Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | ||
Mar. 31, 2020 | May 15, 2020 | Dec. 31, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | Terra Property Trust, Inc. | ||
Entity Central Index Key | 0001674356 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-Q | ||
Document Period End Date | Mar. 31, 2020 | ||
Entity File Number | 000-56117 | ||
Entity Tax Identification Number | 81-0963486 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | Q1 | ||
Amendment Flag | false | ||
Entity Ex Transition Period | true | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Shell Company | false | ||
Entity Incorporation, State or Country Code | MD | ||
Entity Address, Address Line One | 550 Fifth Avenue | ||
Entity Address, Address Line Two | 6th Floor | ||
Entity Address, City or Town | New York | ||
Entity Address, State or Province | NY | ||
Entity Address, Postal Zip Code | 10036 | ||
City Area Code | 212 | ||
Local Phone Number | 753-5100 | ||
Title of 12(g) Security | Common Stock $0.01 par value per share | ||
Common Stock, Shares, Outstanding | 19,700,151 | 19,700,151 | 15,125,681 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 82,163,055 | $ 29,609,484 |
Restricted Cash | 16,255,423 | 18,542,163 |
Cash held in escrow by lender | 2,062,941 | 2,398,053 |
Marketable securities | 3,490,394 | 0 |
Loans Held for Investment | 402,969,513 | 378,612,768 |
Real estate owned, Net | ||
Land, building and building improvements, net | 64,358,637 | 64,751,247 |
Lease intangible assets, net | 12,286,955 | 12,845,228 |
Operating lease right-of-use assets | 16,111,217 | 16,112,925 |
Interest receivable | 2,253,718 | 1,876,799 |
Other assets | 2,535,476 | 2,594,411 |
Total assets | 604,487,329 | 527,343,078 |
Liabilities | ||
Obligations under participation agreements (Note 7) | 67,670,405 | 103,186,327 |
Repurchase agreement payable, net of deferred financing fees | 91,352,312 | 79,608,437 |
Mortgage loan payable, net of deferred financing fees and other | 44,687,123 | 44,753,633 |
Revolving credit facility payable, net of deferred financing fees | 34,930,844 | 0 |
Interest reserve and other deposits held on investments | 16,255,423 | 18,542,163 |
Operating Lease Liabilities | 16,111,217 | 16,112,925 |
Lease Intangible Liabilities, net | 11,276,085 | 11,424,809 |
Due to Manager (Note 7) | 1,359,132 | 1,037,168 |
Interest payable | 933,011 | 1,076,231 |
Accounts Payable and Accrued Liabilities | 2,563,299 | 1,749,525 |
Unearned income | 587,535 | 624,021 |
Dividends Payable | 3,906 | 0 |
Other Liabilities | 1,906,300 | 1,684,106 |
Total liabilities | 289,636,592 | 279,799,345 |
Commitments and Contingencies | ||
Equity | ||
Preferred stock, $0.01 par value, 50,000,000 shares authorized and none issued | 0 | 0 |
Common stock, $0.01 par value, 450,000,000 shares authorized and 19,700,151 and 15,125,681 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 197,002 | 151,257 |
Additional paid-in capital | 377,061,545 | 301,727,297 |
Accumulated deficit | (62,716,835) | (54,459,821) |
Accumulated other comprehensive income | 184,025 | 0 |
Total equity | 314,850,737 | 247,543,733 |
Interest reserve and other deposits held on investments | 16,255,423 | 18,542,163 |
Total liabilities and equity | 604,487,329 | 527,343,078 |
Loans Held for Investment | ||
Assets | ||
Loans Held for Investment | 398,931,946 | 375,462,222 |
Loans Held For Investment Acquired Through Participation | ||
Assets | ||
Loans Held for Investment | 4,037,567 | 3,150,546 |
Cumulative Preferred Stock | ||
Equity | ||
Preferred stock, $0.01 par value, 50,000,000 shares authorized and none issued | $ 125,000 | $ 125,000 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parentheticals) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Common Stock, Shares, Issued | 19,700,151 | 15,125,681 |
Common Stock, Shares, Outstanding | 19,700,151 | 15,125,681 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, No Par Value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 450,000,000 | 450,000,000 |
Cumulative Preferred Stock | ||
Preferred Stock, Shares Authorized | 125 | 125 |
Preferred Stock, Shares Issued | 125 | 125 |
Preferred Stock, Shares Outstanding | 125 | 125 |
Preferred Stock, Dividend Rate, Percentage | 12.50% | 12.50% |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues [Abstract] | ||
Interest income | $ 9,651,865 | $ 10,208,964 |
Real estate operating income | 2,313,051 | 2,321,238 |
Prepayment fee income | 0 | 98,775 |
Other operating income | 112,655 | 108,957 |
Total | 12,077,571 | 12,737,934 |
Operating expenses | ||
Operating expenses reimbursed to Manager | 1,367,189 | 1,115,204 |
Asset management fee | 1,029,533 | 880,355 |
Asset serving fee | 234,208 | 204,477 |
Provision for Loan Losses | 1,144,994 | 0 |
Real estate operating expenses | 944,518 | 755,855 |
Depreciation and amortization | 946,494 | 946,494 |
Professional Fees | 294,761 | 172,786 |
Directors Fee | 83,750 | 83,750 |
Other | 64,949 | 17,584 |
Total Operating Expenses | 6,110,396 | 4,176,505 |
Operating Income | 5,967,175 | 8,561,429 |
Other Income and expense | ||
Interest expense from obligations under participation agreements | (2,600,758) | (2,924,310) |
Interest expense on repurchase agreement payable | (1,551,270) | (933,973) |
Interest expense on mortgage loan payable | (750,636) | (780,271) |
Interest expense on revolving credit facility | 174,989 | 0 |
Net loss on extinguishment of obligations under participation agreements | 319,453 | 0 |
Realized gains on marketable securities | 8,894 | 0 |
Other income and expense | (5,388,212) | (4,638,554) |
Net income | 578,963 | 3,922,875 |
Preferred stock dividend declared | (3,906) | (3,906) |
Net income allocable to common stock | $ 575,057 | $ 3,918,969 |
Earnings per share — basic and diluted | $ 0.03 | $ 0.26 |
Weighted-average shares — basic and diluted | 16,707,279 | 14,912,990 |
Dividends declared per common share | $ 0.53 | $ 0.51 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income Statement - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Other Comprehensive Income [Abstract] | ||
Net income | $ 578,963 | $ 3,922,875 |
Net unrealized gains on marketable securities | 192,919 | 0 |
Marketable Securities, Realized Gain (Loss) | 8,894 | 0 |
Other comprehensive income | 184,025 | 0 |
Total comprehensive Income | 762,988 | 3,922,875 |
Preferred stock dividend declared | (3,906) | (3,906) |
Comprehensive income attributable to common shares | $ 759,082 | $ 3,918,969 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Total | Cumulative Preferred Stock | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Balance at beginning (Share) at Dec. 31, 2018 | 125 | 14,912,990 | |||||
Balance beginning at Dec. 31, 2018 | $ 265,292,359 | $ 125,000 | $ 0 | $ 149,130 | $ 298,109,424 | $ (33,091,195) | $ 0 |
Distribution declared on common share | (7,556,413) | (7,556,413) | |||||
Distributions declared on preferred shares | (3,906) | (3,906) | |||||
Net income | 3,922,875 | 3,922,875 | |||||
Net unrealized gains on marketable securities | 0 | ||||||
Balance at ending (Share) at Mar. 31, 2019 | 125 | 14,912,990 | |||||
Balance ending at Mar. 31, 2019 | 261,654,915 | $ 125,000 | 0 | $ 149,130 | 298,109,424 | (36,728,639) | 0 |
Balance at beginning (Share) at Dec. 31, 2019 | 125 | 15,125,681 | |||||
Balance beginning at Dec. 31, 2019 | 247,543,733 | $ 125,000 | 0 | $ 151,257 | 301,727,297 | (54,459,821) | 0 |
Issuance of common stock (Shares) | 4,574,470 | ||||||
Issuance of common stock | 75,379,993 | $ 45,745 | 75,334,248 | ||||
Distribution declared on common share | (8,832,071) | (8,832,071) | |||||
Distributions declared on preferred shares | (3,906) | (3,906) | |||||
Net income | 578,963 | 578,963 | |||||
Net unrealized gains on marketable securities | 192,919 | 192,919 | |||||
Reclassification of net realized gains on marketable securities into earnings | (8,894) | (8,894) | |||||
Balance at ending (Share) at Mar. 31, 2020 | 125 | 19,700,151 | |||||
Balance ending at Mar. 31, 2020 | $ 314,850,737 | $ 125,000 | $ 0 | $ 197,002 | $ 377,061,545 | $ (62,716,835) | $ 184,025 |
Consolidated Statements of Shar
Consolidated Statements of Shareholder Equity (Parentheticals) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Dividends declared per common share | $ 0.53 | $ 0.51 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net income | $ 578,963 | $ 3,922,875 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Paid-in-kind interest income, net | (80,116) | (657,700) |
Depreciation and amortization | 946,494 | 946,494 |
Provision for Loan Losses | 1,144,994 | 0 |
Amortization of Net Purchase Premium | 11,112 | 12,654 |
Straight-line rent adjustments | (334,452) | (121,395) |
Amortization of deferred financing costs | 551,226 | 419,173 |
Net loss on extinguishment of obligations under participation agreements | 319,453 | 0 |
Amortization of above- and below-market rent intangibles | (111,748) | (111,750) |
Amortization and accretion of investment-related fees, net | (4,140) | (105,567) |
Amortization of above market rent ground lease | (32,587) | (32,587) |
Changes in operating assets and liabilities: | ||
Interest receivable | (376,919) | (109,029) |
Other assets | (9,093) | 155,815 |
Due to Manager | 22,520 | (57,782) |
Unearned income | (167,104) | 563,412 |
Interest payable | (143,220) | (93,939) |
Accounts payable and accrued expenses | 839,938 | (489,766) |
Other liabilities | 222,194 | (89,376) |
Net cash provided by operating activities | 3,377,515 | 4,151,532 |
Cash flows from investing activities: | ||
Origination and purchase of loans | (38,376,448) | (70,813,882) |
Proceeds from repayments of loans | 13,371,565 | 60,319,802 |
Purchase of marketable securities | (3,354,442) | 0 |
Proceeds from sale of marketable securities | 48,073 | 0 |
Capital expenditures on real estate | 0 | (242,071) |
Net cash used in investing activities | (28,311,252) | (10,736,151) |
Cash flows from financing activities: | ||
Proceeds from lines of credit | 35,000,000 | 0 |
Proceeds from borrowings under repurchase agreement | 14,807,834 | 45,347,521 |
Proceeds from issuance of common stock | 0 | |
Distributions Paid | (8,832,071) | 7,556,413 |
Proceeds from obligations under participation agreements | 14,291,899 | 5,716,927 |
Repayment of borrowings under repurchase agreements | (3,395,740) | 0 |
Change in interest reserve and other deposits held on investments | (2,286,740) | 2,250,093 |
Payment of financing costs | (84,175) | (226,738) |
Repayment of mortgage loan payable | (132,625) | 0 |
Repayments of obligations under participation agreements | 0 | 24,903,061 |
Net cash provided by financing activities | 74,865,456 | 16,128,143 |
Net increase in cash, cash equivalents and restricted cash | 49,931,719 | 9,543,524 |
Cash, cash equivalents and restricted cash at beginning of period | 50,549,700 | 28,538,853 |
Cash, cash equivalents and restricted cash at end of period (Note 2) | 100,481,419 | $ 38,082,377 |
Terra Property Trust 2 Inc | ||
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 16,897,074 | |
Terra International Fund 3 | ||
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 8,600,000 | |
Master Repurchase Agreement | ||
Cash flows from financing activities: | ||
Payment of financing costs | $ (2,800,000) |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows Consolidated Statement of Cash Flows - Supplemental cash information - (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Cash Flows [Abstract] | ||
Cash paid for interest | $ 4,459,761 | $ 1,701,039 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flow - Merger (Parenthetical) - Terra Property Trust 2 Inc - USD ($) | Mar. 01, 2020 | Dec. 31, 2019 | Feb. 29, 2020 |
Equity issued in the Merger | $ 34,630,615 | ||
Business Combination Common Stock Shares | 2,116,785.76 | ||
Common Stock, Par Value | $ 0.01 | ||
Cash and cash equivalents acquired in Merger | 16,897,074 | ||
Business Combination Consideration | 17,733,541 | ||
Loans held for investment acquired through participation interest | 17,688,741 | ||
Interest receivable | 134,543 | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Other | 18,384 | ||
Accounts payable and accrued expenses | (57,433) | ||
Due to Manager | $ (50,694) |
Consolidated Statements of Ca_3
Consolidated Statements of Cash Flows - Non-cash Proceeds from Issuance of Common Stock to TIF3 REIT (Parenthetical) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Preferred stock dividend declared | $ 3,906 |
Series A Preferred Stock | |
Preferred stock dividend declared | $ (3,906) |
Preferred Stock, Dividend Rate, Percentage | 12.50% |
Consolidated Statements of Ca_4
Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows - Supplemental Non-Cash Investing Activities (Parenthetical) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jan. 09, 2019USD ($)a |
Loans Held for Investment | $ 402,969,513 | $ 378,612,768 | |
Area of Land | a | 4.9 | ||
Interest receivable | $ 2,253,718 | $ 1,876,799 | |
First Mortgage | |||
Loans Held for Investment | $ 14,325,000 | ||
Area of Land | a | 4.9 | ||
Mortgage Loans in Process of Foreclosure, Amount | $ 14,300,000 | ||
Interest receivable | 439,300 | ||
Restricted Cash and Investments | (60,941) | ||
Land Available-for-sale | 14,703,359 | ||
Land | |||
Land | $ 14,703,359 |
Business
Business | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Note 1. Business Terra Property Trust, Inc. (and, together with its consolidated subsidiaries, the “Company” or “Terra Property Trust”) was incorporated under the general corporation laws of the State of Maryland on December 31, 2015. Terra Property Trust is a real estate credit focused company that originates, structures, funds and manages commercial real estate investments, including mezzanine loans, first mortgage loans, subordinated mortgage loans and preferred equity investments. The Company’s loans finance the acquisition, construction, development or redevelopment of quality commercial real estate in the United States. The Company focuses on the origination of middle market loans in the approximately $ 10 million to $ 50 million range, to finance properties in primary and secondary markets. The Company believes these loans are subject to less competition and offer higher risk adjusted returns than larger loans with similar risk/return metrics. On January 1, 2016, Terra Secured Income Fund 5, LLC (“Terra Fund 5”), the Company’s then parent, contributed its consolidated portfolio of net assets to the Company pursuant to a contribution agreement in exchange for shares of the Company’s common stock. Upon receipt of the contribution of the consolidated portfolio of net assets from Terra Fund 5, the Company commenced its operations on January 1, 2016 . On March 2, 2020, the Company engaged in a series of transactions pursuant to which the Company issued an aggregate of 4,574,470.35 shares of our common stock in exchange for the settlement of an aggregate of $ 49.8 million of participation interests in loans held by the Company, cash of $ 25.5 million and other working capital. Following the completion of the transactions, as of March 31, 2020, Terra JV, LLC (“Terra JV”) held 86.4 % of the issued and outstanding shares of the Company's common stock with the remainder held by TIF3 REIT ( Note 3 ). The Company has elected to be taxed, and to qualify annually thereafter, as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), commencing with the taxable year ended December 31, 2016. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. The Company also operates its business in a manner that permits it to maintain its exclusion from registration under the Investment Company Act of 1940, as amended. The Company’s investment activities are externally managed by Terra REIT Advisors, LLC (“Terra REIT Advisors” or the “Manager”), a subsidiary of the Company’s sponsor, Terra Capital Partners, LLC, pursuant to a management agreement (the “Management Agreement”), under the oversight of the Company’s board of directors ( Note 7 ). The Company does not currently have any employees and does not expect to have any employees. Services necessary for the Company’s business are provided by individuals who are employees of the Manager or by individuals who were contracted by the Company or by the Manager to work on behalf of the Company pursuant to the terms of the Management Agreement. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include all of the Company’s accounts and those of its consolidated subsidiaries. The accompanying interim financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. All intercompany balances and transactions have been eliminated. Loans Held for Investment The Company originates, acquires, and structures real estate-related loans generally to be held to maturity. Loans held for investment are carried at the principal amount outstanding, adjusted for the accretion of discounts on investments and exit fees, and the amortization of premiums on investments and origination fees. The Company’s preferred equity investments, which are economically similar to mezzanine loans and subordinate to any loans but senior to common equity, are accounted for as loans held for investment. Loans are carried at cost less allowance for loan losses. Allowance for Loan Losses The Company’s loans are typically collateralized by either the sponsors’ equity interest in the real estate properties or the underlying real estate properties. As a result, the Company regularly evaluates the extent and impact of any credit migration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash from operations and/or reserve balances are sufficient to cover the debt service requirements currently and into the future; (ii) the ability of the borrower to refinance the loan; and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of the sponsor as well as its competency in managing and operating the real estate property. In addition, the Company considers the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates. Such analyses are completed and reviewed by asset management and finance personnel, who utilize various data sources, including (i) periodic financial data such as debt service coverage ratio, property occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, the capitalization and discount rates; (ii) site inspections; and (iii) current credit spreads and discussions with market participants. The Manager performs a quarterly evaluation for possible impairment of the Company’s portfolio of loans. A loan is impaired if it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. Impairment is measured based on the present value of expected future cash flows or the fair value of the collateral, if the loan is collateral dependent. Upon measurement of impairment, the Company records an allowance to reduce the carrying value of the loan with a corresponding charge to net income. In conjunction with the quarterly evaluation of loans not considered impaired, the Manager assesses the risk factors of each loan and assigns each loan a risk rating between 1 and 5, which is an average of the numerical ratings in the following categories: (i) sponsor capability and financial condition; (ii) loan and collateral performance relative to underwriting; (iii) quality and stability of collateral cash flows and/or reserve balances; and (iv) loan to value. Based on a 5-point scale, the Company’s loans are rated “1” through “5”, from less risk to greater risk, as follows: Risk Rating Description 1 Very low risk 2 Low risk 3 Moderate/average risk 4 Higher risk 5 Highest risk The Company records an allowance for loan losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4”, plus (ii) 5% of the aggregate carrying amount of loans rated as a “5”, plus (iii) impaired loan reserves, if any. There may be circumstances where the Company modifies a loan by granting the borrower a concession that it might not otherwise consider when a borrower is experiencing financial difficulty or is expected to experience financial difficulty in the foreseeable future. Such concessionary modifications are classified as troubled debt restructurings (“TDR”s) unless the modification solely results in a delay in a payment that is insignificant. Loans classified as TDRs are considered impaired loans for reporting and measurement purposes. Marketable Securities The Company from time to time invests in short term debt and equity securities. These securities are classified as available-for-sale and are carried at fair value. Unrealized gains or losses on available-for-sale securities are reported in other comprehensive income or loss until they are realized. Real Estate Owned, Net Real estate acquired is recorded at its estimated fair value at acquisition and is shown net of accumulated depreciation and impairment charges. Acquisition of properties generally are accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs, are accumulated and then allocated to individual assets and liabilities acquired based upon their relative fair value. The Company allocates the purchase price of its real estate acquisitions to land, building, tenant improvements, acquired in-place leases, intangibles for the value of any above or below market leases at fair value and to any other identified intangible assets or liabilities. The Company amortizes the value allocated to in-place leases over the remaining lease term, which is reported in depreciation and amortization expense on its consolidated statements of operations. The value allocated to above or below market leases are amortized over the remaining lease term as an adjustment to rental income. Real estate assets are depreciated using the straight-line method over their estimated useful lives: buildings and improvements - not to exceed 40 years, and tenant improvements - shorter of the lease term or life of the asset. Ordinary repairs and maintenance which are not reimbursed by the tenants are expensed as incurred. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their estimated useful life. Management reviews the Company’s real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate assets. If impaired, the real estate asset will be written down to its estimated fair value. Leases The Company determines if an arrangement is a lease at inception. Operating leases in which the Company is the lessee are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s lease typically does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made in advance and excludes lease incentives if there were any. The Company’s lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Revenue Recognition Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Interest Income: Interest income is accrued based upon the outstanding principal amount and contractual terms of the loans and preferred equity investments that the Company expects to collect and it is accrued and recorded on a daily basis. Discounts and premiums on investments purchased are accreted or amortized over the expected life of the respective loan using the effective yield method, and are included in interest income in the consolidated statements of operations. Loan origination fees and exit fees, net of portions attributable to obligations under participation agreements, are capitalized and amortized or accreted to interest income over the life of the investment using the effective interest method. Income accrual is generally suspended for loans at the earlier of the date at which payments become 90 days past due or when, in the opinion of the Manager, recovery of income and principal becomes doubtful. Outstanding interest receivable is assessed for recoverability. Interest is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. The Company holds loans in its portfolio that contain paid-in-kind (“PIK”) interest provisions. The PIK interest, which represents contractually deferred interest that is added to the principal balance that is due at maturity, is recorded on the accrual basis. Real Estate Operating Revenues: Real estate operating revenue is derived from leasing of space to various types of tenants. The leases are for fixed terms of varying length and generally provide for annual rent increases and expense reimbursements to be paid in monthly installments. Lease revenue, or rental income from leases, is recognized on a straight-line basis over the term of the respective leases. Additionally, the Company recorded above- and below-market lease intangibles, which are included in real estate owned, net, in connection with the acquisition of the real estate properties. These intangible assets and liabilities are amortized to lease revenue over the remaining contractual lease term. Other Revenues: Prepayment fee income is recognized as prepayments occur. All other income is recognized when earned. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments, with original maturities of ninety days or less when purchased, as cash equivalents. Cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains all of its cash at financial institutions which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation. Restricted cash represents cash held as additional collateral by the Company on behalf of the borrowers related to the investments in loans or preferred equity instruments for the purpose of such borrowers making interest and property-related operating payments. Restricted cash is not available for general corporate purposes. The related liability is recorded in “ Interest reserve and other deposits held on investments ” on the consolidated balance sheets. Cash held in escrow by lender represents amounts funded to an escrow account for debt services and tenant improvements. The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its consolidated statements of cash flows: March 31, 2020 March 31, 2019 Cash and cash equivalents $ 82,163,055 $ 20,738,351 Restricted cash 16,255,423 15,120,570 Cash held in escrow by lender 2,062,941 2,223,456 Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 100,481,419 $ 38,082,377 Participation Interests Loan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. For the investments for which participation has been granted, the interest earned on the entire loan balance is recorded within “ Interest income ” and the interest related to the participation interest is recorded within “ Interest expense from obligations under participation agreements ” in the consolidated statements of operations. Interest expense from obligations under participation agreement is reversed when recovery of interest income on the related loan becomes doubtful. See “ Obligations under Participation Agreements ” in Note 8 for additional information. Repurchase Agreement The Company finances certain of its senior loans through repurchase transactions under a master repurchase agreement. The Company accounts for the repurchase transactions as secured borrowing transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees. Fair Value Measurements U.S. