Terra Property Trust Inc

Previous wording

•actual and potential conflicts of interest with any of the following affiliated entities: Terra Fund Advisors, LLC, Terra REIT Advisors, LLC (our “Manager”); Terra Capital Partners, LLC (“Terra Capital Partners”), our sponsor; Terra Income Fund 6, Inc. (“Terra Fund 6” or “Terra BDC”); Terra Secured Income Fund 5 International; Terra Income Fund International; Terra Secured Income Fund 7, LLC (“Terra Fund 7”); Terra Offshore Funds REIT, LLC (“Terra Offshore REIT”); Mavik Real Estate Special Opportunities Fund, LP (“RESOF”); or any of their affiliates;

Current wording

•actual and potential conflicts of interest with any of the following affiliated entities: Terra Fund Advisors, LLC, Terra REIT Advisors, LLC (our “Manager”); Terra Capital Partners, LLC (“Terra Capital Partners”), our sponsor; Terra Secured Income Fund 5 International; Terra Income Fund International; Terra Secured Income Fund 7, LLC (“Terra Fund 7”); Terra Offshore Funds REIT, LLC (“Terra Offshore REIT”); Mavik Real Estate Special Opportunities Fund, LP (“RESOF”); or any of their affiliates;

Previous wording

As of June 30, 2024, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of 17 loans in nine states with an aggregate net principal balance of $400.3 million, a weighted average coupon rate of 12.8% and a weighted average remaining term to maturity of 0.9 years.

Current wording

As of September 30, 2024, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of 14 loans in nine states with an aggregate net principal balance of $297.9 million, a weighted average coupon rate of 12.7% and a weighted average remaining term to maturity of 1.0 years.

Previous wording

Each of our loans was originated by Terra Capital Partners or its affiliates. Our portfolio is diversified based on location of the underlying properties, loan structure and property type. As of June 30, 2024, our portfolio included underlying properties located in 17 markets, across nine states and includes property types such as multifamily housing, student housing, commercial offices, medical offices, mixed-use and industrial properties. The profile of these properties ranges from stabilized and value-added properties to pre-development and construction. Our loans are structured across mezzanine debt, first mortgages, preferred equity investments and credit facilities.

Current wording

Each of our loans was originated by Terra Capital Partners or its affiliates. Our portfolio is diversified based on location of the underlying properties, loan structure and property type. As of September 30, 2024, our portfolio included underlying properties located in 14 markets, across nine states and includes property types such as multifamily housing, student housing, commercial offices, medical offices, mixed-use and industrial properties. The profile of these properties ranges from stabilized and value-added properties to pre-development and construction. Our loans are structured across mezzanine debt, first mortgages, preferred equity investments and credit facilities.

Previous wording

On October 1, 2022, pursuant to that certain Agreement and Plan of Merger, dated as of May 2, 2022 (the “Merger Agreement”), Terra BDC merged with and into Terra Income Fund 6, LLC (“Terra LLC”), our wholly owned subsidiary, with Terra LLC continuing as the surviving entity of the merger (the “BDC Merger”) and as our wholly owned subsidiary. Pursuant to the terms of the transactions described in the Merger Agreement, approximately 4,847,910 shares of our Class B Common Stock, $0.01 par value per share ("Class B Common Stock"), were issued to former Terra BDC stockholders in connection with the BDC Merger, based on the number of outstanding shares of Terra BDC Common Stock as of October 1, 2022.

Current wording

On October 1, 2022, pursuant to that certain Agreement and Plan of Merger, dated as of May 2, 2022 (the “Merger Agreement”), Terra Income Fund 6, Inc. (“Terra BDC”) merged with and into Terra Income Fund 6, LLC (“Terra LLC”), our wholly owned subsidiary, with Terra LLC continuing as the surviving entity of the merger (the “BDC Merger”) and as our wholly owned subsidiary. Pursuant to the terms of the transactions described in the Merger Agreement, approximately 4,847,910 shares of our Class B Common Stock, $0.01 par value per share ("Class B Common Stock"), were issued to former Terra BDC stockholders in connection with the BDC Merger, based on the number of outstanding shares of Terra BDC Common Stock as of October 1, 2022.

