Terra Property Trust, Inc.
For the period ended Mar 31, 2025. Filed May 9, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 9, 2025
TPTS$13.00+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001674356-24-000033
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0001674356-25-000015
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 179 previous paragraphs and 176 current paragraphs.
111 unchanged; 47 reworded; 17 added; 20 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 11 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
•tariffs imposed by the current presidential administration and the threat of such tariffs;
Current report
(4)Excludes non-performing loans for which recovery of interest income was not probable.
Current report
(5)Excludes loans that are in maturity default and represents current effective maturity as of March 31, 2025 and December 31, 2024, exclusive of any extension available.
Current report
Equity Interest in Unconsolidated Investments
Current report
Provision for Credit Losses
Current report
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, real estate operating expenses increased by $0.3 million, primarily due to an increase in repairs and maintenance as well as other expenses, partially offset by a decrease in real estate taxes.
Current report
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, equity loss from the joint ventures decreased primarily due to equity income recognized from our new investments in non-real estate operating companies as well as a decrease in the net loss of the real estate joint ventures resulting from the sale of a property in 2024.
Current report
Other equity investment relates to a preferred equity agreement in which we also share residual profit from the sale of underlying property with the borrower. There was no such investment during the three months ended March 31, 2024.
Current report
For the three months ended March 31, 2025, cash flows provided by investing activities were $46.2 million, primarily related to proceeds from repayment of loans of $54.0 million, partially offset by origination. purchase and funding of loans of $7.9 million.
Current report
For the three months ended March 31, 2025, cash flows used in financing activities were $45.9 million, primarily related to principal repayments on secured financing of $43.7 million, distributions paid of $4.6 million and a decrease in interest reserve and other deposits held on investments of $1.4 million, partially offset by proceeds from secured financing of $3.3 million and proceeds from obligations under participation agreements of $0.7 million.
Current report
The term of the Management Agreement will expire on December 31, 2027 (the “Initial Term”) and will automatically renew for an unlimited number of additional one-year terms upon each anniversary date of the last day of the Initial Term (each, a “Renewal Term”), unless terminated by us or the Manager during the Initial Term or a Renewal Term in accordance with the terms of the Management Agreement (as described below).
Current report
The Management Agreement may be terminated by us during the Initial Term or any Renewal Term upon a finding by either (i) at least two-thirds of the independent directors on our Board or (ii) the holders of a majority of the outstanding shares of our common stock (other than those shares held by members of the our senior management team or affiliates of our Manager) that either (a) there has been unsatisfactory performance by our Manager that is materially detrimental to us, or (b) the compensation payable to our Manager pursuant to the Management Agreement is unfair; provided, however, that we will not have the right to terminate the Management Agreement on the basis of unfair compensation to our Manager if our Manager agrees to continue to provide its services under the Management Agreement in exchange for reduced fees that at least two-thirds of the independent directors on our Board determine to be fair pursuant to the procedures set forth in the Management Agreement. We must deliver prior written notice of any such termination to our Manager at least 180 days prior to the last calendar day of the Initial Term or the then-current Renewal Term, as applicable, and the Management Agreement will terminate effective as of the last calendar day of the Initial Term or the then-current Renewal Term, as applicable.
Current report
Upon any termination of the Management Agreement by us as discussed above, we will pay our Manager, on the date on which such termination is effective, a termination fee in an amount equal to three times the average annual fees of all types and expense reimbursements received by or owed to our Manager pursuant to the Management Agreement during the 24-month period immediately preceding such termination (the “Termination Fee”), calculated as of the end of the most recently completed monthly prior to the date of such termination.
Current report
We may also terminate the Management Agreement, effective upon 30 calendar days’ prior written notice from our Board to our Manager, without payment of any Termination Fees or other penalties, upon (i) the material breach of the Management Agreement by our Manager or its affiliates that continues for 30 days after written notice thereof to our Manager (or 45 days after delivery of written notice thereof if our Manager takes diligent steps to cure such breach within 30 days of delivery of the written notice), (ii) any fraud or other criminal conduct, gross negligence or breach of fiduciary duty by our Manager or its affiliates in connection with the Management Agreement, as determined by a final, non-appealable judgment of a court of competent jurisdiction, (iii) our Manager’s bankruptcy, insolvency or dissolution, or (iv) an Internalization Event (as defined in the Management Agreement). No Termination Fee or other penalty is payable upon such a termination by us.