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The Company has not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, obligations under participation agreements, mortgage loan payable, repurchase agreement payable and revolving credit facility payable. Such financial instruments are carried at cost, less impairment. Marketable securities are financial instruments that are reported at fair value. Deferred Financing Costs Deferred financing costs represent fees and expenses incurred in connection with obtaining financing for investments. These costs are presented in the consolidated balance sheets as a direct deduction of the debt liability to which the costs pertain. These costs are amortized using the effective interest method and are included in interest expense on mortgage loan payable in the consolidated statements of operations over the life of the borrowings. Income Taxes The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable year ended December 31, 2016. In order to qualify as a REIT, the Company is required, among other things, to distribute at least 90% of its REIT net taxable income to the stockholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax for taxable years before 2018) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. Any gains from the sale of foreclosed properties within two years are subject to U.S. federal and state income taxes at regular corporate rates. As of March 31, 2020 , the Company has satisfied all the requirements for a REIT and accordingly, no provision for federal income taxes has been included in the consolidated financial statements for the three months ended March 31, 2020 and 2019 . The Company did not have any uncertain tax positions that met the recognition or measurement criteria of Accounting Standards Codification (“ASC”) 740-10-25, Income Taxes , nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in its consolidated statements of operations. For the three months ended March 31, 2020 and 2019 , the Company did not incur any interest or penalties. Although the Company files federal and state tax returns, its major tax jurisdiction is federal. The Company’s inception-to-date federal tax returns remain subject to examination by the Internal Revenue Service. Earnings Per Share The Company has a simple equity capital structure with only common stock and preferred stock outstanding. As a result, earnings per share, as presented, represent both basic and dilutive per-share amounts for the periods presented in the consolidated financial statements. Income per basic share of common stock is calculated by dividing net income allocable to common stock by the weighted-average number of shares of common stock issued and outstanding during such period. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. During the first quarter of 2020, there was a global outbreak of a novel coronavirus (“COVID-19”), which has spread to over 200 countries and territories, including the United States, and has spread to every state in the United States. The World Health Organization has designated COVID-19 as a pandemic, and numerous countries, including the United States, have declared national emergencies with respect to COVID-19. The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading and operations of non-essential offices and retail centers. Such actions are creating disruption in global supply chains, and adversely impacting many industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable and supportable based on the information available as of March 31, 2020 , however uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and the Company’s business in particular, makes any estimates and assumptions as of March 31, 2020 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may ultimately differ from those estimates. Segment Information The Company’s primary business is originating, acquiring and structuring real estate-related loans related to high quality commercial real estate. From time to time, the Company may acquire real estate encumbering the senior loans through foreclosure. However, management treats the operations of the real estate acquired through foreclosure as the continuation of the original senior loans. The Company operates in a single segment focused on mezzanine loans, other loans and preferred equity investments, and to a lesser extent, owning and managing real estate. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. In April 2019, the FASB issued additional amendments to clarify the scope of ASU 2016-13 and address issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. In May 2019, the FASB issued ASU 2019-05 — Targeted Transition Relief, which provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. In October 2019, the FASB decided that for smaller reporting companies, ASU 2016-13 and related amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company meets the definition of a smaller reporting company under the regulation of the Securities and Exchange Commission. As such, the Company will adopt this ASU and related amendments on January 1, 2023. Management is currently evaluating the impact this change will have on the Company’s consolidated financial statements and disclosures. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of information required by U.S. GAAP. The amendments in ASU 2018-13 added, removed and modified certain fair value measurement disclosure requirements. ASU 2018-13 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted ASU 2018-13 on January 1, 2020. The adoption of ASU 2018-13 did not have a material impact on its consolidated financial statements and disclosures. London Interbank Offered Rate (“LIBOR”) is a benchmark interest rate referenced in a variety of agreements that are used by all types of entities. At the end of 2021, banks will no longer be required to report information that is used to determine LIBOR. As a result, LIBOR could be discontinued. Other interest rates used globally could also be discontinued for similar reasons. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The provisions of optional relief include: (i) contract modifications - account for the modification as a continuation of the existing contract without additional analysis; (ii) hedging accounting - continue hedge accounting when certain critical terms of a hedging relationship change; and (iii) held-to-maturity (HTM) debt securities - one-time sale and/or transfer to available for sale or trading may be made for HTM debt securities that both reference an eligible reference rate and were classified as HTM before January 1, 2020. Companies can apply the amendments in ASU 2020-04 immediately. However, ASU 2020-04 will only be available for a limited time (generally through December 31, 2022). The Company is currently evaluating the impact of the reference rate reform and ASU 2020-04 on its consolidated financial statements and disclosures. |
Merger and Asset Contribution
Merger and Asset Contribution | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combination Disclosure | Note 3. Merger and Issuance of Common Stock to TIF3 REIT Merger On February 28, 2020, the Company entered into the Merger Agreement pursuant to which TPT2 was merged with and into the Company, with the Company continuing as the surviving corporation, effective March 1, 2020. In connection with the Merger, each share of common stock, par value $ 0.01 per share, of TPT2 issued and outstanding immediately prior to the effective time of the Merger was converted into the right to receive from the Company a number of shares of common stock, par value $ 0.01 per share, of the Company equal to an exchange ratio, which was 1.2031 . The exchange ratio was based on the relative net asset values of the Company and TPT2 as of December 31, 2019 as adjusted to reflect changes in the net working capital of each of the Company and TPT2 during the period from January 1, 2020 through March 1, 2020, the effective time for the Merger. For purposes of determining the respective fair values of the Company and TPT2, the value of the loans (or participation interests therein) held by each of the Company and TPT2 was the value of such loans (or participation interests) as set forth in the audited financial statements of the Company as of and for the year ended December 31, 2019. As a result, Terra Fund 7, the sole stockholder of TPT2, received 2,116,785.76 shares of common stock of the Company as consideration in the Merger. The shares of common stock were issued in a private placement in reliance on Section 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations promulgated thereunder. The following table presents a summary of the consideration exchanged and settlement of the Company’s obligations under participation agreements as a result of the Merger: Total Consideration Equity issued in the Merger $ 34,630,615 $ 34,630,615 Net Assets of TPT2 Received in the Merger Loans held for investment acquired through participation $ 17,688,741 Cash and cash equivalents 16,897,074 Interest receivable 134,543 Other assets 18,384 Accounts payable and accrued expenses (57,433 ) Due to Manager (50,694 ) Total identifiable net assets $ 34,630,615 The fair value of the 2,116,785.76 shares of the Company’s stock issued in the Merger as consideration paid for TPT2 was derived from the fair value per share of the Company as of December 31, 2019 as adjusted to reflect the change in the net working capital of the Company during the period from January 1, 2020 through March 1, 2020, the effective time of the Merger. In connection with the Merger, the size of the board of directors of the Company was reduced from eight directors to four directors, with Andrew M. Axelrod, Vikram S. Uppal, Roger H. Beless and Michael L. Evans continuing as directors of the Company. Issuance of Common Stock to TIF3 REIT In addition, on March 2, 2020, the Company entered into two separate contribution agreements, one by and among the Company, TIF3 REIT and Terra Income Fund International, and another by and among the Company, TIF3 REIT and Terra Secured Income Fund 5 International, pursuant to which the Company issued 2,457,684.59 shares of common stock of the Company to TIF3 REIT in exchange for the settlement of $ 32.1 million of participation interests in loans also held by the Company, $ 8.6 million in cash and other net working capital. The shares of common stock were issued in a private placement in reliance on Section 4(a)(2) under the Securities Act and the rules and regulations promulgated thereunder. The fair value of the 2,457,684.59 shares of the Company’s stock issued in the transaction as consideration paid for TIF3 REIT was derived from the fair value per share of the Company as of December 31, 2019, which was the most recently determined fair value per share of the Company. The following table presents a summary of the consideration exchanged and settlement of the Company’s obligations under participation agreements as a result of the Issuance of Common Stock to TIF3 REIT: Total Consideration Equity issued to TIF3 REIT $ 40,749,378 $ 40,749,378 Net Assets of TIF3 REIT Received Investments through participation interest, at fair value $ 32,112,257 Cash and cash equivalents 8,600,000 Interest receivable 270,947 Due to Manager (233,826 ) Total identifiable net assets $ 40,749,378 Terra JV, LLC Prior to the completion of the Merger and the Issuance of Common Stock to TIF3 REIT transactions described above, Terra Fund 5 owned approximately 98.6 % of the issued and outstanding shares of the Company’s common stock indirectly through its wholly owned subsidiary, Terra JV, of which Terra Fund 5 was the sole managing member, and the remaining issued and outstanding shares of the Company’s common stock were owned by TIF3 REIT. As described above, the Company acquired TPT2 in the Merger and, in connection with such transaction, Terra Fund 7 contributed the shares of the Company’s common stock received as consideration in the Merger to Terra JV and became a co-managing member of Terra JV pursuant to the amended and restated operating agreement of Terra JV, dated March 2, 2020 (the “JV Agreement”). The JV Agreement and related stockholders agreement between Terra JV and the Company, dated March 2, 2020, provide for the joint approval of Terra Fund 5 and Terra Fund 7 with respect to certain major decisions that are taken by Terra JV and the Company. On March 2, 2020, the Company, Terra Fund 5, Terra JV and Terra REIT Advisors also entered into the Amended and Restated Voting Agreement (the “Voting Agreement”), pursuant to which Terra Fund 5 assigned its rights and obligations under the Voting Agreement to Terra JV. Consistent with the original voting agreement dated February 8, 2018, for the period that Terra REIT Advisors remains the external manager of the Company, Terra REIT Advisors will have the right to nominate two individuals to serve as directors of the Company and, until Terra JV no longer holds at least 10 % of the outstanding shares of the Company’s common stock, Terra JV will have the right to nominate one individual to serve as a director of the Company. Following the completion of the transactions described above, as of March 31, 2020 , Terra JV owns 86.4 % of the issued and outstanding shares of the Company’s common stock with the remainder held by TIF3 REIT, and Terra Fund 5 and Terra Fund 7 own an 87.6 % and 12.4 % interest, respectively, in Terra JV. Net Loss on Extinguishment of Obligations Under Participation Agreements As discussed in Note 7 , in the normal course of business, the Company may enter into participation agreements with related parties, primarily other affiliated funds managed by the Manager, and to a lesser extent, unrelated parties. The obligations under participation agreements were released as a result of the Merger and the Issuance of Common Stock to TIF3 REIT. In connection with these transactions, the Company recognized a net loss of $ 0.3 million , which was primarily transaction costs incurred in connection with both transactions. |
Loans Held for Investment
Loans Held for Investment | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Investment | Note 4. Loans Held for Investment Portfolio Summary The following table provides a summary of the Company’s loan portfolio as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Fixed Rate Floating (1)(2)(3) Total Fixed Rate Floating (1)(2)(3) Total Number of loans 8 14 22 8 15 23 Principal balance $ 81,751,847 $ 320,935,591 $ 402,687,438 $ 70,692,767 $ 306,695,550 $ 377,388,317 Carrying value $ 82,483,887 $ 320,485,626 $ 402,969,513 $ 71,469,137 $ 307,143,631 $ 378,612,768 Fair value $ 82,249,333 $ 317,360,045 $ 399,609,378 $ 71,516,432 $ 307,643,983 $ 379,160,415 Weighted-average coupon rate 12.76 % 8.50 % 9.36 % 11.93 % 9.13 % 9.65 % Weighted-average remaining term (years) 1.76 2.05 1.99 2.28 2.09 2.13 _______________ (1) These loans pay a coupon rate of LIBOR plus a fixed spread. Coupon rate shown was determined using LIBOR of 0.99% and 1.76 % as of March 31, 2020 and December 31, 2019 , respectively. (2) As of March 31, 2020 and December 31, 2019 , amounts included $136.1 million and $ 114.8 million, respectively, of senior mortgages used as collateral for $92.5 million and $ 81.1 million, respectively, of borrowings under a repurchase agreement ( Note 8 ). These borrowings bear interest at an annual rate of LIBOR plus a spread ranging from 2.00 % to 2.50 % as of March 31, 2020 and LIBOR plus a spread ranging from 2.25 % to 2.50 % as of December 31, 2019 . (3) As of both March 31, 2020 and December 31, 2019 , twelve of these loans are subject to a LIBOR floor. Lending Activities The following table presents the activities of the Company’s loan portfolio for the three months ended March 31, 2020 and 2019 : Loans Held for Investment Loans Held for Investment through Participation Interests Total Balance, January 1, 2020 $ 375,462,222 $ 3,150,546 $ 378,612,768 New loans made 37,504,601 871,847 38,376,448 Principal repayments received (13,371,565 ) — (13,371,565 ) PIK interest (1) 294,237 — 294,237 Net amortization of premiums on loans (15,348 ) — (15,348 ) Accrual, payment and accretion of investment-related fees and other, net 202,793 15,174 217,967 Provision for loan losses (1,144,994 ) — (1,144,994 ) Balance, March 31, 2020 $ 398,931,946 $ 4,037,567 $ 402,969,513 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 70,813,882 — 70,813,882 Principal repayments received (60,319,802 ) — (60,319,802 ) Foreclosure of collateral (2) (14,325,000 ) — (14,325,000 ) PIK interest (1) 852,968 — 852,968 Net amortization of premiums on loans (18,350 ) — (18,350 ) Accrual, payment and accretion of investment-related fees, net (651,089 ) — (651,089 ) Balance, March 31, 2019 $ 384,596,583 $ — $ 384,596,583 _______________ (1) Certain loans in the Company’s portfolio contain PIK interest provisions. The PIK interest represents contractually deferred interest that is added to the principal balance. PIK interest related to obligations under participation agreements amounted to $ 0.2 million for both the three months ended March 31, 2020 and 2019 . (2) On January 9, 2019, the Company acquired 4.9 acres of adjacent land encumbering a $ 14.3 million first mortgage via deed in lieu of foreclosure in exchange for the relief of the first mortgage and related fees and expenses ( Note 5 ). Portfolio Information The tables below detail the types of loans in the Company’s loan portfolio, as well as the property type and geographic location of the properties securing these loans as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Loan Structure Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total First mortgages $ 208,956,222 $ 209,289,995 51.9 % $ 178,130,623 $ 178,203,675 47.1 % Preferred equity investments 157,686,635 158,285,097 39.3 % 157,144,040 157,737,763 41.6 % Mezzanine loans 36,044,581 36,539,415 9.1 % 42,113,654 42,671,330 11.3 % Allowance for loan losses — (1,144,994 ) (0.3 )% — — — % Total $ 402,687,438 $ 402,969,513 100.0 % $ 377,388,317 $ 378,612,768 100.0 % March 31, 2020 December 31, 2019 Property Type Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total Office $ 143,941,260 $ 143,879,383 35.7 % $ 142,055,845 $ 141,870,355 37.5 % Multifamily 83,318,419 83,907,425 20.8 % 76,640,369 77,136,016 20.4 % Student housing 75,155,569 75,608,070 18.8 % 58,049,717 58,553,496 15.5 % Hotel 47,859,380 48,029,027 11.9 % 46,598,011 46,731,939 12.3 % Infill land 34,812,810 34,992,810 8.7 % 36,444,375 36,624,375 9.7 % Condominium 10,600,000 10,697,792 2.7 % 10,600,000 10,696,587 2.8 % Industrial 7,000,000 7,000,000 1.7 % 7,000,000 7,000,000 1.8 % Allowance for loan losses — (1,144,994 ) (0.3 )% — — — % Total $ 402,687,438 $ 402,969,513 100.0 % $ 377,388,317 $ 378,612,768 100.0 % March 31, 2020 December 31, 2019 Geographic Location Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total United States California $ 178,222,394 $ 178,498,419 44.3 % $ 150,988,463 $ 151,108,109 39.9 % New York 74,681,066 74,830,437 18.6 % 79,734,323 79,896,663 21.1 % Georgia 64,832,131 65,075,669 16.1 % 61,772,764 61,957,443 16.4 % North Carolina 32,651,847 32,829,933 8.1 % 32,592,767 32,766,311 8.7 % Washington 23,500,000 23,666,693 5.9 % 23,500,000 23,661,724 6.2 % Illinois 4,004,877 4,039,438 1.0 % 8,004,877 8,071,562 2.1 % Massachusetts 7,000,000 7,000,000 1.7 % 7,000,000 7,000,000 1.8 % Kansas 6,200,000 6,253,504 1.6 % 6,200,000 6,251,649 1.7 % Texas 3,500,000 3,532,794 0.9 % 3,500,000 3,531,776 0.9 % Other (1) 8,095,123 8,387,620 2.1 % 4,095,123 4,367,531 1.2 % Allowance for loan losses — (1,144,994 ) (0.3 )% — — — % Total $ 402,687,438 $ 402,969,513 100.0 % $ 377,388,317 $ 378,612,768 100.0 % _______________ (1) Other includes $5.1 million and $ 1.1 million of unused portion of a credit facility at March 31, 2020 and December 31, 2019 , respectively. Other also includes a $3.0 million loan with collateral located in South Carolina at both March 31, 2020 and December 31, 2019 . Loan Risk Rating As described in Note 2 , the Manager evaluates the Company’s loan portfolio on a quarterly basis or more frequently as needed. In conjunction with the quarterly review of the Company’s loan portfolio, the Manager assesses the risk factors of each loan, and assigns a risk rating based on a five-point scale with “1” being the lowest risk and “5” being the greatest risk. The following table allocates the principal balance and the carrying value of the Company’s loans based on the loan risk rating as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Loan Risk Rating Number of Loans Principal Balance Carrying Value % of Total Number of Loans Principal Balance Carrying Value % of Total 1 0 $ — $ — — % 0 $ — $ — — % 2 2 25,000,000 25,180,000 6.2 % 5 50,000,000 50,284,751 13.3 % 3 15 294,854,525 295,669,585 73.2 % 17 322,648,317 323,588,017 85.4 % 4 (1) 3 76,332,913 76,483,600 18.9 % 0 — — — % 5 0 — — — % 0 — — — % Other (2) 2 6,500,000 6,781,322 1.7 % 1 4,740,000 4,740,000 1.3 % 22 $ 402,687,438 404,114,507 100.0 % 23 $ 377,388,317 378,612,768 100.0 % Allowance for loan losses (1,144,994 ) — Total, net of allowance for loan losses $ 402,969,513 $ 378,612,768 _______________ (1) The increase in number of loans with a loan risk rating of “4” was due to the higher risk in loans collateralized by hospitality and select other asset classes that are particularly negatively impacted by the COVID-19 pandemic. (2) These loans were deemed impaired and removed from the pool of loans on which a general allowance is calculated. As of March 31, 2020 and December 31, 2019 , no specific reserve for loan losses was recorded on these loans because the fair value of the collateral was greater than carrying value for each loan. The Company entered into forbearance agreement with the borrower for the two loans categorized as “other” above as of March 31, 2020 . The Company expects to recover in full the principal balance of these two loans. In March 2020, the loan categorized as “other” above as of December 31, 2019 was repaid in full. As of March 31, 2020 , the Company had three loans with a loan risk rating of “4” and recorded a general allowance for loan losses of $1.1 million The following table presents the activity in the Company’s allowance for loan losses for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, 2020 2019 Allowance for loan losses, beginning of period $ — $ — Provision for loan losses 1,144,994 — Charge-offs — — Recoveries — — Allowance for loan losses, end of period $ 1,144,994 $ — The allowance for loan losses reserve reflects the macroeconomic impact of the COVID-19 pandemic on commercial real estate markets generally and is not specific to any loan losses or impairments in our portfolio. See Note 2 and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion of COVID-19. |
Real Estate Owned, Net
