Terra Property Trust, Inc.

Previous 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.

Current wording

As of June 30, 2025, we held a net loan portfolio (gross loans less obligations under participation agreements and secured borrowing) comprised of nine loans in seven states with an aggregate net principal balance of $225.9 million, a weighted average coupon rate of 13.1% and a weighted average remaining term to maturity of 1.5 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 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.

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 June 30, 2025, our portfolio included underlying properties located in nine markets, across seven 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

(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.

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 4.32% and Term SOFR of 4.32% as of June 30, 2025 and average SOFR of 4.53% and Term SOFR of 4.33% as of December 31, 2024.

Previous 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).

Current wording

(2)As of June 30, 2025 and December 31, 2024, amount included $119.3 million and $208.0 million of senior mortgages used as collateral for $58.7 million and $123.2 million of borrowings under secured financing agreements, respectively (Note 8).

Previous 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.

Current wording

(3)As of June 30, 2025 and December 31, 2024, six and ten 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 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.

Current wording

In addition to our net loan portfolio, we own five industrial buildings. As of June 30, 2025 and December 31, 2024, the real estate and related lease intangible assets and liabilities had a net carrying value of $77.2 million and $125.3 million, respectively, and the mortgage loans payable encumbering the real estate properties had an outstanding principal amount of $40.3 million and $74.4 million, respectively. Additionally, as of June 30, 2025, we own two industrial buildings that are classified as held for sale with a net carrying value of $27.0 million, and a mortgage loan payable encumburing the real estate properties with an outstanding principal amount of $20.3 million.

Previous 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.

Current wording

As of both June 30, 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 June 30, 2025 and December 31, 2024, these equity interests had total carrying value of $107.2 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 March 31, 2025 and December 31, 2024 was $7.39 and $7.63, 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 Common Stock as of June 30, 2025 and December 31, 2024 was $6.92 and $7.63, respectively.

Previous 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.

Current wording

For the three months ended June 30, 2025 and 2024, we invested $5.4 million and $46.3 million in new and add-on investments and had $19.7 million and $54.6 million of repayments, resulting in net repayments of $14.4 million and $8.3 million, respectively. Amounts are net of obligations under participation agreements and secured financing agreements.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, interest income decreased by $1.9 million and $3.8 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.

Previous 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.

Current wording

For the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, real estate operating revenue decreased by $1.3 million, primarily due to the sale of an industrial building in June 2025, the expiration of a lease in December 2025, and the write off of an unamortized below-market rent intangible in January 2024 in connection with a lease termination.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, operating expenses reimbursed to our Manager decreased by $1.4 million and $2.1 million, respectively, primarily due to a decrease in the allocation ratio as a result of a decrease in our total funds under management.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, asset management fees decreased by $0.3 million and $0.7 million, respectively, primarily due to a decrease in total assets under management resulting from repayment of loans.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, 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.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, provision for credit losses decreased by $1.2 million and $1.0 million, respectively, primarily due to the repayment of loans as well as loans approaching maturity, which decreased the allowance for credit losses, partially offset by 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 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 wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, real estate operating expenses increased by $0.8 million and $1.1 million, respectively, primarily due to an increase in real estate taxes. The real estate operating expenses for the six-month period also increased due to an increase in repairs and maintenance.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, depreciation and amortization decreased by $0.5 million and $1.3 million, respectively, primarily due to the sale of an industrial building in June 2025 as well as the write off of the unamortized in-place lease intangibles in January 2024 in connection with a lease termination.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, professional fees decreased by $0.1 million and $0.4 million, respectively, primarily due to legal fees incurred in connection with a review of strategic alternatives for our company in 2024.

Previous wording

Our secured financing consists of repurchase agreements, revolving line of credit, term loan, promissory notes and property mortgages.

Current wording

Our secured financing consisted of repurchase agreements, revolving line of credit, term loan, promissory notes and property mortgages.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, interest expense on secured financing decreased by $3.1 million and $5.8 million, respectively, as a result of a decrease in the weighted average principal amount outstanding.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, interest expense on unsecured notes payable increased by $0.05 million and $0.1 million, respectively, primarily due to an increase in the amortization of financing costs using the effective interest rate method.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, interest expense from obligations under participation agreements increased by $0.2 million and $0.4 million, respectively, 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

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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 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 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 wording

For the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, equity loss from the joint ventures increased primarily due to a gain recognized by a joint venture in connection with a sale of a property in 2024. For the six months ended June 30, 2025 as compared to the six months ended June 30, 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, partially offset by a gain recognized by the joint venture in connection with the sale of the property in 2024.

