accrual, payment and accretion of investment-related fees, net (3) | (1,903,054 | ) | 29,659 | (1,873,395 | ) | ||||||
Balance, December 31, 2019 | $ | 375,462,222 | $ | 3,150,546 | $ | 378,612,768 |
Loans Held for Investment | Loans Held for Investment through Participation Interests | Total | |||||||||
Balance, January 1, 2018 | $ | 355,289,015 | $ | 1,804,715 | $ | 357,093,730 | |||||
New loans made | 232,330,036 | — | 232,330,036 | ||||||||
Principal repayments received | (146,840,590 | ) | (1,800,000 | ) | (148,640,590 | ) | |||||
Foreclosure of collateral (4) | (54,000,000 | ) | — | (54,000,000 | ) | ||||||
PIK interest (2) | 2,291,260 | — | 2,291,260 | ||||||||
Net amortization of premiums on loans | (713,784 | ) | — | (713,784 | ) | ||||||
Accrual, payment and accretion of investment-related fees, net | (111,963 | ) | (4,715 | ) | (116,678 | ) | |||||
Balance, December 31, 2018 | $ | 388,243,974 | $ | — | $ | 388,243,974 |
Loans Held for Investment | Loans Held for Investment through Participation Interests | Total | |||||||||||||||
Balance, January 1, 2023 | $ | 584,417,939 | $ | 42,072,828 | $ | 626,490,767 | |||||||||||
Cumulative effect of credit loss accounting standard effective | (4,123,143) | (126,909) | (4,250,052) | ||||||||||||||
Principal repayments received | (122,860,357) | (3,282,208) | (126,142,565) | ||||||||||||||
New loans made | 78,883,295 | — | 78,883,295 | ||||||||||||||
Settlement of loans (1)(2) | (70,737,874) | — | (70,737,874) | ||||||||||||||
Net amortization of premiums on loans | (1,124,157) | — | (1,124,157) | ||||||||||||||
Accrual, payment and accretion of investment-related fees and other, net | (1,049,981) | (5,608) | (1,055,589) | ||||||||||||||
Provision for credit losses | (45,491,949) | (99,618) | (45,591,567) | ||||||||||||||
Balance, December 31, 2023 | $ | 417,913,773 | $ | 38,558,485 | $ | 456,472,258 |
(1)In May 2023, the Company settled $68.7 million of senior loans in exchange for ownership interest in the underlying real estate properties (Note 6). (2)In November 2023, the Company settled a $20.8 million mezzanine loan and wrote off the related allowance for credit losses of $18.3 million in exchange for a $2.5 million note from the sponsor. On the date of closing, the sponsor made a payment of $0.5 million. The remaining $2.0 million is included in Other assets on the consolidated balance sheets.
F-21 Notes to Consolidated Financial Statements |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Loan Structure | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||||||||||||||||||
First mortgages | $ | 365,465,500 | $ | 368,918,890 | 80.9 | % | $ | 456,408,889 | $ | 461,299,182 | 73.7 | % | ||||||||||||||||||||||||||
Preferred equity investments | 126,550,969 | 127,105,312 | 27.8 | % | 121,231,434 | 122,132,177 | 19.5 | % | ||||||||||||||||||||||||||||||
Mezzanine loans | 17,444,357 | 17,424,081 | 3.8 | % | 39,352,303 | 39,451,115 | 6.3 | % | ||||||||||||||||||||||||||||||
Credit facility | — | — | — | % | 28,802,833 | 29,080,183 | 4.6 | % | ||||||||||||||||||||||||||||||
Allowance for credit losses | — | (56,976,025) | (12.5) | % | — | (25,471,890) | (4.1) | % | ||||||||||||||||||||||||||||||
Total | $ | 509,460,826 | $ | 456,472,258 | 100.0 | % | $ | 645,795,459 | $ | 626,490,767 | 100.0 | % |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Property Type | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||||||||||||||||||
Office | $ | 144,812,619 | $ | 144,853,769 | 31.7 | % | $ | 184,196,708 | $ | 184,722,657 | 29.4 | % | ||||||||||||||||||||||||||
Multifamily | 85,660,082 | 86,210,868 | 18.9 | % | 104,589,464 | 105,570,432 | 16.9 | % | ||||||||||||||||||||||||||||||
Industrial | 67,579,869 | 67,612,621 | 14.8 | % | 147,796,164 | 148,891,742 | 23.8 | % | ||||||||||||||||||||||||||||||
Mixed-use | 63,096,365 | 63,531,806 | 13.9 | % | 64,880,450 | 65,838,965 | 10.5 | % | ||||||||||||||||||||||||||||||
Infill land | 52,839,509 | 54,172,663 | 11.9 | % | 48,860,291 | 49,565,437 | 7.9 | % | ||||||||||||||||||||||||||||||
Hotel - full/select service | 43,222,382 | 43,801,303 | 9.6 | % | 43,222,382 | 43,758,804 | 7.0 | % | ||||||||||||||||||||||||||||||
Student housing | 31,000,000 | 31,821,832 | 7.0 | % | 31,000,000 | 31,774,261 | 5.1 | % | ||||||||||||||||||||||||||||||
Infrastructure | 21,250,000 | 21,443,421 | 4.7 | % | 21,250,000 | 21,840,359 | 3.5 | % | ||||||||||||||||||||||||||||||
