Terra Property Trust, Inc.

What they do

The company originates, invests in and manages a portfolio of real estate and real estate-related assets, focused primarily on commercial real estate credit investments including first mortgage loans, subordinated loans (B-notes, mezzanine and preferred equity) and credit facilities across the United States. Loans finance acquisition, development or recapitalization of commercial real estate, with a focus on middle-market loans of approximately $10 million to $50 million. Each investment was originated by Terra Capital Partners or its affiliates, and the portfolio as of December 31, 2025 spanned nine markets across seven states, including multifamily, student housing, commercial office, retail, mixed-use and infill properties. It is externally managed by Terra REIT Advisors, LLC and has elected REIT tax status since its taxable year ended December 31, 2016.

Revenue drivers

• Commercial real estate loan portfolio — Interest income from first mortgage loans, subordinated loans, mezzanine and preferred equity, and credit facilities. Loans held for investment, net, were $67.9 million at June 30, 2026, down from $134.6 million at December 31, 2025.
• Loans held through participation — Participations in loans generated $19.4 million net of allowance at June 30, 2026, versus $18.7 million at year-end 2025, a relatively stable book.
• Equity interests in unconsolidated investments — Equity interest in unconsolidated investments was $91.0 million at June 30, 2026, down from $94.2 million at December 31, 2025, and represents a large share of the $249.6 million total assets.
• Real estate owned — Land, building and building improvements, net were $46.3 million at June 30, 2026, alongside $0.3 million of lease intangible assets, producing rental-related revenue from owned property.

Recent performance

Annual revenue declined from $67.9 million in 2023 to $49.7 million in 2024 and $35.4 million in 2025, while net loss narrowed from $56.9 million in 2023 to $37.2 million in 2024 and $27.8 million in 2025. Diluted EPS improved from negative $2.34 in 2023 to negative $1.14 in 2025. Quarterly revenue was $7.3 million in 2025-09-30 and $7.1 million in 2025-12-31, then dropped to $3.2 million in 2026-03-31 before recovering to $4.6 million in 2026-06-30. Total assets fell to $249.6 million at June 30, 2026 from $351.5 million at December 31, 2025, with unsecured notes payable of $117.9 million at year-end 2025 fully absent from the June 30, 2026 balance sheet.

Strategy

Management is pursuing exchange offers to exchange all outstanding 6.00% unsecured senior notes due 2026 and Terra LLC's 7.00% unsecured senior notes due 2026 for newly issued 7.00% Senior Secured Notes due 2029. The exchange notes would be secured by a perfected first lien pledge in the equity interests of certain direct subsidiaries, and the company is also soliciting consents to amend the TPT Notes indenture to eliminate substantially all restrictive covenants. The registration statement was amended on March 12, 2026 to reduce the interest rate on the new notes from 9.75% to 7.00% and extend the expiration to March 26, 2026. The company engaged Portage Point Partners as restructuring banker and Alston & Bird LLP as restructuring counsel, which could include evaluating strategic alternatives and restructuring options. Day-to-day, the company continues to originate and manage middle-market credit investments through its external manager.

Risks

• No public market for common stock — The company states there is no established trading market for its common stock and no assurance one will develop, making it difficult for holders to sell shares or obtain a price.
• Note maturities and liquidity — TIF6 owes approximately $38.4 million of notes and the company owed approximately $80.4 million of TPT Notes as of December 31, 2025; the company said there may not be sufficient liquidity for TIF6 to repay its notes at maturity while remaining a going concern.
• Exchange offer uncertainty — As of March 12, 2026 only 3.80% of TPT Notes and 0.37% of TIF6 Notes had been tendered, and the company cannot assure that it will obtain alternative or additional liquidity on acceptable terms.
• Shrinking loan portfolio — Loans held for investment, net declined to $67.9 million at June 30, 2026 from $134.6 million at December 31, 2025, and total assets fell to $249.6 million from $351.5 million, which reduces the earning asset base.

Outlook

Management's disclosed focus is completing the exchange offers and consent solicitation for the existing unsecured notes and addressing the TIF6 Notes maturity, while evaluating all options in accordance with its fiduciary duties. The company has flagged uncertainty about whether it can obtain alternative or additional liquidity to repay any remaining TPT Notes. No forward financial guidance is provided in the excerpted materials.