Previous wording

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 wording

Other equity investment relates to a preferred equity agreement we acquired in June 2024 in which we also share residual profit from the sale of underlying property with the borrower. The increase in income from other equity investment is due to holding the investment for a longer period of time in the current period.

Previous 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.

Current wording

For the three and six months ended June 30, 2024, we sold a portion of our investments in trading securities and recognized a net loss on sale of $0.3 million and $0.4 million, respectively. There was no such realized loss for the six months ended June 30, 2025.

Previous 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.

Current wording

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, the resulting net loss increased by $1.6 million and decreased by $3.3 million.

Previous 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.

Current wording

We expect to fund approximately $9.4 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 $19.6 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 $11.1 million matured on June 30, 2025. The outstanding balance was repaid in full on July 1, 2025. Additionally, two promissory notes payable with a total outstanding principal balance of $27.5 million that are collateralized by senior loans with an aggregate principal balance of $58.3 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, Terra LLC’s 7.00% unsecured senior notes due 2026 (the “7.00% Senior Notes Due 2026”) and our 6.00% unsecured senior notes due 2026 (the “6.00% Senior Notes Due 2026”) with an outstanding principal balance of $38.4 million and $85.1 million, respectively, are scheduled to mature on March 31, 2026 and June 30, 2026, respectively. We intend to repay the 6.00% Senior Notes Due 2026, and intend to cause Terra LLC, our wholly owned subsidiary, to repay the 7.00% Senior Notes Due 2026, through ordinary course loan repayments, asset sales and distributions and may also use debt or equity capital sources or facilities. However, no assurance can be given that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all.

Previous wording

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 wording

For the six months ended June 30, 2025, cash flows provided by investing activities were $86.5 million, primarily related to proceeds from repayment of loans of $87.0 million and proceeds from sale of real estate of $13.8 million, partially offset by origination, purchase and funding of loans of $15.3 million and capital contributions to and purchase of equity interests in unconsolidated investments of $0.7 million.

Previous 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.

Current 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 funding of loans of $42.6 million and capital contributions to and purchase of equity interests in unconsolidated investments of $36.6 million.

Previous wording

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 wording

For the six months ended June 30, 2025, cash flows used in financing activities were $74.7 million, primarily related to principal repayments on secured financing of $91.1 million, distributions paid of $7.0 million and a decrease in interest reserve and other deposits held on investments of $1.7 million, partially offset by proceeds from secured financing of $23.4 million and proceeds from obligations under participation agreements of $1.6 million.

Previous 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.

Current 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.

Previous wording

Our consolidated financial statements are prepared in conformity with United States generally accepted accounting principles, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the consolidated financial statements, management has utilized available information, including industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. As we execute our expected operating plans, we will describe additional critical accounting policies in the notes to our future consolidated financial statements in addition to those discussed below.

Current wording

Our consolidated financial statements are prepared in conformity with United States generally accepted accounting principles, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the consolidated financial statements, management has utilized available information, including industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. As we execute our expected operating plans, we will describe additional critical accounting policies in the notes to our future consolidated financial statements in addition to those discussed below.

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 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.

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 the fee paid by the borrower in connection with such extension.

Previous wording

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 wording

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 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.

Previous wording

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 wording

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 month prior to the date of such termination.

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 March 31, 2025 and December 31, 2024, amount outstanding under the promissory note payable was $43.6 million and $45.1 million, respectively. 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 June 30, 2025 and December 31, 2024, amount outstanding under the promissory note payable was $47.2 million and $45.1 million, respectively. The activity associated with this agreement is eliminated in consolidation and therefore has no impact on our consolidated financial statements.

Previous wording

As of March 31, 2025, the principal balance of our participation obligation was $18.7 million, which was a participation obligation to a related-party managed by the Manager.

Current wording

As of June 30, 2025, the principal balance of our participation obligation was $19.6 million, which was a participation obligation to a related-party managed by the Manager.

Previous wording

For the three months ended March 31, 2025 and 2024, the weighted average outstanding principal balance on obligations under participation agreements was approximately $18.3 million and $12.0 million, respectively, and the weighted average interest rate was approximately 19.3% and 20.3%, respectively.

Current wording

For the six months ended June 30, 2025 and 2024, the weighted average outstanding principal balance on obligations under participation agreements was approximately $18.7 million and $13.5 million, respectively, and the weighted average interest rate was approximately 18.7% and 18.3%, respectively.