Allowance for credit losses | — | (56,976,025) | (12.5) | % | — | (25,471,890) | (4.1) | % | ||||||||||||||||||||||||||||||
Total | $ | 509,460,826 | $ | 456,472,258 | 100.0 | % | $ | 645,795,459 | $ | 626,490,767 | 100.0 | % |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Geographic Location | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||||||||||||||||||
United States | ||||||||||||||||||||||||||||||||||||||
California | $ | 119,093,246 | $ | 120,296,944 | 26.4 | % | $ | 164,253,345 | $ | 165,839,561 | 26.5 | % | ||||||||||||||||||||||||||
New York | 90,483,672 | 90,483,672 | 19.8 | % | 91,845,479 | 91,877,084 | 14.7 | % | ||||||||||||||||||||||||||||||
New Jersey | 82,419,378 | 83,489,049 | 18.3 | % | 62,228,622 | 62,958,482 | 10.0 | % | ||||||||||||||||||||||||||||||
Georgia | 74,335,828 | 74,602,328 | 16.3 | % | 72,401,718 | 73,101,964 | 11.7 | % | ||||||||||||||||||||||||||||||
Utah | 49,250,000 | 50,329,949 | 11.0 | % | 49,250,000 | 50,698,251 | 8.1 | % | ||||||||||||||||||||||||||||||
Washington | 34,052,223 | 34,020,449 | 7.5 | % | 56,671,267 | 57,027,639 | 9.1 | % | ||||||||||||||||||||||||||||||
Arizona | 31,000,000 | 31,296,235 | 6.9 | % | 31,000,000 | 31,276,468 | 5.0 | % | ||||||||||||||||||||||||||||||
North Carolina | 21,826,479 | 21,929,657 | 4.8 | % | 43,520,028 | 44,041,162 | 7.0 | % | ||||||||||||||||||||||||||||||
Massachusetts | 7,000,000 | 7,000,000 | 1.5 | % | 7,000,000 | 7,000,000 | 1.1 | % | ||||||||||||||||||||||||||||||
Texas | — | — | — | % | 67,625,000 | 68,142,046 | 10.9 | % | ||||||||||||||||||||||||||||||
Allowance for credit losses | — | (56,976,025) | (12.5) | % | — | (25,471,890) | (4.1) | % | ||||||||||||||||||||||||||||||
Total | $ | 509,460,826 | $ | 456,472,258 | 100.0 | % | $ | 645,795,459 | $ | 626,490,767 | 100.0 | % |
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||
Loan Structure | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||
First mortgages | $ | 178,130,623 | $ | 178,203,675 | 47.1 | % | $ | 117,094,351 | $ | 118,524,986 | 30.5 | % | ||||||||||
Preferred equity investments | 157,144,040 | 157,737,763 | 41.6 | % | 174,720,610 | 175,436,447 | 45.2 | % | ||||||||||||||
Mezzanine loans | 42,113,654 | 42,671,330 | 11.3 | % | 93,226,740 | 94,282,541 | 24.3 | % | ||||||||||||||
Total | $ | 377,388,317 | $ | 378,612,768 | 100.0 | % | $ | 385,041,701 | $ | 388,243,974 | 100.0 | % |
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||
Property Type | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||
Office | $ | 142,055,845 | $ | 141,870,355 | 37.5 | % | $ | 62,501,150 | $ | 62,646,400 | 16.1 | % | ||||||||||
Multifamily | 76,640,369 | 77,136,016 | 20.4 | % | 45,256,891 | 45,622,987 | 11.8 | % | ||||||||||||||
Student housing | 58,049,717 | 58,553,496 | 15.5 | % | 60,343,774 | 60,967,825 | 15.7 | % | ||||||||||||||
Hotel | 46,598,011 | 46,731,939 | 12.3 | % | 84,318,305 | 85,516,577 | 22.0 | % | ||||||||||||||
Infill land | 36,444,375 | 36,624,375 | 9.7 | % | 80,444,375 | 80,899,375 | 20.9 | % | ||||||||||||||
Condominium | 10,600,000 | 10,696,587 | 2.8 | % | 45,177,206 | 45,590,810 | 11.7 | % | ||||||||||||||
Industrial | 7,000,000 | 7,000,000 | 1.8 | % | 7,000,000 | 7,000,000 | 1.8 | % | ||||||||||||||
Total | $ | 377,388,317 | $ | 378,612,768 | 100.0 | % | $ | 385,041,701 | $ | 388,243,974 | 100.0 | % |
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||
Geographic Location | Principal Balance | Carrying Value | % of Total | Principal Balance | Carrying Value | % of Total | ||||||||||||||||
United States | ||||||||||||||||||||||
California | $ | 150,988,463 | $ | 151,108,109 | 39.9 | % | $ | 81,317,188 | $ | 81,830,030 | 21.1 | % | ||||||||||
New York | 79,734,323 | 79,896,663 | 21.1 | % | 119,987,931 | 120,505,416 | 31.0 | % | ||||||||||||||
Georgia | 61,772,764 | 61,957,443 | 16.4 | % | 27,500,000 | 27,775,000 | 7.2 | % | ||||||||||||||
North Carolina | 32,592,767 | 32,766,311 | 8.7 | % | 8,548,954 | 8,609,379 | 2.2 | % | ||||||||||||||
Washington | 23,500,000 | 23,661,724 | 6.2 | % | 23,115,541 | 23,258,826 | 6.0 | % | ||||||||||||||
Illinois | 8,004,877 | 8,071,562 | 2.1 | % | 17,110,630 | 17,247,637 | 4.4 | % | ||||||||||||||
Massachusetts | 7,000,000 | 7,000,000 | 1.8 | % | 7,000,000 | 7,000,000 | 1.8 | % | ||||||||||||||
Kansas | 6,200,000 | 6,251,649 | 1.7 | % | — | — | — | % | ||||||||||||||
Texas | 3,500,000 | 3,531,776 | 0.9 | % | 3,500,000 | 3,528,012 | 0.9 | % | ||||||||||||||