Current report
Our Manager may terminate the Management Agreement, effective upon 60 days’ prior written from our Manager to us, if we breach the Management Agreement and such breach continues for 30 days after written notice thereof. We will pay our Manager the Termination Fee upon such termination by our Manager.
Current report
Management Agreement Amendment
Current report
As discussed herein, we may make real estate and non-real estate related investments of any type that align with our investment objectives and criteria. Accordingly, on May 8, 2025, we and our Manager entered into an amendment to the Management Agreement, effective as of January 1, 2025 (the “Amendment”), in order to clarify that the origination, asset management, asset servicing, disposition and breakup fees we pay to our Manager pursuant to the Management Agreement are payable with respect to all real estate and non-real estate investments of any type that we originate or acquire. Unless otherwise specifically noted, all references herein to the “Management Agreement” refer to the Management Agreement as modified by the Amendment.
Removed paragraphs (20)
Previous report
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Previous report
Equity Investments
Previous report
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 report
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 report
(Reversal of) Provision for Credit Losses
Previous report
For the three months ended September 30, 2024, we recorded a reversal of provision for credit losses of $(0.7) million, primarily related to an increase in modeled economic forecasts for commercial real estate and the overall shortening duration of loans in the portfolio, partially offset by a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in funding on the senior loan.
Previous report
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 report
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 report
Impairment Charge
Previous report
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 report
Unrealized (Loss) Gain on Investments, Net
Previous report
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 report
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 report
Loss on Repayment of Loan
Previous report
In August 2024, a $65.0 million senior loan was repaid, resulting in a loss on repayment of $5.6 million for the three and nine months ended September 30, 2024, which included the write-off of interest receivable of $4.8 million. There was no such loss for the three and nine months ended September 30, 2023.
Previous report
Gain on Extinguishment of Debt
Previous report
In September 2023, an unrelated counterparty to a participation agreement conveyed its interest in the obligation under participation agreement to us and we recognized a gain on debt extinguishment of $14.1 million. There was no such gain for the three and nine months ended September 30, 2024.
Previous report
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 report
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 report
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.
Reworded paragraphs (47)
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 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”); Mavik Real Estate Special Opportunities VS2, LP (“VS2”); or any of their affiliates;
Previous 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.
Current wording
As of March 31, 2025, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of 10 loans in eight states with an aggregate net principal balance of $252.5 million, a weighted average coupon rate of 13.3% and a weighted average remaining term to maturity of 0.8 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 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.
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 March 31, 2025, our portfolio included underlying properties located in 10 markets, across eight states and includes property types such as multifamily housing, student housing, commercial offices, medical offices, mixed-use and infill 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
The following tables provide a summary of our net loan portfolio as of:
Current wording
The following tables provide a summary of our net loan portfolio. Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.
Previous 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.
Current wording
(1)These loans pay a coupon rate of Secured Overnight Financing Rate (“SOFR”) or forward-looking term rate based on SOFR (“Term SOFR”), as applicable, plus a fixed spread. Coupon rates shown were determined using the average SOFR of 4.33% and Term SOFR of 4.32% as of March 31, 2025 and average SOFR of 4.53% and Term SOFR of 4.33% as of December 31, 2024.
Previous 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.
Current wording
(2)As of March 31, 2025 and December 31, 2024, amount included $169.1 million and $208.0 million of senior mortgages used as collateral for $82.8 million and $123.2 million of borrowings under secured financing agreements, respectively (Note 8).
Previous wording
(3)As of September 30, 2024 and December 31, 2023, 10 and 14 loans, respectively, are subject to a SOFR, or Term SOFR floor, as applicable.
Current wording
(3)As of March 31, 2025 and December 31, 2024, 7 and 10 loans, respectively, were subject to a SOFR or Term SOFR floor, as applicable.
Previous 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.
Current wording
In addition to our net loan portfolio, we own eight industrial buildings. As of March 31, 2025 and December 31, 2024, the real estate and related lease intangible assets and liabilities had a net carrying value of $124.4 million and $125.3 million, respectively, and the mortgage loans payable encumbering the real estate properties had an outstanding principal amount of $74.4 million and $74.4 million, respectively.
Previous 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.