Previous wording

(1)These loans pay a coupon rate of London Interbank Offered Rate (“LIBOR”), Secured Overnight Financing Rate (“SOFR”), or forward-looking term rate SOFR (“Term SOFR”) plus a fixed spread. Coupon rates shown were determined using LIBOR of 5.45%, average SOFR of 5.34% and Term SOFR of 5.34% as of June 30, 2024, and LIBOR of 5.47%, average SOFR of 5.34% and Term SOFR of 5.35% as of December 31, 2023.

Current wording

(1)These loans pay a coupon rate of Secured Overnight Financing Rate (“SOFR”), or forward-looking term rate SOFR (“Term SOFR”) plus a fixed spread. Coupon rates shown were determined using average SOFR of 5.16% and Term SOFR of 4.85% as of September 30, 2024, and average SOFR of 5.34% and Term SOFR of 5.35% as of December 31, 2023.

Previous wording

(2)As of June 30, 2024 and December 31, 2023, amount included $302.6 million and $342.9 million of senior mortgages used as collateral for $192.5 million and $204.9 million of borrowings under credit facilities, respectively.

Current wording

(2)As of September 30, 2024 and December 31, 2023, amount included $201.4 million and $342.9 million of senior mortgages used as collateral for $120.6 million and $204.9 million of borrowings under credit facilities, respectively.

Previous wording

In addition to our net loan portfolio, we own eight industrial buildings. As of June 30, 2024 and December 31, 2023, the real estate and related lease intangible assets and liabilities had a net carrying value of $127.4 million and $129.8 million, respectively, and the mortgage loans payable encumbering the real estate properties had an outstanding principal amount of $74.4 million and $73.5 million, respectively.

Current wording

In addition to our net loan portfolio, we own eight industrial buildings. As of September 30, 2024 and December 31, 2023, the real estate and related lease intangible assets and liabilities had a net carrying value of $126.4 million and $129.8 million, respectively, and the mortgage loans payable encumbering the real estate properties had an outstanding principal amount of $74.4 million and $73.5 million, respectively.

Previous wording

As of both June 30, 2024 and December 31, 2023, we owned 14.9% of equity interest in a limited partnership that invests primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. We also beneficially own equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, a non-real estate operating company, as well as a preferred equity investment with residual profit sharing from sale of the underlying property. These investments are accounted for using the equity method of accounting. As of June 30, 2024 and December 31, 2023, these equity investments had total carrying value of $70.7 million and $37.2 million, respectively.

Current wording

As of both September 30, 2024 and December 31, 2023, we owned 14.9% of equity interest in a limited partnership that invests primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. We also beneficially own equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, non-real estate operating companies, as well as a preferred equity investment with residual profit sharing from sale of the underlying property. These investments are accounted for using the equity method of accounting. As of September 30, 2024 and December 31, 2023, these equity investments had total carrying value of $80.8 million and $37.2 million, respectively.

Previous wording

We calculate our book value per share by dividing our net equity by the number of outstanding shares of our common stock, unless otherwise determined by our Board. Our book value per share of Class B Stock Common Stock as of June 30, 2024 and December 31, 2023 was $8.98 and $9.93, respectively.

Current wording

We calculate our book value per share by dividing our net equity by the number of outstanding shares of our common stock, unless otherwise determined by our Board. Our book value per share of Class B Stock Common Stock as of September 30, 2024 and December 31, 2023 was $8.47 and $9.93, respectively.

Previous wording

For the three months ended June 30, 2024 and 2023, we invested $46.3 million and $7.5 million in new and add-on investments and had $54.6 million and $6.4 million of repayments, resulting in net repayments of $8.3 million and net investments of $1.1 million, respectively. Amounts are net of obligations under participation agreements and secured financing agreements.