Florida | — | — | — | % | 63,519,351 | 64,553,820 | 16.6 | % | ||||||||||||||
Pennsylvania | — | — | — | % | 14,325,000 | 14,325,000 | 3.7 | % | ||||||||||||||
Ohio | — | — | — | % | 8,375,000 | 8,442,060 | 2.2 | % | ||||||||||||||
Colorado | — | — | — | % | 4,027,736 | 4,068,014 | 1.0 | % | ||||||||||||||
Alabama | — | — | — | % | 3,700,000 | 3,763,796 | 1.0 | % | ||||||||||||||
Other (1) | 4,095,123 | 4,367,531 | 1.2 | % | 3,014,370 | 3,336,984 | 0.9 | % | ||||||||||||||
Total | $ | 377,388,317 | $ | 378,612,768 | 100.0 | % | $ | 385,041,701 | $ | 388,243,974 | 100.0 | % |
Years Ended December 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Allowance for credit losses, beginning of period | $ | 25,471,890 | $ | 13,658,481 | ||||||||||
Cumulative effect of credit loss accounting standard effective | 4,250,052 | — | ||||||||||||
Provision for credit losses (1) | 45,591,567 | 11,813,409 | ||||||||||||
Charge-offs (2) | (18,337,484) | — | ||||||||||||
Recoveries | — | — | ||||||||||||
Allowance for credit losses, end of period | $ | 56,976,025 | $ | 25,471,890 |
Year Ended December 31, 2023 | ||||||||
Liability for credit losses on unfunded commitments, beginning of period | $ | — | ||||||
Cumulative effect of | 369,671 | |||||||
Reversal of provision for credit losses | (42,764) | |||||||
Liability for credit losses on unfunded commitments, end of period | $ | 326,907 |
Risk Rating | Description | |||||||
1 | Very low risk | |||||||
2 | Low risk | |||||||
3 | Moderate/average risk | |||||||
4 | Higher risk | |||||||
5 | Highest risk |
December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Risk Rating | Number of Loans | Amortized Cost | % of Total | Amortized Cost by Year Originated | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2021 | 2020 | 2019 | Prior | |||||||||||||||||||||||||||||||||||||||||||||||||||
1 | — | $ | — | — | % | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
2 | 1 | 7,000,000 | 1.4 | % | — | — | — | — | — | 7,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
3 | 13 | 278,296,080 | 54.2 | % | 10,809,959 | 77,383,153 | 97,514,884 | 27,810,327 | 61,842,453 | 2,935,304 | ||||||||||||||||||||||||||||||||||||||||||||||
4 | 1 | 18,855,139 | 3.7 | % | — | 18,855,139 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
5 | — | — | — | % | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Non-performing | 6 | 209,297,064 | 40.7 | % | — | 60,612,621 | — | — | 58,200,770 | 90,483,673 | ||||||||||||||||||||||||||||||||||||||||||||||
21 | 513,448,283 | 100.0 | % | $ | 10,809,959 | $ | 156,850,913 | $ | 97,514,884 | $ | 27,810,327 | $ | 120,043,223 | $ | 100,418,977 | |||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses | (56,976,025) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total, net of allowance for credit losses | $ | 456,472,258 |
December 31, 2019 | December 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2022 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Risk Rating | Number of Loans | Principal Balance | Carrying Value | % of Total | Number of Loans | Principal Balance | Carrying Value | % of Total | Loan Risk Rating | Number of Loans | Principal Balance | Amortized Cost | % of Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | 0 | $ | — | $ | — | — | % | 0 | $ | — | $ | — | — | % | 1 | — | $ | $ | — | $ | $ | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | 5 | 50,000,000 | 50,284,751 | 13.3 | % | 4 | 59,500,000 | 60,012,092 | 15.5 | % | 2 | 2 | 25,000,000 | 25,000,000 | 25,041,782 | 25,041,782 | 3.8 | 3.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | 17 | 322,648,317 | 323,588,017 | 85.4 | % | 23 | 307,188,965 | 309,838,868 | 79.8 | % | 3 | 25 | 530,867,244 | 530,867,244 | 536,992,660 | 536,992,660 | 82.4 | 82.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | 0 | — | — | — | % | 0 | — | — | — | % | 4 | — | — | — | — | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | 0 | — | — | — | % | 0 | — | — | — | % | 5 | — | — | — | — | — | — | — | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (1) | 1 | 4,740,000 | 4,740,000 | 1.3 | % | 2 | 18,352,736 | 18,393,014 | 4.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23 | $ | 377,388,317 | $ | 378,612,768 | 100.0 | % | 29 | $ | 385,041,701 | $ | 388,243,974 | 100.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-performing (1) | Non-performing (1) | 4 | 89,928,215 | 89,928,215 | 13.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