Real Estate Owned, Net | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Real Estate Disclosure | Note 5. Real Estate Owned, Net Acquisition of Real Estate 2019 — On January 9, 2019, the Company acquired 4.9 acres of adjacent land encumbering a first mortgage via deed in lieu of foreclosure in exchange for the payment of the first mortgage and related fees and expenses. The following table summarizes the carrying value of the first mortgage prior to the deed in lieu of foreclosure on January 9, 2019: 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 The table below summarizes the allocation of the estimated fair value of the real estate acquired on January 9, 2019 based on the policy described in Note 2 : Assets Acquired Real estate owned: Land $ 14,703,359 The Company capitalized transaction costs of approximately $ 0.2 million to land. Real Estate Owned, Net Real estate owned is comprised of 4.9 acres of adjacent land located in Pennsylvania and a multi-tenant office building, with lease intangible assets and liabilities, located in California. The following table presents the components of real estate owned, net: March 31, 2020 December 31, 2019 Cost Accumulated Depreciation/Amortization Net Cost Accumulated Depreciation/Amortization Net Real estate: Land $ 13,395,430 $ — $ 13,395,430 $ 13,395,430 $ — $ 13,395,430 Building and building improvements 51,725,969 (2,155,271 ) 49,570,698 51,725,969 (1,831,980 ) 49,893,989 Tenant improvements 1,854,640 (462,131 ) 1,392,509 1,854,640 (392,812 ) 1,461,828 Total real estate 66,976,039 (2,617,402 ) 64,358,637 66,976,039 (2,224,792 ) 64,751,247 Lease intangible assets: In-place lease 15,852,232 (3,692,559 ) 12,159,673 15,852,232 (3,138,675 ) 12,713,557 Above-market rent 156,542 (29,260 ) 127,282 156,542 (24,871 ) 131,671 Total intangible assets 16,008,774 (3,721,819 ) 12,286,955 16,008,774 (3,163,546 ) 12,845,228 Lease intangible liabilities: Below-market rent (3,371,314 ) 774,252 (2,597,062 ) (3,371,314 ) 658,115 (2,713,199 ) Above-market ground lease (8,896,270 ) 217,247 (8,679,023 ) (8,896,270 ) 184,660 (8,711,610 ) Total intangible liabilities (12,267,584 ) 991,499 (11,276,085 ) (12,267,584 ) 842,775 (11,424,809 ) Total real estate $ 70,717,229 $ (5,347,722 ) $ 65,369,507 $ 70,717,229 $ (4,545,563 ) $ 66,171,666 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: Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Real estate operating revenues: Lease revenue $ 1,922,128 $ 1,922,538 Other operating income 390,923 398,700 Total $ 2,313,051 $ 2,321,238 Real estate operating expenses: Utilities $ 39,022 $ 33,762 Real estate taxes 232,875 80,360 Repairs and maintenances 237,132 209,843 Management fees 56,701 61,349 Lease expense, including amortization of above-market ground lease 283,538 283,538 Other operating expenses 95,250 87,003 Total $ 944,518 $ 755,855 Leases On July 30, 2018, the Company foreclosed on a multi-tenant office building in full satisfaction of a first mortgage and related fees and expenses. In connection with the foreclosure, the Company assumed four leases whereby the Company is the lessor to the leases. These four tenant leases had remaining lease terms ranging from 6.3 years to 8.8 years as of July 30, 2018 and provide for annual fixed rent increase. Three of the tenant leases each provides two options to renew the lease for five years each and the remaining tenant lease provides one option to renew the lease for five years. In addition, the Company assumed a ground lease whereby the Company is the lessee (or a tenant) to the ground lease. The ground lease had a remaining lease term of 68.3 years and provides for a new base rent every five 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, 2020. Since future rent increase on the ground lease is unknown, the Company did not include the future rent increase in calculating the present value of future rent payments. The ground lease does not provide for renewal options. On the date of foreclosure, the Company performed lease classification test on the tenant leases as well as the ground lease in accordance with ASC 840. The result of the lease classification test indicated that the tenant leases and the ground lease shall be classified as operating leases on the date of foreclosure. On January 1, 2019, the Company adopted ASU 2016-02 using a modified retrospective transition approach and chose not to adjust comparable periods ( Note 2 ). The Company elected to use the package of practical expedients for its existing leases whereby the Company did not need to reassess whether a contract is or contains a lease, lease classification and initial direct costs. As a result, the leases continue to be classified as operating leases under ASC 842, Leases . The adoption of ASU 2016-02 did not have any impact on the tenant leases; however, for the ground lease, the Company recognized $ 16.1 million of both operating lease right-of-use assets and operating lease liabilities on its consolidated balance sheets. No cumulative effect adjustment was recorded because there was no change to operating lease cost. In addition, as of January 1, 2019, the Company had $ 0.5 million of unamortized leasing commission (initial direct costs) on the tenant leases. The Company elected to continue to amortize the remaining leasing commission through the end of the lease terms. Scheduled Future Minimum Rent Income Scheduled future minimum rents, exclusive of renewals and expenses paid by tenants, under non-cancelable operating leases at March 31, 2020 are as follows: Years Ending December 31, Total 2020 (April 1 through December 31) $ 5,060,780 2021 7,025,413 2022 7,547,261 2023 7,787,842 2024 8,026,942 Thereafter 5,836,010 Total $ 41,284,248 Scheduled Annual Net Amortization of Intangibles Based on the intangible assets and liabilities recorded at March 31, 2020 , scheduled annual net amortization of intangibles for each of the next five calendar years and thereafter is as follows: Years Ending December 31, Net Decrease in Real Estate Operating Revenue (1) Increase in Depreciation and Amortization (1) Decrease in Rent Expense (1) Total 2020 (April 1 through December 31) $ (335,247 ) $ 1,661,652 $ (97,761 ) $ 1,228,644 2021 (446,995 ) 2,215,536 (130,348 ) 1,638,193 2022 (446,995 ) 2,215,536 (130,348 ) 1,638,193 2023 (446,995 ) 2,215,536 (130,348 ) 1,638,193 2024 (446,995 ) 2,215,536 (130,348 ) 1,638,193 Thereafter (346,553 ) 1,635,877 (8,059,870 ) (6,770,546 ) Total $ (2,469,780 ) $ 12,159,673 $ (8,679,023 ) $ 1,010,870 _______________ (1) Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to lease revenues; amortization of in-place lease intangibles is included in depreciation and amortization; and amortization of above-market ground lease is recorded as a reduction to rent expense. Supplemental Ground Lease Disclosures Supplemental balance sheet information related to the ground lease was as follows: March 31, 2020 Operating lease Operating lease right-of-use assets $ 16,111,217 Operating lease liabilities $ 16,111,217 Weighted average remaining lease term — operating lease (years) 66.6 Weighted average discount rate — operating lease 7.9 % The component of lease expense for the ground lease was as follows: Three Months Ended March 31, 2020 Operating lease cost $ 316,125 Supplemental non-cash information related to the ground lease was as follows: Three Months Ended March 31, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 316,125 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 316,125 Maturities of operating lease liabilities are as follows: Years Ending December 31, Operating Lease 2020 (April 1 through December 31) (Year of rent reset) $ 948,375 2021 1,264,500 2022 1,264,500 2023 1,264,500 2024 1,264,500 Thereafter 78,135,563 Total lease payments 84,141,938 Less: Imputed interest (68,030,721 ) Total $ 16,111,217 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block] | Note 6. Fair Value Measurements The Company adopted the provisions of ASC 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 established a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the state of the marketplace (including the existence and transparency of transactions between market participants). Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments measured and reported at fair value are classified and disclosed into one of the following categories based on the inputs as follows: Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access. Level 2 — Pricing inputs are other than quoted prices in active markets, including, but not limited to, quoted prices for similar assets and liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. 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 are determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. As of March 31, 2020 and December 31, 2019 , the Company has not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, obligations under participation agreements, mortgage loan payable, repurchase agreement payable and revolving credit facility payable. Such financial instruments are carried at cost, less impairment. Marketable securities are financial instruments that are reported at fair value. Financial Instruments Carried at Fair Value on a Recurring Basis In March 2020, the Company invested $3.4 million in short-term debt and equity securities. These securities are comprised of preferred stock and bonds. The Company classified these short-term marketable securities as available-for-sale securities, which are presented at fair value on the consolidated balance sheet with the change in fair value reported in other comprehensive income until the securities are realized. The following tables present fair value measurements of marketable securities, by major class, as of March 31, 2020 , according to the fair value hierarchy: March 31, 2020 Fair Value Measurements Level 1 Level 2 Level 3 Total Marketable Securities: Preferred stock $ 1,028,189 $ — $ — $ 1,028,189 Bonds — 2,462,205 — 2,462,205 Total $ 1,028,189 $ 2,462,205 $ — $ 3,490,394 The following table presents the activities of the marketable securities for the periods presented. Three Months Ended March 31, 2020 2019 Beginning balance $ — $ — Purchases 3,354,442 — Proceeds from sale (48,073 ) — Net unrealized gains on marketable securities 192,919 — Reclassification of realized gains (2) (8,894 ) — Ending balance $ 3,490,394 $ — _______________ (1) Amount is presented as Net unrealized gains on marketable securities on the consolidated statements of comprehensive income. (2) Amount is presented as realized gains on marketable securities on the consolidated statements of operations. Financial Instruments Not Carried at Fair Value The following table presents the carrying value, which represents the principal amount outstanding, adjusted for the accretion of purchase discounts on loans and exit fees, and the amortization of purchase premiums on loans and origination fees, and estimated fair value of the Company’s financial instruments that are not carried at fair value on the consolidated balance sheets: March 31, 2020 December 31, 2019 Level Principal Amount Carrying Value Fair Value Principal Amount Carrying Value Fair Value Loans: Loans held for investment, net 3 $ 398,694,704 $ 400,076,940 $ 395,581,145 $ 374,267,430 $ 375,462,222 $ 375,956,154 Loans held for investment acquired through participation, net 3 3,992,734 4,037,567 4,028,233 3,120,887 3,150,546 3,204,261 Allowance for loan losses — (1,144,994 ) — — — — Total loans $ 402,687,438 $ 402,969,513 $ 399,609,378 $ 377,388,317 $ 378,612,768 $ 379,160,415 Liabilities: Obligations under participation agreements 3 $ 67,624,467 $ 67,670,405 $ 59,524,887 $ 102,564,795 $ 103,186,327 $ 103,188,783 Mortgage loan payable 3 44,481,855 44,687,123 44,813,764 44,614,480 44,753,633 44,947,378 Repurchase agreement payable 3 92,546,529 91,352,312 92,546,529 81,134,436 79,608,437 81,134,436 Revolving credit facility payable 3 35,000,000 34,930,844 35,000,000 — — — Total liabilities $ 239,652,851 $ 238,640,684 $ 231,885,180 $ 228,313,711 $ 227,548,397 $ 229,270,597 The Company estimated that its other financial assets and liabilities, not included in the tables above, had fair values that approximated their carrying values at both March 31, 2020 and December 31, 2019 due to their short-term nature. Valuation Process for Fair Value Measurement The fair value of the Company’s investment in preferred stock is determined based on quoted prices in an active market and is classified as Level 1 of the fair value hierarchy. The fair value of the Company’s investment in bonds is determined based on a matrix which takes the following factors into consideration: structured product markets, interest rate movements, trends, spreads, new issue information and other pertinent data to produce price evaluations that are designed to represent closing market bids or means for the current day. Valuation of bonds falls within Level 2 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, including available current market data on applicable yields of comparable debt/preferred equity instruments; market credit spreads and yield curves; the investment’s yield; covenants of the investment, including prepayment provisions; the portfolio company’s ability to make payments, net operating income and debt-service coverage ratio; construction progress reports and construction budget analysis; the nature, quality and realizable value of any collateral (and loan-to-value ratio); the forces that influence the local markets in which the asset (the collateral) is purchased and sold, such as capitalization rates, occupancy rates, rental rates and replacement costs; and the anticipated duration of each real estate-related loan investment. The Manager designates a valuation committee to oversee the entire valuation process of the Company’s Level 3 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 Manager pursuant to the Company’s valuation policy. The fair values of the Company’s mortgage loan payable, repurchase agreement payable and revolving credit facility payable are determined by discounting the contractual cash flows at the interest rate the Company estimates such arrangements would bear if executed in the current market. The following table summarizes the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 loans as of March 31, 2020 and December 31, 2019 . The tables are not intended to be all-inclusive, but instead identify the significant unobservable inputs relevant to the determination of fair values. Fair Value at March 31, 2020 Primary Valuation Technique Unobservable Inputs March 31, 2020 Asset Category Minimum Maximum Weighted Average Assets: Loans held for investment, net $ 395,581,145 Discounted cash flow Discount rate 4.45 % 19.25 % 11.03 % Loans held for investment acquired through 4,028,233 Discounted cash flow Discount rate 13.15 % 13.15 % 13.15 % Total Level 3 Assets $ 399,609,378 Liabilities: Obligations under Participation Agreements $ 59,524,887 Discounted cash flow Discount rate 9.86 % 19.25 % 13.23 % Mortgage loan payable 44,813,764 Discounted cash flow Discount rate 6.08 % 6.08 % 6.08 % Repurchase agreement payable 92,546,529 Discounted cash flow Discount rate 3.34 % 4.77 % 4.00 % Revolving credit facility payable 35,000,000 Discounted cash flow Discount rate 6.00 % 6.00 % 6.00 % Total Level 3 Liabilities $ 231,885,180 Fair Value at December 31, 2019 Primary Valuation Technique Unobservable Inputs December 31, 2019 Asset Category Minimum Maximum Weighted Average Assets: Loans held for investment, net $ 375,956,154 Discounted cash flow Discount rate 4.71 % 14.95 % 9.77 % Loans held for investment acquired through participation, net 3,204,261 Discounted cash flow Discount rate 11.90 % 11.90 % 11.90 % Total Level 3 Assets $ 379,160,415 Liabilities: Obligations under Participation Agreements $ 103,188,783 Discounted cash flow Discount rate 9.00 % 14.95 % 11.99 % Mortgage loan 44,947,378 Discounted cash flow Discount rate 6.08 % 6.08 % 6.08 % Repurchase agreement payable 81,134,436 Discounted cash flow Discount rate 4.11 % 4.75 % 4.33 % Total Level 3 Liabilities $ 229,270,597 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure | Note 7. Related Party Transactions Management Agreement The Company entered into a Management Agreement with the Manager whereby the Manager is responsible for its day-to-day operations. The Management Agreement runs co-terminus with the amended and restated operating agreement for Terra Fund 5, which is scheduled to terminate on December 31, 2023 unless Terra Fund 5 is dissolved earlier. The following table presents a summary of fees paid and costs reimbursed to the Manager in connection with providing services to the Company that are included on the consolidated statements of operations: Three Months Ended March 31, 2020 2019 Origination and extension fee expense (1) $ 437,617 $ 683,172 Asset management fee 1,029,533 880,355 Asset servicing fee 234,208 204,477 Operating expenses reimbursed to Manager 1,367,189 1,115,204 Disposition fee (2) 75,520 469,933 Total $ 3,144,067 $ 3,353,141 _______________ (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 loans, including any third-party expenses related to such loans. In the event that the term of any real estate-related loan held by the Company is extended, the Manager also receives an extension fee equal to the lesser of (i) 1% of the principal amount of the loan being extended or (ii) the amount of fee paid to the Company by the borrower in connection with such extension. Asset Management Fee Under the terms of the Management Agreement, the Manager or its affiliates provides the Company with certain investment management services in return for a management fee. The Company pays a monthly asset management fee at an annual rate of 1% 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. 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 March 31, 2020 , the Company has not received any breakup fees. Operating Expenses The Company reimburses the Manager for operating expenses incurred in connection with services provided to the operations of the Company, including the Company’s allocable share of the Manager’s overhead, such as rent, employee costs, utilities, and technology costs. Disposition and Extension Fee 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. Distributions Paid For the three months ended March 31, 2020 , the Company made distributions to Terra Fund 5, Terra JV and TIF3 REIT in the aggregate of $8.8 million , of which $8.3 million were returns of capital ( Note 10 ). For the three months ended March 31, 2019 , the Company made distributions to Terra Fund 5 totaling $7.6 million , of which $3.6 million were returns of capital ( Note 10 ). Due to Manager As of March 31, 2020 and December 31, 2019 , approximately $1.4 million and $1.0 million was due to the Manager, respectively, as reflected on the consolidated balance sheets, primarily related to the present value of the disposition fees on individual loans due to the Manager. Merger and Issuance of Common Stock to TIF3 REIT As discussed in Note 3 , on March 1, 2020, TPT2 merged with and into the Company with the Company continuing as the surviving company. In connection with the Merger, the Company issued 2,116,785.76 shares of common stock of the Company to Terra Fund 7, the sole stockholder of TPT2, as consideration in the Merger. In addition, on March 2, 2020, TIF3 REIT contributed cash and released obligations under the participation agreements to the Company ( Note 3 ) in exchange for the issuance of 2,457,684.59 shares of common stock of the Company. As described in Note 3 , Terra Fund 7 contributed the shares of the Company’s common stock received as consideration in the Merger to Terra JV and became a co-managing member of Terra JV pursuant to the JV Agreement. The JV Agreement and related stockholders agreement between Terra JV and the Company, dated March 2, 2020, provide for the joint approval of Terra Fund 5 and Terra Fund 7 with respect to certain major decisions that are taken by Terra JV and the Company. Following the completion of the transactions described above, as of March 31, 2020 , Terra JV owns 86.4% of the issued and outstanding shares of the Company’s common stock with the remainder held by TIF3 REIT, and Terra Fund 5 and Terra Fund 7 own an 87.6% and 12.4% interest, respectively, in Terra JV. Terra International 3 On September 30, 2019, the Company entered into a Contribution and Repurchase Agreement with Terra International Fund 3, L.P. (“Terra International 3”) and TIF3 REIT, a wholly-owned subsidiary of Terra International 3. Pursuant to this agreement, Terra International 3, through TIF3 REIT, contributed cash in the amount of $ 3.6 million to the Company in exchange for 212,691 shares of common stock, at a price of $ 17.02 per share. In addition, Terra International 3 agreed to contribute to the Company future cash proceeds, if any, raised from time to time by it, and the Company agreed to issue shares of common stock to International Fund 3 in exchange for any such future cash proceeds, in each case pursuant to and in accordance with the terms and conditions specified in the agreement. The shares were issued in a private placement in reliance on Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder. Under Cayman securities law, when there is a change in the terms of the offering, previously admitted partners have rights to rescind their subscription. On September 24, 2019, Terra International 3 amended its private placement memorandum to change its term from finite life to perpetual life with limited opportunity for liquidity, as well as to change the selling commission structure and to provide for a dividend reinvestment plan. As a result of the change in the terms of the offering, as of today, Terra International 3 received requests to rescind all of the units of its limited partnership interest at a price of $ 50,000 per unit. Terra International 3 expects to honor all the requests. As a result of the rescission requests, TIF3 REIT redeemed the previously purchased of 212,691 shares of the Company’s common stock on April 29, 2020. Participation Agreements In the normal course of business, the Company may enter into participation agreements (“PAs”) with related parties, primarily other affiliated funds managed by the Manager, and to a lesser extent, unrelated parties (the “Participants”). The purpose of the PAs is to allow the Company and an affiliate to originate a specified loan when, individually, the Company does not have the liquidity to do so or to achieve a certain level of portfolio diversification. The Company may transfer portions of its investments to other Participants or it may be a Participant to a loan held by another entity. ASC 860, Transfers and Servicing (“ASC 860”) , establishes accounting and reporting standards for transfers of financial assets. ASC 860-10 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The Company has determined that the participation agreements it enters into are accounted for as secured borrowings under ASC 860 (See “ Participation interests ” in Note 2 and “ Obligations under Participation Agreements ” in ( Note 7 ). Participation Interests Purchased by the Company The below table lists the loan interests participated in by the Company via PAs as of March 31, 2020 and December 31, 2019 . In accordance with the terms of each PA, each Participant’s rights and obligations, as well as the proceeds received from the related borrower/issuer of the loan, are based upon their respective pro rata participation interest in the loan. March 31, 2020 December 31, 2019 Participating Interests Principal Balance Carrying Value Participating Interests Principal Balance Carrying Value LD Milpitas Mezz, LP (1) 25.00% 3,992,734 4,037,567 25.00% 3,120,887 3,150,546 ________________ (1) On June 27, 2018, the Company entered into a participation agreement with Terra Income Fund 6, Inc. (“Terra Fund 6”) to purchase a 25 % participation interest, or $ 4.3 million, in a $ 17.0 million mezzanine loan. As of March 31, 2020 , the unfunded commitment was $ 0.3 million. Transfers of Participation Interest by the Company The following tables summarize the loans that were subject to PAs with affiliated entities as of March 31, 2020 and December 31, 2019 : Transfers Treated as Obligations Under Participation Agreements as of March 31, 2020 Principal Balance Carrying Value % Transferred Principal Balance (6) Carrying Value (6) 14th & Alice Street Owner, LLC (5) $ 19,610,084 $ 19,728,938 80.00 % $ 15,688,067 $ 15,752,112 370 Lex Part Deux, LLC (2) 49,668,256 49,734,503 35.00 % 17,383,890 17,383,890 City Gardens 333 LLC (2) 28,905,569 28,917,582 14.00 % 4,046,781 4,048,428 NB Private Capital, LLC (2) 20,000,000 20,172,593 16.67 % 3,333,333 3,362,098 Orange Grove Property Investors, LLC (2) 10,600,000 10,697,792 80.00 % 8,480,000 8,558,182 RS JZ Driggs, LLC (2) 8,200,000 8,283,124 50.00 % 4,100,000 4,140,330 Stonewall Station Mezz LLC (2) 9,851,847 9,936,287 44.00 % 4,334,813 4,371,496 TSG-Parcel 1, LLC (2) 18,000,000 18,180,000 11.11 % 2,000,000 2,020,000 Windy Hill PV Five CM, LLC (5) 11,949,208 11,581,850 69.11 % 8,257,583 8,033,869 $ 176,784,964 $ 177,232,669 $ 67,624,467 $ 67,670,405 Transfers Treated as Obligations Under Participation Agreements as of December 31, 2019 Principal Balance Carrying Value % Transferred Principal Balance (6) Carrying Value (6) 14th & Alice Street Owner, LLC (5) $ 12,932,034 $ 12,957,731 80.00 % $ 10,345,627 $ 10,387,090 2539 Morse, LLC (1)(3)(7) 7,000,000 7,067,422 40.00 % 2,800,001 2,825,519 370 Lex Part Deux, LLC (2)(4)(7) 48,349,948 48,425,659 47.00 % 22,724,476 22,724,476 Austin H. I. Owner LLC (1)(7) 3,500,000 3,531,776 30.00 % 1,050,000 1,059,532 City Gardens 333 LLC (1)(2)(3)(4)(7) 28,049,717 28,056,179 47.00 % 13,182,584 13,184,648 High Pointe Mezzanine Investments, LLC (3)(7) 3,000,000 3,263,285 37.20 % 1,116,000 1,217,160 NB Private Capital, LLC (1)(2)(3)(4)(7) 20,000,000 20,166,610 72.40 % 14,480,392 14,601,021 Orange Grove Property Investors, LLC (2) 10,600,000 10,696,587 80.00 % 8,480,000 8,557,205 RS JZ Driggs, LLC (2) 8,200,000 8,286,629 50.00 % 4,100,000 4,142,264 SparQ Mezz Borrower, LLC (1)(3)(7) 8,700,000 8,783,139 36.81 % 3,202,454 3,231,689 Stonewall Station Mezz LLC (2) 9,792,767 9,875,162 44.00 % 4,308,817 4,344,635 The Bristol at Southport, LLC (1)(3)(4)(7) 23,500,000 23,661,724 42.44 % 9,974,444 10,043,088 TSG-Parcel 1, LLC (1)(2)(7) 18,000,000 18,180,000 37.78 % 6,800,000 6,868,000 $ 201,624,466 $ 202,951,903 $ 102,564,795 $ 103,186,327 ________________ (1) Participant is Terra Secured Income Fund 5 International, an affiliated fund advised by the Manager. (2) Participant is Terra Fund 6, an affiliated fund advised by Terra Income Advisors. (3) Participant is Terra Income Fund International, an affiliated fund advised by the Manager. (4) Participant is TPT2, an affiliated fund managed by the Manager. (5) Participant is a third-party. (6) Amounts transferred may not agree to the proportionate share of the principal balance and fair value due to the rounding of percentage transferred. (7) As discussed in Note 3 , in March 2020, the Company settled an aggregate of $ 49.8 million of participation interests in loans held by the Company with TPT2 and TIF3 REIT, which TIF3 REIT received from Terra Secured Income Fund 5 International and Terra Income Fund International. In connection with the Merger and the Issuance of Common Stock to TIF3 REIT, the related participation obligations were settled. 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 management and asset servicing fees), are based upon their respective pro rata participation interest in such participated investments, as specified in the respective PA. The Participants’ share of the investments is repayable only from the proceeds received from the related borrower/issuer of the investments and, therefore, the Participants also are subject to credit risk ( i.e. , risk of default by the underlying borrower/issuer). Pursuant to the PAs with these entities, the Company receives and allocates the interest income and other related investment income to the Participants based on their respective pro rata participation interest. The Participants pay related expenses also based on their respective pro rata participation interest ( i.e. , asset management and asset servicing fees, disposition fees) directly to the Manager. Co-investment In January 2018, the Company and Terra Fund 6 co-invested in an $ 8.9 million mezzanine loan that bears interest at an annual fixed rate of 12.75 % and matured on March 31, 2019. In March 2019, the maturity of this loan was extended to July 1, 2019. In June 2019, the maturity of this loan was further extended to September 30, 2019. In August 2019, the loan was repaid in full. