Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 000-55429

Terra Income Fund 6, LLC

(Exact name of registrant as specified in its charter)


Delaware						92-0548263
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

205 West 28th Street, 12th Floor

New York, New York 10001

(Address of principal executive offices) (Zip Code)

(212) 753-5100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on
which registered

7.00% Notes due 2026

TFSA

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	þ	Smaller reporting company	þ
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ☑

All of the limited liability company interest in the registrant is held by an affiliate of the registrant. No market value has been computed based upon the fact that no active trading market had been established as of the date of this document.

OMISSION OF CERTAIN INFORMATION

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Quarterly Report on Form 10-Q with reduced disclosure format.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements

	Consolidated Balance Sheets as of September 30, 2024 (unaudited) and December 31, 2023	2

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	3

	Consolidated Statements of Changes in Member’s Capital for the Three and Nine Months Ended September 30, 2024 and 2023 (unaudited)	4

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 (unaudited)	5

	Notes to Consolidated Financial Statements as of September 30, 2024 (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	30

PART II	OTHER INFORMATION	30

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults upon Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	31

Signatures		32

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Terra Income Fund 6, LLC

Consolidated Balance Sheets


	September 30, 2024		December 31, 2023
	(unaudited)
Assets
Cash and cash equivalents	$	6,640,033	$	3,193,078
Restricted cash	—		106,918
Loans held for investment, net of allowance for credit losses of $218,805 and $469,011	21,496,314		60,458,534
Loans held for investment acquired through participation, net of allowance for credit losses of $11,060,394 and $9,234,320	16,205,046		17,884,930
Equity investment in unconsolidated investments	37,222,951		40,431,710
Promissory note receivable (Note 6)	35,096,786		—
Marketable securities	500,914		507,266
Interest receivable	291,169		1,241,308
Prepaid expenses and other assets	680,516		515,407
Total assets	$	118,133,729	$	124,339,151
Liabilities and Equity
Liabilities:
Unsecured notes payable, net of purchase discount	36,180,905		35,213,543
Term loan payable, net of deferred financing cost	—		14,948,604
Obligation under participation agreement (Note 7)	15,132,411		—
Interest payable from obligation under participation agreement	220,417		—
Interest reserve and other deposits held on investments	—		106,918
Other liabilities	8,046		410,075
Accrued expenses	91,955		254,716
Total liabilities	51,633,734		50,933,856
Commitments and contingencies (Note 8)
Equity:
Managing member	66,506,347		73,405,295
Accumulated other comprehensive loss	(6,352)		—
Total equity	66,499,995		73,405,295
Total liabilities and equity	$	118,133,729	$	124,339,151

See notes to unaudited consolidated financial statements.

Terra Income Fund 6, LLC

Consolidated Statements of Operations and Comprehensive (Loss) Income

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues
Interest income	$	1,851,745	$	2,321,378	$	5,782,363	$	7,848,610
Dividend and other income	10,497		19,162		37,323		56,637
	1,862,242		2,340,540		5,819,686		7,905,247
Operating expenses
Asset management and asset servicing fees paid/ payable to Terra REIT (1)	238,710		408,726		906,389		1,272,159
Operating expense reimbursement to Terra REIT (1)	177,824		395,041		880,332		1,107,401
Provision for credit losses	524,486		1,710,516		1,575,113		1,642,528
Professional fees	163,157		152,868		491,484		618,910
Insurance expense	21,072		21,072		63,216		104,263
General and administrative	10,463		32,238		58,004		59,625
	1,135,712		2,720,461		3,974,538		4,804,886
Operating income (loss)	726,530		(379,921)		1,845,148		3,100,361
Other income and expenses
Loss from equity investment in unconsolidated investments	(792,622)		(543,934)		(2,943,172)		(353,027)
Interest expense on unsecured notes payable	(1,003,009)		(968,170)		(2,982,049)		(2,880,368)
Interest expense on term loan	—		(532,387)		(517,528)		(1,239,418)
Interest expense from obligation under participation agreement	(792,352)		—		(2,301,347)		—
Unrealized gain on investments, net	—		16,790		—		22,619
Realized loss on investments, net	—		—		—		(12,512)
	(2,587,983)		(2,027,701)		(8,744,096)		(4,462,706)
Net loss	$	(1,861,453)	$	(2,407,622)	$	(6,898,948)	$	(1,362,345)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale debt securities	2,211		—		(6,352)		—
	2,211		—		(6,352)		—
Comprehensive loss	$	(1,859,242)	$	(2,407,622)	$	(6,905,300)	$	(1,362,345)

______________

(1)Fees were paid and payable, and expenses were reimbursed, to Terra Property Trust, Inc. (“Terra REIT”) pursuant to a cost sharing agreement with Terra REIT (Note 6).

See notes to unaudited consolidated financial statements.

Terra Income Fund 6, LLC

Consolidated Statement of Changes in Member’s Capital

(Unaudited)


	Managing Member		Accumulated Other Comprehensive Income (Loss)		Total
Balance, January 1, 2024	$	73,405,295	$	—	$	73,405,295
Net loss	(3,058,870)		—		(3,058,870)
Other comprehensive loss:
Unrealized loss on available-for-sale debt securities	—		(148,287)		(148,287)
Balance, March 31, 2024	70,346,425		(148,287)		70,198,138
Net loss	(1,978,625)		—		(1,978,625)
Other comprehensive income:
Unrealized gain on available-for-sale debt securities	—		139,724		139,724
Balance, June 30, 2024	68,367,800		(8,563)		68,359,237
Net loss	(1,861,453)		—		(1,861,453)
Other comprehensive income:
Unrealized loss on available-for-sale debt securities	—		2,211		2,211
Balance, September 30, 2024	$	66,506,347	$	(6,352)	$	66,499,995


	Managing Member		Total
Balance, January 1, 2023	$	79,691,832	$	79,691,832
Cumulative effect of adoption of credit loss accounting standard effective January 1, 2023 (Note 2)	(661,422)		(661,422)
Net income	966,398		966,398
Balance, March 31, 2023	79,996,808		79,996,808
Net income	78,879		78,879
Balance, June 30, 2023	80,075,687		80,075,687
Net loss	(2,407,622)		(2,407,622)
Balance, September 30, 2023	$	77,668,065	$	77,668,065

See notes to unaudited consolidated financial statements.

Terra Income Fund 6, LLC

Consolidated Statement of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(6,898,948)	$	(1,362,345)
Adjustments to reconcile net loss from operations to net cash (used in) provided by operating activities:
Provision for credit losses	1,575,113		1,642,528
Amortization of premiums and discounts on investments	150,961		909,717
Amortization and accretion of investment-related fees, net	96,375		(281,094)
Amortization of discount on debt	967,362		865,681
Amortization of deferred financing costs	51,396		48,434
Loss from equity investment in unconsolidated investments	2,943,172		880,026
Realized loss on investments, net	—		12,512
Unrealized gain on investments, net	—		(22,619)
Changes in operating assets and liabilities:
Decrease in interest receivable	950,139		234,837
Increase in prepaid expenses and other assets	(165,109)		(296,277)
Decrease in accrued expenses	(162,761)		(499,889)
Increase in interest payable from obligation under participation agreement	220,417		—
Decrease in other liabilities	(401,274)		(210,631)
Net cash (used in) provided by operating activities	(673,157)		1,920,880
Cash flows from investing activities:
Repayment of loans	39,941,496		41,777,390
Origination and purchase of loans	(990,186)		(4,564,970)
Purchase of equity interest in unconsolidated investment	(527)		(27,354,342)
Funding for promissory note receivable	(40,096,786)		—
Repayment of promissory note receivable	5,000,000		—
Distributions on equity interest in unconsolidated investment	266,115		352,000
Proceeds from redemption of held-to-maturity debt securities	—		10,000,000
Purchase of held-to-maturity debt securities	—		(10,012,512)
Purchase of marketable securities	—		(525,867)
Net cash provided by investing activities	4,120,112		9,671,699
Cash flows from financing activities:
Proceeds from obligation under participation agreement	15,000,000		—
Repayment of term loan	(15,000,000)		(10,000,000)
Change in interest reserve and other deposits held on investments	(106,918)		784,643
Payment of financing costs	—		(150,000)
Net cash used in financing activities	(106,918)		(9,365,357)
Net increase in cash, cash equivalents and restricted cash	3,340,037		2,227,222
Cash, cash equivalents and restricted cash, at beginning of period	3,299,996		6,739,953
Cash, cash equivalents and restricted cash, at end of period (Note 2)	$	6,640,033	$	8,967,175

Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,429,337	$	3,254,105
Income taxes paid	$	—	$	277,647

Supplemental non-cash information:
Settlement of a mezzanine loan accounted for as an equity investment in exchange for equity interest in a joint venture that owns real estate (Note 4)	$	—	$	10,149,642

See notes to unaudited consolidated financial statements.

Terra Income Fund 6, LLC

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Principal Business and Organization

Terra Income Fund 6, LLC (“Terra LLC”, and together with its consolidated subsidiaries, the “Company”) was formed as a Delaware limited liability company on April 29, 2022 as a wholly owned subsidiary of Terra Property Trust, Inc. (“Terra REIT”). On October 1, 2022, pursuant to an Agreement and Plan of Merger, dated as of May 2, 2022 (as amended, the “Merger Agreement”), Terra Income Fund 6, Inc. (“Terra BDC”) merged with and into Terra LLC, with Terra LLC continuing as the surviving entity of the merger (the “Merger”). Subsequent to the Merger, Terra LLC became the successor of Terra BDC and assumed all of Terra BDC’s rights and obligations.

In February 2021, Terra BDC issued $38.4 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, for net proceeds of $37.2 million, after deducting underwriting commissions of $1.2 million, see “Unsecured Senior Notes” in Note 7 for more information. In connection with the Merger, Terra LLC assumed the obligations of Terra BDC under the indenture governing the 7.00% fixed-rate notes due 2026.

The Company is a wholly owned subsidiary of Terra REIT, and its investment objective is to provide attractive risk-adjusted returns to Terra REIT’s stockholders, primarily through Terra REIT’s regular distributions. Terra REIT’s investments activities are externally managed by Terra REIT Advisors, LLC (the “REIT Manager”), an affiliate of the Company. The Company originates, invests in and manages a diverse portfolio of real estate-related investments that generate a stable income stream. The Company directly originates, structures and underwrites most, if not all, of its loans, as it believes that doing so will provide it with the best opportunity to invest in loans that satisfy its standards, establish a direct relationship with the borrower and optimize the terms of its investments; however, the Company may acquire existing loans from the originating lender should the REIT Manager determine such an investment is in its best interest. The Company may hold its investments until their scheduled maturity dates or may sell them if the Company is able to command favorable terms for their disposition. The Company may also seek to realize growth in the value of its investments by timing their sale to maximize value.

The Company may also make strategic non-real estate-related investments that align with its investment objectives and criteria.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its consolidated subsidiaries. The accompanying interim consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. Certain prior period amounts have been reclassified to conform to the current period presentation.

Consolidation

Terra LLC consolidates entities in which it has a controlling financial interest based on either the variable interest entity (“VIE”) or voting interest entity (“VOE”) model. Terra LLC is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. If Terra LLC determines the entity is not a VIE, it then applies the VOE model. Under the VOE model, Terra LLC consolidates an entity when it holds a majority voting interest in an entity.