31 | 31 | $ | 645,795,459 | 651,962,657 | 100.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total, net of allowance for credit losses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total, net of allowance for credit losses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total, net of allowance for credit losses |
(1)Because these loans have an event of default, they were Troubled Debt Restructuring As ofDecember 31, 2022, there was one investment that qualified as troubled debt restructuring. In December 2022, the borrower of a $40.1 million senior loan experienced financial difficulty and offered to repay the loan for $38.7 million. The remaining $1.4 million was converted to subordinated equity that accrues dividends at 8.0% and the F-24 Notes to Consolidated Financial Statements Company is entitled to receive waterfall profit upon a sale. The Company does not anticipate a full recovery of the equity position and does not expect to receive any additional income. As a result, the remaining $1.4 million is reflected as a loan receivable and it is fully reserved for as of December 31, 2023 and 2022. The Company classified this loan modification as a TDR as it met all the conditions to be considered a TDR pursuant to ASC 310-40. The following table summarizes the recorded investment of TDR as of the date of restructuring:
(1) As of December 31, 2023 and 2022, the principal balance of this loan was the same as the carrying value. The Company recorded an allowance for credit losses of $1.4 million to fully reserve for the unpaid principal balance. There was no income from this investment from the date of modification on December 28, 2022 through December 31, 2023. Note 5. Equity Investment in Unconsolidated Investments The Company owns interests in a limited partnership and three joint ventures. The Company accounts for its interests in these investments under the equity method of accounting (Note 2). 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, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities. Equity Investment in a Limited Partnership On August 3, 2020, the Company entered into a subscription agreement with Mavik Real Estate Special Opportunities Fund, LP (“RESOF”) whereby the Company committed to fund up to $50.0 million to purchase a limited partnership interest in RESOF. 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. As of December 31, 2023 and 2022, the unfunded commitment was $37.4 million and $22.4 million, respectively. 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. As of December 31, 2023 and 2022, the Company owned 14.9% and 27.9% of the equity interest in RESOF, respectively. As of December 31, 2023 and 2022, the carrying value of the Company’s investment in RESOF was $18.2 million and $36.8 million, respectively. For the year ended December 31, 2023, the Company recorded equity income from RESOF of $1.1 million. The equity income for the year ended December 31, 2023 included the negative adjustments made due to the dilution in the Company’s ownership interest in RESOF as new investors were admitted in 2022 and 2023. For the year ended December 31, 2023, the Company received distributions from RESOF of $6.6 million. For the year ended December 31, 2022, the Company recorded equity income from RESOF of $5.2 million and received no distributions from RESOF. In connection with the equity investment in RESOF, the Company paid origination fees to the Manager totaling $0.5 million, to be amortized to equity income on a straight-line basis over the life of RESOF. F-25 Notes to Consolidated Financial Statements The following tables present summarized financial information of the Company’s equity investment in RESOF. Amounts provided are the total amounts attributable to the investment and do not represent the Company’s proportionate share:
Equity Investment in Joint Ventures As of December 31, In December 2022, the Company originated a $10.0 million mezzanine loan to a borrower to finance the acquisition of a real estate portfolio. In connection with this mezzanine loan, the Company entered into a residual profit sharing agreement with the borrower where the borrower would pay the Company an additional amount of 35.0% of remaining net cash flow from the sale of the real estate portfolio. The Company accounted for this arrangement using the equity method of accounting. In May 2023, the Company purchased the underlying asset (Note 8) and the $10.0 million mezzanine loan was settled in connection with the purchase. In November 2023, in connection with a loan F-26 Notes to Consolidated Financial Statements The following table presents a summary of the