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt Disclosure | Note 8. Debt Repurchase Agreement On December 12, 2018, Terra Mortgage Capital I, LLC (the “Seller”), a special-purpose indirect wholly-owned subsidiary of the Company, entered into an Uncommitted Master Repurchase Agreement (the “Master Repurchase Agreement”) with Goldman Sachs Bank USA (the “Buyer”). The Master Repurchase Agreement provides for advances of up to $ 150.0 million in the aggregate, which the Company expects to use to finance certain secured performing commercial real estate loans. Advances under the Master Repurchase Agreement accrue interest at a per annum pricing rate equal to the sum of (i) the 30-day LIBOR and (ii) the applicable spread, and have a maturity date of December 12, 2020 . The actual terms of financing for each asset will be determined at the time of financing in accordance with the Master Repurchase Agreement. Subject to satisfaction of certain conditions, the Seller may extend the maturity date of the Master Repurchase Agreement for a period of one year. The Master Repurchase Agreement contains margin call provisions that provide the Buyer with certain rights in the event of a decline in the market value of the assets purchased under the Master Repurchase Agreement. Upon the occurrence of a margin deficit event, the Buyer may require the Seller to make a payment to reduce the outstanding obligation to eliminate any margin deficit. During the three months ended March 31, 2020 , the Company received a margin call on one of the borrowings and as a result, made a repayment of $3.4 million to reduce the outstanding obligation under the Master Repurchase Agreement. In connection with the Master Repurchase Agreement, the Company entered into a Guarantee Agreement in favor of the Buyer (the “Guarantee Agreement”), pursuant to which the Company will guarantee the obligations of the Seller under the Master Repurchase Agreement. Subject to certain exceptions, the maximum liability under the Master Repurchase Agreement will not exceed 50% of the then currently outstanding repurchase obligations under the Master Repurchase Agreement. Under the Master Repurchase Agreement, on the second anniversary of the closing date and on each anniversary thereafter, the Company is required to pay the Buyer the difference, if positive, between $ 4.2 million and the interest paid during the immediately preceding 12-month period. The Company currently expects the actual interest paid in calendar year 2020 on borrowings under the Master Repurchase Agreement to be less than $4.2 million. As a result, the Company accrued approximately $ 0.1 million for the three months ended March 31, 2020 to make up for the difference between the actual interest paid and the $ 4.2 million. The Master Repurchase Agreement and the Guarantee Agreement contain various representations, warranties, covenants, conditions precedent to funding, events of default and indemnities that are customary for agreements of these types. In addition, the Guarantee Agreement contains financial covenants, which require the Company to maintain: (i) liquidity of at least 10 % of the then-current outstanding amount under the Master Repurchase Agreement; (ii) cash liquidity of at least the greater of $ 5 million or 5 % of the then-current outstanding amount under the Master Repurchase Agreement; (iii) tangible net worth at an amount equal to or greater than 75 % of the Company’s tangible net worth as of December 12, 2018, plus 75% of new capital contributions thereafter; (iv) an EBITDA to interest expense ratio of not less than 1.50 to 1.00; and (v) a total indebtedness to tangible net worth ratio of not more than 3.00 to 1.00. As of March 31, 2020 and December 31, 2019 , the Company is in compliance with these covenants. In connection with entering into the Master Repurchase Agreement, the Company incurred $ 2.8 million of deferred financing costs, which are being amortized to interest expense over the term of the facility. As of March 31, 2020 and December 31, 2019 , unamortized deferred financing costs were $ 1.2 million and $ 1.5 million , respectively. The following tables present summary information with respect to the Company’s outstanding borrowing under the Master Repurchase Agreement as of March 31, 2020 and December 31, 2019 : March 31, 2020 Arrangement Weighted (1) Amount Outstanding Amount Remaining Available Weighted (2) Master Repurchase Agreement 4.0 % $ 92,546,530 $ 57,453,470 1.47 years December 31, 2019 Arrangement Weighted (1) Amount Outstanding Amount Remaining Available Weighted (2) Master Repurchase Agreement 4.3 % $ 81,134,436 $ 68,865,564 1.55 years _______________ (1) Amount is calculated using LIBOR of 0.99% and 1.76% as of March 31, 2020 and December 31, 2019 , respectively. (2) The weighted average term is determined based on the current maturity of the corresponding loan. Each transaction under the facility has its own specific term. The Company may extend the maturity date of the Master Repurchase Agreement for a period of one year, subject to satisfaction of certain conditions. The following tables present detailed information with respect to each borrowing under the Master Repurchase Agreement as of March 31, 2020 and December 31, 2019 : March 31, 2020 Collateral Borrowings Under Master Repurchase Agreement Principal Amount Carrying Value Fair Value Borrowing Date Principal Amount Interest Rate 330 Tryon DE LLC $ 22,800,000 $ 22,893,646 $ 22,862,074 2/15/2019 $ 17,100,000 LIBOR+2.25% (LIBOR floor of 2.52%) 1389 Peachtree St, LP; 1401 Peachtree St, LP; and 1409 Peachtree St, LP 41,523,796 41,631,238 41,676,800 3/7/2019 24,448,102 LIBOR+2.35% AGRE DCP Palm Springs, LLC 30,514,799 30,522,379 30,551,440 12/23/2019 19,242,528 LIBOR+2.50% (LIBOR floor of 1.8%) MSC Fields Peachtree Retreat, LLC 23,308,335 23,444,431 22,886,081 3/25/2019 17,355,900 LIBOR+2.25% (LIBOR floor of 2.00%) Patrick Henry Recovery Acquisition, LLC 18,000,000 18,038,146 17,773,917 1/6/2020 14,400,000 LIBOR + 2.00% (1.5% Floor) $ 136,146,930 $ 136,529,840 $ 135,750,312 $ 92,546,530 December 31, 2019 Collateral Borrowings Under Master Repurchase Agreement Principal Amount Carrying Value Fair Value Borrowing Date Principal Amount Interest Rate 330 Tryon DE LLC $ 22,800,000 $ 22,891,149 $ 22,906,207 2/15/2019 $ 17,100,000 LIBOR+2.25% (LIBOR floor of 2.49%) 1389 Peachtree St, LP; 1401 Peachtree St, LP; and 1409 Peachtree St, LP 38,464,429 38,510,650 38,655,000 3/7/2019 24,040,268 LIBOR+2.35% AGRE DCP Palm Springs, LLC 30,184,357 30,174,455 30,326,076 12/23/2019 22,638,268 LIBOR+2.50% (LIBOR floor of 1.8%) MSC Fields Peachtree Retreat, LLC 23,308,335 23,446,793 23,418,996 3/25/2019 17,355,900 LIBOR+2.25% (LIBOR floor of 2.00%) $ 114,757,121 $ 115,023,047 $ 115,306,279 $ 81,134,436 For the three months ended March 31, 2020 and 2019 , the Company borrowed $14.8 million and $3.4 million under the Master Repurchase Agreement, respectively, for the financing of new and follow-on investments. For the three months ended March 31, 2020 , the Company made a repayment of $3.4 million as a result of a margin call described above. For the three months ended March 31, 2019 , there was no repayment on borrowings under the Master Repurchase Agreement. Revolving Credit Facility On June 20, 2019, Terra LOC Portfolio I, LLC, a special-purpose indirect wholly-owned subsidiary of the Company, entered into a credit agreement with Israel Discount Bank of New York to provide for revolving credit loans of up to $ 35.0 million in the aggregate (“Revolving Credit Facility”), which the Company expects to use solely for short term financing needed to bridge the timing of anticipated loans repayments and funding obligations. Borrowings under the Revolving Credit Facility can be either prime rate loans or LIBOR rate loans and accrue interest at an annual rate of prime rate plus 1 % or LIBOR plus 4 % with a floor of 6 %. Each loan made under the Revolving Credit Facility shall be in a minimum aggregate principal amount of the lesser of $ 1.0 million or the then unused amount under the facility and cannot be more than $ 25.0 million in the aggregate with respect to each asset purchased with the proceeds from the Revolving Credit Facility. The Revolving Credit Facility matures on June 20, 2020. In connection with obtaining the Revolving Credit Facility, the Company incurred deferred financing costs of $ 0.3 million, which are being amortized to interest expense over the term of the facility. As of March 31, 2020 , the amount outstanding under the Revolving Credit Facility was $ 35.0 million. The Revolving Credit Facility requires the Company to maintain: (i) an EBITDA to interest expense ratio of not less than 1.00 ; (ii) cash liquidity of at least $ 7.0 million; (iii) tangible net worth of at least $ 200.0 million; and (iii) a total indebtedness to tangible net worth ratio of not more than 1.75 to 1.00. Additionally, the Revolving Credit Facility requires Terra LOC Portfolio I, LLC to maintain a tangible net worth of at least $ 100.0 million. As of March 31, 2020 and December 31, 2019 , both the Company and Terra LOC Portfolio I, LLC are in compliance with these covenants. For the three months ended March 31, 2020 , the Company borrowed $35.0 million under the Revolving Credit Facility. Mortgage Loan Payable As of March 31, 2020 , the Company had a $ 44.5 million mortgage loan payable collateralized by a multi-tenant office building that the Company acquired through foreclosure. The following table presents certain information about the mortgage loan payable as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Lender Current Interest Rate Maturity Date (1) Principal Amount Carrying Value Carrying Value of Collateral Carrying Value Carrying Value of Centennial Bank LIBOR + 3.85% September 27, 2020 $ 44,481,855 $ 44,687,123 $ 51,974,077 $ 44,753,633 $ 52,776,236 _______________ (1) The Company has an option to extend the maturity of the mortgage loan payable by two years subject to certain conditions provided in the credit and security agreement. Scheduled Debt Principal Payments Scheduled debt principal payments for each of the five calendar years following March 31, 2020 are as follows: Years Ending December 31, Total 2020 (April 1 through December 31) $ 172,028,385 2021 — 2022 — 2023 — 2024 — 172,028,385 Unamortized deferred financing costs (1,058,106 ) Total $ 170,970,279 At March 31, 2020 and December 31, 2019 , the unamortized deferred financing costs were $1.1 million and $ 1.4 million , respectively. 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 participation interests meet certain criteria in order for the interest transaction to be recorded as a sale. Loan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. As of March 31, 2020 and December 31, 2019 , obligations under participation agreements had a carrying value of approximately $67.7 million and $ 103.2 million, respectively, and the carrying value of the loans that are associated with these obligations under participation agreements was approximately $177.2 million and $ 203.0 million, respectively, (see “ Participation Agreements ” in Note 7 ). The weighted-average interest rate on the obligations under participation agreements was approximately 10.8% and 11.8 % as of March 31, 2020 and December 31, 2019 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure | Note 9. Commitments and Contingencies Impact of COVID-19 As further discussed in Note 2 , the full extent of the impact of COVID-19 on the global economy generally, and the Company’s business in particular, is uncertain. As of March 31, 2020 , no contingencies have been recorded on the Company’s consolidated balance sheet as a result of COVID-19, however as the global pandemic continues and the economic implications worsen, it may have long-term impacts on the Company’s financial condition, results of operations, and cash flows. Refer to Note 2 for further discussion of COVID-19. 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 $107.0 million and $ 116.7 million as of March 31, 2020 and December 31, 2019 , respectively. The Company expects to maintain sufficient cash on hand to fund such unfunded commitments, primarily through matching these commitments with principal repayments on outstanding loans and proceeds from the Revolving Credit Facility. 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. The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under contracts with its portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material adverse effect upon its financial condition or results of operations. See Note 7 for a discussion of the Company’s commitments to the Manager. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | Note 10. Equity 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 Company’s board of directors may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any series from time to time, into one or more classes or series of stock. As of March 31, 2020 and December 31, 2019 , there were no Preferred Stock issued or outstanding. Series A Preferred Stock On November 30, 2016, the Company’s board of directors classified and designated 125 shares of preferred stock as a separate class of preferred stock to be known as the 12.5 % Series A Redeemable Cumulative Preferred Stock, $ 1,000 liquidation value per share (“Series A Preferred Stock”). In December 2016, the Company sold 125 shares of the Series A Preferred Stock for $ 125,000 . The Series A Preferred Stock pays dividends at an annual rate of 12.5 % of the liquidation preference. These dividends are cumulative and payable semi-annually in arrears on June 30 and December 31 of each year . The Series A Preferred Stock, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Company, rank senior to common stock. The Company, at its option, may redeem the shares, with written notice, at a redemption price of $ 1,000 per share, plus any accrued unpaid distribution through the date of the redemption. The Series A Preferred Stock carries a redemption premium of $ 50 per share if redeemed prior to January 1, 2019. The Series A Preferred Stock generally has no voting rights. However, the Series A Preferred Stock holders’ voting is required if (i) authorization or issuance of any securities senior to the Series A Preferred Stock; (ii) an amendment to the Company’s charter that has a material adverse effect on the rights and preference of the Series A Preferred Stock; and (iii) any reclassification of the Series A Preferred Stock. Common Stock As discussed in Note 3 , on March 1, 2020, TPT2 merged with and into the Company with the Company continuing as the surviving corporation. In connection with the Merger, the Company issued 2,116,785.76 shares of common stock of the Company to Terra Fund 7, the sole stockholder of TPT2, as consideration in the Merger. In addition, on March 2, 2020, the Company issued 2,457,684.5 9 shares of common stock of the Company in exchange for the settlement of certain participation interests in loans held by the Company and cash. As described in Note 3 , Terra Fund 7 contributed the shares of the Company’s common stock received as consideration in the Merger to Terra JV and became a co-managing member of Terra JV pursuant to the JV Agreement. The JV Agreement and related stockholders agreement between Terra JV and the Company, dated March 2, 2020, provide for the joint approval of Terra Fund 5 and Terra Fund 7 with respect to certain major decisions that are taken by Terra JV and the Company. As of March 31, 2020 , Terra JV owns 86.4 % of the issued and outstanding shares of the Company’s common stock with the remainder held by TIF3 REIT, and Terra Fund 5 and Terra Fund 7 own an 87.6 % and 12.4 % interest, respectively, in Terra JV. On September 30, 2019, the Company issued 212,691 shares of its common stock to TIF3 REIT at a price of $ 17.02 per share for total proceeds of $ 3.6 million. On April 29, 2020, the Company repurchased the 212,691 shares it previously sold to TIF3 REIT ( Note 7 ). 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 Company’s board of directors and will depend upon its taxable income, financial condition, maintenance of REIT status, applicable law, and other factors as its board of directors deems relevant. For the three months ended March 31, 2020 , the Company made distributions to Terra Fund 5, Terra JV and TIF3 REIT in the aggregate of $8.8 million , of which $8.3 million were returns of capital. For the three months ended March 31, 2019 , the Company made distributions to Terra Fund 5 totaling $7.6 million , of which $3.6 million were returns of capital. Additionally, for both the three months ended March 31, 2020 and 2019 , the Company made distributions to preferred stockholders of $3,906 . |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11. Subsequent Events Management has evaluated subsequent events through the date the consolidated financial statements were available to be issued. Management has determined that there are no material events that would require adjustment to, or disclosure in, the Company’s consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Consolidation | Basis of Presentation and Principles of Consolidation The interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include all of the Company’s accounts and those of its consolidated subsidiaries. The accompanying interim financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. All intercompany balances and transactions have been eliminated. |
Credit Loss, Financial Instrument [Policy Text Block] | Loans Held for Investment The Company originates, acquires, and structures real estate-related loans generally to be held to maturity. Loans held for investment are carried at the principal amount outstanding, adjusted for the accretion of discounts on investments and exit fees, and the amortization of premiums on investments and origination fees. The Company’s preferred equity investments, which are economically similar to mezzanine loans and subordinate to any loans but senior to common equity, are accounted for as loans held for investment. Loans are carried at cost less allowance for loan losses. |
Allowance for Loan Losses Policy | Allowance for Loan Losses The Company’s loans are typically collateralized by either the sponsors’ equity interest in the real estate properties or the underlying real estate properties. As a result, the Company regularly evaluates the extent and impact of any credit migration associated with the performance and/or value of the underlying collateral property as well as the financial and operating capability of the borrower/sponsor on a loan-by-loan basis. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash from operations and/or reserve balances are sufficient to cover the debt service requirements currently and into the future; (ii) the ability of the borrower to refinance the loan; and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of the sponsor as well as its competency in managing and operating the real estate property. In addition, the Company considers the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates. Such analyses are completed and reviewed by asset management and finance personnel, who utilize various data sources, including (i) periodic financial data such as debt service coverage ratio, property occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, the capitalization and discount rates; (ii) site inspections; and (iii) current credit spreads and discussions with market participants. The Manager performs a quarterly evaluation for possible impairment of the Company’s portfolio of loans. A loan is impaired if it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of the loan. Impairment is measured based on the present value of expected future cash flows or the fair value of the collateral, if the loan is collateral dependent. Upon measurement of impairment, the Company records an allowance to reduce the carrying value of the loan with a corresponding charge to net income. In conjunction with the quarterly evaluation of loans not considered impaired, the Manager assesses the risk factors of each loan and assigns each loan a risk rating between 1 and 5, which is an average of the numerical ratings in the following categories: (i) sponsor capability and financial condition; (ii) loan and collateral performance relative to underwriting; (iii) quality and stability of collateral cash flows and/or reserve balances; and (iv) loan to value. Based on a 5-point scale, the Company’s loans are rated “1” through “5”, from less risk to greater risk, as follows: Risk Rating Description 1 Very low risk 2 Low risk 3 Moderate/average risk 4 Higher risk 5 Highest risk The Company records an allowance for loan losses equal to (i) 1.5% of the aggregate carrying amount of loans rated as a “4”, plus (ii) 5% of the aggregate carrying amount of loans rated as a “5”, plus (iii) impaired loan reserves, if any. There may be circumstances where the Company modifies a loan by granting the borrower a concession that it might not otherwise consider when a borrower is experiencing financial difficulty or is expected to experience financial difficulty in the foreseeable future. Such concessionary modifications are classified as troubled debt restructurings (“TDR”s) unless the modification solely results in a delay in a payment that is insignificant. Loans classified as TDRs are considered impaired loans for reporting and measurement purposes. |
Marketable Securities, Policy [Policy Text Block] | Marketable Securities The Company from time to time invests in short term debt and equity securities. These securities are classified as available-for-sale and are carried at fair value. Unrealized gains or losses on available-for-sale securities are reported in other comprehensive income or loss until they are realized. |
Real Estate Owned [Policy Text Block] | Real Estate Owned, Net Real estate acquired is recorded at its estimated fair value at acquisition and is shown net of accumulated depreciation and impairment charges. Acquisition of properties generally are accounted for as asset acquisitions. Under asset acquisition accounting, the costs to acquire real estate, including transaction costs, are accumulated and then allocated to individual assets and liabilities acquired based upon their relative fair value. The Company allocates the purchase price of its real estate acquisitions to land, building, tenant improvements, acquired in-place leases, intangibles for the value of any above or below market leases at fair value and to any other identified intangible assets or liabilities. The Company amortizes the value allocated to in-place leases over the remaining lease term, which is reported in depreciation and amortization expense on its consolidated statements of operations. The value allocated to above or below market leases are amortized over the remaining lease term as an adjustment to rental income. Real estate assets are depreciated using the straight-line method over their estimated useful lives: buildings and improvements - not to exceed 40 years, and tenant improvements - shorter of the lease term or life of the asset. Ordinary repairs and maintenance which are not reimbursed by the tenants are expensed as incurred. Major replacements and betterments which improve or extend the life of the asset are capitalized and depreciated over their estimated useful life. Management reviews the Company’s real estate for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The review of recoverability is based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate assets. If impaired, the real estate asset will be written down to its estimated fair value. |
Lessee, Leases [Policy Text Block] | Leases The Company determines if an arrangement is a lease at inception. Operating leases in which the Company is the lessee are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s lease typically does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made in advance and excludes lease incentives if there were any. The Company’s lease term may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. |
Revenue Recognition Leases, Operating [Policy Text Block] | Revenue Recognition Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Interest Income: Interest income is accrued based upon the outstanding principal amount and contractual terms of the loans and preferred equity investments that the Company expects to collect and it is accrued and recorded on a daily basis. Discounts and premiums on investments purchased are accreted or amortized over the expected life of the respective loan using the effective yield method, and are included in interest income in the consolidated statements of operations. Loan origination fees and exit fees, net of portions attributable to obligations under participation agreements, are capitalized and amortized or accreted to interest income over the life of the investment using the effective interest method. Income accrual is generally suspended for loans at the earlier of the date at which payments become 90 days past due or when, in the opinion of the Manager, recovery of income and principal becomes doubtful. Outstanding interest receivable is assessed for recoverability. Interest is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. The Company holds loans in its portfolio that contain paid-in-kind (“PIK”) interest provisions. The PIK interest, which represents contractually deferred interest that is added to the principal balance that is due at maturity, is recorded on the accrual basis. Real Estate Operating Revenues: Real estate operating revenue is derived from leasing of space to various types of tenants. The leases are for fixed terms of varying length and generally provide for annual rent increases and expense reimbursements to be paid in monthly installments. Lease revenue, or rental income from leases, is recognized on a straight-line basis over the term of the respective leases. Additionally, the Company recorded above- and below-market lease intangibles, which are included in real estate owned, net, in connection with the acquisition of the real estate properties. These intangible assets and liabilities are amortized to lease revenue over the remaining contractual lease term. Other Revenues: Prepayment fee income is recognized as prepayments occur. All other income is recognized when earned. |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents | Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments, with original maturities of ninety days or less when purchased, as cash equivalents. Cash and cash equivalents are exposed to concentrations of credit risk. The Company maintains all of its cash at financial institutions which, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation. Restricted cash represents cash held as additional collateral by the Company on behalf of the borrowers related to the investments in loans or preferred equity instruments for the purpose of such borrowers making interest and property-related operating payments. Restricted cash is not available for general corporate purposes. The related liability is recorded in “ Interest reserve and other deposits held on investments ” on the consolidated balance sheets. Cash held in escrow by lender represents amounts funded to an escrow account for debt services and tenant improvements. The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its consolidated statements of cash flows: March 31, 2020 March 31, 2019 Cash and cash equivalents $ 82,163,055 $ 20,738,351 Restricted cash 16,255,423 15,120,570 Cash held in escrow by lender 2,062,941 2,223,456 Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 100,481,419 $ 38,082,377 |