Current wording

For the three months ended September 30, 2024 and 2023, we invested $15.3 million and $3.9 million in new and add-on investments and had $21.7 million and $16.5 million of repayments, resulting in net repayments of $6.4 million and $12.6 million, respectively. Amounts are net of obligations under participation agreements and secured financing agreements.

Previous wording

For the six months ended June 30, 2024 and 2023, we invested $57.7 million and $33.2 million in new and add-on investments and had $82.2 million and $46.3 million of repayments, resulting in net repayments of $24.5 million and $13.1 million, respectively. Amounts are net of obligations under participation agreements and secured financing agreements.

Current wording

For the nine months ended September 30, 2024 and 2023, we invested $73.1 million and $37.1 million in new and add-on investments and had $103.8 million and $29.8 million of repayments, resulting in net repayments of $30.8 million and net investments of $7.3 million, respectively. Amounts are net of obligations under participation agreements and secured financing agreements.

Previous wording

For the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, interest income decreased by $7.4 million and $10.9 million, respectively primarily due to a decrease in contractual interest income as a result of a decrease in the weighted average principal balance of performing loans as well as an increase in suspended interest income accrual on non-performing loans of $3.0 million and $5.4 million, respectively, partially offset by an increase in the weighted average coupon rate due to increases in the underlying index rates.

Current wording

For the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, interest income decreased by $14.2 million, primarily due to a decrease in contractual interest income as a result of a decrease in the weighted average principal balance of performing loans as well as an increase in suspended interest income accrual on non-performing loans of $5.3 million, partially offset by an increase in the weighted average coupon rate due to increases in the underlying index rates.

Previous wording

For the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, real estate operating revenue decreased by $0.1 million, primarily due to a reduction in lease revenue resulting from the disposal of the office building in October 2023, substantially offset by an increase in lease revenue contributed by the five industrial buildings acquired in May 2023.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, real estate operating revenue decreased by $1.4 million and $0.1 million, respectively, primarily due to a reduction in lease revenue resulting from the disposal of the office building in October 2023, partially offset by an increase in lease revenue contributed by the five industrial buildings acquired in May 2023.

Previous wording

For both the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, operating expenses reimbursed to our Manager increased by $0.2 million, primarily due to an increase in our Manager’s overhead costs.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, operating expenses reimbursed to our Manager decreased by $1.1 million and $0.9 million, respectively, primarily due to a decrease in our Manager’s overhead costs as well as a decrease in the allocation ratio.

Previous wording

For the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, asset management fees decreased by $0.5 million and $0.8 million, respectively, primarily due to a decrease in total assets under management primarily resulting from repayment of loans.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, asset management fees decreased by $0.5 million and $1.3 million, respectively, primarily due to a decrease in total assets under management primarily resulting from repayment of loans.

Previous wording

For the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, asset servicing fees decreased by $0.1 million and $0.2 million, respectively, primarily due to a decrease in total assets under management resulting from the repayment of loans.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, asset servicing fees decreased by $0.1 million and $0.3 million, respectively, primarily due to a decrease in total assets under management resulting from the repayment of loans.

Previous wording

On January 1, 2023, we adopted the provisions of ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses.

Current wording

On January 1, 2023, we adopted the provisions of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses.

Previous wording

For the three and six months ended June 30, 2024, provision for credit losses was $2.6 million and $4.4 million, respectively, primarily related to the decline in fair value of collateral underlying one loan in the investment portfolio as well as a decline in modeled macroeconomic forecasts for commercial real estate.

Current wording

For the nine months ended September 30, 2024, provision for credit losses was $3.8 million, primarily related to a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in senior funding as well as a decline in modeled macroeconomic forecasts for commercial real estate.

Previous wording

For thethree and six months ended June 30, 2023, provision for credit losses was $4.7 million and $3.8 million, respectively, primarily due to a decline in the fair value of the collateral on a loan.

Current wording

For thethree and nine months ended September 30, 2023, provision for credit losses was $27.1 million and $30.9 million, respectively, primarily due to a decline in the fair value of the collateral on a loan.