Terra LLC accounts for investments in which it has significant influence but not a controlling financial interest using the equity method of accounting. All significant intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid investments, with original maturities of ninety days or less when purchased, as cash equivalents. Cash and cash equivalents held at financial institutions, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation.

Notes to Consolidated Financial Statements (Unaudited)

Restricted Cash

Restricted cash represents cash held as additional collateral by the Company on behalf of the borrowers related to the investments for the purpose of such borrowers making interest and property-related operating payments. There is a corresponding liability of the same amount on the statements of assets and liabilities called “Interest reserve and other deposits held on investments.”

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its statements of cash flows:


	September 30,
	2024		2023
Cash and cash equivalents	$	6,640,033	$	7,967,175
Restricted cash	—		1,000,000
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	6,640,033	$	8,967,175

Loans Held for Investment

The Company originates, acquires, and structures, or acquires through participations, real estate-related loans generally to be held to maturity (collectively the “loans”). Loans held for investment are carried at the principal amount outstanding, adjusted for the accretion of discounts on investments and exit fees, and the amortization of premiums on investments and origination fees. The Company’s preferred equity investments, which are economically similar to mezzanine loans and subordinate to any loans but senior to common equity, are accounted for as loans held for investment. Loans are carried at amortized cost less allowance for credit losses. Amortized cost is the amount at which a financing receivable or a loan is originated or acquired, adjusted for accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash and write-offs.

Allowance for Credit Losses

On January 1, 2023, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses. ASC 326 mandates the use of a current expected credit loss (“CECL”) methodology for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” methodology previously required under U.S. GAAP. The CECL methodology 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. As permitted by ASC 326, the Company elected not to measure an allowance for credit losses on accrued interest receivable (which is presented separately on the consolidated balance sheet), but rather write off in a timely manner by reversing interest income that would likely be uncollectible. The Company’s adoption of the ASC 326 resulted in a $0.7 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to member’s capital as of January 1, 2023. Subsequent to the adoption of the CECL methodology, any increase or decrease to the allowance for credit losses is recorded in earnings on the consolidated statement of operations.

Performing Loans

The Company uses a model-based approach for estimating the allowance for credit losses on performing loans on a collective basis, including future funding commitments for which the Company does not have the unconditional right to cancel, as these loans share similar risk characteristics. The Company utilizes information obtained from internal and external sources relating to past events, current economic conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. The Company utilizes a commercial mortgage-based, third-party loan loss model and because the Company does not have a meaningful history of realized credit losses on its loan portfolio, it subscribes to a database service to provide historical proxy loan loss information. The Company employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. The Company has chosen to incorporate a weighted average macroeconomic forecast that encompasses baseline, upside and downside scenarios, into its allowance for credit losses on performing loans estimate during the reasonable and supportable forecast period which is currently eight quarters. The Company selects certain economics variables from a group of independent variables such as Commercial Real Estate Price Index, unemployment and interest rate which are included in the model as part of macroeconomic forecast and updated regularly based on current economic trends. The specific loan level information input into the model includes loan-to-value and debt service coverage ratio metrics, as well as principal balances, property type, location, coupon rate, coupon rate type, original or remaining term, expected repayment dates and contractual

Notes to Consolidated Financial Statements (Unaudited)

future funding commitments. Based on the inputs, the loan loss model determines a loan loss rate through the generation of a probability of default (PD) and loss given default (LGD) for each loan. The allowance for credit losses on performing loans is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. A significant amount of judgment is applied in selecting inputs and analyzing results produced by the models to determine the allowance for credit losses on performing loans. Changes in such estimates can significantly affect the expected credit losses.

Beyond the Company’s reasonable and supportable forecast period, the Company reverts to historical loss information on a straight-line basis over the remaining contractual loan term, taken from a period that most accurately reflects the expectation of conditions expected to exist during the period of reversion. The Company may adjust historical loss information for differences in risk that may not reflect the characteristics of its current portfolio, including but not limited to, loan-to-value and debt service coverage ratios, among other relevant factors. The method of reversion selected represents the best estimate of the collectability of the investments and is reevaluated each reporting period.

The determination of the performing loans credit loss estimate considers historical loss information and current economic conditions for each loan, reversion period and reasonable and supportable forecasts about the future. The reasonable and supportable forecast period is determined based on the Company’s assessment of the most likely scenario of assumptions and plausible outcomes for the U.S. economy. The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed.

The Company also performs a qualitative assessment and applies qualitative adjustments as necessary, usually due to limitations of the loan loss model. The Company’s qualitative analysis includes a review of data that may directly impact its estimates including internal and external information about the loan or property including current market conditions, asset specific conditions, property operations or borrower/sponsor details (i.e., refinance, sale, bankruptcy) which allows the Company to determine the amount of the expected loss more accurately and reasonably for these investments. The Company also evaluates the contractual life of its loans to determine if changes are needed for certain contractual extension options, renewals, modifications, and prepayments.

Unfunded Commitments

Some of the Company’s performing loans include commitments to fund incremental proceeds to the borrowers over the life of the loan and these unfunded commitments are also subject to the CECL methodology because the Company does not have an unconditional right to cancel such commitments. The allowance for credit losses related to unfunded commitments is recorded as a component of other liabilities on the Company’s consolidated balance sheets. This allowance for credit losses is estimated using the same method outlined above for the Company’s outstanding performing loan balances and increases or decreases are also recorded in earnings on the consolidated statements of operations.

Non-Performing Loans

During the loan review process, if the Company determines that it is not able to collect all amounts due for both principal and interest according to the contractual terms of a loan, or if a loan is in maturity default, the Company considers that loan non-performing. For all non-performing loans, such as those in default, collateral-dependent or modified loans, including historical troubled debt restructurings, the Company removes these loans from the industry loss rate approach described above and analyzes them separately. The credit loss reserve for these loans is calculated as any excess of the amortized cost of the loan over (i) the present value of expected future cash flows discounted at the appropriate discount rate or (ii) the fair value of collateral, if repayment is expected solely from the collateral.

Equity Investment in Unconsolidated Investments

The Company accounts for its equity interests in unconsolidated investments under the equity method of accounting, i.e., at cost, increased or decreased by its share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting.

The Company classifies distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities.

The Company evaluates its equity investment unconsolidated investments on a periodic basis to determine if there are any indicators that the value of its equity investments may be impaired and whether or not that impairment is other-than-temporary. To the extent an impairment has occurred and is determined to be other-than-temporary, the Company measures the charge as

Notes to Consolidated Financial Statements (Unaudited)

the excess of the carrying value of its investment over its estimated fair value, which is determined by calculating its share of the estimated fair market value of the underlying net assets based on the terms of the applicable partnership or joint venture agreements.

Marketable Securities

From time to time, the Company may invest in short-term debt. These securities are classified as available-for-sale securities and are carried at fair value. Changes in the fair value of debt securities are reported in other comprehensive income until a gain or loss on the securities is realized.

Revenue Recognition

Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Interest Income: Interest income is accrued based upon the outstanding principal amount and contractual terms of the loans and preferred equity investments that the Company expects to collect, and it is accrued and recorded on a daily basis. Discounts and premiums on investments purchased are accreted or amortized over the expected life of the respective loan using the effective yield method, and are included in interest income in the consolidated statements of operations. Loan origination fees and exit fees, net of portions attributable to obligations under participation agreements, if any, are capitalized and amortized or accreted to interest income over the life of the investment using the effective yield method. Outstanding interest receivable is assessed for recoverability. The Company generally reverses the accrued and unpaid interest against interest income and no longer accrues for the interest when, in the opinion of the REIT Manager, recovery of interest and principal becomes not probable. Interest is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.

The Company may hold loans in its portfolio that contain paid-in-kind (“PIK”) interest provisions. The PIK interest, which represents contractually deferred interest that is added to the principal balance that is due at maturity, is recorded on the accrual basis.

Other Revenues: Prepayment fee income is recognized as prepayments occur. All other income is recognized when earned.

Deferred Debt Issuance Costs

The Company records issue discounts and other financing costs related to its debt obligation as deferred debt issuance costs, which are presented as a direct deduction from the carrying value of the related debt liability. These expenses are deferred and amortized using the effective interest method over the stated maturity of the debt obligation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of income, expenses and gains and losses during the reporting period. Actual results may ultimately differ from those estimates, and those differences could be material.

Note 3. Loans Held for Investment

The Company elected the practical expedient under ASC 326 to exclude accrued interest from amortized cost. As of September 30, 2024 and December 31, 2023, accrued interest receivable of $0.3 million and $1.2 million, respectively, is included in interest receivable on the consolidated balance sheets, and is excluded from the amortized cost of loans held for investment.

Notes to Consolidated Financial Statements (Unaudited)

Portfolio Summary

The following table provides a summary of the Company’s loan portfolio:


	September 30, 2024						December 31, 2023
	Fixed Rate		Floating Rate (1)(2)		Total		Fixed Rate		Floating Rate (1)(2)		Total
Number of loans	2		2		4		4		2		6
Principal balance	$	5,773,564	$	43,059,173	$	48,832,737	$	44,377,373	$	43,059,173	$	87,436,546
Carrying value	$	5,723,071	$	31,978,289	$	37,701,360	$	44,528,468	$	33,814,996	$	78,343,464
Fair value	$	5,773,564	$	32,260,110	$	38,033,674	$	44,313,689	$	34,214,046	$	78,527,735
Weighted-average coupon rate	11.6%		16.2%		15.7%		13.7%		16.6%		15.1%
Weighted-average remaining term (years)	2.60		0.35		0.67		0.76		1.10		0.87

_______________

(1)As of September 30, 2024 and December 31, 2023, 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 average SOFR and Term SOFR of 5.2% and 4.8%, respectively, as of September 30, 2024, and 5.3% and 5.4%, respectively, as of December 31, 2023.

(2)As of both September 30, 2024 and December 31, 2023, two loans were subject to a SOFR or Term SOFR floor, as applicable.

Lending Activities

The following tables present the activities of the Company’s loan portfolio:


	Loans Held for Investment, Net		Loans Held for Investment through Participation Interests, Net		Total
Balance, January 1, 2024	$	60,458,534	$	17,884,930	$	78,343,464
Origination and purchase of loans	843,996		146,190		990,186
Principal repayments received	(39,941,496)		—		(39,941,496)
Net amortization of premiums on loans	(150,961)		—		(150,961)
Accrual, payment and accretion of investment-related fees and other, net	36,035		—		36,035
Reversal of (provision for) credit losses	250,206		(1,826,074)		(1,575,868)
Balance, September 30, 2024	$	21,496,314	$	16,205,046	$	37,701,360


	Loans Held for Investment, Net		Loans Held for Investment through Participation Interests, Net		Total
Balance, January 1, 2023	$	79,082,650	$	42,330,376	$	121,413,026
Cumulative effect of adoption of credit loss accounting standard effective January 1, 2023 (Note 2)	(593,040)		—		(593,040)
Origination and purchase of loans	3,621,008		943,962		4,564,970
Principal repayments received	(21,655,810)		(20,121,580)		(41,777,390)
Net amortization of premiums on loans	(828,306)		(81,411)		(909,717)
Accrual, payment and accretion of investment-related fees and other, net	196,047		85,047		281,094
Reversal of (provision for) credit losses	66,375		(1,770,293)		(1,703,918)
Balance, September 30, 2023	$	59,888,924	$	21,386,101	$	81,275,025

Notes to Consolidated Financial Statements (Unaudited)

Portfolio Information

The tables below detail the types of loans in the Company’s loan portfolio, as well as the property type and geographic location of the properties securing these loans. Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.