Participation Interests | Participation Interests Loan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. For the investments for which participation has been granted, the interest earned on the entire loan balance is recorded within “ Interest income ” and the interest related to the participation interest is recorded within “ Interest expense from obligations under participation agreements ” in the consolidated statements of operations. Interest expense from obligations under participation agreement is reversed when recovery of interest income on the related loan becomes doubtful. See “ Obligations under Participation Agreements ” in Note 8 for additional information. |
Repurchase Agreements | Repurchase Agreement The Company finances certain of its senior loans through repurchase transactions under a master repurchase agreement. The Company accounts for the repurchase transactions as secured borrowing transactions, which are carried at their contractual amounts (cost), net of unamortized deferred financing fees. |
Fair Value Measurement, Policy [Policy Text Block] | Fair Value Measurements U.S. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs. The Company has not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, obligations under participation agreements, mortgage loan payable, repurchase agreement payable and revolving credit facility payable. Such financial instruments are carried at cost, less impairment. Marketable securities are financial instruments that are reported at fair value. The Company adopted the provisions of ASC 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 established a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the state of the marketplace (including the existence and transparency of transactions between market participants). Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments measured and reported at fair value are classified and disclosed into one of the following categories based on the inputs as follows: Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access. Level 2 — Pricing inputs are other than quoted prices in active markets, including, but not limited to, quoted prices for similar assets and liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. 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 are determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. As of March 31, 2020 and December 31, 2019 , the Company has not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, obligations under participation agreements, mortgage loan payable, repurchase agreement payable and revolving credit facility payable. Such financial instruments are carried at cost, less impairment. Marketable securities are financial instruments that are reported at fair value. |
Financing Receivable, Fee and Interest Income [Policy Text Block] | Deferred Financing Costs Deferred financing costs represent fees and expenses incurred in connection with obtaining financing for investments. These costs are presented in the consolidated balance sheets as a direct deduction of the debt liability to which the costs pertain. These costs are amortized using the effective interest method and are included in interest expense on mortgage loan payable in the consolidated statements of operations over the life of the borrowings. |
Income Tax, Policy [Policy Text Block] | Income Taxes The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable year ended December 31, 2016. In order to qualify as a REIT, the Company is required, among other things, to distribute at least 90% of its REIT net taxable income to the stockholders and meet certain tests regarding the nature of its income and assets. As a REIT, the Company is not subject to federal income taxes on income and gains distributed to the stockholders as long as certain requirements are satisfied, principally relating to the nature of income and the level of distributions, as well as other factors. If the Company fails to continue to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, the Company will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax for taxable years before 2018) beginning with the year in which it fails to qualify and may be precluded from being able to elect to be treated as a REIT for the Company’s four subsequent taxable years. Any gains from the sale of foreclosed properties within two years are subject to U.S. federal and state income taxes at regular corporate rates. As of March 31, 2020 , the Company has satisfied all the requirements for a REIT and accordingly, no provision for federal income taxes has been included in the consolidated financial statements for the three months ended March 31, 2020 and 2019 . The Company did not have any uncertain tax positions that met the recognition or measurement criteria of Accounting Standards Codification (“ASC”) 740-10-25, Income Taxes , nor did the Company have any unrecognized tax benefits as of the periods presented herein. The Company recognizes interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in its consolidated statements of operations. For the three months ended March 31, 2020 and 2019 , the Company did not incur any interest or penalties. Although the Company files federal and state tax returns, its major tax jurisdiction is federal. The Company’s inception-to-date federal tax returns remain subject to examination by the Internal Revenue Service. |
Earnings Per Share, Policy [Policy Text Block] | Earnings Per Share The Company has a simple equity capital structure with only common stock and preferred stock outstanding. As a result, earnings per share, as presented, represent both basic and dilutive per-share amounts for the periods presented in the consolidated financial statements. Income per basic share of common stock is calculated by dividing net income allocable to common stock by the weighted-average number of shares of common stock issued and outstanding during such period. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. During the first quarter of 2020, there was a global outbreak of a novel coronavirus (“COVID-19”), which has spread to over 200 countries and territories, including the United States, and has spread to every state in the United States. The World Health Organization has designated COVID-19 as a pandemic, and numerous countries, including the United States, have declared national emergencies with respect to COVID-19. The global impact of the outbreak has been rapidly evolving, and as cases of COVID-19 have continued to be identified in additional countries, many countries have reacted by instituting quarantines and restrictions on travel, closing financial markets and/or restricting trading and operations of non-essential offices and retail centers. Such actions are creating disruption in global supply chains, and adversely impacting many industries. The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable and supportable based on the information available as of March 31, 2020 , however uncertainty over the ultimate impact COVID-19 will have on the global economy generally, and the Company’s business in particular, makes any estimates and assumptions as of March 31, 2020 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may ultimately differ from those estimates. |
Segment Reporting, Policy [Policy Text Block] | Segment Information The Company’s primary business is originating, acquiring and structuring real estate-related loans related to high quality commercial real estate. From time to time, the Company may acquire real estate encumbering the senior loans through foreclosure. However, management treats the operations of the real estate acquired through foreclosure as the continuation of the original senior loans. The Company operates in a single segment focused on mezzanine loans, other loans and preferred equity investments, and to a lesser extent, owning and managing real estate. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. In April 2019, the FASB issued additional amendments to clarify the scope of ASU 2016-13 and address issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments, among other things. In May 2019, the FASB issued ASU 2019-05 — Targeted Transition Relief, which provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. In October 2019, the FASB decided that for smaller reporting companies, ASU 2016-13 and related amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company meets the definition of a smaller reporting company under the regulation of the Securities and Exchange Commission. As such, the Company will adopt this ASU and related amendments on January 1, 2023. Management is currently evaluating the impact this change will have on the Company’s consolidated financial statements and disclosures. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of information required by U.S. GAAP. The amendments in ASU 2018-13 added, removed and modified certain fair value measurement disclosure requirements. ASU 2018-13 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted ASU 2018-13 on January 1, 2020. The adoption of ASU 2018-13 did not have a material impact on its consolidated financial statements and disclosures. London Interbank Offered Rate (“LIBOR”) is a benchmark interest rate referenced in a variety of agreements that are used by all types of entities. At the end of 2021, banks will no longer be required to report information that is used to determine LIBOR. As a result, LIBOR could be discontinued. Other interest rates used globally could also be discontinued for similar reasons. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. The provisions of optional relief include: (i) contract modifications - account for the modification as a continuation of the existing contract without additional analysis; (ii) hedging accounting - continue hedge accounting when certain critical terms of a hedging relationship change; and (iii) held-to-maturity (HTM) debt securities - one-time sale and/or transfer to available for sale or trading may be made for HTM debt securities that both reference an eligible reference rate and were classified as HTM before January 1, 2020. Companies can apply the amendments in ASU 2020-04 immediately. However, ASU 2020-04 will only be available for a limited time (generally through December 31, 2022). The Company is currently evaluating the impact of the reference rate reform and ASU 2020-04 on its consolidated financial statements and disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Cash, Cash Equivalents and Investments [Table Text Block] | The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its consolidated statements of cash flows: March 31, 2020 March 31, 2019 Cash and cash equivalents $ 82,163,055 $ 20,738,351 Restricted cash 16,255,423 15,120,570 Cash held in escrow by lender 2,062,941 2,223,456 Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 100,481,419 $ 38,082,377 |
Merger and Asset Contribution (
Merger and Asset Contribution (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The following table presents a summary of the consideration exchanged and settlement of the Company’s obligations under participation agreements as a result of the Issuance of Common Stock to TIF3 REIT: Total Consideration Equity issued to TIF3 REIT $ 40,749,378 $ 40,749,378 Net Assets of TIF3 REIT Received Investments through participation interest, at fair value $ 32,112,257 Cash and cash equivalents 8,600,000 Interest receivable 270,947 Due to Manager (233,826 ) Total identifiable net assets $ 40,749,378 Total Consideration Equity issued in the Merger $ 34,630,615 $ 34,630,615 Net Assets of TPT2 Received in the Merger Loans held for investment acquired through participation $ 17,688,741 Cash and cash equivalents 16,897,074 Interest receivable 134,543 Other assets 18,384 Accounts payable and accrued expenses (57,433 ) Due to Manager (50,694 ) Total identifiable net assets $ 34,630,615 |
Loans Held for Investment (Tabl
Loans Held for Investment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Summary Investment Holdings | The following table provides a summary of the Company’s loan portfolio as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Fixed Rate Floating (1)(2)(3) Total Fixed Rate Floating (1)(2)(3) Total Number of loans 8 14 22 8 15 23 Principal balance $ 81,751,847 $ 320,935,591 $ 402,687,438 $ 70,692,767 $ 306,695,550 $ 377,388,317 Carrying value $ 82,483,887 $ 320,485,626 $ 402,969,513 $ 71,469,137 $ 307,143,631 $ 378,612,768 Fair value $ 82,249,333 $ 317,360,045 $ 399,609,378 $ 71,516,432 $ 307,643,983 $ 379,160,415 Weighted-average coupon rate 12.76 % 8.50 % 9.36 % 11.93 % 9.13 % 9.65 % Weighted-average remaining term (years) 1.76 2.05 1.99 2.28 2.09 2.13 _______________ (1) These loans pay a coupon rate of LIBOR plus a fixed spread. Coupon rate shown was determined using LIBOR of 0.99% and 1.76 % as of March 31, 2020 and December 31, 2019 , respectively. (2) As of March 31, 2020 and December 31, 2019 , amounts included $136.1 million and $ 114.8 million, respectively, of senior mortgages used as collateral for $92.5 million and $ 81.1 million, respectively, of borrowings under a repurchase agreement ( Note 8 ). These borrowings bear interest at an annual rate of LIBOR plus a spread ranging from 2.00 % to 2.50 % as of March 31, 2020 and LIBOR plus a spread ranging from 2.25 % to 2.50 % as of December 31, 2019 . (3) As of both March 31, 2020 and December 31, 2019 , twelve of these loans are subject to a LIBOR floor. |
Investment Holdings, Schedule of Investments | The tables below detail the types of loans in the Company’s loan portfolio, as well as the property type and geographic location of the properties securing these loans as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Loan Structure Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total First mortgages $ 208,956,222 $ 209,289,995 51.9 % $ 178,130,623 $ 178,203,675 47.1 % Preferred equity investments 157,686,635 158,285,097 39.3 % 157,144,040 157,737,763 41.6 % Mezzanine loans 36,044,581 36,539,415 9.1 % 42,113,654 42,671,330 11.3 % Allowance for loan losses — (1,144,994 ) (0.3 )% — — — % Total $ 402,687,438 $ 402,969,513 100.0 % $ 377,388,317 $ 378,612,768 100.0 % March 31, 2020 December 31, 2019 Property Type Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total Office $ 143,941,260 $ 143,879,383 35.7 % $ 142,055,845 $ 141,870,355 37.5 % Multifamily 83,318,419 83,907,425 20.8 % 76,640,369 77,136,016 20.4 % Student housing 75,155,569 75,608,070 18.8 % 58,049,717 58,553,496 15.5 % Hotel 47,859,380 48,029,027 11.9 % 46,598,011 46,731,939 12.3 % Infill land 34,812,810 34,992,810 8.7 % 36,444,375 36,624,375 9.7 % Condominium 10,600,000 10,697,792 2.7 % 10,600,000 10,696,587 2.8 % Industrial 7,000,000 7,000,000 1.7 % 7,000,000 7,000,000 1.8 % Allowance for loan losses — (1,144,994 ) (0.3 )% — — — % Total $ 402,687,438 $ 402,969,513 100.0 % $ 377,388,317 $ 378,612,768 100.0 % March 31, 2020 December 31, 2019 Geographic Location Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total United States California $ 178,222,394 $ 178,498,419 44.3 % $ 150,988,463 $ 151,108,109 39.9 % New York 74,681,066 74,830,437 18.6 % 79,734,323 79,896,663 21.1 % Georgia 64,832,131 65,075,669 16.1 % 61,772,764 61,957,443 16.4 % North Carolina 32,651,847 32,829,933 8.1 % 32,592,767 32,766,311 8.7 % Washington 23,500,000 23,666,693 5.9 % 23,500,000 23,661,724 6.2 % Illinois 4,004,877 4,039,438 1.0 % 8,004,877 8,071,562 2.1 % Massachusetts 7,000,000 7,000,000 1.7 % 7,000,000 7,000,000 1.8 % Kansas 6,200,000 6,253,504 1.6 % 6,200,000 6,251,649 1.7 % Texas 3,500,000 3,532,794 0.9 % 3,500,000 3,531,776 0.9 % Other (1) 8,095,123 8,387,620 2.1 % 4,095,123 4,367,531 1.2 % Allowance for loan losses — (1,144,994 ) (0.3 )% — — — % Total $ 402,687,438 $ 402,969,513 100.0 % $ 377,388,317 $ 378,612,768 100.0 % _______________ (1) Other includes $5.1 million and $ 1.1 million of unused portion of a credit facility at March 31, 2020 and December 31, 2019 , respectively. Other also includes a $3.0 million loan with collateral located in South Carolina at both March 31, 2020 and December 31, 2019 . |
Schedule of Accounts, Notes, Loans and Financing Receivable | The tables below detail the types of loans in the Company’s loan portfolio, as well as the property type and geographic location of the properties securing these loans as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Loan Structure Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total First mortgages $ 208,956,222 $ 209,289,995 51.9 % $ 178,130,623 $ 178,203,675 47.1 % Preferred equity investments 157,686,635 158,285,097 39.3 % 157,144,040 157,737,763 41.6 % Mezzanine loans 36,044,581 36,539,415 9.1 % 42,113,654 42,671,330 11.3 % Allowance for loan losses — (1,144,994 ) (0.3 )% — — — % Total $ 402,687,438 $ 402,969,513 100.0 % $ 377,388,317 $ 378,612,768 100.0 % March 31, 2020 December 31, 2019 Property Type Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total Office $ 143,941,260 $ 143,879,383 35.7 % $ 142,055,845 $ 141,870,355 37.5 % Multifamily 83,318,419 83,907,425 20.8 % 76,640,369 77,136,016 20.4 % Student housing 75,155,569 75,608,070 18.8 % 58,049,717 58,553,496 15.5 % Hotel 47,859,380 48,029,027 11.9 % 46,598,011 46,731,939 12.3 % Infill land 34,812,810 34,992,810 8.7 % 36,444,375 36,624,375 9.7 % Condominium 10,600,000 10,697,792 2.7 % 10,600,000 10,696,587 2.8 % Industrial 7,000,000 7,000,000 1.7 % 7,000,000 7,000,000 1.8 % Allowance for loan losses — (1,144,994 ) (0.3 )% — — — % Total $ 402,687,438 $ 402,969,513 100.0 % $ 377,388,317 $ 378,612,768 100.0 % March 31, 2020 December 31, 2019 Geographic Location Principal Balance Carrying Value % of Total Principal Balance Carrying Value % of Total United States California $ 178,222,394 $ 178,498,419 44.3 % $ 150,988,463 $ 151,108,109 39.9 % New York 74,681,066 74,830,437 18.6 % 79,734,323 79,896,663 21.1 % Georgia 64,832,131 65,075,669 16.1 % 61,772,764 61,957,443 16.4 % North Carolina 32,651,847 32,829,933 8.1 % 32,592,767 32,766,311 8.7 % Washington 23,500,000 23,666,693 5.9 % 23,500,000 23,661,724 6.2 % Illinois 4,004,877 4,039,438 1.0 % 8,004,877 8,071,562 2.1 % Massachusetts 7,000,000 7,000,000 1.7 % 7,000,000 7,000,000 1.8 % Kansas 6,200,000 6,253,504 1.6 % 6,200,000 6,251,649 1.7 % Texas 3,500,000 3,532,794 0.9 % 3,500,000 3,531,776 0.9 % Other (1) 8,095,123 8,387,620 2.1 % 4,095,123 4,367,531 1.2 % Allowance for loan losses — (1,144,994 ) (0.3 )% — — — % Total $ 402,687,438 $ 402,969,513 100.0 % $ 377,388,317 $ 378,612,768 100.0 % _______________ (1) Other includes $5.1 million and $ 1.1 million of unused portion of a credit facility at March 31, 2020 and December 31, 2019 , respectively. Other also includes a $3.0 million loan with collateral located in South Carolina at both March 31, 2020 and December 31, 2019 . The following table allocates the principal balance and the carrying value of the Company’s loans based on the loan risk rating as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Loan Risk Rating Number of Loans Principal Balance Carrying Value % of Total Number of Loans Principal Balance Carrying Value % of Total 1 0 $ — $ — — % 0 $ — $ — — % 2 2 25,000,000 25,180,000 6.2 % 5 50,000,000 50,284,751 13.3 % 3 15 294,854,525 295,669,585 73.2 % 17 322,648,317 323,588,017 85.4 % 4 (1) 3 76,332,913 76,483,600 18.9 % 0 — — — % 5 0 — — — % 0 — — — % Other (2) 2 6,500,000 6,781,322 1.7 % 1 4,740,000 4,740,000 1.3 % 22 $ 402,687,438 404,114,507 100.0 % 23 $ 377,388,317 378,612,768 100.0 % Allowance for loan losses (1,144,994 ) — Total, net of allowance for loan losses $ 402,969,513 $ 378,612,768 _______________ (1) The increase in number of loans with a loan risk rating of “4” was due to the higher risk in loans collateralized by hospitality and select other asset classes that are particularly negatively impacted by the COVID-19 pandemic. (2) These loans were deemed impaired and removed from the pool of loans on which a general allowance is calculated. As of March 31, 2020 and December 31, 2019 , no specific reserve for loan losses was recorded on these loans because the fair value of the collateral was greater than carrying value for each loan. The Company entered into forbearance agreement with the borrower for the two loans categorized as “other” above as of March 31, 2020 . The Company expects to recover in full the principal balance of these two loans. In March 2020, the loan categorized |
Financing Receivable, Allowance for Credit Loss | The following table presents the activity in the Company’s allowance for loan losses for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, 2020 2019 Allowance for loan losses, beginning of period $ — $ — Provision for loan losses 1,144,994 — Charge-offs — — Recoveries — — Allowance for loan losses, end of period $ 1,144,994 $ — |
Real Estate Owned, Net (Tables)
Real Estate Owned, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Schedule of Real Estate Properties [Table Text Block] | The following table presents the components of real estate owned, net: March 31, 2020 December 31, 2019 Cost Accumulated Depreciation/Amortization Net Cost Accumulated Depreciation/Amortization Net Real estate: Land $ 13,395,430 $ — $ 13,395,430 $ 13,395,430 $ — $ 13,395,430 Building and building improvements 51,725,969 (2,155,271 ) 49,570,698 51,725,969 (1,831,980 ) 49,893,989 Tenant improvements 1,854,640 (462,131 ) 1,392,509 1,854,640 (392,812 ) 1,461,828 Total real estate 66,976,039 (2,617,402 ) 64,358,637 66,976,039 (2,224,792 ) 64,751,247 Lease intangible assets: In-place lease 15,852,232 (3,692,559 ) 12,159,673 15,852,232 (3,138,675 ) 12,713,557 Above-market rent 156,542 (29,260 ) 127,282 156,542 (24,871 ) 131,671 Total intangible assets 16,008,774 (3,721,819 ) 12,286,955 16,008,774 (3,163,546 ) 12,845,228 Lease intangible liabilities: Below-market rent (3,371,314 ) 774,252 (2,597,062 ) (3,371,314 ) 658,115 (2,713,199 ) Above-market ground lease (8,896,270 ) 217,247 (8,679,023 ) (8,896,270 ) 184,660 (8,711,610 ) Total intangible liabilities (12,267,584 ) 991,499 (11,276,085 ) (12,267,584 ) 842,775 (11,424,809 ) Total real estate $ 70,717,229 $ (5,347,722 ) $ 65,369,507 $ 70,717,229 $ (4,545,563 ) $ 66,171,666 The following table presents the components of real estate operating revenues and expenses that are included in the consolidated statements of operations: Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Real estate operating revenues: Lease revenue $ 1,922,128 $ 1,922,538 Other operating income 390,923 398,700 Total $ 2,313,051 $ 2,321,238 Real estate operating expenses: Utilities $ 39,022 $ 33,762 Real estate taxes 232,875 80,360 Repairs and maintenances 237,132 209,843 Management fees 56,701 61,349 Lease expense, including amortization of above-market ground lease 283,538 283,538 Other operating expenses 95,250 87,003 Total $ 944,518 $ 755,855 |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | Scheduled future minimum rents, exclusive of renewals and expenses paid by tenants, under non-cancelable operating leases at March 31, 2020 are as follows: Years Ending December 31, Total 2020 (April 1 through December 31) $ 5,060,780 2021 7,025,413 2022 7,547,261 2023 7,787,842 2024 8,026,942 Thereafter 5,836,010 Total $ 41,284,248 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Based on the intangible assets and liabilities recorded at March 31, 2020 , scheduled annual net amortization of intangibles for each of the next five calendar years and thereafter is as follows: Years Ending December 31, Net Decrease in Real Estate Operating Revenue (1) Increase in Depreciation and Amortization (1) Decrease in Rent Expense (1) Total 2020 (April 1 through December 31) $ (335,247 ) $ 1,661,652 $ (97,761 ) $ 1,228,644 2021 (446,995 ) 2,215,536 (130,348 ) 1,638,193 2022 (446,995 ) 2,215,536 (130,348 ) 1,638,193 2023 (446,995 ) 2,215,536 (130,348 ) 1,638,193 2024 (446,995 ) 2,215,536 (130,348 ) 1,638,193 Thereafter (346,553 ) 1,635,877 (8,059,870 ) (6,770,546 ) Total $ (2,469,780 ) $ 12,159,673 $ (8,679,023 ) $ 1,010,870 _______________ (1) Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to lease revenues; amortization of in-place lease intangibles is included in depreciation and amortization; and amortization of above-market ground lease is recorded as a reduction to rent expense. |