Previous wording

For the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, real estate operating expenses decreased by $1.1 million and $1.6 million, respectively, primarily due to a reduction in ground lease rent on the office building disposed of in October 2023, partially offset by an increase in real estate operating expenses related to the industrial buildings that we acquired in 2023.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, real estate operating expenses decreased by $1.3 million and $2.9 million, respectively, primarily due the disposal of the office building in October 2023.

Previous wording

For the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, depreciation and amortization decreased by $0.01 million, primarily due to the disposal of the office building in October 2023, substantially offset by an increase in depreciation and amortization related to 5 industrial buildings that we acquired in May 2023.

Current wording

For the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, depreciation and amortization decreased by $0.8 million, primarily due to the disposal of the office building in October 2023, partially offset by an increase in depreciation and amortization related to 5 industrial buildings that we acquired in May 2023.

Previous wording

For the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, depreciation and amortization increased by $1.4 million, primarily due to the industrial buildings that we acquired in 2023, partially offset by a reduction in depreciation and amortization related to the disposal of the office building in October 2023.

Current wording

For the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, depreciation and amortization increased by $0.6 million, primarily due to the industrial buildings that we acquired in 2023, partially offset by a reduction in depreciation and amortization related to the disposal of the office building in October 2023.

Previous wording

For both the three and six months ended June 30, 2023, we recognized an impairment charge of $11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value. There was no impairment charge recorded for the three and six months ended June 30, 2024.

Current wording

For the nine months ended September 30, 2023, we recognized an impairment charge of $11.8 million on the multi-tenant office building located in California in order to reduce the carrying value of the building to its estimated fair value. There was no impairment charge for the three and nine months ended September 30, 2024 and the three months ended September 30, 2023.

Previous wording

For the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, interest expense on secured financing decreased by $0.9 million as a result of a decrease in the weighted average principal amount outstanding, partially offset by an increase in the index rate on secured financing agreements.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, interest expense on secured financing decreased by $0.8 million and $0.5 million, respectively, as a result of a decrease in the weighted average principal amount outstanding, partially offset by an increase in the index rate on secured financing agreements.

Previous wording

For the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, interest expense on unsecured notes payable remained substantially the same.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, interest expense on unsecured notes payable remained substantially the same.

Previous wording

For the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, interest expense from obligations under participation agreements increased by $0.2 million and $0.3 million, respectively, primarily as a result of an increase in the weighted average interest rate on the outstanding obligations under participation agreements as well as an increase in the weighted average principal amount outstanding.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, interest expense from obligations under participation agreements increased by $0.5 million and $0.8 million, respectively, primarily as a result of an increase in the weighted average interest rate on the outstanding obligations under participation agreements as well as an increase in the weighted average principal amount outstanding.

Previous wording

For the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, unrealized gain on investments, net increased by $0.2 million and $0.1 million, respectively, primarily due to an increase in the fair value of our marketable securities at period end.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, unrealized loss on investments, net decreased by $1.0 million and $1.1 million, respectively, primarily due to an increase in the fair value of our marketable securities at period end.

Previous wording

As of both June 30, 2024 and December 31, 2023, we owned a 14.9% equity interest in RESOF, a limited partnership that invests primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. We also beneficially owned equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, a non-real estate operating company, and a preferred equity investment with residual profit-sharing.

Current wording

As of both September 30, 2024 and December 31, 2023, we owned a 14.9% equity interest in RESOF, a limited partnership that invests primarily in performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. We also beneficially owned equity interests in joint ventures that invest in real estate properties, opportunistic debt and equity securities and, indirectly, together with other non-affiliated entities, non-real estate operating companies, and a preferred equity investment with residual profit-sharing.

Previous wording

For the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, equity loss from the joint ventures decreased primarily due to a gain on sale of a real estate property, partially offset by an increase in depreciation and amortization and interest expense recognized by the joint ventures.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, equity loss from the joint ventures increased primarily due to an increase in depreciation, amortization and interest expense recognized by the joint ventures.