	September 30, 2024						December 31, 2023
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Preferred equity investments	$	45,832,737	$	34,751,853	92.2	%	$	63,186,546	$	53,973,564	68.9	%
Mezzanine loans	3,000,000		2,949,507		7.8	%	3,000,000		2,907,732		3.7	%
First mortgages	—		—		—	%	21,250,000		21,462,168		27.4	%
Total	$	48,832,737	$	37,701,360	100.0	%	$	87,436,546	$	78,343,464	100.0	%


	September 30, 2024						December 31, 2023
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Mixed use	$	18,567,296	$	18,546,806	49.2	%	$	18,567,296	$	18,557,439	23.7	%
Office	24,491,877		13,431,483		35.6	%	24,491,877		15,257,557		19.5	%
Student housing	3,000,000		2,949,507		7.8	%	3,000,000		2,907,732		3.7	%
Multifamily	2,773,564		2,773,564		7.4	%	20,127,373		20,158,568		25.7	%
Infrastructure	—		—		—	%	21,250,000		21,462,168		27.4	%
Total	$	48,832,737	$	37,701,360	100.0	%	$	87,436,546	$	78,343,464	100.0	%


	September 30, 2024						December 31, 2023
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	21,567,296	$	21,496,313	57.0	%	$	21,567,296	$	21,465,171	27.4	%
New York	27,265,441		16,205,047		43.0	%	27,119,250		17,884,930		22.8	%
Utah	—		—		—	%	21,250,000		21,462,168		27.4	%
Georgia	—		—		—	%	17,500,000		17,531,195		22.4	%
Total	$	48,832,737	$	37,701,360	100.0	%	$	87,436,546	$	78,343,464	100.0	%

Allowance for Credit Losses

As described in Note 2, on January 1, 2023, the Company 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”). ASU 2016-13, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses. The adoption of ASU 2016-13 resulted in a $0.7 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to member’s capital as of January 1, 2023.

Certain of the Company’s performing loans contain provisions for future funding commitments, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. These unfunded commitments on loans amounted to approximately $0.7 million and $0.7 million as of September 30, 2024 and December 31, 2023, respectively. The liability for credit losses on unfunded commitments is included in other liabilities on the consolidated balance sheets.

As discussed in Note 2, for loans that are considered non-performing, the Company removes them from the industry loss rate approach and analyzes them separately for recoverability or based on sponsor’s guarantee. As of September 30, 2024 and December 31, 2023, the Company had two non-performing loans with total carrying value, excluding specific allowance, of $27.3 million and $27.1 million, respectively. Accordingly, the Company utilized the estimated fair value of the loan collateral or sponsor’s guarantee to estimate the total specific allowance for credit losses of $11.1 million and $9.2 million as of September 30, 2024 and December 31, 2023, respectively. Please see “Significant Unobservable Inputs” in Note 5 for information on how the fair values of these loans were determined.

Notes to Consolidated Financial Statements (Unaudited)

The following table presents the activity in allowance for credit losses:


	Nine Months Ended September 30, 2024
	Specific Allowance		General Allowance				Total
			Funded		Unfunded
Allowance for credit losses, beginning of period	$	9,234,321	$	469,010	$	8,801	$	9,712,132
Provision for (reversal of provision for) credit losses	1,826,073		(250,205)		(755)		1,575,113
Charge-offs	—		—		—		—
Recoveries	—		—		—		—
Allowance for credit losses, end of period	$	11,060,394	$	218,805	$	8,046	$	11,287,245


	Nine Months Ended September 30, 2023
	Specific Allowance		General Allowance				Total
			Funded		Unfunded
Allowance for credit losses, beginning of period	$	3,937,050	$	—	$	—	$	3,937,050
Cumulative effect of adoption of ASU 2016-13 effective January 1, 2023 (Note 2)	—		593,040		68,382		661,422
Provision for (reversal of provision for) credit losses	1,770,292		(66,374)		(61,390)		1,642,528
Charge-offs	—		—		—		—
Recoveries	—		—		—		—
Allowance for credit losses, end of period	$	5,707,342	$	526,666	$	6,992	$	6,241,000

Accrued Interest Receivable

The Company elected not to measure a CECL reserve on accrued interest receivable due to the Company’s policy of writing off uncollectible accrued interest receivable balances in a timely manner. If the Company determines it has uncollectible accrued interest receivable, it generally will reverse the accrued and unpaid interest against interest income and suspend the accrual for future interest income. For the three and nine months ended September 30, 2024 and 2023, the Company did not reverse any interest income accrual because all accrued interest income was deemed collectible. As of September 30, 2024 and December 31, 2023, the Company had two loans that were in default, and suspended interest income accrual of $1.2 million and $1.1 million, respectively, and $3.7 million and $3.1 million, respectively, for the three and nine months ended September 30, 2024 and 2023, respectively, because recovery of such income was not probable. As of September 30, 2024 and December 31, 2023, there was no outstanding interest receivable on these loans.

Loan Risk Rating

The Company assesses the risk factors of each performing loan and assigns each performing loan a risk rating between 1 and 5, which is an average of the numerical ratings in the following categories: (i) sponsor capability and financial condition; (ii) loan and collateral performance relative to underwriting; (iii) quality and stability of collateral cash flows and/or reserve balances; and (iv) loan to value. Based on a 5-point scale, the Company’s performing loans are rated “1” through “5”, from less risk to greater risk as follows:


Risk Rating						Description
1						Very low risk
2						Low risk
3						Moderate/average risk
4						Higher risk
5						Highest risk

Additionally, as discussed in Note 2, during the loan review process, if the Company determines that it is not able to collect all amounts due for both principal and interest according to the contractual terms of a loan, or if a loan is in maturity default, the Company considers that loan non-performing.

Notes to Consolidated Financial Statements (Unaudited)

The following tables present the amortized cost of the Company's loan portfolio by year of origination and loan risk rating:


	September 30, 2024
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2024		2023		2022		2021		2020		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	—	—		—	%	—		—		—		—		—
3	1	2,949,506		6.0	%	—				—		—		—		2,949,506
4	1	18,765,612		38.3	%	—		—		18,765,612		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	2	27,265,441		55.7	%	—		—		—		—		—		27,265,441
	4	48,980,559		100.0	%	$	—	$	—	$	18,765,612	$	—	$	—	$	30,214,947
Allowance for credit losses		(11,279,199)
Total, net of allowance for credit losses		$	37,701,360


	December 31, 2023
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2023		2022		2021		2020		2019		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	—	—		—	%	—		—		—		—		—
3	3	42,130,731		47.9	%	—				39,195,427		—		—		2,935,304
4	1	18,796,818		21.3	%	—		18,796,818		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	2	27,119,246		30.8	%	—		—		—		—				27,119,246
	6	88,046,795		100.0	%	$	—	$	18,796,818	$	39,195,427	$	—	$	—	$	30,054,550
Allowance for credit losses		(9,703,331)
Total, net of allowance for credit losses		$	78,343,464

Held-to-Maturity Debt Securities

In the first quarter of 2023, the Company purchased $10.0 million of corporate bonds with a coupon rate of 6.125% that matured on May 15, 2023. The Company classified these bonds as held-to-maturity debt securities, as it had the intent and ability to hold these securities until maturity. These securities were recorded at amortized cost and were fully redeemed at par on May 15, 2023.

Note 4. Equity Investment in Unconsolidated Investments

As of September 30, 2024 and December 31, 2023, the Company owns equity interests in two joint ventures that own real estate properties. The Company accounts for its interests in these investments using the equity method of accounting because the Company does not have a controlling financial interest in these entities.

The following table presents a summary of the Company’s equity investment in unconsolidated investments as of:


		September 30, 2024			December 31, 2023
Entity	Co-owner	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
SF - Dallas Industrial, LLC (1)	Affiliate	80.0%	$	34,102,082	80.0%	$	35,690,795
610 Walnut Investors LLC (2)	Third party	38.4%	3,120,869		42.4%	4,740,915
			$	37,222,951		$	40,431,710

_______________

Notes to Consolidated Financial Statements (Unaudited)

(1)On December 28, 2022, the Company originated a $10.0 million mezzanine loan to a borrower to finance the acquisition of a real estate portfolio. Additionally, the Company entered into a residual profit-sharing agreement with the borrower in which the borrower would pay the Company an additional amount of 35.0% of remaining net cash flow from the sale of the real estate portfolio. The Company accounted for the entire arrangement as equity investment in unconsolidated investment. In May 2023, the Company made a cash payment of $27.4 million and settled the $10.0 million mezzanine loan in exchange for an 80.0% equity interest in a joint venture that owns the real estate portfolio. Terra REIT owns the other 20.0% of the joint venture.

(2)In November 2023, the Company contributed $5.1 million to a joint venture that owns a real estate property.

The following table presents a summary of equity income of and distributions received from the Company’s equity investment in unconsolidated investments:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Loss from equity investment in unconsolidated investments	$	(792,622)	$	(543,934)	$	(2,943,172)	$	(353,027)
Distributions received from unconsolidated investments	$	160,000	$	352,000	$	266,115	$	878,998

The following tables present estimated combined summarized financial information of the Company’s equity investment in the joint ventures. Amounts provided are the total amounts attributable to the joint ventures and do not represent the Company’s proportionate share:


	September 30, 2024		December 31, 2023
Net investments in real estate	$	114,535,875	$	118,332,211
Other assets	8,138,354		8,658,923
Total assets	122,674,229		126,991,134
Mortgage loan payable	77,358,528		77,223,082
Other liabilities	4,198,401		5,501,677
Total liabilities	81,556,929		82,724,759
Members’ capital	$	41,117,300	$	44,266,375


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues	$	1,731,382	$	1,564,960	$	5,120,316	$	2,085,142
Operating expenses	(737,730)		(408,635)		(2,196,339)		(699,147)
Depreciation and amortization expense	(1,224,490)		(1,149,051)		(4,031,387)		(1,506,589)
Interest expense	(1,532,045)		(686,419)		(4,637,649)		(962,324)
Net loss	$	(1,762,883)	$	(679,145)	$	(5,745,059)	$	(1,082,918)

Note 5. Fair Value Measurements

The Company follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 established a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the state of the marketplace (including the existence and transparency of transactions between market participants). Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments measured and reported at fair value are classified and disclosed into one of the following categories based on the inputs as follows:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access.

Notes to Consolidated Financial Statements (Unaudited)

Level 2 — Pricing inputs are other than quoted prices in active markets, including, but not limited to, quoted prices for similar assets and liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs.

Level 3 — Significant unobservable inputs are based on the best information available in the circumstances, to the extent observable inputs are not available, including the Company’s own assumptions used in determining the fair value of investments. Fair value for these investments is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and the Company considers factors specific to the investment.