Ground Lease Disclosure [Table Text Block] | Supplemental non-cash information related to the ground lease was as follows: Three Months Ended March 31, 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 316,125 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 316,125 The component of lease expense for the ground lease was as follows: Three Months Ended March 31, 2020 Operating lease cost $ 316,125 Supplemental balance sheet information related to the ground lease was as follows: March 31, 2020 Operating lease Operating lease right-of-use assets $ 16,111,217 Operating lease liabilities $ 16,111,217 Weighted average remaining lease term — operating lease (years) 66.6 Weighted average discount rate — operating lease 7.9 % |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | Maturities of operating lease liabilities are as follows: Years Ending December 31, Operating Lease 2020 (April 1 through December 31) (Year of rent reset) $ 948,375 2021 1,264,500 2022 1,264,500 2023 1,264,500 2024 1,264,500 Thereafter 78,135,563 Total lease payments 84,141,938 Less: Imputed interest (68,030,721 ) Total $ 16,111,217 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Of Marketable Securities [Table Text Block] | The following tables present fair value measurements of marketable securities, by major class, as of March 31, 2020 , according to the fair value hierarchy: March 31, 2020 Fair Value Measurements Level 1 Level 2 Level 3 Total Marketable Securities: Preferred stock $ 1,028,189 $ — $ — $ 1,028,189 Bonds — 2,462,205 — 2,462,205 Total $ 1,028,189 $ 2,462,205 $ — $ 3,490,394 |
Marketable Securities | The following table presents the activities of the marketable securities for the periods presented. Three Months Ended March 31, 2020 2019 Beginning balance $ — $ — Purchases 3,354,442 — Proceeds from sale (48,073 ) — Net unrealized gains on marketable securities 192,919 — Reclassification of realized gains (2) (8,894 ) — Ending balance $ 3,490,394 $ — |
Fair Value Measurements, Nonrecurring | The following table presents the carrying value, which represents the principal amount outstanding, adjusted for the accretion of purchase discounts on loans and exit fees, and the amortization of purchase premiums on loans and origination fees, and estimated fair value of the Company’s financial instruments that are not carried at fair value on the consolidated balance sheets: March 31, 2020 December 31, 2019 Level Principal Amount Carrying Value Fair Value Principal Amount Carrying Value Fair Value Loans: Loans held for investment, net 3 $ 398,694,704 $ 400,076,940 $ 395,581,145 $ 374,267,430 $ 375,462,222 $ 375,956,154 Loans held for investment acquired through participation, net 3 3,992,734 4,037,567 4,028,233 3,120,887 3,150,546 3,204,261 Allowance for loan losses — (1,144,994 ) — — — — Total loans $ 402,687,438 $ 402,969,513 $ 399,609,378 $ 377,388,317 $ 378,612,768 $ 379,160,415 Liabilities: Obligations under participation agreements 3 $ 67,624,467 $ 67,670,405 $ 59,524,887 $ 102,564,795 $ 103,186,327 $ 103,188,783 Mortgage loan payable 3 44,481,855 44,687,123 44,813,764 44,614,480 44,753,633 44,947,378 Repurchase agreement payable 3 92,546,529 91,352,312 92,546,529 81,134,436 79,608,437 81,134,436 Revolving credit facility payable 3 35,000,000 34,930,844 35,000,000 — — — Total liabilities $ 239,652,851 $ 238,640,684 $ 231,885,180 $ 228,313,711 $ 227,548,397 $ 229,270,597 |
Fair Value Measurement Inputs and Valuation Techniques | The following table summarizes the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 loans as of March 31, 2020 and December 31, 2019 . The tables are not intended to be all-inclusive, but instead identify the significant unobservable inputs relevant to the determination of fair values. Fair Value at March 31, 2020 Primary Valuation Technique Unobservable Inputs March 31, 2020 Asset Category Minimum Maximum Weighted Average Assets: Loans held for investment, net $ 395,581,145 Discounted cash flow Discount rate 4.45 % 19.25 % 11.03 % Loans held for investment acquired through 4,028,233 Discounted cash flow Discount rate 13.15 % 13.15 % 13.15 % Total Level 3 Assets $ 399,609,378 Liabilities: Obligations under Participation Agreements $ 59,524,887 Discounted cash flow Discount rate 9.86 % 19.25 % 13.23 % Mortgage loan payable 44,813,764 Discounted cash flow Discount rate 6.08 % 6.08 % 6.08 % Repurchase agreement payable 92,546,529 Discounted cash flow Discount rate 3.34 % 4.77 % 4.00 % Revolving credit facility payable 35,000,000 Discounted cash flow Discount rate 6.00 % 6.00 % 6.00 % Total Level 3 Liabilities $ 231,885,180 Fair Value at December 31, 2019 Primary Valuation Technique Unobservable Inputs December 31, 2019 Asset Category Minimum Maximum Weighted Average Assets: Loans held for investment, net $ 375,956,154 Discounted cash flow Discount rate 4.71 % 14.95 % 9.77 % Loans held for investment acquired through participation, net 3,204,261 Discounted cash flow Discount rate 11.90 % 11.90 % 11.90 % Total Level 3 Assets $ 379,160,415 Liabilities: Obligations under Participation Agreements $ 103,188,783 Discounted cash flow Discount rate 9.00 % 14.95 % 11.99 % Mortgage loan 44,947,378 Discounted cash flow Discount rate 6.08 % 6.08 % 6.08 % Repurchase agreement payable 81,134,436 Discounted cash flow Discount rate 4.11 % 4.75 % 4.33 % Total Level 3 Liabilities $ 229,270,597 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | The following table presents a summary of fees paid and costs reimbursed to the Manager in connection with providing services to the Company that are included on the consolidated statements of operations: Three Months Ended March 31, 2020 2019 Origination and extension fee expense (1) $ 437,617 $ 683,172 Asset management fee 1,029,533 880,355 Asset servicing fee 234,208 204,477 Operating expenses reimbursed to Manager 1,367,189 1,115,204 Disposition fee (2) 75,520 469,933 Total $ 3,144,067 $ 3,353,141 _______________ (1) Origination and extension fee expense is generally offset with origination and extension fee income. Any excess is deferred and amortized to interest income over the term of the loan. (2) Disposition fee is generally offset with exit fee income and included in interest income on the consolidated statements of operations. The below table lists the loan interests participated in by the Company via PAs as of March 31, 2020 and December 31, 2019 . In accordance with the terms of each PA, each Participant’s rights and obligations, as well as the proceeds received from the related borrower/issuer of the loan, are based upon their respective pro rata participation interest in the loan. March 31, 2020 December 31, 2019 Participating Interests Principal Balance Carrying Value Participating Interests Principal Balance Carrying Value LD Milpitas Mezz, LP (1) 25.00% 3,992,734 4,037,567 25.00% 3,120,887 3,150,546 ________________ (1) On June 27, 2018, the Company entered into a participation agreement with Terra Income Fund 6, Inc. (“Terra Fund 6”) to purchase a 25 % participation interest, or $ 4.3 million, in a $ 17.0 million mezzanine loan. As of March 31, 2020 , the unfunded commitment was $ 0.3 million. The following tables summarize the loans that were subject to PAs with affiliated entities as of March 31, 2020 and December 31, 2019 : Transfers Treated as Obligations Under Participation Agreements as of March 31, 2020 Principal Balance Carrying Value % Transferred Principal Balance (6) Carrying Value (6) 14th & Alice Street Owner, LLC (5) $ 19,610,084 $ 19,728,938 80.00 % $ 15,688,067 $ 15,752,112 370 Lex Part Deux, LLC (2) 49,668,256 49,734,503 35.00 % 17,383,890 17,383,890 City Gardens 333 LLC (2) 28,905,569 28,917,582 14.00 % 4,046,781 4,048,428 NB Private Capital, LLC (2) 20,000,000 20,172,593 16.67 % 3,333,333 3,362,098 Orange Grove Property Investors, LLC (2) 10,600,000 10,697,792 80.00 % 8,480,000 8,558,182 RS JZ Driggs, LLC (2) 8,200,000 8,283,124 50.00 % 4,100,000 4,140,330 Stonewall Station Mezz LLC (2) 9,851,847 9,936,287 44.00 % 4,334,813 4,371,496 TSG-Parcel 1, LLC (2) 18,000,000 18,180,000 11.11 % 2,000,000 2,020,000 Windy Hill PV Five CM, LLC (5) 11,949,208 11,581,850 69.11 % 8,257,583 8,033,869 $ 176,784,964 $ 177,232,669 $ 67,624,467 $ 67,670,405 Transfers Treated as Obligations Under Participation Agreements as of December 31, 2019 Principal Balance Carrying Value % Transferred Principal Balance (6) Carrying Value (6) 14th & Alice Street Owner, LLC (5) $ 12,932,034 $ 12,957,731 80.00 % $ 10,345,627 $ 10,387,090 2539 Morse, LLC (1)(3)(7) 7,000,000 7,067,422 40.00 % 2,800,001 2,825,519 370 Lex Part Deux, LLC (2)(4)(7) 48,349,948 48,425,659 47.00 % 22,724,476 22,724,476 Austin H. I. Owner LLC (1)(7) 3,500,000 3,531,776 30.00 % 1,050,000 1,059,532 City Gardens 333 LLC (1)(2)(3)(4)(7) 28,049,717 28,056,179 47.00 % 13,182,584 13,184,648 High Pointe Mezzanine Investments, LLC (3)(7) 3,000,000 3,263,285 37.20 % 1,116,000 1,217,160 NB Private Capital, LLC (1)(2)(3)(4)(7) 20,000,000 20,166,610 72.40 % 14,480,392 14,601,021 Orange Grove Property Investors, LLC (2) 10,600,000 10,696,587 80.00 % 8,480,000 8,557,205 RS JZ Driggs, LLC (2) 8,200,000 8,286,629 50.00 % 4,100,000 4,142,264 SparQ Mezz Borrower, LLC (1)(3)(7) 8,700,000 8,783,139 36.81 % 3,202,454 3,231,689 Stonewall Station Mezz LLC (2) 9,792,767 9,875,162 44.00 % 4,308,817 4,344,635 The Bristol at Southport, LLC (1)(3)(4)(7) 23,500,000 23,661,724 42.44 % 9,974,444 10,043,088 TSG-Parcel 1, LLC (1)(2)(7) 18,000,000 18,180,000 37.78 % 6,800,000 6,868,000 $ 201,624,466 $ 202,951,903 $ 102,564,795 $ 103,186,327 ________________ (1) Participant is Terra Secured Income Fund 5 International, an affiliated fund advised by the Manager. (2) Participant is Terra Fund 6, an affiliated fund advised by Terra Income Advisors. (3) Participant is Terra Income Fund International, an affiliated fund advised by the Manager. (4) Participant is TPT2, an affiliated fund managed by the Manager. (5) Participant is a third-party. (6) Amounts transferred may not agree to the proportionate share of the principal balance and fair value due to the rounding of percentage transferred. (7) As discussed in Note 3 , in March 2020, the Company settled an aggregate of $ 49.8 million of participation interests in loans held by the Company with TPT2 and TIF3 REIT, which TIF3 REIT received from Terra Secured Income Fund 5 International and Terra Income Fund International. In connection with the Merger and the Issuance of Common Stock to TIF3 REIT, the related participation obligations were settled. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt [Table Text Block] | The following tables present summary information with respect to the Company’s outstanding borrowing under the Master Repurchase Agreement as of March 31, 2020 and December 31, 2019 : March 31, 2020 Arrangement Weighted (1) Amount Outstanding Amount Remaining Available Weighted (2) Master Repurchase Agreement 4.0 % $ 92,546,530 $ 57,453,470 1.47 years December 31, 2019 Arrangement Weighted (1) Amount Outstanding Amount Remaining Available Weighted (2) Master Repurchase Agreement 4.3 % $ 81,134,436 $ 68,865,564 1.55 years _______________ (1) Amount is calculated using LIBOR of 0.99% and 1.76% as of March 31, 2020 and December 31, 2019 , respectively. (2) The weighted average term is determined based on the current maturity of the corresponding loan. Each transaction under the facility has its own specific term. The Company may extend the maturity date of the Master Repurchase Agreement for a period of one year, subject to satisfaction of certain conditions. The following tables present detailed information with respect to each borrowing under the Master Repurchase Agreement as of March 31, 2020 and December 31, 2019 : March 31, 2020 Collateral Borrowings Under Master Repurchase Agreement Principal Amount Carrying Value Fair Value Borrowing Date Principal Amount Interest Rate 330 Tryon DE LLC $ 22,800,000 $ 22,893,646 $ 22,862,074 2/15/2019 $ 17,100,000 LIBOR+2.25% (LIBOR floor of 2.52%) 1389 Peachtree St, LP; 1401 Peachtree St, LP; and 1409 Peachtree St, LP 41,523,796 41,631,238 41,676,800 3/7/2019 24,448,102 LIBOR+2.35% AGRE DCP Palm Springs, LLC 30,514,799 30,522,379 30,551,440 12/23/2019 19,242,528 LIBOR+2.50% (LIBOR floor of 1.8%) MSC Fields Peachtree Retreat, LLC 23,308,335 23,444,431 22,886,081 3/25/2019 17,355,900 LIBOR+2.25% (LIBOR floor of 2.00%) Patrick Henry Recovery Acquisition, LLC 18,000,000 18,038,146 17,773,917 1/6/2020 14,400,000 LIBOR + 2.00% (1.5% Floor) $ 136,146,930 $ 136,529,840 $ 135,750,312 $ 92,546,530 December 31, 2019 Collateral Borrowings Under Master Repurchase Agreement Principal Amount Carrying Value Fair Value Borrowing Date Principal Amount Interest Rate 330 Tryon DE LLC $ 22,800,000 $ 22,891,149 $ 22,906,207 2/15/2019 $ 17,100,000 LIBOR+2.25% (LIBOR floor of 2.49%) 1389 Peachtree St, LP; 1401 Peachtree St, LP; and 1409 Peachtree St, LP 38,464,429 38,510,650 38,655,000 3/7/2019 24,040,268 LIBOR+2.35% AGRE DCP Palm Springs, LLC 30,184,357 30,174,455 30,326,076 12/23/2019 22,638,268 LIBOR+2.50% (LIBOR floor of 1.8%) MSC Fields Peachtree Retreat, LLC 23,308,335 23,446,793 23,418,996 3/25/2019 17,355,900 LIBOR+2.25% (LIBOR floor of 2.00%) $ 114,757,121 $ 115,023,047 $ 115,306,279 $ 81,134,436 |
Mortgage Loan Payable [Table Text Block] | The following table presents certain information about the mortgage loan payable as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Lender Current Interest Rate Maturity Date (1) Principal Amount Carrying Value Carrying Value of Collateral Carrying Value Carrying Value of Centennial Bank LIBOR + 3.85% September 27, 2020 $ 44,481,855 $ 44,687,123 $ 51,974,077 $ 44,753,633 $ 52,776,236 _______________ (1) The Company has an option to extend the maturity of the mortgage loan payable by two years subject to certain conditions provided in the credit and security agreement. |
Schedule of Long-term Debt Instruments [Table Text Block] | Scheduled debt principal payments for each of the five calendar years following March 31, 2020 are as follows: Years Ending December 31, Total 2020 (April 1 through December 31) $ 172,028,385 2021 — 2022 — 2023 — 2024 — 172,028,385 Unamortized deferred financing costs (1,058,106 ) Total $ 170,970,279 |
Business (Details)
Business (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 02, 2020 | Dec. 31, 2019 | |
Investment Company, Financial Highlights [Line Items] | |||
Loans Held for Investment | $ 402,969,513 | $ 378,612,768 | |
Cash | $ 25,500,000 | ||
Equity Method Investment, Ownership Percentage | 90.00% | ||
Operations Commenced Date | Jan. 1, 2016 | ||
Common Stock, Shares, Issued | 19,700,151 | 4,574,470.35 | 15,125,681 |
Participating Mortgage Loans, Participation Liabilities, Amount | $ 67,700,000 | $ 49,800,000 | $ 103,200,000 |
Minimum | |||
Investment Company, Financial Highlights [Line Items] | |||
Loans Held for Investment | 10,000,000 | ||
Maximum | |||
Investment Company, Financial Highlights [Line Items] | |||
Loans Held for Investment | $ 50,000,000 | ||
Partnership interest | |||
Investment Company, Financial Highlights [Line Items] | |||
Equity Method Investment, Ownership Percentage | 86.40% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 82,163,055 | $ 29,609,484 | $ 20,738,351 | |
Restricted cash | 15,120,570 | |||
Cash held in escrow by lender | 2,062,941 | 2,398,053 | 2,223,456 | |
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ 100,481,419 | $ 50,549,700 | $ 38,082,377 | $ 28,538,853 |
Merger and Asset Contribution -
Merger and Asset Contribution - Narratives - Mergers (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 31, 2020 | Feb. 29, 2020 | |
Terra PropertyTrust | |||
Business Acquisition | |||
Common Stock, Par Value | $ 0.01 | ||
Terra Property Trust 2 Inc | |||
Business Acquisition | |||
Business Acquisition, Share Price | $ 1.2031 | ||
Business Combination Common Stock Shares | 2,116,785.76 | ||
Common Stock, Par Value | $ 0.01 |
Merger and Aset Contribution -
Merger and Aset Contribution - Summary of the assets acquired and liabilities assumed (Details) - Terra Property Trust 2 Inc | Mar. 01, 2020USD ($) |
Business Acquisition | |
Equity issued in the Merger | $ 34,630,615 |
Total Consideration | 34,630,615 |
Net Assets of TPT2 Received in the Merger | |
Loans held for investment acquired through participation | 17,688,741 |
Cash and cash equivalents | 16,897,074 |
Interest receivable | 134,543 |
Other assets | 18,384 |
Accounts payable and accrued expenses | (57,433) |
Business Combination Recognized Identifiable Assets Acquired And Liabilities Assumed Current Liabilities Due To Related Parties | 50,694 |
Total identifiable net assets | $ 34,630,615 |
Mergers and Asset Contribution
Mergers and Asset Contribution - Narratives - Issuance of Common Stock to TIF3 REIT (Details) - USD ($) | Mar. 02, 2020 | Feb. 27, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Business Acquisition | ||||
Settlement of participation interests in loans held | $ 32,100,000 | |||
Proceeds from issuance of common stock | $ 0 | |||
Terra Property Trust 2 Inc | ||||
Business Acquisition | ||||
Stock issued in the transaction as consideration | 2,116,785.76 | |||
Terra International Fund 3 | ||||
Business Acquisition | ||||
Proceeds from issuance of common stock | $ 8,600,000 | |||
Stock issued in the transaction as consideration | 2,457,684.59 |
Merger and Asset Contribution_2
Merger and Asset Contribution - Issuance of Common Stock to TIF3 REIT (Details) - Terra International Fund 3 | Mar. 02, 2020USD ($) |
Business Acquisition | |
Equity issued in the Merger | $ 40,749,378 |
Total Consideration | 40,749,378 |
Loans held for investment acquired through participation interest | 32,112,257 |
Cash and cash equivalents acquired in Merger | 8,600,000 |
Interest receivable | 270,947 |
Due to Manager | (233,826) |
Total identifiable net assets | $ 40,749,378 |
Merger and Asset Contribution_3
Merger and Asset Contribution - Narratives - Terra JV, LLC (Details) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 02, 2020 | Feb. 28, 2020 | |
Business Acquisition | |||
Equity Method Investment, Ownership Percentage | 90.00% | ||
Terra JV | |||
Business Acquisition | |||
Equity Method Investment, Ownership Percentage | 86.40% | ||
Terra Fund 5 | |||
Business Acquisition | |||
Percent Of Ownership In Joint Venture | 98.60% | ||
Terra Fund 5 | Terra JV | |||
Business Acquisition | |||
Limited Liability Company or Limited Partnership, Members or Limited Partners, Ownership Interest | 87.60% | ||
Threshold For Nomination Rights | 0.1 | ||
Terra Fund 7 | Terra JV | |||
Business Acquisition | |||
Limited Liability Company or Limited Partnership, Members or Limited Partners, Ownership Interest | 12.40% |
Merger and Asset Contribution_4
Merger and Asset Contribution - Narratives - Net loss on Obligations Under Participation Agreement (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Business Combinations [Abstract] | |
Business Combination, Separately Recognized Transactions, Net Gains and Losses | $ 300,000 |
Loans Held for Investment - Sum
Loans Held for Investment - Summary of the Companys loan portfolio (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020USD ($)Loans | Dec. 31, 2019USD ($)Loans | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 22 | 23 |
Principal Balance | $ 402,687,438 | $ 377,388,317 |
Loans Held for Investment | 402,969,513 | 378,612,768 |
Loans Receivable, Fair Value Disclosure | $ 399,609,378 | $ 379,160,415 |
Finance Lease, Weighted Average Discount Rate, Percent | 9.36% | 9.65% |
Finance Lease, Weighted Average Remaining Lease Term | 1 year 11 months 23 days | 2 years 2 months |
Fixed Rate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 8 | 8 |
Principal Balance | $ 81,751,847 | $ 70,692,767 |
Loans Receivable with Fixed Rates of Interest | 82,483,887 | 71,469,137 |
Loans Receivable, Fair Value Disclosure | $ 82,249,333 | $ 71,516,432 |
Finance Lease, Weighted Average Discount Rate, Percent | 12.76% | 11.93% |
Finance Lease, Weighted Average Remaining Lease Term | 1 year 9 months 4 days | 2 years 3 months |
Floating rate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 14 | 15 |
Principal Balance | $ 320,935,591 | $ 306,695,550 |
Loans Receivable with Variable Rates of Interest | 320,485,626 | 307,143,631 |
Loans Receivable, Fair Value Disclosure | $ 317,360,045 | $ 307,643,983 |
Finance Lease, Weighted Average Discount Rate, Percent | 8.50% | 9.13% |
Finance Lease, Weighted Average Remaining Lease Term | 2 years 14 days | 2 years 1 month |
Loans Held for Investment - S_2
Loans Held for Investment - Summary of the Company's loan portfolio - subnote (Details) | Mar. 31, 2020USD ($)Loans | Dec. 31, 2019USD ($)Loans |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Held for Investment | $ 402,969,513 | $ 378,612,768 |
Repurchase agreement payable, net of deferred financing fees | $ 91,352,312 | $ 79,608,437 |
Number Of Loans | Loans | 22 | 23 |
Floating rate | LIBOR | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Receivable, Basis Spread on Variable Rate | 0.99% | 1.76% |
Number Of Loans | Loans | 12 | |
Minimum | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Held for Investment | $ 10,000,000 | |
Minimum | Floating rate | LIBOR | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Receivable, Basis Spread on Variable Rate | 2.00% | 2.25% |
Maximum | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Held for Investment | $ 50,000,000 | |
Maximum | Floating rate | LIBOR | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Receivable, Basis Spread on Variable Rate | 2.50% | 2.50% |
Repurchase Agreements | Floating rate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Repurchase agreement payable, net of deferred financing fees | $ 92,500,000 | $ 81,100,000 |
Collateralized Mortgage Obligations | Floating rate | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans Held for Investment | $ 136,100,000 | $ 114,800,000 |
Loans Held for Investment - Act
Loans Held for Investment - Activities of the Companys loan portfolio (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance | $ 378,612,768 | |
Paid-in-Kind Interest | 80,116 | $ 657,700 |
Provision for Loan Losses | (1,144,994) | 0 |
Ending balance | 402,969,513 | |
Real Estate Loan | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance | 378,612,768 | 388,243,974 |
New loans made | 38,376,448 | 70,813,882 |
Proceeds from Principal Repayments on Loans and Leases Held-for-investment | (13,371,565) | (60,319,802) |
Proceeds from Sale of Loans Receivable | (14,325,000) | |
Paid-in-Kind Interest | 294,237 | 852,968 |
Net amortization of premiums on loans | (15,348) | (18,350) |
Accrual, payment and accretion of investment related fees and other | 217,967 | (651,089) |
Provision for Loan Losses | (1,144,994) | |
Ending balance | 402,969,513 | 384,596,583 |
Loans Held for Investment | Real Estate Loan | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance | 375,462,222 | 388,243,974 |
New loans made | 37,504,601 | 70,813,882 |
Proceeds from Principal Repayments on Loans and Leases Held-for-investment | (13,371,565) | (60,319,802) |
Proceeds from Sale of Loans Receivable | (14,325,000) | |
Paid-in-Kind Interest | 294,237 | 852,968 |
Net amortization of premiums on loans | (15,348) | (18,350) |
Accrual, payment and accretion of investment related fees and other | 202,793 | (651,089) |
Provision for Loan Losses | (1,144,994) | |
Ending balance | 398,931,946 | 384,596,583 |
Loans Held For Investment Acquired Through Participation | Real Estate Loan | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Beginning balance | 3,150,546 | 0 |
New loans made | 871,847 | 0 |
Proceeds from Principal Repayments on Loans and Leases Held-for-investment | 0 | 0 |
Proceeds from Sale of Loans Receivable | 0 | |
Paid-in-Kind Interest | 0 | 0 |
Net amortization of premiums on loans | 0 | 0 |
Accrual, payment and accretion of investment related fees and other | 15,174 | 0 |
Provision for Loan Losses | 0 | |
Ending balance | $ 4,037,567 | $ 0 |
Loans Held for Investment - A_2
Loans Held for Investment - Activity of loan receivables - subnote (Details) | 3 Months Ended | ||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Jan. 09, 2019USD ($)a | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Paid-in-Kind Interest | $ 80,116 | $ 657,700 | |
Area of Land | a | 4.9 | ||
Obligations Under Participation Agreements | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Paid-in-Kind Interest | $ 200,000 | $ 200,000 | |
First Mortgage | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Area of Land | a | 4.9 | ||
Mortgage Loans in Process of Foreclosure, Amount | $ 14,300,000 |
Loans Held for Investment - Loa
Loans Held for Investment - Loan Structure (Details) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 402,687,438 | $ 377,388,317 |
Carrying value | $ 402,969,513 | $ 378,612,768 |
Percent Of Loan Portfolio Holdings | 100.00% | 100.00% |
Allowance for Loan and Lease Losses, Real Estate | $ (1,144,994) | $ 0 |
Percent Of Allowance Of Loan Losses | (0.003) | 0 |
First Mortgage | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 208,956,222 | $ 178,130,623 |
Carrying value | $ 209,289,995 | $ 178,203,675 |
Percent Of Loan Portfolio Holdings | 51.90% | 47.10% |
Equity Securities, Investment Summary | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 157,686,635 | $ 157,144,040 |
Carrying value | $ 158,285,097 | $ 157,737,763 |
Percent Of Loan Portfolio Holdings | 39.30% | 41.60% |
Mezzanine Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 36,044,581 | $ 42,113,654 |
Carrying value | $ 36,539,415 | $ 42,671,330 |
Percent Of Loan Portfolio Holdings | 9.10% | 11.30% |
Loans Held for Investment - Pro
Loans Held for Investment - Property Type (Details) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 402,687,438 | $ 377,388,317 |
Carrying value | $ 402,969,513 | $ 378,612,768 |
Percent Of Loan Portfolio Holdings | 100.00% | 100.00% |
Allowance for Loan and Lease Losses, Real Estate | $ (1,144,994) | $ 0 |
Percent Of Allowance Of Loan Losses | (0.003) | 0 |
Office | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 143,941,260 | $ 142,055,845 |
Carrying value | $ 143,879,383 | $ 141,870,355 |
Percent Of Loan Portfolio Holdings | 35.70% | 40.00% |
Multifamily | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 83,318,419 | $ 76,640,369 |
Carrying value | $ 83,907,425 | $ 77,136,016 |
Percent Of Loan Portfolio Holdings | 20.80% | 20.00% |
Student housing | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 75,155,569 | $ 58,049,717 |
Carrying value | $ 75,608,070 | $ 58,553,496 |
Percent Of Loan Portfolio Holdings | 18.80% | 20.00% |
Hotel | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 47,859,380 | $ 46,598,011 |