Previous wording

For the three and six months ended June 30, 2024, we sold a portion of our investments in marketable equity securities and recognized a net loss on sale of $0.3 million and $0.4 million, respectively.

Current wording

For the nine months ended September 30, 2024, we sold a portion of our investments in marketable equity securities and recognized a net loss on sale of $0.4 million. There was no such realized loss on investments for the three months ended September 30, 2024.

Previous wording

For both the three and six months ended June 30, 2023, our held-to-maturity debt securities that we purchased at a premium was redeemed at par and we recognized a net loss investment of $0.03 million.

Current wording

For the nine months ended September 30, 2023, our held-to-maturity debt securities that we purchased at a premium was redeemed at par and we recognized a net loss investment of $0.03 million. There was no such realized loss on investments for the three months ended September 30, 2023.

Previous wording

For the three and six months ended June 30, 2024 as compared to the three and six months ended June 30, 2023, the resulting net loss decreased by $11.7 million and $5.0 million, respectively.

Current wording

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, the resulting net loss decreased by $9.7 million and $14.6 million, respectively.

Previous wording

We expect to fund approximately $19.1 million of the unfunded commitments to borrowers as well as $15.0 million of the unfunded commitment on a subscription agreement during the next twelve months. We expect to maintain sufficient liquidity to fund such commitments through matching these commitments with principal repayments on outstanding loans or draw downs on our credit facilities. Obligation under participation agreement of $15.0 million will mature in the next twelve months. We use the proceeds from the repayment of the corresponding investment to repay the participation obligation. Our revolving line of credit with outstanding principal balance of $34.8 million is to come due on December 31, 2024 and our Goldman Sachs Bank repurchase agreement with outstanding principal balance of $76.3 million is to come due on February 18, 2025. We expect to either extend the facility term of the facilities or convert the facilities to a term loan with maturity co-terminus with the underlying loans and use the proceeds from the repayment of the underlying loans to repay the term loans, or refinance with another lender. Additionally, two promissory notes payable with a total outstanding principal balance of $68.5 million that is collateralized by senior loans with aggregate principal balance of $113.9 million will mature within the next twelve months. We expect to use proceeds from the repayment of the underlying loans to repay the promissory notes payable.

Current wording

We expect to fund approximately $19.8 million of the unfunded commitments to borrowers as well as $15.0 million of the unfunded commitment on a subscription agreement during the next twelve months. We expect to maintain sufficient liquidity to fund such commitments through matching these commitments with principal repayments on outstanding loans or draw downs on our credit facilities. Obligation under participation agreement of $15.0 million will mature in the next twelve months. We use the proceeds from the repayment of the corresponding investment to repay the participation obligation. Our revolving line of credit with outstanding principal balance of $34.8 million is to come due on December 31, 2024 and our Goldman Sachs Bank repurchase agreement with outstanding principal balance of $48.2 million is to come due on February 18, 2025. We expect to either extend the term of the facilities or convert the facilities to a term loan with maturity co-terminus with the underlying loans and use the proceeds from the repayment of the underlying loans to repay the term loans, or refinance with another lender. Additionally, two promissory notes payable with a total outstanding principal balance of $22.3 million that is collateralized by senior loans with aggregate principal balance of $50.9 million will mature within the next twelve months. We expect to use proceeds from the repayment of the underlying loans to repay the promissory notes payable.

Previous wording

For the six months ended June 30, 2024, cash flows used in operating activities was $7.3 million, compared to cash flow from operating activities of $12.0 million for the six months ended June 30, 2023. The decrease in operating cash flows was primarily due to a decrease in net contractual interest income.

Current wording

For the nine months ended September 30, 2024, cash flows used in operating activities was $5.6 million, compared to cash flow from operating activities of $6.0 million for the nine months ended September 30, 2023. The decrease in operating cash flows was primarily due to a decrease in net contractual interest income.

Previous wording

Cash Flows Provided by (Used in) Investing Activities

Current wording

Cash Flows Provided by Investing Activities

Previous wording

For the six months ended June 30, 2024, cash flows provided by investing activities were $39.4 million, primarily related to proceeds from repayment of loans of $110.4 million and promissory note receivable of $9.0 million, partially offset by origination and purchase of loans of $42.6 million and purchase of equity interests in unconsolidated investments of $36.6 million.