As of September 30, 2024 and December 31, 2023, the Company had not elected the fair value option for its financial instruments, including loans held for investment, loans held for investment acquired through participation, term loan payable and unsecured notes payable. Such financial instruments are carried at cost, less impairment or less net deferred costs, where applicable. Held-to-maturity debt securities are financial instruments that are reported at amortized cost.

Financial Instruments Carried at Fair Value on a Recurring Basis

From time to time, the Company may invest in short-term debt and equity securities which are classified as available-for-sale securities, and are presented at fair value on the consolidated balance sheet. Changes in the fair value of equity securities are recognized in earnings. Changes in the fair value of debt securities are reported in other comprehensive income until the securities are realized. Additionally, the Company may invest in short-term money market funds. These funds are included in cash and cash equivalents on the consolidated balance sheet due to their short-term nature and can be easily converted to cash.

The following tables present fair value measurements of financial instruments that were carried at fair value, by major class, according to the fair value hierarchy:


	September 30, 2024
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable securities - debt securities	$	500,914	$	—	$	—	$	500,914
Total	$	500,914	$	—	$	—	$	500,914


	December 31, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable securities - debt securities	$	507,266	$	—	$	—	$	507,266
Total	$	507,266	$	—	$	—	$	507,266

The following table presents the activities of the marketable securities:


	Nine Months Ended September 30,
	2024		2023
Beginning balance	$	507,266	$	—
Purchases	—		525,867
Fair market value adjustment	(6,352)		22,619
Ending balance	$	500,914	$	548,486

Notes to Consolidated Financial Statements (Unaudited)

Financial Instruments Not Carried at Fair Value

The following table presents the carrying value, which represents the amortized cost of loan, net of applicable allowance for credit losses, and estimated fair value of the Company’s financial instruments that are not carried at fair value on the consolidated balance sheets as of:


		September 30, 2024						December 31, 2023
	Level	Principal Balance		Carrying Value		Fair Value		Principal Balance		Carrying Value		Fair Value
Investments:
Loans held for investment	3	$	21,567,296	$	21,496,314	$	21,828,627	$	60,317,296	$	60,458,534	$	60,642,806
Loans held for investment acquired through participation	3	27,265,441		16,205,046		16,205,047		27,119,250		17,884,930		17,884,929
Total loans		$	48,832,737	$	37,701,360	$	38,033,674	$	87,436,546	$	78,343,464	$	78,527,735
Liabilities:
Unsecured notes payable (1))(2)	1	$	38,375,000	$	36,180,905	$	36,855,350	$	38,375,000	$	35,213,543	$	36,287,400
Obligation under participation agreement	3	15,000,000		15,132,411		15,211,122		—		—		—
Term loan payable (3)(4)	3	—		—		—		15,000,000		14,948,604		15,000,000
Total liabilities		$	53,375,000	$	51,313,316	$	52,066,472	$	53,375,000	$	50,162,147	$	51,287,400

_______________

(1)Carrying value is net of unamortized purchase discount of $2.2 million and $3.2 million as of September 30, 2024 and December 31, 2023, respectively.

(2)Valuation falls under Level 1 of the fair value hierarchy, which is based on the trading price of $24.01 and $23.64 as of the close of the business day on September 30, 2024 and December 29, 2023, respectively.

(3)Carrying value is net of unamortized discount of $0.1 million as of December 31, 2023.

(4)Valuation falls under Level 3 of the fair value hierarchy, which is based on a discounted cash flow model with a discount rate of 12.48%, as of December 31, 2023.

Valuation Methodology

The fair value of the Company’s investment in corporate bonds, preferred stock and common stock within the marketable securities portfolio, if any, is determined based on quoted prices in an active market and is classified as Level 1 of the fair value hierarchy. Additionally, the fair value of the Company’s unsecured notes payable is determined based on quoted price in an active market and is also classified as Level 1.

Market quotations are not readily available for the Company’s real estate-related loan investments, all of which are included in Level 3 of the fair value hierarchy, as these investments are valued utilizing a yield approach, i.e., a discounted cash flow methodology to arrive at an estimate of the fair value of each respective investment in the portfolio using an estimated market yield. In following this methodology, investments are evaluated individually, and management takes into account, in determining the risk-adjusted discount rate for each of the Company’s investments, relevant factors, including available current market data on applicable yields of comparable debt/preferred equity instruments; market credit spreads and yield curves; the investment’s yield; covenants of the investment, including prepayment provisions; the ability of the Company’s borrowers and investees to make payments, net operating income and debt service coverage ratio; construction progress reports and construction budget analysis; the nature, quality and realizable value of any collateral (and loan-to-value ratio); the forces that influence the local markets in which the asset (the collateral) is purchased and sold, such as capitalization rates, occupancy rates, rental rates and replacement costs; and the anticipated duration of each real estate-related loan investment.

These valuation techniques are applied in a consistent and verifiable manner to all investments that are categorized within Level 3 of the fair value hierarchy and the REIT Manager provides the board of directors of Terra REIT (the “Terra REIT Board”), (a majority of which is made up of independent directors) with the investment valuations that are based on this discounted cash flow methodology. Valuations are prepared quarterly, or more frequently as needed, with each asset in the portfolio subject to a valuation prepared by a third-party valuation service at a minimum of once during every 12-month period. REIT Manager reviews the preliminary valuation with the Terra REIT Board and, together with an independent valuation firm, if applicable, responds and supplements the preliminary valuation to reflect any comments provided by the Terra REIT Board. The REIT Manager discusses valuations and determines the fair value of each investment in the portfolio in good faith based on various metrics and other factors, including the input and recommendation provided by the Terra REIT Board and any third-party valuation firm, if applicable.

Notes to Consolidated Financial Statements (Unaudited)

Significant Unobservable Inputs

The following tables summarize the significant unobservable inputs used by the Company to value the Level 3 investments as of September 30, 2024 and December 31, 2023. The following tables are not intended to be all-inclusive, but instead identify the significant unobservable inputs relevant to the determination of fair values.


September 30, 2024
			Primary Valuation Technique	Unobservable Input	Range				Weighted
Asset Category	Fair Value				Minimum		Maximum		Average
Assets:
Loans	$	21,828,627	Discounted cash flow	Discount rate	11.00	%	15.40	%	14.79	%
Loans through participation interest (1)	16,205,047		Discounted cash flow	Discount rate	N/A		N/A		N/A
Total Level 3 Assets	$	38,033,674
Liabilities:
Obligation under participation agreement	$	15,211,122	Discounted cash flow	Discount rate	15.40	%	15.40	%	15.40	%

December 31, 2023

Primary
Valuation
Technique

Unobservable Input

Range

Weighted

Asset Category

Fair Value

Minimum

Maximum

Average

Assets:

Loans

60,642,806

Discounted cash flow

Discount rate

13.02

16.95

15.88

Loans through participation interest (1)

17,884,929

Discounted cash flow

Discount rate

N/A

Total Level 3 Assets

78,527,735

_______________

(1)These were non-performing loans, as described in Note 3. The fair market value estimates were determined primarily using discounted cash flow models and Level 3 inputs, which include estimates of property-specific cash flows over a specific holding period, a discount rate of 6.75% and a terminal capitalization rate of 5.75%. These inputs are based on the location, type and nature of the property, current sales and lease comparables, anticipated real estate and capital market conditions, and management’s knowledge, experience and judgment. Additionally, the Company may use sales comparables to corroborate the estimated value of a loan’s collateral or may use sponsor’s guarantee to estimate the value of a non-performing loan.

If the weighted average discount rate used to value the Company’s investments were to increase, the fair value of the Company’s investments would decrease. Conversely, if the weighted average discount rate used to value the Company’s investments were to decrease, the fair value of Company’s investments would increase.

Note 6. Related Party Transactions

Promissory Note Receivable

On January 24, 2024, the Company entered into a revolving promissory note receivable with Terra REIT. The promissory note receivable 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. For the nine months ended September 30, 2024, the Company provided funding under the promissory note receivable of $40.1 million and received repayment of $5.0 million. As of September 30, 2024, the amount outstanding under the promissory note receivable was $35.1 million. For the three and nine months ended September 30, 2024, interest income recognized on the promissory note receivable was $0.7 million and $1.2 million, respectively, which was included in Interest income on the consolidated statements of operations and comprehensive loss.

Cost Sharing Agreement

On November 8, 2022, the Company entered into the Cost Sharing Agreement with Terra REIT effective October 1, 2022, pursuant to which the Company reimburses Terra REIT for its allocable portion of management and transaction fees and operating expenses incurred by Terra REIT, including fees paid by Terra REIT to the REIT Manager.

Notes to Consolidated Financial Statements (Unaudited)

The following table presents a summary of such fees and reimbursements incurred pursuant to the Cost Sharing Agreement between Terra LLC and Terra REIT:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Amounts Included in the Statements of Operations
Asset management and asset servicing fees	$	238,710	$	408,726	$	906,389	$	1,272,159
Operating expense reimbursement to Adviser (1)	177,824		395,041		880,332		1,107,401
Origination, extension and disposition fees	1,003		226,172		357,400		543,924

_______________

(1)Amounts were primarily compensation for time spent supporting the Company’s day-to-day operations.

Terra REIT’s Management Agreement with the REIT Manager

Terra REIT is the Company’s parent and sole member. The Company has entered into a cost sharing arrangement with Terra REIT pursuant to which the Company is responsible for its allocable share of Terra REIT’s expenses, including fees paid by Terra REIT to its manager, the REIT Manager. Terra REIT currently pays the following fees to the REIT Manager pursuant to the Management Agreement:

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, the REIT 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.

Asset Management Fee. A monthly asset management fee at an annual rate equal to 1.0% of the aggregate funds under management, which includes the loan origination amount or aggregate gross acquisition cost, as applicable, for each real estate-related loan and cash held by Terra REIT.

Asset Servicing Fee. A monthly asset servicing fee at an annual rate equal to 0.25% of the aggregate gross origination price or aggregate gross acquisition price for each real estate related loan then held by Terra REIT (inclusive of closing costs and expenses).

Disposition Fee. A disposition fee in the amount of 1.0% of the gross sale price received by Terra REIT from the disposition of each loan, but not upon the maturity, prepayment, workout, modification or extension of a loan unless there is a corresponding fee paid by the borrower, in which case the disposition fee will be the lesser of (i) 1.0% of the principal amount of the loan and ii) the amount of the fee paid by the borrower in connection with such transaction. If Terra REIT takes ownership of a property as a result of a workout or foreclosure of a loan, Terra REIT will pay a disposition fee upon the sale of such property equal to 1.0% of the sales price.

Transaction Breakup Fee. In the event that Terra REIT receive any “breakup fees,” “busted-deal fees,” termination fees, or similar fees or liquidated damages from a third-party in connection with the termination or non-consummation of any loan or disposition transaction, the REIT Manager will be entitled to receive one-half of such amounts, in addition to the reimbursement of all out-of-pocket fees and expenses incurred by the REIT Manager with respect to its evaluation and pursuit of such transactions.

In addition to the fees described above, Terra REIT reimburses the REIT Manager for operating expenses incurred in connection with services provided to the operations of Terra REIT, including its allocable share of the REIT Manager’s overhead, such as rent, employee costs, utilities, and technology costs.