_______________ (1)This investment was acquired in November 2023. (2)This investment that meets the definition of an equity investment was entered into in December 2022. As discussed above, this investment was settled in May 2023. The following tables present estimated combined summarized financial information of the Company’s equity investment in the joint ventures. Amounts provided are the total amounts attributable to the joint ventures and do not represent the Company’s
For the F-27
Note
Additionally, during the year ended December 31, 2023, the Company entered into the following investments:
These acquisitions were deemed to be real estate asset acquisitions, and therefore total transaction costs were capitalized to the cost basis of assets. The following table
2022 — In June 2022, the Company sold the 4.9acres of F-28
Notes to Consolidated Financial Statements Real Estate Owned, Net Real estate owned is comprised of
Real Estate Operating Revenues and Expenses The following table presents the components of real estate operating revenues and expenses that are included in the consolidated statements of operations:
Leases three tenants. In addition, the F-29 Notes to Consolidated Financial Statements the landlord with respect to the appropriate method for determining the fair value of the land for purposes of setting the ground rent Scheduled Future Minimum Rent Income Scheduled future minimum rents, exclusive of renewals and expenses paid by tenants, under non-cancelable operating leases at December 31,
Scheduled Annual Net Amortization of Intangibles Based on the intangible assets and liabilities recorded at December 31,
_______________ (1)Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to lease revenues; and amortization of in-place lease intangibles is included in depreciation and amortization. Supplemental Ground Lease Disclosures As discussed in “Leases” above, on October 19, 2023, the Company conveyed its interest in the property to a subsidiary of Centennial Bank by deed in lieu of foreclosure. Accordingly, the Company is no longer a party to the ground lease. Supplemental balance sheet information related to the ground lease was as
F-30 Notes to Consolidated Financial Statements
The component of lease expense for the ground lease was as follows:
Supplemental non-cash information related to the ground lease was as follows:
Note The Company 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, 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 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 December 31, F-31 Notes to Consolidated Financial Statements Financial Instruments Carried at Fair Value on a Recurring Basis From time to time, the Company may invest in short-term debt and equity securities which are classified as available-for-sale securities, which are presented at fair value and included in Other assets in the consolidated balance sheet. Changes in the fair value of equity securities are recognized in earnings. Changes in the fair value of debt securities are reported in other comprehensive income until the securities are realized. As discussed in Note 9, in March 2023, the Company entered into a loan agreement with a lender to provide financing for the acquisition of real estate properties (Note 6). In connection with the financing, the Company purchased an interest rate cap for $258,500 to effectively cap the related index rate at 5.0%. The interest rate cap met all the criteria of a derivative under ASC 815, but it did not meet the criteria under ASC 815-20-25 to qualify for hedging accounting. As such, the interest rate cap is reported at fair value and is included in other assets in the consolidated balance sheet, and the change in the fair value of the interest rate cap is reported in the consolidated statements of operations. The following tables present fair value measurements of marketable securities and derivatives, by major class according to the fair value hierarchy as of:
(1) Amount is included in cash and cash equivalents on the consolidated balance sheets. (2) Amount is included in other assets on the consolidated balance sheets.