Current wording

For the nine months ended September 30, 2024, cash flows provided by investing activities were $117.9 million, primarily related to proceeds from repayment of loans of $206.0 million and promissory note receivable of $9.5 million, partially offset by origination and purchase of loans of $49.8 million and purchase of equity interests in unconsolidated investments of $47.2 million.

Previous wording

For the six months ended June 30, 2023, cash flows used in investing activities were $6.8 million, primarily related to origination and purchase of loans of $63.8 million, purchase of real estate properties of $52.3 million, and purchase of held-to-maturity securities of $20.0 million, partially offset by proceeds from repayments of loans of $99.0 million, proceeds from sale of debt securities of $20.0 million and return of capital on unconsolidated investments of $10.7 million.

Current wording

For the nine months ended September 30, 2023, cash flows provided by investing activities were $0.6 million, primarily related to proceeds from repayments of loans of $123.4 million, proceeds from sale of debt securities of $20.0 million and return of capital on unconsolidated investments of $11.3 million, partially offset by origination and purchase of loans of $73.1 million, purchase of real estate properties of $52.5 million, and purchase of debt securities of $20.0 million and purchase of marketable securities of $7.9 million.

Previous wording

For the six months ended June 30, 2024, cash flows used in financing activities were $21.2 million, primarily related to principal repayments on secured financing of $84.8 million, distributions paid of $9.3 million and payment for financing costs of $1.1 million, partially offset by proceeds from secured financing of $58.2 million and proceeds from obligations under participation agreements of $15.0 million.

Current wording

For the nine months ended September 30, 2024, cash flows used in financing activities were $98.7 million, primarily related to principal repayments on secured financing of $159.1 million, distributions paid of $13.9 million and payment for financing costs of $1.1 million, partially offset by proceeds from secured financing of $60.7 million and proceeds from obligations under participation agreements of $15.0 million.

Previous wording

For the six months ended June 30, 2023, cash flows provided by financing activities were $16.4 million, primarily due to proceeds from mortgage loan payable of $72.6 million, and borrowings under the revolving line of credit of $57.0 million, partially offset by repayments of borrowings under repurchase agreements of $49.3 million, repayments of borrowings under revolving line of credit of $41.7 million, repayments of borrowings under the term loan of $10.0 million, and distributions paid of $9.3 million.

Current wording

For the nine months ended September 30, 2023, cash flows used in financing activities were $13.5 million, primarily due to repayment of borrowing under the repurchase agreements of $72.2 million, repayment of borrowing under the revolving line of credit of $96.8 million, distributions paid of $14.0 million and repayment of borrowing under the term loan of $10.0 million, partially offset by proceeds from mortgage loan payable of $73.2 million, proceeds from borrowing under the revolving line of credit of $57.0 million, proceeds from borrowing under a note payable of $36.6 million, proceeds from borrowing under the repurchase agreements of $14.2 million and proceeds from obligations under participation agreements of $1.5 million.

Previous wording

On January 24, 2024, we, as borrower, entered into a revolving promissory note payable with Terra LLC. The promissory note payable bears interest at the Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days. The promissory note matures on March 31, 2027. As of June 30, 2024, amount outstanding under the promissory note payable was $34.3 million. The activity associated with this agreement is eliminated in consolidation and therefore has no impact on our consolidated financial statements.

Current wording

On January 24, 2024, we, as borrower, entered into a revolving promissory note payable with Terra LLC. The promissory note payable bears interest at the Prime Rate, as such Prime Rate is published in the Wall Street Journal, computed on the basis of the actual number of days elapsed and a year of 365 days. The promissory note matures on March 31, 2027. As of September 30, 2024, amount outstanding under the promissory note payable was $35.1 million. The activity associated with this agreement is eliminated in consolidation and therefore has no impact on our consolidated financial statements.