Participation Agreements

The Company may enter into participation agreements with related and unrelated parties, primarily other affiliated funds of the REIT Manager. The participation agreements provide the Company with the opportunity to invest along the same terms, conditions, price and rights in the specified investment. The purpose of the participation agreements is to allow the Company and an affiliate to originate a specified investment when, individually, the Company does not have the liquidity to do so or to

Notes to Consolidated Financial Statements (Unaudited)

achieve a certain level of portfolio diversification. The Company may transfer portions of its investments to other participants or it may be a participant to an investment held by another entity.

ASC Topic 860, Transfers and Servicing (“ASC 860”), establishes accounting and reporting standards for transfers of financial assets. ASC 860-10 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The Company has determined that the participation agreements it enters into are accounted for as secured borrowings under ASC Topic 860.

Participation interest purchased by the Company: The below tables list the investment interests purchased by the Company via participation agreements (each, a “PA”) as of September 30, 2024 and December 31, 2023. In accordance with the terms of each PA, each participant’s rights and obligations, including interest income and other income (e.g., exit fee and prepayment income) and related fees/expenses are based upon its respective pro-rata participation interest in such investments, as specified in the respective PA. The Company’s share of the investment is repayable only from the proceeds received from the related borrower/issuer of the investment, and therefore the Company is also subject to the credit risk (i.e., risk of default by the underlying borrower/issuer).

Pursuant to each PA, the affiliated fund receives and allocates the interest income and other related investment incomes in respect of the investment to the Company. The Company paid related expenses (i.e., the base management fee) directly to Terra REIT.


	September 30, 2024						December 31, 2023
	Participating Interests		Principal Balance		Carrying Value		Participating Interests		Principal Balance		Carrying Value
370 Lex Part Deux, LLC (1)(2)	35.0	%	$	24,491,877	$	13,431,482	35.0	%	$	24,491,877	$	15,257,557
RS JZ Driggs, LLC (2)	50.0	%	2,773,564		2,773,564		50.0	%	2,627,373		2,627,373
Total			$	27,265,441	$	16,205,046			$	27,119,250	$	17,884,930

_______________

(1)Carrying value is net of specific allowance for loan losses of $11.1 million and $9.2 million as of September 30, 2024 and December 31, 2023, respectively.

(2)The loan is held in the name of Terra REIT, the Company’s parent entity.

Transfers of participation interests by the Company: The following table summarizes the investment that was subject to a PA with investment partnership affiliated with the REIT Manager as of September 30, 2024. There was no such investment as of December 31, 2023.


					September 30, 2024
					Transfers treated as obligations under participation agreements
	Principal		Carrying Value		% Transferred		Principal		Carrying Value
Asano Bankers Hill, LLC (1)	$	18,567,296	$	18,546,807	80.8	%	$	15,000,000	$	15,132,411

________________

(1)Participant is a certain separately managed account, an investment partnership managed by the REIT Manager.

This investment is held in the name of the Company, but the Participant’s rights and obligations, including interest income and other income (e.g., exit fee, prepayment income) and related fees/expenses (e.g., disposition fees, asset management and asset servicing fees), are based upon its pro rata participation interest in such participated investment, as specified in the participation agreement. The Participant’s share of the investment is repayable only from the proceeds received from the related borrower/issuer of the investment and, therefore, the Participant also is subject to credit risk (i.e., risk of default by the underlying borrower/issuer). Pursuant to the participation agreement with this entity, the Company receives and allocates the interest income and other related investment income to the Participant based on its pro rata participation interest. The Participant pays any expenses, including any fees to the REIT Manager, only on its pro rata participation interest, subject to the terms of the governing fee arrangements.

Notes to Consolidated Financial Statements (Unaudited)

Note 7. Debt

Senior Unsecured Notes

On February 10, 2021, Terra BDC issued $34.8 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, and on February 26, 2021, the underwriters exercised the option to purchase an additional $3.6 million of the notes (collectively the “7.00% Senior Notes Due 2026”). The 7.00% Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at Terra BDC’s option on or after February 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest. In connection with the Merger, Terra LLC assumed all of Terra BDC’s rights and obligations under the indenture governing the 7.00% Senior Notes Due 2026.

The indenture between Terra LLC (as successor to Terra BDC) and the trustee contains certain debt limitations and asset coverage covenants. As of September 30, 2024, the Company was in compliance with the asset coverage ratio requirements under the indenture.

The following table is a summary of the Company’s unsecured notes payable outstanding as of:


	Coupon Rate		Effective Rate (1)		Maturity Date	September 30, 2024		December 31, 2023
7.00% Senior Notes Due 2026 (2)	7.00	%	10.36	%	3/31/2026	38,375,000		38,375,000
Unamortized purchase discount (2)						(2,194,095)		(3,161,457)
Unsecured notes payable, net						$	36,180,905	$	35,213,543

_______________

(1)Includes purchase discount that is amortized to interest expense over the remaining life of the notes.

(2)In connection with the Merger, Terra LLC assumed all the obligations under the 7.00% Senior Notes and recorded a purchase discount of $4.6 million, representing the difference between the carrying value and the fair value of the notes on the date of the merger.

Term Loan

In April 2021, Terra BDC entered into a credit agreement (the “Credit Agreement”) with a lender to provide for a delayed draw term loan of $25.0 million (the “Term Loan”). On September 27, 2022, the Credit Agreement was amended to, among other things, remove the make whole premium on voluntary prepayment of the loans as well as to provide consent to the consummation of the Merger and the assumption by Terra LLC of all of the rights and obligations of Terra BDC under the Credit Agreement. On June 30, 2023, Terra LLC amended the Credit Agreement to, among other things, (i) decrease the principal amount to $15.0 million, (ii) extend the scheduled maturity date to March 31, 2024, and (iii) increase the rate on which the loans thereunder bear interest from a fixed rate of 5.625% per annum to a floating rate based on SOFR plus 7.375% with a SOFR floor of 5.0%, and repaid $10.0 million of the principal amount of the Term Loan. The Credit Agreement was secured by a lien on substantially all of Terra BDC's, and, following the Merger, Terra LLC’s owned and thereafter acquired property. In March 2024, the Term Loan was repaid in full.

The following table is a summary of the Company’s obligations under the Credit Agreement as of December 31, 2023. There was no such loan outstanding as of September 30, 2024.


	December 31, 2023
	Maturity	Interest rate		Principal Amount
Term loan payable	3/31/2024	12.72	%	$	15,000,000
Unamortized deferred financing cost				(51,396)
Unsecured notes payable, net				$	14,948,604

Notes to Consolidated Financial Statements (Unaudited)

Scheduled Debt Principal Payments

Scheduled debt principal payments for each of the five calendar years following September 30, 2024 are as follows:


Years Ending December 31,	Total
2024 (October 1 through December 31)	$	—
2025	—
2026	38,375,000
2027	—
2028	—
Thereafter	—
	38,375,000
Unamortized purchase discount	(2,194,095)
Total	$	36,180,905

Obligation Under Participation Agreement

As discussed in Note 2, the Company follows the guidance in ASC 860 when accounting for loan participation. Such guidance requires the transferred interests meet certain criteria in order for the transaction to be recorded as a sale. Loan participation from the Company which does not qualify for sale treatment remains on the Company’s consolidated balance sheets and the proceeds are recorded as obligation under participation agreement. As of September 30, 2024, obligation under participation agreement had a carrying value of $15.1 million, and the carrying value of the loan that is associated this obligation under participation agreement was $18.5 million (see “Participation Agreements” in Note 6). The interest rate on the obligation under participation agreement was 20.2%. There was no such obligation under participation agreement as of December 31, 2023.

Note 8. Commitments and Contingencies

Unfunded Commitments on Loans Held for Investment

In the ordinary course of business, the Company may enter into future funding commitments, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. As of both September 30, 2024 and December 31, 2023, the Company had $0.7 million of unfunded commitments. The Company maintained sufficient cash on hand to fund such unfunded commitments, including matching these commitments with principal repayments on outstanding loans.

Other

The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. Management of Terra Income Advisors has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote.

The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under its contracts with its borrowers and investees. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material adverse effect upon its financial condition or results of operations.

See Note 6 for a discussion of the Company’s commitments to Terra REIT.

Note 9. Subsequent Events

The management of the Company has evaluated events and transactions through the date the consolidated financial statements were issued and has determined that there are no material events that would require adjustment to or disclosure in the Company’s consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto and other financial information included elsewhere in this Quarterly Report on Form 10-Q. In this report, “we,” “us” and “our” refer to Terra Income Fund 6, LLC.

FORWARD-LOOKING STATEMENTS

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include, but are not limited to, statements as to:

•our expected financial performance and operating results;

•our ability to achieve the expected synergies, cost savings and other benefits from the Merger (as defined in the section entitled “Overview” below);

•the availability of attractive risk-adjusted investment opportunities in our target asset class and other real estate-related investments that satisfy our objectives and strategies;

•the origination or acquisition of our targeted assets, including the timing of originations or acquisitions;

•volatility in our industry, interest rates and spreads, the debt or equity markets, the general economy or the real estate market specifically, whether the results of market events or otherwise;

•changes in our investment objectives and business strategy;

•the availability of financing on acceptable terms or at all;

•the performance and financial condition of our borrowers;

•changes in interest rates and the market value of our assets;

•borrower defaults or decreased recovery rates from our borrowers;

•changes in prepayment rates on our loans;

•our use of financial leverage;

•actual and potential conflicts of interest with any of the following affiliated entities: Terra Property Trust, Inc. (“Terra REIT”), our parent company; Terra Capital Partners, LLC (“Terra Capital Partners”), our sponsor; Terra REIT Advisors, LLC, a subsidiary of Terra Capital Partners, and the external manager to our sole member Terra REIT (the “REIT Manager”); Terra Fund Advisors, LLC, an affiliate of Terra Capital Partners; Terra Secured Income Fund 5 International, Terra Income Fund International and Terra Secured Income Fund 7, LLC, (collectively, the “Terra Income Funds”); Terra Offshore Funds REIT, LLC; Mavik Real Estate Special Opportunities Fund, LP; or any of their affiliates;

•our dependence on the REIT Manager or its affiliates and the availability of its senior management team and other personnel;

•actions and initiatives of the U.S., federal, state and local government and changes to the U.S. federal, state and local government policies and the execution and impact of these actions, initiatives and policies; and

•the degree and nature of our competition.

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth as “Risk Factors” in our Annual Report on Form 10-K. Other factors that could cause actual results to differ materially include:

•changes in the economy;

•risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and

•future changes in laws or regulations and conditions in our operating areas.

We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders are advised to consult any additional disclosures that we may make directly to stockholders or through reports that we may file in the future with the Securities and Exchange Commission (the “SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements and projections contained in this quarterly report on Form 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Overview

Terra Income Fund 6 LLC (“Terra LLC”) was formed as a Delaware limited liability company on April 29, 2022 as a wholly owned subsidiary of Terra REIT. On October 1, 2022, pursuant to an Agreement and Plan of Merger, dated as of May 2, 2022 (as amended, the “Merger Agreement”), Terra Income Fund 6, Inc. (“Terra BDC”) merged with and into Terra LLC, with Terra LLC continuing as the surviving entity of the merger (the “Merger”). Subsequent to the Merger, Terra LLC became the successor of Terra BDC and assumed all of Terra BDC’s rights and obligations, including the obligations under the indenture governing Terra BDC’s unsecured notes payable.