The following table presents the activities of the marketable securities and derivatives:
(1)On July 25, 2023, the Company disclosed that it acquired approximately 5.2% of the outstanding shares of common stock of MITT as of July 24, 2023. (2)During the fourth quarter of 2023, the Company sold a portion of the MITT common stock. As of December 31, 2023, the Company owned less than 3.0% of the outstanding shares of common stock of MITT. F-32 Notes to Consolidated Financial Statements Financial Instruments Not Carried at Fair Value In the first quarter of 2023, the Company purchased $20.0 million of corporate bonds with a coupon rate of 6.125% with a maturity date of May 15, 2023. The Company classified these bonds as held-to-maturity debt securities, as it had the intent and ability to hold these securities until maturity. These securities were recorded at amortized cost and were fully redeemed at par on May 15, 2023. The following table presents the carrying value
The Company estimated that its other financial assets and liabilities, not included in the Items Measured at Fair Value on a Non-Recurring Basis (Including Impairment Charge) The Company periodically assesses whether there are any indicators that the value of its real estate investments may be impaired or that their carrying value may not be recoverable (Note 2). The following table presents information about assets for which the Company recorded impairment charge and that were measured at fair value on a non-recurring basis for the year ended December 31, 2023 and 2022:
Impairment charge, and their related triggering events and fair value measurements were as follows: Real Estate and Intangibles The impairment charge described below are reflected within Impairment charge in the consolidated statements of operations. For the year ended December 31, 2023, the Company recorded an impairment charge of $11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value. The fair value measurement was determined by estimating discounted cash flows using two significant unobservable inputs, which were the cash flow discount rate (8.50%) and terminal capitalization rate (7.50%). In October 2023, the Company conveyed its F-33 Notes to Consolidated Financial Statements interest in the office building to the lender by deed in lieu of foreclosure. Accordingly, the Company no longer owns the multi-tenant office building. For the year ended December 31, 2022, the Company recorded an impairment charge of $1.6 million on the 4.9acres of land located in Pennsylvania to reduce the carrying value of the land to its estimated fair value, which was based on the selling price in the purchase and sale agreement. The land was sold in June 2022. Valuation Process for Fair Value Measurement The fair value of the Company’s investment in equity securities, held-to-maturity debt securities and its unsecured notes payable is determined based on quoted prices in an active market and is classified as Level 1 of the fair value hierarchy. Market quotations are not readily available for the Company’s real estate-related loan investments, all of which are included in Level 3 of the fair value hierarchy, and therefore these investments are valued utilizing a yield approach, i.e., a discounted cash flow methodology to arrive at an estimate of the fair value of each respective investment in the portfolio using an estimated market yield. 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, 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 The Manager designates a valuation committee to oversee the entire valuation process of the Company’s Level 3 loans. 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 The fair values of the Company’s mortgage loan payable, secured borrowing, term loan payable and The following
F-34
Notes to Consolidated Financial Statements anticipated real estate and capital market conditions, and managements knowledge, experience and judgment. Additionally, the Company may use sales comparables, purchase price and appraisals to corroborate the estimated value of a loan’s collateral or may use sponsor’s guarantee to estimate the value of a non-performing loan.