Current wording
As of both March 31, 2025 and December 31, 2024, 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 March 31, 2025 and December 31, 2024, these equity interests had total carrying value of $108.1 million and $106.8 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 September 30, 2024 and December 31, 2023 was $8.47 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 March 31, 2025 and December 31, 2024 was $7.39 and $7.63, respectively.
Previous 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.
Current wording
For the three months ended March 31, 2025 and 2024, we invested $29.0 million and $11.4 million in new and add-on investments and had $23.7 million and $27.5 million of repayments, resulting in net repayments of $5.3 million and $16.1 million, respectively. Amounts are net of obligations under participation agreements and secured financing agreements.
Previous wording
In assessing the performance of our loans, we believe it is appropriate to evaluate the loans on an economic basis, that is, gross loans net of obligations under participation agreements, promissory notes payable, revolving credit facility and repurchase agreements payable.
Current wording
In assessing the performance of our loans, we believe it is appropriate to evaluate the loans on an economic basis, that is, gross loans net of obligations under participation agreements, promissory notes payable, revolving credit facility, secured borrowing and repurchase agreements payable.
Previous wording
For the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, interest income decreased by $3.3 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 a decrease in the weighted average coupon rate due to decreases in the underlying index rates.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, interest income decreased by $1.9 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.
Previous 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.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, real estate operating revenue decreased by $0.5 million, primarily due to the write off of the unamortized below-market rent intangible in connection with a least termination in January 2024.
Previous wording
For both the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, other operating income decreased by $0.2 million, primarily due to a decline in dividend income earned on our marketable securities.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, other operating income decreased by $0.1 million, primarily due to dividend income earned on our trading equity securities in 2024 (there was no such dividend income earned in 2025).
Previous 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.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, operating expenses reimbursed to our Manager decreased by $0.7 million, primarily due to a decrease in the allocation ratio as a result of a decrease in our total funds under management.
Previous wording
Under the terms of the Management Agreement with our Manager, we paid our Manager a monthly asset management fee at an annual rate of 1% of the aggregate funds under management, which included the aggregate gross acquisition price, net of participation interest sold to affiliates, for each real estate-related investment and cash held by us.
Current wording
Under the terms of the Management Agreement with our Manager, we paid our Manager a monthly asset management fee at an annual rate of 1% of the aggregate funds under management, which included the aggregate gross acquisition price, net of participation interest sold to affiliates, for each investment and cash held by us.
Previous 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.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, asset management fees decreased by $0.3 million, primarily due to a decrease in total assets under management resulting from repayment of loans.
Previous wording
Under the terms of the Management Agreement with our Manager, we paid our Manager a monthly servicing fee at an annual rate of 0.25% of the aggregate gross origination price or acquisition price for each real estate-related loan held by us.
Current wording
Under the terms of the Management Agreement with our Manager, we paid our Manager a monthly servicing fee at an annual rate of 0.25% of the aggregate gross origination price or acquisition price for each investment held by us.
Previous 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.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, asset servicing fees decreased by $0.1 million, 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 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.
Current wording
We follow the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses.
Previous 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.
Current wording
For the three months ended March 31, 2025 and 2024, provision for credit losses was $2.1 million and$1.9 million, respectively, primarily related to a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in senior funding.
Previous 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.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, depreciation and amortization decreased by $0.8 million, primarily due to a decrease in amortization of in-place lease intangibles related to the termination of a lease for a space in one of the industrial properties in January 2024, resulting in a write off of the related unamortized in-place lease.
Previous wording
For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, professional fees decreased by $0.5 million and $0.6 million, respectively, primarily due to legal fees incurred in connection with a review of strategic alternatives for our company in 2023.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, professional fees decreased by $0.4 million, primarily due to legal fees incurred in connection with a review of strategic alternatives for our company in 2024.
Previous 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.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, interest expense on secured financing decreased by $2.7 million, as a result of a decrease in the weighted average principal amount outstanding.
Previous 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.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, interest expense on unsecured notes payable increased by $0.1 million, primarily due to an increase in the amortization of financing costs using the effective interest rate method.
Previous 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.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, interest expense from obligations under participation agreements increased by $0.3 million, primarily as a result of an increase in the weighted average principal amount outstanding, partially offset by a decrease in the weighted average interest rate on the obligations under participation agreements.