We are a wholly owned subsidiary of Terra REIT. Terra REIT’s investments activities are externally managed by the REIT Manager, our affiliate. We originate, invest in and manage a diverse portfolio of real estate-related investments that generate a stable income stream. We directly originate, structure and underwrite most, if not all, of our loans, as we believe that doing so will provide us with the best opportunity to invest in loans that satisfy our standards, establish a direct relationship with the borrower and optimize the terms of its investments; however, we may acquire existing loans from the originating lender should its adviser determine such an investment is in its best interest. We may also make strategic non-real estate related investments that align with our investment objectives and criteria. We may hold our investments until their scheduled maturity dates or may sell them if we are able to command favorable terms for their disposition. We may seek to realize growth in the value of its investments by timing their sale to maximize value.

On November 8, 2022, we entered into a cost sharing agreement with Terra REIT effective October 1, 2022, pursuant to which we reimburse Terra REIT for its allocable portion of management and transaction fees and operating expenses incurred by Terra REIT, including fees paid by Terra REIT to the REIT Manager (the “Cost Sharing Agreement”).

Portfolio Summary

Net Loan Portfolio

The following table provides a summary of our net loan portfolio as of:


	September 30, 2024
	Fixed Rate		Floating Rate (1)(2)		Total Gross Loans		Obligations under Participation Agreements		Total Net Loans
Number of loans	2		2		4		1		4
Principal balance	$	5,773,564	$	43,059,173	$	48,832,737	$	15,000,000	$	33,832,737
Carrying value	5,723,071		31,978,289		37,701,360		15,132,411		22,568,949
Fair value	5,773,564		32,260,110		38,033,674		15,211,122		22,822,552
Weighted-average coupon rate	11.6%		16.2%		15.7%		20.2%		13.7%
Weighted-average remaining term (years)	2.60		0.35		0.67		0.35		1.38


	December 31, 2023
	Fixed Rate		Floating Rate (1)(2)		Total		Obligations under Participation Agreements			Total Net Loans
Number of loans	4		2		6		—			6
Principal balance	$	44,377,373	$	43,059,173	$	87,436,546	$	—		$	87,436,546
Carrying value	44,528,468		33,814,996		78,343,464		—			78,343,464
Fair value	44,313,689		34,214,046		78,527,735		—			78,527,735
Weighted-average coupon rate	13.7%		16.6%		15.1%		—		%	15.1%
Weighted-average remaining term (years)	0.76		1.10		0.87		—			0.87

_______________

(2)As of both September 30, 2024 and December 31, 2023, two loans were subject to SOFR or Term SOFR floor, as applicable.

Equity Investments

In addition to our loan portfolio, we owned equity interests in two joint ventures that own real estate properties. We account for our equity interest in the joint ventures as equity method investments because we do not have a controlling financial interest in the entities. As of September 30, 2024 and December 31, 2023, these equity investments had total carrying value of $37.2 million and $40.4 million, respectively.

Portfolio Investment Activity

For the three months ended September 30, 2024 and 2023, we invested $5.9 million and $1.3 million in new and add-on investments, and had $5.0 million and none of repayments, resulting in net investment of $0.9 million and $1.3 million, respectively. For the three months ended September 30, 2024, new and add-on investments included $5.8 million of funding and $5.0 million of repayment under the promissory note receivable.

For the nine months ended September 30, 2024 and 2023, we invested $41.1 million and $42.5 million in new and add-on investments, and had $44.9 million and $51.8 million of repayments, resulting in net repayments of $3.9 million and $9.3 million, respectively. For the nine months ended September 30, 2024, new and add-on investments included $40.1 million of funding and $5.0 million of repayment under the promissory note receivable.

Senior Unsecured Notes

Term Loan

In April 2021, Terra BDC entered into a credit agreement (the “Credit Agreement”) with a lender to provide for a delayed draw term loan of $25.0 million (the “Term Loan”). On September 27, 2022, the Credit Agreement was amended to, among other things, remove the make whole premium on voluntary prepayment of the loans as well as to provide consent to the consummation of the Merger and the assumption by Terra LLC of all of the rights and obligations of Terra BDC under the Credit Agreement. On June 30, 2023, we amended the Credit Agreement to, among other things, (i) decrease the principal amount to $15.0 million, (ii) extend the scheduled maturity date to March 31, 2024, and (iii) increase the rate on which the loans thereunder bear interest from a fixed rate of 5.625% per annum to a floating rate based on SOFR plus 7.375% with a SOFR floor of 5.0%, and repaid $10.0 million of the principal amount of the Term Loan. The Credit Agreement was secured by

a lien on substantially all of Terra BDC’s, and, following the Merger, Terra LLC’s owned and thereafter acquired property. In March 2024, the Term Loan was repaid in full.

Factors Impacting Operating Results

Our portfolio is concentrated in a limited number of industries and borrowers, and, as a result, a downturn in any particular industry or borrower in which we are heavily invested may significantly impact the aggregate returns we realize. If an industry in which we are heavily invested suffers from adverse business or economic conditions, a material portion of our investment could be affected adversely, which, in turn, could adversely affect our financial position and results of operations. For example, as of September 30, 2024, our investments secured by office and mixed-used properties represented approximately 72.4% and 10.5%, respectively, of the principal balance of our total net loan investments. In addition, as of September 30, 2024, we held only four loan investments and our largest net loan investment represented approximately 72.4% of the principal balance of our total net loan investments and our largest three net loan investments represented approximately 91.8% of the principal balance of our total net loan investments.

Results of Operations

Operating results for the three and nine months ended September 30, 2024 and 2023 were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024		2023		Change		2024		2023		Change
Revenues
Interest income	$	1,851,745	$	2,321,378	$	(469,633)	$	5,782,363	$	7,848,610	$	(2,066,247)
Dividend and other income	10,497		19,162		(8,665)		37,323		56,637		(19,314)
	1,862,242		2,340,540		(478,298)		5,819,686		7,905,247		(2,085,561)
Operating expenses
Asset management and asset servicing fees paid/payable to Terra REIT (1)	238,710		408,726		(170,016)		906,389		1,272,159		(365,770)
Operating expense reimbursement to Terra REIT (1)	177,824		395,041		(217,217)		880,332		1,107,401		(227,069)
Provision for credit losses	524,486		1,710,516		(1,186,030)		1,575,113		1,642,528		(67,415)
Professional fees	163,157		152,868		10,289		491,484		618,910		(127,426)
Insurance expense	21,072		21,072		—		63,216		104,263		(41,047)
General and administrative expenses	10,463		32,238		(21,775)		58,004		59,625		(1,621)
	1,135,712		2,720,461		(1,584,749)		3,974,538		4,804,886		(830,348)
Operating income (loss)	726,530		(379,921)		1,106,451		1,845,148		3,100,361		(1,255,213)
Other income and expenses
Loss from equity investment in unconsolidated investments	(792,622)		(543,934)		(248,688)		(2,943,172)		(353,027)		(2,590,145)
Interest expense on unsecured notes payable	(1,003,009)		(968,170)		(34,839)		(2,982,049)		(2,880,368)		(101,681)
Interest expense on term loan	—		(532,387)		532,387		(517,528)		(1,239,418)		721,890
Interest expense from obligation under participation agreement	(792,352)		—		(792,352)		(2,301,347)		—		(2,301,347)
Unrealized gain on investments, net	—		16,790		(16,790)		—		22,619		(22,619)
Realized loss on investments, net	—		—		—		—		(12,512)		12,512
	(2,587,983)		(2,027,701)		(560,282)		(8,744,096)		(4,462,706)		(4,281,390)
Net loss	$	(1,861,453)	$	(2,407,622)	$	546,169	$	(6,898,948)	$	(1,362,345)	$	(5,536,603)

_____________

(1)Fees were paid and payable, and expenses were reimbursed, to Terra REIT pursuant to the Cost Sharing Agreement with Terra REIT.

Net Loan Portfolio

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. The following table presents a reconciliation of our loan portfolio on a weighted average basis from gross to net:


	Three Months Ended September 30,
	2024			2023
	Weighted Average Principal Amount		Weighted Average Coupon Rate	Weighted Average Principal Amount		Weighted Average Coupon Rate
Gross loan investments	$	48,782,203	15.9%	$	86,005,460	15.1%
Obligation under participation agreement	(15,000,000)		20.3%	—		—%
Net loan investments	$	33,782,203	13.9%	$	86,005,460	15.1%


	Nine Months Ended September 30,
	2024			2023
	Weighted Average Principal Amount		Weighted Average Coupon Rate	Weighted Average Principal Amount		Weighted Average Coupon Rate
Gross loan investments	$	61,952,617	15.5%	$	98,569,922	14.9%
Obligation under participation agreement	(14,014,599)		19.0%	—		—%
Net loan investments	$	47,938,018	14.5%	$	98,569,922	14.9%

Interest Income

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, interest income decreased by $0.5 million and $2.1 million, respectively, primarily due to a decrease in the weighted average principal balance of gross loans, partially offset by an increase in the weighted average coupon rate due to increases in the underlying index rates and the interest income earned on the promissory note receivable.

Asset Management and Asset Servicing Fees

On November 8, 2022, we entered into the Cost Sharing Agreement with Terra REIT effective October 1, 2022, pursuant to which we reimburse Terra REIT for our allocable portion of management and transaction fees and operating expenses incurred by Terra REIT, including fees paid by Terra REIT to the REIT Manager.

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, management fees consisting of asset management and asset servicing fees paid/payable to Terra REIT pursuant to the Cost Sharing Agreement decreased by $0.2 million and $0.4 million, respectively, primarily due to a decrease in total funds under management.

Operating Expense Reimbursement

For the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, operating expense incurred on our behalf pursuant to the Cost Sharing Agreement decreased by $0.2 million and $0.2 million, respectively, primarily due to a decrease in the allocation ratio as well as a decrease in costs being allocated.

Provision for Credit Losses

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.

For the three and nine months ended September 30, 2024, we recorded a provision for credit losses of $0.5 million and $1.6 million, respectively, primarily as a result of a decline in our estimated recoverable amount on a non-performing subordinated loan due to an increase in funding on the senior loan.

For the three and nine months ended September 30, 2023, we recorded a provision for credit losses of $1.7 million and $1.6 million, primarily as a result of a decline in the fair value of the collateral of a loan due to a decline in the macroeconomic outlook for commercial real estate.

Professional Fees

For the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, professional fees were substantially the same. For the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, professional fees decreased by $0.1 million, primarily due to legal fees incurred in connection with the SEC industry inquiry in 2023.

Loss From Equity Investment In Unconsolidated Investments

For the three and nine months ended September 30, 2024, we recognized a loss from equity investment in unconsolidated investment of $0.8 million and $2.9 million, respectively, related to our portion of the net loss incurred by the two joint ventures that own real estate properties primarily as a result of depreciation expense and interest expense on floating rate loans.