Note Management Agreement The Company entered into
_______________ (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. Origination and Extension Fee Expense Pursuant to the Management Agreement, the Manager or its affiliates receives an origination fee in the amount of 1% of the amount used to originate, fund, acquire or structure real estate-related Asset Management Fee Under the terms of the Management Agreement, the Manager or its affiliates provides the Company with certain investment management services in return for a management fee. The Company pays a monthly asset management fee at an annual rate of 1% of the aggregate funds under management, which includes the loan origination price or aggregate gross acquisition price, as defined in the Management Agreement, for each real estate related loan and cash held by the Company. F-35 Notes to 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 real estate-related loan held by the Company. Transaction Breakup Fee In the event that the Company receives any “breakup fees,” “busted-deal fees,” termination fees, or similar fees or liquidated damages from a third-party in connection with the termination or non-consummation of any loan or disposition transaction, the Manager will be entitled to receive one-half of such amounts, in addition to the reimbursement of all out-of-pocket fees and expenses incurred by the Manager with respect to its evaluation and pursuit of such transactions. As of December 31, 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 Pursuant to the Management Agreement, the Manager or its affiliates receives a disposition fee in the amount of 1% of the gross sale price received by the Company from the disposition of any real estate-related loan, or any portion of, or interest in, any real estate-related loan. The disposition fee is paid concurrently with the closing of any such disposition of all or any portion of any real estate-related loan or any interest therein, which is the lesser of (i) 1% of the principal amount of the loan or debt-related loan prior to such transaction or (ii) the amount of the fee paid by the borrower in connection with such transaction. 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% of the sales price. 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 F-36 Notes to Consolidated Financial Statements 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. Due From Affiliate On December 1, 2022, the Company entered into a revolving promissory note receivable with Mavik Special Opps Co-Investments, LP, an affiliate of the Company. The promissory note receivable bears interest at the Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days. The promissory note was scheduled to mature on December 1, 2023. In December 2023, the promissory note was amended to extend the maturity date to June 30, 2024. During the year ended December 31, 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 years ended December 31, 2023 and 2022, the Company made distributions to investors totaling Due to Manager As of December 31, On August 3, Participation Agreements In the normal course of business, the Company may enter into participation agreements F-37 Notes to Consolidated Financial Statements 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 Participation Interests Purchased by the Company
________________ (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)This loan was repaid in February 2023. Transfers of Participation Interest by the Company The following tables summarize the loans that were subject to
________________ (1)Participant was a third party. In September 2023, the participant conveyed its interest in the obligation under participation agreements to the Company and the Company recognized a gain on extinguishment of participation liability of $14.1 million. These investments are held in the name of the Company, but each of 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 F-38 Notes to Consolidated Financial Statements management and asset servicing fees), are based upon their respective pro rata participation interest in such participated investments, as specified in the respective Note 9. Debt Unsecured Notes Payable The following table is a summary of the Company’s unsecured notes payable outstanding as of:
_______________ (1)Includes issue discount, purchase discount and (2)In connection with the BDC Merger, Terra LLC assumed all the obligations under the The 6.00% Senior Notes Due 2026 On June 10, 2021, the Company issued $78.5 million in aggregate principal amount of its 6.00% notes due 2026, and on June 25, 2021, the underwriters partially exercised their option to purchase an additional $6.6 million of the notes (collectively the “6.00% Senior Notes Due 2026”). The 6.00% Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after June 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest. 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”). The 7.00% Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at Terra BDC’s option on or after February 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest. 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. Covenant Compliance The Company’s unsecured notes payable contain certain financial covenants. As of December 31, 2023, the Company was in compliance with such covenants. F-39 Notes to Consolidated Financial Statements Secured Financing Arrangements
(1)Amount is calculated using the applicable index rate as of December 31, 2023. (2)These facilities were used to finance the Company’s senior loan investments. (3)Interest rate is based on Term SOFR (subject to underlying loan floors on a case-by-case basis) plus a spread ranging from 2.0% to 5.00%. In March 2024, the Company (4)Interest rate is based on Term SOFR plus a spread of 1.965%. In February 2024, the outstanding balance was repaid. In March 2024, the Company amended the side letter to the UBS AG facility agreement to reduce the maximum amount available under this facility to zero. In connection with this amendment, UBS AG waived the payment of any fees and the meeting of any representations, warranties or covenants for the period commencing on December 31, 2023 until such time as there are amounts outstanding under the UBS AG facility agreement. (5)The maturity of this facility can be extended annually on mutually agreeable terms. (6)Interest rate is based on Term SOFR plus a spread ranging from 4.75% to 5.6% with a combined floor rate ranging from 9.0% to 10.9%. (7)Interest rate is based on Term SOFR plus a spread of 3.5% with a Term SOFR floor of 3.75%. (8)Prior to March 31, 2023 borrowings under this facility bore interest at an annual rate of LIBOR + 3.25% with a combined floor of 4.0%. In connection with the transition of LIBOR, on March 31, 2023, the facility was amended and the interest rate was changed to Term SOFR + 3.35% with a combined floor of 6.0%. In March 2024, the Company amended the facility agreement to waive the quarterly minimum net worth covenant for the purposes of the (9)Terra LLC assumed this facility from Terra BDC in connection with the BDC Merger. Terra BDC pledged substantially all of its owned and thereafter acquired property as security for the obligations under the credit agreement. On June 30, 2023, the Company amended the facility to, among other things, (i) extend the scheduled maturity date to March 31, 2024, and (ii) increase the rate on which the loans bear interest from a fixed rate of 5.625% per annum to a floating rate based on SOFR plus 7.375% with a SOFR floor of 5.0%. 