Previous wording
Income (Loss) from Equity Investment in Unconsolidated Investments
Current wording
Income (Loss) from Equity Interest in Unconsolidated Investments
Previous 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.
Current wording
As of both March 31, 2025 and December 31, 2024, we owned a 14.9% equity interest in RESOF, an affiliated 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
Our income (loss) from equity investment in unconsolidated investments are as follows:
Current wording
Our income (loss) from equity interest in unconsolidated investments are as follows:
Previous wording
For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, equity income from RESOF increased as a result of increased income associated with increased investment.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, equity income from RESOF increased as a result of an increase in RESOF’s net income associated with increased investments.
Previous 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.
Current wording
For the three months ended March 31, 2024, we sold a portion of our investments in trading securities and recognized a net loss on sale of $0.1 million. There was no such realized loss for the three months ended March 31, 2025.
Previous 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.
Current wording
For the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, the resulting net loss decreased by $4.9 million.
Previous 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.
Current wording
We expect to fund approximately $11.2 million of the unfunded commitments to borrowers 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. Obligations under participation agreements of $18.7 million will mature in the next twelve months. We will use the proceeds from the repayment of the corresponding investment to repay the participation obligations. Our revolving line of credit with outstanding principal balance of $12.6 million is scheduled to mature on June 30, 2025. We expect to use proceeds from repayment of the underlying loan to repay the outstanding principal or refinance with another lender. Additionally, two promissory notes payable with a total outstanding principal balance of $24.9 million that are collateralized by senior loans with an aggregate principal balance of $54.5 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. Finally, our 7.00% Senior Notes Due 2026 with an outstanding principal balance of $38.4 million are scheduled to mature on March 31, 2026. We intend to refinance or repay the 7.00% Senior Notes Due 2026 through debt or equity capital sources or facilities. No assurance can be given about the availability of such financings on acceptable terms or at all.
Previous 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.
Current wording
Cash Flows Provided by (Used in) Operating Activities
Previous wording
Cash Flows (Used in) Provided by Operating Activities
Current wording
For the three months ended March 31, 2025, cash flow provided by operating activities was $0.9 million, compared to cash flow used in operating activities of $4.2 million for the three months ended March 31, 2024. The increase in operating cash flows was primarily due to a decrease in interest expense on secured financing resulting from a decrease in the weighted average principal amount outstanding, a decrease in asset management fees resulting from the repayment of loans, as well as an increase in equity income distributions from RESOF resulting from an increase in income associated with increased investments.
Previous 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.
Current wording
For the three months ended March 31, 2024, cash flows provided by investing activities were $33.4 million, primarily related to proceeds from repayment of loans of $47.0 million, partially offset by origination, purchase and funding of loans of $7.2 million and purchase of equity interests in unconsolidated investments of $6.5 million.
Previous 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.
Current wording
For the three months ended March 31, 2024, cash flows used in financing activities were $22.2 million, primarily related to principal repayments on secured financing of $84.8 million, distributions paid of $4.6 million and payment for financing costs of $0.9 million, partially offset by proceeds from secured financing of $53.0 million and proceeds from obligations under participation agreements of $15.0 million.
Previous wording
On January 1, 2023, we adopted the provisions of ASU 2016-13, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses (“CECL”). The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to estimating credit losses upon the occurrence of an actual loss event under the previous “incurred loss” methodology.
Current wording
We follow the provisions of ASC 326, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses (“CECL”). The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to estimating credit losses upon the occurrence of an actual loss event under the previous “incurred loss” methodology.
Previous wording
Origination and Extension Fee. An origination fee in the amount of 1.0% of the amount used to originate, acquire, fund or structure real estate-related investments, including any third-party expenses related to such loan. In the event that the term of any real estate-related loan is extended, our Manager also receives an origination fee equal to the lesser of (i) 1.0% of the principal amount of the loan being extended or (ii) the amount of fee paid by the borrower in connection with such extension.
Current wording
Origination and Extension Fee. An origination fee in the amount of 1.0% of the amount used to originate, acquire, fund or structure investments, including any third-party expenses related to such investments. In the event that the term of any loan is extended, our Manager also receives an origination fee equal to the lesser of (i) 1.0% of the principal amount of the loan being extended or (ii) the amount of fee paid by the borrower in connection with such extension.
Showing the first 40 of 47 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
•the availability of financing on acceptable terms or at all;
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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.