For the three and nine months ended September 30, 2023, we recognized loss from equity investment in unconsolidated investment of $0.5 million and $0.4 million, respectively, primarily related to the equity loss from the joint venture that invests in real estate properties, partially offset by interest income earned on a $10.0 million mezzanine loan for which we accounted for using the equity method of accounting due to the profit sharing arrangement.

Interest Expense on Unsecured Notes Payable

As discussed in the section entitled “Senior Unsecured Notes” above, we assumed the $38.4 million 7.00% Senior Notes Due 2026 in connection with the Merger.

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.

Interest Expense on Term Loan

As discussed in the section entitled “Term Loan” above, we assumed the $25.0 million Term Loan in connection with the Merger. In June 30, 2023, we made a $10.0 million partial repayment on the Term Loan. In March 2024, the Term Loan was repaid in full.

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 the Term Loan decreased by $0.5 million and $0.7 million, respectively, primarily due to a decrease in the weighted average outstanding balance, partially offset by an increase in contractual interest rate.

Interest Expense From Obligation Under Participation Agreement

For the three and nine months ended September 30, 2024, interest expense from obligation under participation agreement was $0.8 million and $2.3 million, respectively, primarily related to a portion of a loan we transferred to an affiliate via a participation agreement for which it did not qualify for sale treatment. There was no such interest expense for the three and nine months ended September 30, 2023.

Net loss

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 $0.5 million and increased by $5.5 million, respectively.

Terra REIT’s Management Agreement with the REIT Manager

Terra REIT is our parent and sole member. We have entered into a cost sharing arrangement with Terra REIT pursuant to which we will be responsible for our allocable share of Terra REIT’s expenses, including fees paid by Terra REIT to its manager, the REIT Manager. Terra REIT currently pays the following fees to the REIT Manager pursuant to a management agreement:

Financial Condition, Liquidity and Capital Resources

We currently generate cash primarily from cash flows from interest, dividends and fees earned from our investments, principal repayments, and proceeds from sales of our investments. Our primary use of cash is for our targeted assets and payments of our expenses.

We may borrow funds to make investments to the extent we determine that leveraging our portfolio would be appropriate. In February 2021, Terra BDC issued $38.4 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, for net proceeds of $37.2 million after deducting underwriting commissions of $1.2 million. On October 1, 2022 in connection with the Merger, Terra BDC, Terra LLC and U.S. Bank National Association entered into a second supplemental indenture pursuant to which Terra LLC assumed the payment of the notes and the performance of every covenant of the indenture, to be performed or observed by Terra BDC.

Certain of our loans provide for commitments to fund the borrower at a future date. As of September 30, 2024, we had one loan with funding commitments of $19.3 million, of which we funded $18.6 million. We do not expect to fund the remaining $0.7 million unfunded commitments to the borrower in the next twelve months as the borrower has not met the requirement for funding. Additionally, our $15.0 million obligation under participation agreement will mature in the next twelve months. We expect to use the proceeds from the repayment of the corresponding investment to repay the participation obligation.

Cash Flows (Used in) Provided by Operating Activities

For the nine months ended September 30, 2024, cash used in operating activities was $0.7 million. For the nine months ended September 30, 2023, cash provided by operating activities was $1.9 million. The decrease in operating cash was primarily due to decrease in contractual interest income.

Cash Flows Provided by Investing Activities

For the nine months ended September 30, 2024, cash provided by investing activities was $4.1 million, primarily related to proceeds from repayment of loans of $39.9 million and proceeds from repayment of promissory note receivable of $5.0 million, partially offset by funding for promissory note receivable of $40.1 million and origination and purchase of loans of $1.0 million.

For the nine months ended September 30, 2023, cash provided by investing activities was $9.7 million, primarily related to proceeds from repayment of loans of $41.8 million, proceeds from sale of held-to-maturity debt securities of $10.0 million and distributions received from unconsolidated investment of $0.4 million, partially offset by purchase of equity interest in unconsolidated investment of $27.4 million, purchase of held-to-maturity debt securities of $10.0 million, payments for origination and purchase of loans of $4.6 million and payment for marketable securities of $0.5 million.

Cash Flows From Financing Activities

For the nine months ended September 30, 2024, cash used in financing activities was $0.1 million, primarily due to repayment of the Term Loan of $15.0 million as well as a decrease in interest reserve and other deposits held on investment of $0.1 million, partially offset by proceeds from obligation under participation agreement of $15.0 million.

For the nine months ended September 30, 2023, cash used in financing activities was $9.4 million, primarily due to the repayments of borrowings under term loan payable of $10.0 million and payment for financing cost of $0.2 million, partially offset by an increase in interest reserve and other deposits held on investments of $0.8 million.

Critical Accounting Policies and Use of Estimates

Our consolidated financial statements are prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”), 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 period. 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.

Allowance for Credit Losses

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.

We use a model-based approach for estimating the allowance for credit losses on performing loans on a collective basis, including future funding commitments for which we do not have the unconditional right to cancel, as these loans share similar risk characteristics. We utilize information obtained from internal and external sources relating to past events, current economic conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for our loan portfolio. We utilize a commercial mortgage-based, third-party loan loss model and because we do not have a meaningful history of realized credit losses on our loan portfolio, we subscribe to a database service to provide historical proxy loan loss information. We employ logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. We have chosen to incorporate a weighted average macroeconomic forecast that encompasses baseline, upside and downside scenarios, into our allowance for credit losses on performing loans estimate during the reasonable and supportable forecast period which is currently eight quarters. We select certain economics variables from a group of independent variables such as Commercial Real Estate Price Index, unemployment and interest rate which are included in the model as part of macroeconomic forecast and updated regularly based on current economic trends. The specific loan level information input into the model includes loan-to-value and debt service coverage ratio metrics, as well as principal balances, property type, location, coupon rate, coupon rate type, original or remaining term, expected repayment dates and contractual future funding commitments. Based on the inputs, the loan loss model determines a loan loss rate through the generation of a probability of default (PD) and loss given default (LGD) for each loan. The allowance for credit losses on performing loans is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. A significant amount of judgment is applied in selecting inputs and analyzing results produced by the models to determine the allowance for credit losses. Changes in such estimates can significantly affect the expected credit losses.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

This section has been omitted pursuant to General Instruction H(2)(c) of Form 10-Q.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer of our sole and managing member, Terra REIT, performing functions equivalent to those a principal executive officer and principal financial officer of our company would perform if we had any officers, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2024. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations.

Changes in Internal Control Over Financial Reporting

During the most recent fiscal quarter, there was no change in our internal controls over financial reporting, as defined under Rule 13a-15(f) under the Exchange Act, that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II

Item 1. Legal Proceedings.

Neither we nor Terra REIT nor the REIT Manager is currently subject to any material legal proceedings, nor, to our knowledge, are material legal proceedings threatened against us, Terra REIT, or the REIT Manager. From time to time, we and individuals employed by Terra REIT may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors.

For a discussion of the potential risks and uncertainties associated with our business, please see Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. You should be aware that those risk factors may not describe every risk facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

This section has been omitted pursuant to General Instruction H(2)(b) of Form 10-Q.

Item 3. Defaults Upon Senior Securities.

This section has been omitted pursuant to General Instruction H(2)(b) of Form 10-Q.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

The following exhibits are filed with this report. Documents other than those designated as being filed herewith are incorporated herein by reference.


Exhibit No.						Description and Method of Filing
3.1						Articles of Amendment and Restatement of Terra Income Fund 6, Inc. (incorporated by reference to Exhibit (a) to Post-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-202399) filed with the SEC on May 12, 2015.)
3.2						Articles of Amendment to the Articles of Amendment and Restatement of Terra Income Fund 6, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on May 1, 2019.)
3.3						Amendment No. 1 to the Amended and Restated Bylaws of Terra Income Fund 6, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on April 29, 2022.)
3.4						Amended and Restated Bylaws of Terra Income Fund 6, Inc. (incorporated by reference to Exhibit (b) to Post-Effective Amendment No. 1 to the Registration Statement on Form N-2 (File No. 333-202399) filed with the SEC on May 12, 2015.)
3.5						Limited Liability Company Agreement of Terra Merger Sub, LLC, dated as of September 26, 2022, by Terra Property Trust, Inc. (incorporated by reference to Exhibit 3.5 to the Quarterly Report on Form 10-Q filed with the SEC on November 14, 2022.)
4.1						Form of Subscription Agreement (incorporated by reference to Appendix A to the Final Prospectus dated February 2, 2018, filed with the SEC on February 2, 2018.)
4.2						Indenture, dated February 10, 2021, by and between Terra Income Fund 6, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on February 10, 2021.)
4.3						First Supplemental Indenture, dated February 10, 2021, by and between Terra Income Fund 6, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on February 10, 2021.)
4.4						Second Supplemental Indenture, dated October 1, 2022, by and among Terra Income Fund 6, Inc., Terra Merger Sub, LLC and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K filed with the SEC on October 3, 2022.)


31.1*						Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File Included as Exhibit 101 (embedded within the Inline XBRL document)

* Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 8, 2024



									TERRA INCOME FUND 6, LLC
									By: Terra Property Trust, Inc., its sole and managing member

						By:			/s/ Vikram S. Uppal
									Vikram S. Uppal
									Chairman of the Board, Chief Executive Officer and Chief Investment Officer
									(Principal Executive Officer)

						By:			/s/ Gregory M. Pinkus
									Gregory M. Pinkus
									Chief Financial Officer, Treasurer and Secretary
									(Principal Financial and Accounting Officer)

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Vikram S. Uppal, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Terra Income Fund 6, LLC;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial report to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2024


						/s/ Vikram S. Uppal
						Vikram S. Uppal
						Chairman of the Board, Chief Executive Officer and President
						(Principal Executive Officer)
						Terra Property Trust, Inc., the sold member of Terra Income Fund 6, LLC

Exhibit 31.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory M. Pinkus, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Terra Income Fund 6, LLC;

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2024


						/s/ Gregory M. Pinkus
						Gregory M. Pinkus
						Chief Financial Officer,
						Chief Operating Officer, Treasurer and Secretary
						(Principal Financial and Principal Accounting Officer)
						Terra Property Trust, Inc., the sold member of Terra Income Fund 6, LLC

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Terra Income Fund 6, LLC (the “Company”) for the quarter ended September 30, 2024 as filed with the Securities Exchange Commission on the date hereof (the “Report”), I, Vikram S. Uppal, and I, Gregory M. Pinkus, each certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2024


						/s/ Vikram S. Uppal
						Vikram S. Uppal
						Chairman of the Board, Chief Executive Officer and President
						(Principal Executive Officer)
						Terra Property Trust, Inc., the sold member of Terra Income Fund 6, LLC


						/s/ Gregory M. Pinkus
						Gregory M. Pinkus
						Chief Financial Officer,
						Chief Operating Officer, Treasurer and Secretary
						(Principal Financial and Principal Accounting Officer)
						Terra Property Trust, Inc., the sold member of Terra Income Fund 6, LLC