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. F-40 Notes to Consolidated Financial Statements For the years ended December 31, 2023 and 2022, approximately $2.5 million and $2.0 million, respectively, of amortization of deferred financing costs and other from secured financing agreements was included in interest expense on the consolidated statements of operations. Additionally, for the years ended December 31, 2023 and 2022, the Company received proceeds from secured financing of $211.0 million and $286.6 million, respectively, and made repayments on secured financing of $205.3 million and $239.7 million, respectively. Repurchase The
•Two property mortgages for a •Three promissory notes for a total of $63.5 million to Additionally, in Covenant Compliance The Company’s secured financing
Scheduled Debt Principal Payments Scheduled debt principal payments for each of the five calendar years following December 31,
_______________ F-41 Notes to Consolidated Financial Statements Obligations Under Participation Agreements As discussed in Note 2, the Company follows the guidance in ASC 860 when accounting for loan participations. Such guidance requires Note 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 approximately Unfunded Investment Commitment As discussed in Note 5, on August 3, 2020, the Company entered into a subscription agreement with RESOF whereby the Company committed to fund up to $50.0 million to purchase limited partnership interests in RESOF. As of December 31, 2023 and 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. As described above in Note 6 “Real Estate Operating Revenue and Expenses”, the Company previously owned a multi-tenant office building that is subject to a ground lease. The ground lease provides for a new base rent every 5 years based on the greater of the annual base rent for the prior lease year or 9% of the fair market value of the land. The next rent reset on the ground lease is scheduled for November 1, 2025. The Company Additionally, from time to time, Notes to Consolidated Financial Statements Note Earnings Per Share The following table presents earnings per
Preferred Stock Classes Preferred Stock 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 Series A Preferred Stock On November 30, 2016, the The Series A Preferred Stock, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, In March 2023, the Series A Preferred Stock was fully redeemed at par for a total of $125,000 plus accrued dividends. Common Stock On 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. F-43 Notes to Consolidated Financial Statements In connection with the potential liquidity transactions discussed in Note 1, on December 1, 2023, the Company 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 Distributions 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 For Distributions paid to stockholders consist of ordinary income, capital gains, return of capital or a combination thereof for income tax purposes. The following table presents distributions per share, declared and paid during the years ended December 31,
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 year ended December 31, 2023, the Company issued 663 shares of Class B Common Stock for a total of $8,399 pursuant to the Plan.
Note 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 other than F-44 Terra Property Trust, Inc. Schedule III – Real Estate and Accumulated Depreciation As of December 31,
At December 31, The changes in total real estate assets and accumulated depreciation
___________________________ (1)During the year ended December 31, 2023, the Company recorded an impairment charge of $11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value. In October 2023, the Company conveyed its interest in the office building to the lender by deed-in-lieu of foreclosure and recognized a loss on disposal of real estate of $4.2 million. As of December 31, 2023, the Company no longer owns the multi-tenant office building. F-45
Terra Property Trust, Inc. Schedule IV – Mortgage Loans on Real Estate As of December 31,
F-46
(2)For all floating rate loans, contractual interest rate was determined using the applicable benchmark rate as of December 31, (3)Maximum maturity date assumes all extension options are exercised. (4)Participation interest is with Mavik Real Estate Special Opportunities Fund REIT, LLC, a related-party REIT managed by the Manager. (5)The Company acquired these investments through participation agreements. See “Participation Agreements” in Note 8 in the accompanying notes to the consolidated financial statements. (6)This loan is current in maturity default. The Company recorded an allowance of credit losses of $11.8 million on this loan as a result of a decline in the fair value of the underlying collateral. (7)Amount included $4.0 million of incremental borrowing that bears interest at an annual rate of 20.0% until certain conditions are met, at which time the interest rate will be the same as the original loan. (8)The interest payment on this loan is past due; however, the Company expects to be able to collect all amounts due for both principal and interest according to the contractual terms of the loan. (9)This loan is current in maturity default. The Company recorded an allowance of credit losses of $26.4 million on this loan as a result of a decline in the fair value of the underlying collateral. (10)This loan is current in maturity default. The Company recorded an allowance of credit losses of $15.1 million on this loan and expects the sponsor to pay the remaining balance. (11)This loan is current in maturity default. The Company initiated a litigation to seek full repayment of the loan from the sponsor. (12)The aggregate cost for U.S. federal income tax purposes was $575.9 million. (13)Excludes $0.3 million of allowance for credit losses related to unfunded commitments. F-47
Terra Property Trust, Inc. Notes to Schedule IV - Mortgage Loans on Real Estate December 31,
F-48 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: March 15, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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