Carrying value | $ 48,029,027 | $ 46,731,939 |
Percent Of Loan Portfolio Holdings | 11.90% | 10.00% |
Infill land | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 34,812,810 | $ 36,444,375 |
Carrying value | $ 34,992,810 | $ 36,624,375 |
Percent Of Loan Portfolio Holdings | 8.70% | 10.00% |
Condominium | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 10,600,000 | $ 10,600,000 |
Carrying value | $ 10,697,792 | $ 10,696,587 |
Percent Of Loan Portfolio Holdings | 2.70% | 0.00% |
Industrial | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 7,000,000 | $ 7,000,000 |
Carrying value | $ 7,000,000 | $ 7,000,000 |
Percent Of Loan Portfolio Holdings | 1.70% | 0.00% |
Loans Held for Investment - Geo
Loans Held for Investment - Geographic Locations (Details) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 402,687,438 | $ 377,388,317 |
Carrying value | $ 402,969,513 | $ 378,612,768 |
Percent Of Loan Portfolio Holdings | 100.00% | 100.00% |
Allowance for Loan and Lease Losses, Real Estate | $ (1,144,994) | $ 0 |
Percent Of Allowance Of Loan Losses | (0.003) | 0 |
California | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 178,222,394 | $ 150,988,463 |
Carrying value | $ 178,498,419 | $ 151,108,109 |
Percent Of Loan Portfolio Holdings | 44.30% | 39.90% |
New York | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 74,681,066 | $ 79,734,323 |
Carrying value | $ 74,830,437 | $ 79,896,663 |
Percent Of Loan Portfolio Holdings | 18.60% | 21.10% |
Georgia | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 64,832,131 | $ 61,772,764 |
Carrying value | $ 65,075,669 | $ 61,957,443 |
Percent Of Loan Portfolio Holdings | 16.10% | 16.40% |
North Carolina | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 32,651,847 | $ 32,592,767 |
Carrying value | $ 32,829,933 | $ 32,766,311 |
Percent Of Loan Portfolio Holdings | 8.10% | 8.70% |
Washington | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 23,500,000 | $ 23,500,000 |
Carrying value | $ 23,666,693 | $ 23,661,724 |
Percent Of Loan Portfolio Holdings | 5.90% | 6.20% |
Illinois | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 4,004,877 | $ 8,004,877 |
Carrying value | $ 4,039,438 | $ 8,071,562 |
Percent Of Loan Portfolio Holdings | 1.00% | 2.10% |
Massachusetts | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 7,000,000 | $ 7,000,000 |
Carrying value | $ 7,000,000 | $ 7,000,000 |
Percent Of Loan Portfolio Holdings | 1.70% | 1.80% |
Kansas | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 6,200,000 | $ 6,200,000 |
Carrying value | $ 6,253,504 | $ 6,251,649 |
Percent Of Loan Portfolio Holdings | 1.60% | 1.70% |
Texas | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 3,500,000 | $ 3,500,000 |
Carrying value | $ 3,532,794 | $ 3,531,776 |
Percent Of Loan Portfolio Holdings | 0.90% | 0.90% |
Other (1) | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal Balance | $ 8,095,123 | $ 4,095,123 |
Carrying value | $ 8,387,620 | $ 4,367,531 |
Percent Of Loan Portfolio Holdings | 2.10% | 1.20% |
Loans Held for Investment - G_2
Loans Held for Investment - Geographic Locations - Subnotes (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying value | $ 402,969,513 | $ 378,612,768 |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying value | 8,387,620 | 4,367,531 |
Line of Credit Facility, Remaining Borrowing Capacity | 5,095,123 | 1,100,000 |
South Carolina | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying value | $ 3,000,000 | $ 3,000,000 |
Loans Held for Investment - L_2
Loans Held for Investment - Loan risk rating (Details) | Mar. 31, 2020USD ($)Loans | Dec. 31, 2019USD ($)Loans |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 22 | 23 |
Principal Balance | $ 402,687,438 | $ 377,388,317 |
Financing Receivable, before Allowance for Credit Loss | $ 404,114,507 | $ 378,612,768 |
Percent Of Loan Portfolio Holdings | 100.00% | 100.00% |
Allowance for Loan and Lease Losses, Real Estate | $ (1,144,994) | $ 0 |
1 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 0 | 0 |
Principal Balance | $ 0 | $ 0 |
Financing Receivable, before Allowance for Credit Loss | $ 0 | $ 0 |
Percent Of Loan Portfolio Holdings | 0.00% | 0.00% |
2 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 2 | 5 |
Principal Balance | $ 25,000,000 | $ 50,000,000 |
Financing Receivable, before Allowance for Credit Loss | $ 25,180,000 | $ 50,284,751 |
Percent Of Loan Portfolio Holdings | 10.00% | 10.00% |
3 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 15 | |
Principal Balance | $ 294,854,525 | $ 322,648,317 |
Financing Receivable, before Allowance for Credit Loss | $ 295,669,585 | $ 323,588,017 |
Percent Of Loan Portfolio Holdings | 70.00% | 90.00% |
4 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 3 | 0 |
Principal Balance | $ 76,332,913 | $ 0 |
Financing Receivable, before Allowance for Credit Loss | $ 76,483,600 | $ 0 |
Percent Of Loan Portfolio Holdings | 20.00% | 0.00% |
5 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 0 | 0 |
Principal Balance | $ 0 | $ 0 |
Financing Receivable, before Allowance for Credit Loss | $ 0 | $ 0 |
Percent Of Loan Portfolio Holdings | 0.00% | 0.00% |
Other | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number Of Loans | Loans | 2 | 1 |
Principal Balance | $ 6,500,000 | $ 4,740,000 |
Financing Receivable, before Allowance for Credit Loss | $ 6,781,322 | $ 4,740,000 |
Percent Of Loan Portfolio Holdings | 0.00% | 0.00% |
Loans Held for Investment - All
Loans Held for Investment - Allowance for loan losses (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Receivables [Abstract] | |||
Financing Receivable, Allowance for Credit Loss | $ 0 | $ 0 | |
Loans and Leases Receivable, Allowance | (1,144,994) | $ 0 | |
Provision for loan losses | 1,144,994 | 0 | |
Charge-offs | 0 | 0 | |
Recoveries | 0 | 0 | |
Financing Receivable, Allowance for Credit Loss | $ 1,144,994 | $ 0 |
Loans Held for Investment - Nar
Loans Held for Investment - Narratives - Allowance for loan losses (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Provision for loan losses | $ 1,144,994 | $ 0 | ||
Loans and Leases Receivable, Allowance | 1,144,994 | $ 0 | $ 0 | $ 0 |
4 | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Provision for loan losses | $ 1,100,000 |
Real Estate Owned, Net - Carryi
Real Estate Owned, Net - Carrying value of first mortgage (Details) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jan. 09, 2019USD ($)a |
Real Estate | |||
Loans Held for Investment | $ 402,969,513 | $ 378,612,768 | |
Interest receivable | $ 2,253,718 | $ 1,876,799 | |
Area of Land | a | 4.9 | ||
First Mortgage | |||
Real Estate | |||
Loans Held for Investment | $ 14,325,000 | ||
Interest receivable | 439,300 | ||
Restricted Cash and Investments | (60,941) | ||
Land Available-for-sale | $ 14,703,359 | ||
Area of Land | a | 4.9 |
Note 5 Real Estate Owned, Net R
Note 5 Real Estate Owned, Net Real Estate Owned, Net - Fair value of the real estate acquired (Details) - Land | Jan. 09, 2019USD ($) |
Real Estate | |
Payments to Acquire Land | $ 14,703,359 |
Investment in Real Estate and Accumulated Depreciation, Cost Capitalized Subsequent to Acquisition, Land | $ 0.2 |
Real Estate Owned, Net - Real E
Real Estate Owned, Net - Real Estate Owned Net (Details) | Mar. 31, 2020USD ($)a | Dec. 31, 2019USD ($) | Jan. 09, 2019a |
Real Estate | |||
Real Estate Investment Property, Net | $ 64,358,637 | $ 64,751,247 | |
Finite-Lived Intangible Assets, Net | 1,010,870 | ||
Below Market Lease, Net | 11,276,085 | 11,424,809 | |
Area of Land | a | 4.9 | ||
Real Estate Investment | |||
Real Estate | |||
Real Estate Investment Property, at Cost | 70,717,229 | 70,717,229 | |
Real Estate Investment Property, Accumulated Depreciation | 5,347,722 | 4,545,563 | |
Real Estate Investment Property, Net | 65,369,507 | 66,171,666 | |
Finite Lived Intangible Liabilities Gross | (12,267,584) | (12,267,584) | |
Finite Lived Intangible Liabilities Accumulated Amortization | 991,499 | 842,775 | |
Finite Lived Intangible Liability Net | $ (11,276,085) | (11,424,809) | |
Area of Land | a | 4.9 | ||
Real Estate Investment | Real Estate | |||
Real Estate | |||
Real Estate Investment Property, at Cost | $ 66,976,039 | 66,976,039 | |
Real Estate Investment Property, Accumulated Depreciation | (2,617,402) | (2,224,792) | |
Real Estate Investment Property, Net | 64,358,637 | 64,751,247 | |
Real Estate Investment | Land | |||
Real Estate | |||
Real Estate Investment Property, at Cost | 13,395,430 | 13,395,430 | |
Real Estate Investment Property, Accumulated Depreciation | 0 | 0 | |
Real Estate Investment Property, Net | 13,395,430 | 13,395,430 | |
Finite-Lived Intangible Assets, Gross | 16,008,774 | 16,008,774 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (3,721,819) | (3,163,546) | |
Finite-Lived Intangible Assets, Net | 12,286,955 | 12,845,228 | |
Real Estate Investment | Building and Building Improvements | |||
Real Estate | |||
Real Estate Investment Property, at Cost | 51,725,969 | 51,725,969 | |
Real Estate Investment Property, Accumulated Depreciation | (2,155,271) | (1,831,980) | |
Real Estate Investment Property, Net | 49,570,698 | 49,893,989 | |
Real Estate Investment | Tenant Improvement | |||
Real Estate | |||
Real Estate Investment Property, at Cost | 1,854,640 | 1,854,640 | |
Real Estate Investment Property, Accumulated Depreciation | (462,131) | (392,812) | |
Real Estate Investment Property, Net | 1,392,509 | 1,461,828 | |
Real Estate Investment | Increase in Depreciation and Amortization | |||
Real Estate | |||
Finite-Lived Intangible Assets, Gross | 15,852,232 | 15,852,232 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (3,692,559) | (3,138,675) | |
Finite-Lived Intangible Assets, Net | 12,159,673 | 12,713,557 | |
Real Estate Investment | Above Market Leases | |||
Real Estate | |||
Finite-Lived Intangible Assets, Gross | 156,542 | 156,542 | |
Finite-Lived Intangible Assets, Accumulated Amortization | (29,260) | (24,871) | |
Finite-Lived Intangible Assets, Net | 127,282 | 131,671 | |
Real Estate Investment | Below Market Rent | |||
Real Estate | |||
Finite Lived Intangible Liabilities Gross | (3,371,314) | (3,371,314) | |
Finite Lived Intangible Liabilities Accumulated Amortization | 774,252 | 658,115 | |
Finite Lived Intangible Liability Net | (2,597,062) | (2,713,199) | |
Real Estate Investment | Above Market Ground Lease | |||
Real Estate | |||
Finite Lived Intangible Liabilities Gross | (8,896,270) | (8,896,270) | |
Finite Lived Intangible Liabilities Accumulated Amortization | 217,247 | 184,660 | |
Finite Lived Intangible Liability Net | $ (8,679,023) | $ (8,711,610) |
Real Estate Owned, Net - Compon
Real Estate Owned, Net - Components of real estate operating revenues and expenses (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Real Estate | ||
Real estate operating income | $ 2,313,051 | $ 2,321,238 |
Total | 12,077,571 | 12,737,934 |
Real estate operating expenses | ||
Asset management fee | 1,029,533 | 880,355 |
Operating Lease, Expense | 1,367,189 | 1,115,204 |
Real Estate Operating Expenses | 944,518 | 755,855 |
Real Estate Investment | ||
Real Estate | ||
Lease revenue | 1,922,128 | 1,922,538 |
Other operating income | 390,923 | 398,700 |
Real estate operating income | 2,313,051 | 2,321,238 |
Real estate operating expenses | ||
Utilities | 39,022 | 33,762 |
Real estate taxes | 232,875 | 80,360 |
Repairs and maintenances | 237,132 | 209,843 |
Asset management fee | 56,701 | 61,349 |
Operating Lease, Expense | 283,538 | 283,538 |
Other operating expenses | 95,250 | 87,003 |
Real Estate Operating Expenses | $ 944,518 | $ 755,855 |
Real Estate Owned, Net - Future
Real Estate Owned, Net - Future Minimum Rent Income (Details) | Mar. 31, 2020USD ($) |
Real Estate [Abstract] | |
2020 (April 1 through December 31) | $ 5,060,780 |
2021 | 7,025,413 |
2022 | 7,547,261 |
2023 | 7,787,842 |
2024 | 8,026,942 |
Thereafter | 5,836,010 |
Total | $ 41,284,248 |
Real Estate Owned, Net - Annual
Real Estate Owned, Net - Annual Net Amortization of Intangibles (Details) | Mar. 31, 2020USD ($) |
Real Estate | |
2020 (April 1 through December 31) | $ 1,228,644 |
2021 | 1,638,193 |
2022 | 1,638,193 |
2023 | 1,638,193 |
2024 | 1,638,193 |
Thereafter | (6,770,546) |
Total | 1,010,870 |
Decrease in rent expense | |
Real Estate | |
2020 (April 1 through December 31) | (97,761) |
2021 | (130,348) |
2022 | (130,348) |
2023 | (130,348) |
2024 | (130,348) |
Thereafter | (8,059,870) |
Total | (8,679,023) |
Leases, Acquired-in-Place | |
Real Estate | |
2020 (April 1 through December 31) | 1,661,652 |
2021 | 2,215,536 |
2022 | 2,215,536 |
2023 | 2,215,536 |
2024 | 2,215,536 |
Thereafter | 1,635,877 |
Total | 12,159,673 |
Net Decrease in Real Estate Operating Revenue | |
Real Estate | |
2020 (April 1 through December 31) | (335,247) |
2021 | (446,995) |
2022 | (446,995) |
2023 | (446,995) |
2024 | (446,995) |
Thereafter | (346,553) |
Total | $ (2,469,780) |
Note 5 Real Estate Owned, Net_2
Note 5 Real Estate Owned, Net Real Estate Owned, Net - Supplemental ground lease balance sheet information (Details) | 3 Months Ended | |||
Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) | Jul. 30, 2018lease | |
Real Estate | ||||
Number Of Lease Remaining | lease | 4 | |||
Document Period End Date | Mar. 31, 2020 | |||
Operating lease right-of-use assets | $ 16,111,217 | $ 16,112,925 | ||
Operating Lease Liabilities | 16,111,217 | $ 16,112,925 | ||
Operating Leases, Income Statement, Initial Direct Costs | $ 500,000 | |||
Ground Lease | ||||
Real Estate | ||||
Operating lease right-of-use assets | 16,111,217 | |||
Operating Lease Liabilities | $ 16,111,217 | |||
Weighted average discount rate — operating lease | 7.857% | |||
Multi Tenant Office Building | Minimum | ||||
Real Estate | ||||
Weighted average remaining lease term — operating lease (years) | 6 years 4 months | |||
Multi Tenant Office Building | Maximum | ||||
Real Estate | ||||
Weighted average remaining lease term — operating lease (years) | 8 years 10 months | |||
Ground Lease | ||||
Real Estate | ||||
Percent of Fair Market Value of Land | 0.09 | |||
Operating lease right-of-use assets | $ 16,100,000 |
Real Estate Owned, Net - Comp_2
Real Estate Owned, Net - Component of lease expense (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Real Estate | ||
Operating lease cost | $ 1,367,189 | $ 1,115,204 |
Ground Lease | ||
Real Estate | ||
Operating lease cost | $ 316,125 |
Note 5 Real Estate Owned, Net_3
Note 5 Real Estate Owned, Net Real Estate Owned, Net - Cash information related to the ground lease (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Real Estate [Abstract] | |
Operating cash flows from operating leases | $ 316,125 |
Right-of-use assets obtained in exchange for lease obligations | $ 316,125 |
Note 5 Real Estate Owned, Net_4
Note 5 Real Estate Owned, Net Real Estate Owned, Net - Maturities of operating lease liabilities (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Real Estate [Abstract] | ||
2020 (April 1 through December 31) (Year of rent reset) | $ 948,375 | |
2021 | 1,264,500 | |
2022 | 1,264,500 | |
2023 | 1,264,500 | |
2024 | 1,264,500 | |
Thereafter | 78,135,563 | |
Total lease payment | 84,141,938 | |
Receivable with Imputed Interest, Discount | (68,030,721) | |
Operating Lease Liabilities | $ 16,111,217 | $ 16,112,925 |
Real Estate Owned, Net - Narrat
Real Estate Owned, Net - Narratives - Leases (Details) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Real Estate | ||
Operating Lease, Weighted Average Remaining Lease Term | 66 years 7 months | |
Operating Lease, Liabilities | $ 16,111,217 | $ 16,112,925 |
Ground Lease | ||
Real Estate | ||
Operating Lease, Weighted Average Remaining Lease Term | 68 years 4 months | |
Percent of Fair Market Value of Land | 0.09 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair value measurements of marketable securities (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | $ 3,490,394 | $ 0 | $ 0 | $ 0 |
Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 1,028,189 | |||
Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 2,462,205 | |||
Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 0 | |||
Preferred Stock | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 1,028,189 | |||
Preferred Stock | Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 1,028,189 | |||
Preferred Stock | Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 0 | |||
Preferred Stock | Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 0 | |||
Bonds [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 2,462,205 | |||
Bonds [Member] | Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 0 | |||
Bonds [Member] | Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | 2,462,205 | |||
Bonds [Member] | Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Marketable securities | $ 0 |
Fair Value Measurements - Activ
Fair Value Measurements - Activities of the marketable securities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Fair value measurement [Abstract] | ||
Beginning balance | $ 0 | $ 0 |
Purchases | 3,354,442 | 0 |
Proceeds from sale | (48,073) | 0 |
Net unrealized gains on marketable securities | 192,919 | 0 |
Reclassification of realized gains (2) | (8,894) | 0 |
Ending balance | $ 3,490,394 | $ 0 |
Fair value measurement - Not ca
Fair value measurement - Not carried at Fair Value (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Principal Balance | $ 402,687,438 | $ 377,388,317 |
Loans and Leases Receivable, Gross | 378,612,768 | |
Loans Receivable, Fair Value Disclosure | 399,609,378 | 379,160,415 |
Loans and Leases Receivable, Allowance | (1,144,994) | 0 |
Other Liabilities, Fair Value Disclosure | 229,270,597 | |
Debt Instrument, Face Amount | 176,784,964 | 201,624,466 |
Secured Debt | 177,232,669 | 202,951,903 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans and Leases Receivable, Gross | 402,969,513 | |
Loans Receivable, Fair Value Disclosure | 399,609,378 | |
Other Liabilities, Fair Value Disclosure | 231,885,180 | |
Debt Instrument, Face Amount | 239,652,851 | 228,313,711 |
Secured Debt | 238,640,684 | 227,548,397 |
Long-term Debt, Fair Value | 229,270,597 | |
Loans Held for Investment | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Principal Balance | 374,267,430 | |
Loans and Leases Receivable, Gross | 375,462,222 | |
Loans Receivable, Fair Value Disclosure | 375,956,154 | |
Loans Held for Investment | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Principal Balance | 398,694,704 | |
Loans and Leases Receivable, Gross | 400,076,940 | |
Loans Held For Investment Acquired Through Participation | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Principal Balance | 3,992,734 | 3,120,887 |
Loans and Leases Receivable, Gross | 3,150,546 | |
Loans Receivable, Fair Value Disclosure | 3,204,261 | |
Loans Held For Investment Acquired Through Participation | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans and Leases Receivable, Gross | 4,037,567 | |
Discounted Cash Flow | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans Receivable, Fair Value Disclosure | 379,160,415 | |
Discounted Cash Flow | Mortgage Agreement Payable [Member] | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other Liabilities, Fair Value Disclosure | 44,813,764 | |
Debt Instrument, Face Amount | 44,481,855 | 44,614,480 |
Secured Debt | 44,687,123 | 44,753,633 |
Long-term Debt, Fair Value | 44,947,378 | |
Discounted Cash Flow | Loans Held for Investment | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans Receivable, Fair Value Disclosure | 395,581,145 | 375,956,154 |
Other Liabilities, Fair Value Disclosure | 81,134,436 | |
Discounted Cash Flow | Loans Held For Investment Acquired Through Participation | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Loans Receivable, Fair Value Disclosure | 4,028,233 | 3,204,261 |
Discounted Cash Flow | Obligations Under Participation Agreements | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other Liabilities, Fair Value Disclosure | 103,188,783 | |
Discounted Cash Flow | Obligations Under Participation Agreements | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other Liabilities, Fair Value Disclosure | 59,524,887 | |
Debt Instrument, Face Amount | 67,624,467 | 102,564,795 |
Secured Debt | 67,670,405 | 103,186,327 |
Long-term Debt, Fair Value | 103,188,783 | |
Discounted Cash Flow | Repurchase Agreement Payable | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other Liabilities, Fair Value Disclosure | 92,546,529 | |
Debt Instrument, Face Amount | 92,546,529 | 81,134,436 |
Secured Debt | 91,352,312 | 79,608,437 |
Long-term Debt, Fair Value | 81,134,436 | |
Discounted Cash Flow | Revolving Credit Facility Payable [Member] | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Other Liabilities, Fair Value Disclosure | 35,000,000 | |
Debt Instrument, Face Amount | 35,000,000 | 0 |
Secured Debt | $ 34,930,844 | 0 |
Long-term Debt, Fair Value | $ 0 |
Fair Value Measurements - Valua
Fair Value Measurements - Valuation techniques (Details) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans Receivable, Fair Value Disclosure | $ 399,609,378 | $ 379,160,415 |
Other Liabilities, Fair Value Disclosure | 229,270,597 | |
Loans Held for Investment | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans Receivable, Fair Value Disclosure | 375,956,154 | |
Loans Held For Investment Acquired Through Participation | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans Receivable, Fair Value Disclosure | 3,204,261 | |
Discounted Cash Flow | Obligations Under Participation Agreements | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Other Liabilities, Fair Value Disclosure | $ 103,188,783 | |
Discounted Cash Flow | Minimum | Obligations Under Participation Agreements | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0900 | |
Discounted Cash Flow | Weighted average | Obligations Under Participation Agreements | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.1199 | |
Level 3 | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans Receivable, Fair Value Disclosure | 399,609,378 | |
Other Liabilities, Fair Value Disclosure | 231,885,180 | |
Level 3 | Discounted Cash Flow | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans Receivable, Fair Value Disclosure | $ 379,160,415 | |
Level 3 | Discounted Cash Flow | Mortgage Loan [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Other Liabilities, Fair Value Disclosure | 44,947,378 | |
Level 3 | Discounted Cash Flow | Loans Held for Investment | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans Receivable, Fair Value Disclosure | 395,581,145 | 375,956,154 |
Other Liabilities, Fair Value Disclosure | 81,134,436 | |
Level 3 | Discounted Cash Flow | Loans Held For Investment Acquired Through Participation | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loans Receivable, Fair Value Disclosure | 4,028,233 | $ 3,204,261 |
Level 3 | Discounted Cash Flow | Obligations Under Participation Agreements | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Other Liabilities, Fair Value Disclosure | 59,524,887 | |
Level 3 | Discounted Cash Flow | Revolving Credit Facility Payable [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Other Liabilities, Fair Value Disclosure | 35,000,000 | |
Level 3 | Discounted Cash Flow | Mortgage Agreement Payable [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Other Liabilities, Fair Value Disclosure | 44,813,764 | |
Level 3 | Discounted Cash Flow | Repurchase Agreement Payable | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Other Liabilities, Fair Value Disclosure | $ 92,546,529 | |
Level 3 | Discounted Cash Flow | Minimum | Mortgage Loan [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0608 | |
Level 3 | Discounted Cash Flow | Minimum | Loans Held for Investment | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0411 | |
Level 3 | Discounted Cash Flow | Maximum | Mortgage Loan [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0608 | |
Level 3 | Discounted Cash Flow | Maximum | Loans Held for Investment | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0475 | |
Level 3 | Discounted Cash Flow | Maximum | Obligations Under Participation Agreements | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.1495 | |
Level 3 | Discounted Cash Flow | Weighted average | Mortgage Loan [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0608 | |
Level 3 | Discounted Cash Flow | Weighted average | Loans Held for Investment | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0433 | |
Level 3 | Discounted Cash Flow | Discount Rate | Minimum | Loans Held for Investment | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0445 | 0.0471 |
Level 3 | Discounted Cash Flow | Discount Rate | Minimum | Loans Held For Investment Acquired Through Participation | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.1315 | 0.1190 |
Level 3 | Discounted Cash Flow | Discount Rate | Minimum | Obligations Under Participation Agreements | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0986 | |
Level 3 | Discounted Cash Flow | Discount Rate | Minimum | Revolving Credit Facility Payable [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0600 | |
Level 3 | Discounted Cash Flow | Discount Rate | Minimum | Repurchase Agreement Payable | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0334 | |
Level 3 | Discounted Cash Flow | Discount Rate | Maximum | Loans Held for Investment | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.1925 | 0.1495 |
Level 3 | Discounted Cash Flow | Discount Rate | Maximum | Loans Held For Investment Acquired Through Participation | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.1315 | 0.1190 |
Level 3 | Discounted Cash Flow | Discount Rate | Maximum | Obligations Under Participation Agreements | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.1925 | |
Level 3 | Discounted Cash Flow | Discount Rate | Maximum | Revolving Credit Facility Payable [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0600 | |
Level 3 | Discounted Cash Flow | Discount Rate | Maximum | Repurchase Agreement Payable | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0477 | |
Level 3 | Discounted Cash Flow | Discount Rate | Weighted average | Loans Held for Investment | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.1103 | 0.0977 |
Level 3 | Discounted Cash Flow | Discount Rate | Weighted average | Loans Held For Investment Acquired Through Participation | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.1315 | 0.1190 |
Level 3 | Discounted Cash Flow | Discount Rate | Weighted average | Obligations Under Participation Agreements | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.1323 | |
Level 3 | Discounted Cash Flow | Discount Rate | Weighted average | Revolving Credit Facility Payable [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0600 | |
Level 3 | Discounted Cash Flow | Discount Rate | Weighted average | Mortgage Agreement Payable [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0608 | |
Level 3 | Discounted Cash Flow | Discount Rate | Weighted average | Repurchase Agreement Payable | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement Input | 0.0400 |
Related Party Transactions - Su
Related Party Transactions - Summary of fees paid and costs reimbursed to the Manager (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Related Party Transaction | ||
Origination And Extension Fee Expense | $ 437,617 | $ 683,172 |
Asset management fee | 1,029,533 | 880,355 |
Asset servicing fee | 234,208 | 204,477 |
Disposition Fee | 75,520 | 469,933 |
Operating expenses reimbursed to Manager | 1,367,189 | 1,115,204 |
Total expenses | $ 3,144,067 | $ 3,353,141 |
Related Party Transactions - Pa
Related Party Transactions - Participation Interests Purchased (Details) | 3 Months Ended | ||
Mar. 31, 2020USD ($) | Mar. 02, 2020USD ($) | Dec. 31, 2019USD ($) | |
Related Party Transaction | |||
Document Period End Date | Mar. 31, 2020 | ||
Participating Mortgage Loans, Participation Liabilities, Amount | $ 67,700,000 | $ 49,800,000 | $ 103,200,000 |
Loans Held for Investment | $ 402,969,513 | $ 378,612,768 | |
LD Milpitas Mezz, LP | |||
Related Party Transaction | |||
Participating Interests | 0.2500 | 0.2500 | |
Participating Mortgage Loans, Participation Liabilities, Amount | $ 3,992,734 | $ 3,120,887 | |
Loans Held for Investment | $ 4,037,567 | $ 3,150,546 |
Note 7 Related Party Transactio
Note 7 Related Party Transactions Related Party Transactions - Participation Interests Purchased - Subnote (Details) | Mar. 31, 2020USD ($) | Mar. 02, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 27, 2018USD ($) |
Related Party Transaction | ||||
Participating Mortgage Loans, Participation Liabilities, Amount | $ 67,700,000 | $ 49,800,000 | $ 103,200,000 | |
Unfunded Commitment Outstanding | 107,000,000 | $ 3,600,000 | ||
ERROR in label resolution. | ||||
Related Party Transaction | ||||
Participating Interests | 25 | |||
Participating Mortgage Loans, Participation Liabilities, Amount | $ 4.3 | |||
Unfunded Commitment Outstanding | $ 0.3 |
Related Party Transactions - Tr
Related Party Transactions - Transfers of Participation Interest (Details) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 177,232,669 | $ 202,951,903 |
Percentage Ownership Sold | 0.6911 | |
Debt Instrument, Face Amount | $ 176,784,964 | 201,624,466 |
14th & Alice Street Owner, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 19,728,938 | 12,957,731 |
Debt Instrument, Face Amount | 19,610,084 | 12,932,034 |
2539 Morse, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 7,067,422 | |
Debt Instrument, Face Amount | 7,000,000 | |
370 Lex Part Deux, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 49,734,503 | 48,425,659 |
Debt Instrument, Face Amount | 49,668,256 | 48,349,948 |
Austin H. I. Owner LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 3,531,776 | |
Debt Instrument, Face Amount | 3,500,000 | |
City Gardens 333 LLC (2) | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 28,917,582 | 28,056,179 |
Debt Instrument, Face Amount | 28,905,569 | 28,049,717 |
High Pointe Mezzanine Investments, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 3,263,285 | |
Debt Instrument, Face Amount | 3,000,000 | |
NB Private Capital, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 20,172,593 | 20,166,610 |
Debt Instrument, Face Amount | 20,000,000 | 20,000,000 |
Orange Grove Property Investors, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 10,697,792 | 10,696,587 |
Debt Instrument, Face Amount | 10,600,000 | 10,600,000 |
RS JZ Driggs, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 8,283,124 | 8,286,629 |
Debt Instrument, Face Amount | 8,200,000 | 8,200,000 |
SparQ Mezz Borrower, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 8,783,139 | |
Debt Instrument, Face Amount | 8,700,000 | |
Stonewall Station Mezz LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 9,936,287 | 9,875,162 |
Debt Instrument, Face Amount | 9,851,847 | 9,792,767 |
The Bristol at Southport, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 23,661,724 | |
Debt Instrument, Face Amount | 23,500,000 | |
TSG-Parcel 1, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 18,180,000 | 18,180,000 |
Debt Instrument, Face Amount | 18,000,000 | 18,000,000 |
Windy Hill PV Five CM, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 11,581,850 | |
Debt Instrument, Face Amount | 11,949,208 | |
Obligations Under Participation Agreements | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 67,670,405 | 103,186,327 |
Debt Instrument, Face Amount | 67,624,467 | 102,564,795 |
Obligations Under Participation Agreements | 14th & Alice Street Owner, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 15,752,112 | $ 10,387,090 |
Percentage Ownership Sold | 0.8000 | 0.8000 |
Debt Instrument, Face Amount | $ 15,688,067 | $ 10,345,627 |
Obligations Under Participation Agreements | 2539 Morse, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 2,825,519 | |
Percentage Ownership Sold | 0.4000 | |
Debt Instrument, Face Amount | $ 2,800,001 | |
Obligations Under Participation Agreements | 370 Lex Part Deux, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 17,383,890 | $ 22,724,476 |
Percentage Ownership Sold | 0.3500 | 0.4700 |
Debt Instrument, Face Amount | $ 17,383,890 | $ 22,724,476 |
Obligations Under Participation Agreements | Austin H. I. Owner LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 1,059,532 | |
Percentage Ownership Sold | 0.3000 | |
Debt Instrument, Face Amount | $ 1,050,000 | |
Obligations Under Participation Agreements | City Gardens 333 LLC (2) | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 4,048,428 | $ 13,184,648 |
Percentage Ownership Sold | 0.1400 | 0.4700 |
Debt Instrument, Face Amount | $ 4,046,781 | $ 13,182,584 |
Obligations Under Participation Agreements | High Pointe Mezzanine Investments, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 1,217,160 | |
Percentage Ownership Sold | 0.3720 | |
Debt Instrument, Face Amount | $ 1,116,000 | |
Obligations Under Participation Agreements | NB Private Capital, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 3,362,098 | $ 14,601,021 |
Percentage Ownership Sold | 0.1667 | 0.7240 |
Debt Instrument, Face Amount | $ 3,333,333 | $ 14,480,392 |
Obligations Under Participation Agreements | Orange Grove Property Investors, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 8,558,182 | $ 8,557,205 |
Percentage Ownership Sold | 0.8000 | 0.8000 |
Debt Instrument, Face Amount | $ 8,480,000 | $ 8,480,000 |
Obligations Under Participation Agreements | RS JZ Driggs, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 4,140,330 | $ 4,142,264 |
Percentage Ownership Sold | 0.5000 | 0.5000 |
Debt Instrument, Face Amount | $ 4,100,000 | $ 4,100,000 |
Obligations Under Participation Agreements | SparQ Mezz Borrower, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 3,231,689 | |
Percentage Ownership Sold | 0.3681 | |
Debt Instrument, Face Amount | $ 3,202,454 | |
Obligations Under Participation Agreements | Stonewall Station Mezz LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 4,371,496 | $ 4,344,635 |
Percentage Ownership Sold | 0.4400 | 0.4400 |
Debt Instrument, Face Amount | $ 4,334,813 | $ 4,308,817 |
Obligations Under Participation Agreements | The Bristol at Southport, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 10,043,088 | |
Percentage Ownership Sold | 0.4244 | |
Debt Instrument, Face Amount | $ 9,974,444 | |
Obligations Under Participation Agreements | TSG-Parcel 1, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | $ 2,020,000 | $ 6,868,000 |
Percentage Ownership Sold | 0.1111 | 0.3778 |
Debt Instrument, Face Amount | $ 2,000,000 | $ 6,800,000 |
Obligations Under Participation Agreements | Windy Hill PV Five CM, LLC | ||
Related Party Transaction | ||
Loans and Leases Receivable, Gross | 8,033,869 | |
Debt Instrument, Face Amount | $ 8,257,583 |
Related Party Transactions - Na
Related Party Transactions - Narratives (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Related Party Transaction | |||
Property Management Fee, Percent Fee | 1.00% | ||
Document Period End Date | Mar. 31, 2020 | ||
Distribution Paid | |||
Loans Disposition Fee Due to Manager | $ 1 | ||
Terra Fund 5, Terra JV and TIF3 | |||
Distribution Paid | |||
Investment Company, Tax Return of Capital Distribution | $ 8.8 | ||
Proceeds from Equity Method Investment, Distribution, Return of Capital | $ 8.3 | ||
Terra Fund 5 | |||
Distribution Paid | |||
Investment Company, Tax Return of Capital Distribution | $ 7.6 | ||
Proceeds from Equity Method Investment, Distribution, Return of Capital | $ 3.6 | ||
Limited Partner | |||
Related Party Transaction | |||
Percent of Origination Fees Payable | 0.01 | ||
Loans Disposition Fee Due to Manager Percent | 1.00% | ||
Disposition and Extension Fee Payment Term | 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. |
Related Party Transactions - Me
Related Party Transactions - Merger and Asset Contribution (Details) - shares | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 02, 2020 | Mar. 01, 2020 | Dec. 31, 2019 | |
Related Party Transaction | ||||
Common Stock, Shares, Issued | 19,700,151 | 4,574,470.35 | 15,125,681 | |
Equity Method Investment, Ownership Percentage | 90.00% | |||
Terra Fund 5 | ||||
Related Party Transaction | ||||
Investment Company, Contributed Capital to Committed Capital Ratio | 87.60% | |||
Terra Fund 7 | ||||
Related Party Transaction | ||||
Common Stock, Shares, Issued | 2,116,785.76 | |||
Investment Company, Contributed Capital to Committed Capital Ratio | 12.40% | |||
Terra International Fund 3 | ||||
Related Party Transaction | ||||
Common Stock, Shares, Issued | 2,457,684.59 |
Related Party Transactions - _2
Related Party Transactions - Narratives - Terra International 3 (Details) - USD ($) | Apr. 29, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Mar. 02, 2020 | Dec. 31, 2019 |
Related Party Transaction | |||||
Participating Mortgage Loans, Participation Liabilities, Amount | $ 67,700,000 | $ 49,800,000 | $ 103,200,000 | ||
Equity Method Investment, Ownership Percentage | 90.00% | ||||
TPT 2 and TIF 3 REIT | |||||
Related Party Transaction | |||||
Participating Mortgage Loans, Participation Liabilities, Amount | $ 49,800,000 | ||||
Terra International Fund 3 | |||||
Related Party Transaction | |||||
Proceeds from Contributed Capital | $ 3,600,000 | ||||
Investment Owned, Balance, Shares | 212,691 | ||||
Investment Company, Investment Income (Loss), Per Share | $ 17.02 | ||||
Income (Loss) from Discontinued Operations, Net of Tax, Per Outstanding Limited Partnership and General Partnership Unit, Basic and Diluted | $ 50,000 | ||||
Terra Fund 5 | |||||
Related Party Transaction | |||||
Investment Company, Contributed Capital to Committed Capital Ratio | 87.60% | ||||
Terra Fund 7 | |||||
Related Party Transaction | |||||
Investment Company, Contributed Capital to Committed Capital Ratio | 12.40% | ||||
Forecast | |||||
Related Party Transaction | |||||
Stock Redeemed or Called During Period, Shares | 212,691 |
Related Party Transactions - _3
Related Party Transactions - Narratives - Co-investment (Details) - Co-venturer [Member] | Jan. 31, 2018USD ($) |
Related Party Transaction | |
Investments in and Advances to Affiliates, Balance, Principal Amount | $ 8,900,000 |
Debt Instrument, Interest Rate, Stated Percentage | 12.75% |
Note 7 Related Party Transact_2
Note 7 Related Party Transactions Related Party Transactions - Transfers of Participation Interest - Subnote (Details) - USD ($) | Mar. 31, 2020 | Mar. 02, 2020 | Dec. 31, 2019 |
Related Party Transaction | |||
Participating Mortgage Loans, Participation Liabilities, Amount | $ 67,700,000 | $ 49,800,000 | $ 103,200,000 |
TPT 2 and TIF 3 REIT | |||
Related Party Transaction | |||
Participating Mortgage Loans, Participation Liabilities, Amount | $ 49,800,000 |
Debt - Outstanding borrowing un
Debt - Outstanding borrowing under the Master Repurchase Agreement (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument | ||
Amount Outstanding | $ 91,352,312 | $ 79,608,437 |
Line of Credit Facility, Expiration Date | Jun. 20, 2020 | |
Master Repurchase Agreement | ||
Debt Instrument | ||
Weighted Average Rate | 4.00% | 4.30% |
Amount Outstanding | $ 92,546,530 | $ 81,134,436 |
Amount Remaining Available | $ 57,453,470 | $ 68,865,564 |
Debt - Details of each borrowi
Debt - Details of each borrowing under the Master Repurchase Agreement (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument | ||
Debt Instrument, Face Amount | $ 176,784,964 | $ 201,624,466 |
Line of Credit Facility, Expiration Date | Jun. 20, 2020 | |
Collateral | ||
Debt Instrument | ||
Debt Instrument, Face Amount | $ 136,146,930 | |
Debt Instrument, Collateral Amount | 136,529,840 | |
Debt Instrument, Fair Value Disclosure | 135,750,312 | |
Master Repurchase Agreement | ||
Debt Instrument | ||
Debt Instrument, Face Amount | $ 92,546,530 | |
Debt Instrument Weighted Average Term | 1 year 6 months | 1 year 7 months |
330 Tryon DE LLC | Collateral | ||
Debt Instrument | ||
Debt Instrument, Face Amount | $ 22,800,000 | $ 22,800,000 |
Debt Instrument, Collateral Amount | 22,893,646 | 22,891,149 |
Debt Instrument, Fair Value Disclosure | $ 22,862,074 | 22,906,207 |
330 Tryon DE LLC | Master Repurchase Agreement | ||
Debt Instrument | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Debt Instrument, Face Amount | $ 17,100,000 | 17,100,000 |
Debt Instrument, Issuance Date | Feb. 15, 2019 | |
330 Tryon DE LLC | Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | |
1389 Peachtree St, L.P. and Others | Collateral | ||
Debt Instrument | ||
Debt Instrument, Face Amount | $ 41,523,796 | 38,464,429 |
Debt Instrument, Collateral Amount | 41,631,238 | 38,510,650 |
Debt Instrument, Fair Value Disclosure | $ 41,676,800 | 38,655,000 |
1389 Peachtree St, L.P. and Others | Master Repurchase Agreement | ||
Debt Instrument | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Debt Instrument, Face Amount | $ 24,448,102 | 24,040,268 |
Debt Instrument, Issuance Date | Mar. 7, 2019 | |
1389 Peachtree St, L.P. and Others | Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 2.35% | |
AGRE DCP Palm Springs LLC | Collateral | ||
Debt Instrument | ||
Debt Instrument, Face Amount | $ 30,514,799 | 30,184,357 |
Debt Instrument, Collateral Amount | 30,522,379 | 30,174,455 |
Debt Instrument, Fair Value Disclosure | $ 30,551,440 | 30,326,076 |
AGRE DCP Palm Springs LLC | Master Repurchase Agreement | ||
Debt Instrument | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Debt Instrument, Face Amount | $ 19,242,528 | 22,638,268 |
Debt Instrument, Issuance Date | Dec. 23, 2019 | |
AGRE DCP Palm Springs LLC | Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 2.50% | |
MSC Fields Peachtree Retreat LLC | Collateral | ||
Debt Instrument | ||
Debt Instrument, Face Amount | $ 23,308,335 | 23,308,335 |
Debt Instrument, Collateral Amount | 23,444,431 | 23,446,793 |
Debt Instrument, Fair Value Disclosure | $ 22,886,081 | 23,418,996 |
MSC Fields Peachtree Retreat LLC | Master Repurchase Agreement | ||
Debt Instrument | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Debt Instrument, Face Amount | $ 17,355,900 | 17,355,900 |
Debt Instrument, Issuance Date | Mar. 25, 2019 | |
MSC Fields Peachtree Retreat LLC | Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | |
Patrick Henry Recovery Acquisition LLC | Collateral | ||
Debt Instrument | ||
Debt Instrument, Face Amount | $ 18,000,000 | 114,757,121 |
Debt Instrument, Collateral Amount | 18,038,146 | 115,023,047 |
Debt Instrument, Fair Value Disclosure | $ 17,773,917 | 115,306,279 |
Patrick Henry Recovery Acquisition LLC | Master Repurchase Agreement | ||
Debt Instrument | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Debt Instrument, Face Amount | $ 14,400,000 | $ 81,134,436 |
Debt Instrument, Issuance Date | Jan. 6, 2020 | |
Patrick Henry Recovery Acquisition LLC | Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 2.00% | |
Floor rate | 330 Tryon DE LLC | Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 2.52% | |
Floor rate | AGRE DCP Palm Springs LLC | Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 1.80% | |
Floor rate | MSC Fields Peachtree Retreat LLC | Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 2.00% | |
Floor rate | Patrick Henry Recovery Acquisition LLC | Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | |
Centennial Bank | ||
Debt Instrument | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Centennial Bank | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 3.85% | |
Centennial Bank | Floor rate | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 2.23% |
Debt - Outstanding Borrowing _2
Debt - Outstanding Borrowing under Master purchase agreement - Subnote (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument | ||
Unarmortized Finance Cost | $ 1,058,106 | $ (1,400,000) |
Master Repurchase Agreement | LIBOR | ||
Debt Instrument | ||
Long-term Debt, Percentage Bearing Variable Interest, Percentage Rate | 0.99% |
Debt - Mortgage Loan Payable (D
Debt - Mortgage Loan Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument | ||
Obligation under participation agreement | $ 67,670,405 | $ 103,186,327 |
Debt Instrument, Face Amount | 176,784,964 | 201,624,466 |
Mortgage Loans on Real Estate Carrying value | $ 44,687,123 | 44,753,633 |
Centennial Bank | ||
Debt Instrument | ||
Debt Instrument, Description of Variable Rate Basis | LIBOR | |
Maturity Date | Sep. 27, 2020 | |
Mortgage Loans on Real Estate Carrying value | $ 44,687,123 | 44,753,633 |
Loans Pledged as Collateral | $ 51,974,077 | $ 52,776,236 |
Centennial Bank | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 3.85% | |
Floor rate | Centennial Bank | LIBOR | ||
Debt Instrument | ||
Debt Instrument, Basis Spread on Variable Rate | 2.23% | |
Multifamily | ||
Debt Instrument | ||
Obligation under participation agreement | $ 44,500,000 |
Debt - Scheduled Debt Principal
Debt - Scheduled Debt Principal Payments (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument | ||
Long-Term Debt, Maturity, Year One | $ 172,028,385 | |
Long-Term Debt, Maturity, Year Two | 0 | |
Long-Term Debt, Maturity, Year Three | 0 | |
Long-Term Debt, Maturity, Year Four | 0 | |
Long-Term Debt, Maturity, Year Five | 0 | |
Long-Term Debt, Maturity, after Year Five | 172,028,385 | |
Unarmortized Finance Cost | (1,058,106) | $ 1,400,000 |
Long Term Debt Net | $ 170,970,279 |
Debt - Narratives - Purchase ag
Debt - Narratives - Purchase agreement, Revolving credit facility (Details) | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 20, 2019USD ($) | Dec. 12, 2018USD ($) | |
Repurchase Agreements | ||||||
Payment of financing costs | $ 84,175 | $ 226,738 | ||||
Document Period End Date | Mar. 31, 2020 | |||||
Repayment of borrowings under repurchase agreements | $ 3,395,740 | 0 | ||||
Proceeds from borrowings under repurchase agreement | 14,807,834 | 45,347,521 | ||||
Unarmortized Finance Cost | 1,058,106 | $ (1,400,000) | ||||
Proceeds from lines of credit | $ 35,000,000 | $ 0 | ||||
Revolving Credit Facility | ||||||
Line of Credit Facility, Expiration Date | Jun. 20, 2020 | |||||
Obligation under participation agreement | $ 67,670,405 | 103,186,327 | ||||
Revolving Credit Facility | ||||||
Revolving Credit Facility | ||||||
Line of Credit Facility, Expiration Date | Jun. 20, 2020 | |||||
Revolving Credit Facility | Floor rate | ||||||
Revolving Credit Facility | ||||||
Debt Instrument, Basis Spread on Variable Rate | 6.00% | |||||
Revolving Credit Facility | LIBOR | ||||||
Revolving Credit Facility | ||||||
Debt Instrument, Basis Spread on Variable Rate | 4.00% | |||||
Revolving Credit Facility | Prime Rate | ||||||
Revolving Credit Facility | ||||||
Debt Instrument, Basis Spread on Variable Rate | 1.00% | |||||
Minimum | Revolving Credit Facility | ||||||
Revolving Credit Facility | ||||||
Line of Credit Facility, Periodic Payment, Principal | $ 1,000,000 | |||||
Maximum | Revolving Credit Facility | ||||||
Revolving Credit Facility | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | 25,000,000 | |||||
Master Repurchase Agreement | ||||||
Repurchase Agreements | ||||||
Payment of financing costs | 2,800,000 | |||||
Deferred Costs | $ 1,200,000 | |||||
Maximum Liability Under Repurchase Agreement Percent | 0.5 | |||||
Debt Instrument, Increase, Accrued Interest | $ 0 | |||||
Financing Receivable, Unamortized Loan Fee (Cost) | $ 1,500,000 | |||||
Master Repurchase Agreement | Minimum | ||||||
Repurchase Agreements | ||||||
EBITDA To Interest Expense Ratio | 1.50 | |||||
Master Repurchase Agreement | Maximum | ||||||
Repurchase Agreements | ||||||
Banking Regulation, Tangible Capital Ratio, Actual | 3 | |||||
Israel Discount Bank of New York | Revolving Credit Facility | ||||||
Repurchase Agreements | ||||||
Minimum Net Worth Required for Compliance | $ 200,000,000 | |||||
Ratio of Indebtedness to Net Capital | 1.75 | |||||
Israel Discount Bank of New York | Minimum | Revolving Credit Facility | ||||||
Repurchase Agreements | ||||||
EBITDA To Interest Expense Ratio | 1 | |||||
Israel Discount Bank of New York | Terra LOC Portfolio I, LLC | Revolving Credit Facility | ||||||
Repurchase Agreements | ||||||
Minimum Net Worth Required for Compliance | $ 100,000,000 | |||||
Revolving Credit Facility | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 35,000,000 | |||||
Line of Credit Facility, Fair Value of Amount Outstanding | 35,000,000 | |||||
Goldman Sachs Bank USA | Terra Mortgage Capital LLC | Master Repurchase Agreement | ||||||
Revolving Credit Facility | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 150,000,000 | |||||
Forecast | Master Repurchase Agreement | Minimum | ||||||
Repurchase Agreements | ||||||
Debt Instrument, Increase, Accrued Interest | $ 4,200,000 | |||||
Multifamily | ||||||
Revolving Credit Facility | ||||||
Obligation under participation agreement | $ 44,500,000 |
Debt - Narratives - Loan Partic
Debt - Narratives - Loan Participation Agreement (Details) - USD ($) | Mar. 31, 2020 | Mar. 02, 2020 | Dec. 31, 2019 |
Debt Instrument | |||
Participating Mortgage Loans, Participation Liabilities, Amount | $ 67,700,000 | $ 49,800,000 | $ 103,200,000 |
Participating Mortgage Loans, Liabilities Carrying Value | $ 177,200,000 | $ 203,000,000 | |
Weighted average | |||
Debt Instrument | |||
Participating Mortgage Loans, Mortgage Interest Rate | 10.80% | 11.80% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Unfunded Commitment Outstanding | $ 107,000,000 | $ 3,600,000 |
Equity - Preferred Stock Classe
Equity - Preferred Stock Classes (Details) - USD ($) | Nov. 30, 2016 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2016 |
Class of Stock | |||||
Preferred stock dividend declared | $ 3,906 | $ 3,906 | |||
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 | |||
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 | |||
Preferred Stock, Shares Issued | 0 | 0 | |||
Preferred Stock, Shares Outstanding | 0 | 0 | |||
Common Stock, Value, Issued | $ 197,002 | $ 151,257 | |||
Redeemable Cumulative Preferred Stock | |||||
Class of Stock | |||||
Preferred Stock, Dividend Rate, Percentage | 12.50% | ||||
Preferred Stock, Liquidation Preference Per Share | $ 1,000 | ||||
Preferred Stock Shares Sold | 125 | ||||
Preferred Stock Value Sold | $ 125,000 | ||||
Preferred Stock, Shares Authorized | 125 | ||||
Preferred Stock, Dividend Payment Terms | These dividends are cumulative and payable semi-annually in arrears on June 30 and December 31 of each year | ||||
Preferred Stock, Redemption Price Per Share | $ 1,000 | ||||
Preferred Stock Redemption Premium Per Share | $ 50 |
Equity - Common Stock (Details)
Equity - Common Stock (Details) - USD ($) | Apr. 29, 2020 | Mar. 01, 2020 | Mar. 31, 2020 | Mar. 02, 2020 | Dec. 31, 2019 | Sep. 30, 2019 |
Schedule of Equity Method Investments | ||||||
Common Stock, Shares, Issued | 19,700,151 | 4,574,470.35 | 15,125,681 | |||
Common Stock, Value, Issued | $ 197,002 | $ 151,257 | ||||
Subsequent Event | ||||||
Schedule of Equity Method Investments | ||||||
Stock Repurchased During Period, Shares | 212,691 | |||||
Terra JV | ||||||
Schedule of Equity Method Investments | ||||||
Percent Of Shares Issued And Outstanding Owned | 0.864 | |||||
Terra Fund 5 | Terra JV | ||||||
Schedule of Equity Method Investments | ||||||
Percent Of Ownership In Joint Venture | 12.40% | |||||
TIF 3 REIT | ||||||
Schedule of Equity Method Investments | ||||||
Common Stock, Shares, Issued | 2,457,684.50 | 212,691 | ||||
Common Stock, Par Value | $ 17.02 | |||||
Common Stock, Value, Issued | $ 3,600,000 | |||||
TIF 3 REIT | Terra JV | ||||||
Schedule of Equity Method Investments | ||||||
Percent Of Ownership In Joint Venture | 86.70% | |||||
Common Stock | Terra Fund 7 | ||||||
Schedule of Equity Method Investments | ||||||
Business Combination Common Stock Shares | 2,116,785.76 |
Equity - Distributions (Details
Equity - Distributions (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Schedule of Equity Method Investments | ||
Dividends, Preferred Stock, Stock | $ 3,906 | $ 3,906 |
Terra Fund 5, Terra JV and TIF3 | ||
Schedule of Equity Method Investments | ||
Investment Company, Tax Return of Capital Distribution | 8,800,000 | |
Proceeds from Equity Method Investment, Distribution, Return of Capital | $ 8,300,000 | |
Terra Fund 5 | ||
Schedule of Equity Method Investments | ||
Investment Company, Tax Return of Capital Distribution | 7,600,000 | |
Proceeds from Equity Method Investment, Distribution, Return of Capital | $ 3,600,000 |