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2024	Nov. 08, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	000-55429
Entity Registrant Name	Terra Income Fund 6, LLC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	92-0548263
Entity Address, Address Line One	205 West 28th Street,
Entity Address, Address Line Two	12th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10001
City Area Code	212
Local Phone Number	753-5100
Title of 12(b) Security	7.00% Notes due 2026
Trading Symbol	TFSA
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		0
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0001577134
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Consolidated Balance Sheets - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Assets
Cash and cash equivalents	$ 6,640,033	$ 3,193,078
Restricted cash	0	106,918
Loans held for investment, net of allowance for credit losses of $218,805 and $469,011	37,701,360	78,343,464
Equity investment in unconsolidated investments	37,222,951	40,431,710
Promissory note receivable (Note 6)	35,096,786	0
Marketable securities	500,914	507,266
Interest receivable	291,169	1,241,308
Prepaid expenses and other assets	680,516	515,407
Total assets	118,133,729	124,339,151
Liabilities:
Unsecured notes payable, net of purchase discount	36,180,905	35,213,543
Term loan payable, net of deferred financing cost	0	14,948,604
Obligation under participation agreement (Note 7)	15,132,411	0
Interest payable from obligation under participation agreement	220,417	0
Interest reserve and other deposits held on investments	0	106,918
Other liabilities	8,046	410,075
Accrued expenses	91,955	254,716
Total liabilities	51,633,734	50,933,856
Commitments and contingencies (Note 8)
Equity:
Managing member	66,506,347	73,405,295
Accumulated other comprehensive loss	(6,352)	0
Total equity	66,499,995	73,405,295
Total liabilities and equity	118,133,729	124,339,151
Loans Held for Investment, Net
Assets
Loans held for investment, net of allowance for credit losses of $218,805 and $469,011	21,496,314	60,458,534
Loans held for investment acquired through participation
Assets
Loans held for investment, net of allowance for credit losses of $218,805 and $469,011	$ 16,205,046	$ 17,884,930

Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Allowance for credit losses	$ 11,279,199	$ 9,703,331
Loans Held for Investment, Net
Allowance for credit losses	218,805	469,011
Loans held for investment acquired through participation
Allowance for credit losses	$ 11,060,394	$ 9,234,320

Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($)

3 Months Ended

9 Months Ended

Sep. 30, 2024

Sep. 30, 2023

Sep. 30, 2024

Sep. 30, 2023

Revenues

Interest income

$ 1,851,745

$ 2,321,378

$ 5,782,363

$ 7,848,610

Dividend and other income

10,497

19,162

37,323

56,637

Revenues

1,862,242

2,340,540

5,819,686

7,905,247

Operating expenses

Asset management and asset servicing fees paid/payable to Terra REIT

^[1]

238,710

408,726

906,389

1,272,159

Operating expense reimbursement to Terra REIT

^[1]

177,824

395,041

880,332

1,107,401

Provision for credit losses

524,486

1,710,516

1,575,113

1,642,528

Professional fees

163,157

152,868

491,484

618,910

Insurance expense

21,072

63,216

104,263

General and administrative

10,463

32,238

58,004

59,625

Operating expenses

1,135,712

2,720,461

3,974,538

4,804,886

Operating income (loss)

726,530

(379,921)

1,845,148

3,100,361

Loss from equity investment in unconsolidated investments

(792,622)

(543,934)

(2,943,172)

(353,027)

Interest expense on unsecured notes payable

(1,003,009)

(968,170)

(2,982,049)

(2,880,368)

Interest expense on term loan

(532,387)

(517,528)

(1,239,418)

Interest expense from obligation under participation agreement

(792,352)

(2,301,347)

Unrealized gain on investments, net

16,790

22,619

Realized loss on investments, net

(12,512)

Other income and expenses

(2,587,983)

(2,027,701)

(8,744,096)

(4,462,706)

Net loss

(1,861,453)

(2,407,622)

(6,898,948)

(1,362,345)

Other comprehensive income (loss)

Unrealized gain (loss) on available-for-sale debt securities

2,211

(6,352)

Other comprehensive loss:

2,211

(6,352)

Comprehensive loss

$ (1,859,242)

$ (2,407,622)

$ (6,905,300)

$ (1,362,345)

[1]	Fees were paid and payable, and expenses were reimbursed, to Terra Property Trust, Inc. (“Terra REIT”) pursuant to a cost sharing agreement with Terra REIT (Note 6).

Consolidated Statement of Changes in Member’s Capital - USD ($)	3 Months Ended						9 Months Ended		12 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2022
Accounting standards update [Extensible Enumeration]									Accounting Standards Update 2016-13
Changes in Members' Capital [Roll Forward]
Beginning balance	$ 68,359,237	$ 70,198,138	$ 73,405,295	$ 80,075,687	$ 79,996,808	$ 79,691,832	$ 73,405,295	$ 79,691,832
Net loss	(1,861,453)	(1,978,625)	(3,058,870)	(2,407,622)	78,879	966,398	(6,898,948)	(1,362,345)
Other comprehensive income (loss)	2,211	139,724	(148,287)	0			(6,352)	0
Ending balance	66,499,995	68,359,237	70,198,138	77,668,065	80,075,687	79,996,808	66,499,995	77,668,065	$ 79,691,832
Cumulative Effect of Credit Loss Accounting Standard
Changes in Members' Capital [Roll Forward]
Beginning balance						(661,422)		(661,422)
Ending balance									(661,422)
Accumulated Other Comprehensive Income (Loss)
Changes in Members' Capital [Roll Forward]
Beginning balance	(8,563)	(148,287)	0				0
Other comprehensive income (loss)	2,211	139,724	(148,287)
Ending balance	(6,352)	(8,563)	(148,287)				(6,352)
Managing Member
Changes in Members' Capital [Roll Forward]
Beginning balance	68,367,800	70,346,425	73,405,295	80,075,687	79,996,808	79,691,832	73,405,295	79,691,832
Net loss	(1,861,453)	(1,978,625)	(3,058,870)	(2,407,622)	78,879	966,398
Ending balance	$ 66,506,347	$ 68,367,800	$ 70,346,425	$ 77,668,065	$ 80,075,687	79,996,808	$ 66,506,347	77,668,065	79,691,832
Managing Member \| Cumulative Effect of Credit Loss Accounting Standard
Changes in Members' Capital [Roll Forward]
Beginning balance						$ (661,422)		$ (661,422)
Ending balance									$ (661,422)

Consolidated Statement of Cash Flows - USD ($)	9 Months Ended
Consolidated Statement of Cash Flows - USD ($)	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities:
Net loss	$ (6,898,948)	$ (1,362,345)
Adjustments to reconcile net loss from operations to net cash (used in) provided by operating activities:
Provision for credit losses	1,575,113	1,642,528
Amortization of premiums and discounts on investments	150,961	909,717
Amortization and accretion of investment-related fees, net	96,375	(281,094)
Amortization of discount on debt	967,362	865,681
Amortization of deferred financing costs	51,396	48,434
Loss from equity investment in unconsolidated investments	2,943,172	880,026
Realized loss on investments, net	0	12,512
Unrealized gain on investments, net	0	(22,619)
Changes in operating assets and liabilities:
Decrease in interest receivable	950,139	234,837
Increase in prepaid expenses and other assets	(165,109)	(296,277)
Decrease in accrued expenses	(162,761)	(499,889)
Increase in interest payable from obligation under participation agreement	220,417	0
Decrease in other liabilities	(401,274)	(210,631)
Net cash (used in) provided by operating activities	(673,157)	1,920,880
Cash flows from investing activities:
Repayment of loans	39,941,496	41,777,390
Origination and purchase of loans	(990,186)	(4,564,970)
Purchase of equity interest in unconsolidated investment	(527)	(27,354,342)
Funding for promissory note receivable	(40,096,786)	0
Repayment of promissory note receivable	5,000,000	0
Distributions on equity interest in unconsolidated investment	266,115	352,000
Proceeds from redemption of held-to-maturity debt securities	0	10,000,000
Purchase of held-to-maturity debt securities	0	(10,012,512)
Purchase of marketable securities	0	(525,867)
Net cash provided by investing activities	4,120,112	9,671,699
Cash flows from financing activities:
Proceeds from obligation under participation agreement	15,000,000	0
Repayment of term loan	(15,000,000)	(10,000,000)
Change in interest reserve and other deposits held on investments	(106,918)	784,643
Payment of financing costs	0	(150,000)
Net cash used in financing activities	(106,918)	(9,365,357)
Net increase in cash, cash equivalents and restricted cash	3,340,037	2,227,222
Cash, cash equivalents and restricted cash, at beginning of period	3,299,996	6,739,953
Cash, cash equivalents and restricted cash, at end of period (Note 2)	6,640,033	8,967,175
Supplemental disclosure of cash flow information:
Cash paid for interest	4,429,337	3,254,105
Income taxes paid	0	277,647
Supplemental non-cash information:
Settlement of a mezzanine loan accounted for as an equity investment in exchange for equity interest in a joint venture that owns real estate (Note 4)	$ 0	$ 10,149,642

Principal Business and Organization	9 Months Ended
Principal Business and Organization	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Principal Business and Organization	Principal Business and Organization Terra Income Fund 6, LLC (“Terra LLC”, and together with its consolidated subsidiaries, the “Company”) was formed as a Delaware limited liability company on April 29, 2022 as a wholly owned subsidiary of Terra Property Trust, Inc. (“Terra REIT”). On October 1, 2022, pursuant to an Agreement and Plan of Merger, dated as of May 2, 2022 (as amended, the “Merger Agreement”), Terra Income Fund 6, Inc. (“Terra BDC”) merged with and into Terra LLC, with Terra LLC continuing as the surviving entity of the merger (the “Merger”). Subsequent to the Merger, Terra LLC became the successor of Terra BDC and assumed all of Terra BDC’s rights and obligations. In February 2021, Terra BDC issued $38.4 million in aggregate principal amount of 7.00% fixed-rate notes due 2026, for net proceeds of $37.2 million, after deducting underwriting commissions of $1.2 million, see “Unsecured Senior Notes” in Note 7 for more information. In connection with the Merger, Terra LLC assumed the obligations of Terra BDC under the indenture governing the 7.00% fixed-rate notes due 2026. The Company is a wholly owned subsidiary of Terra REIT, and its investment objective is to provide attractive risk-adjusted returns to Terra REIT’s stockholders, primarily through Terra REIT’s regular distributions. Terra REIT’s investments activities are externally managed by Terra REIT Advisors, LLC (the “REIT Manager”), an affiliate of the Company. The Company originates, invests in and manages a diverse portfolio of real estate-related investments that generate a stable income stream. The Company directly originates, structures and underwrites most, if not all, of its loans, as it believes that doing so will provide it with the best opportunity to invest in loans that satisfy its standards, establish a direct relationship with the borrower and optimize the terms of its investments; however, the Company may acquire existing loans from the originating lender should the REIT Manager determine such an investment is in its best interest. The Company may hold its investments until their scheduled maturity dates or may sell them if the Company is able to command favorable terms for their disposition. The Company may also seek to realize growth in the value of its investments by timing their sale to maximize value. The Company may also make strategic non-real estate-related investments that align with its investment objectives and criteria.

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation

Consolidation

Cash and Cash Equivalents

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its statements of cash flows:


	September 30,
	2024		2023
Cash and cash equivalents	$	6,640,033	$	7,967,175
Restricted cash	—		1,000,000
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	6,640,033	$	8,967,175

Loans Held for Investment

Allowance for Credit Losses

Performing Loans

Unfunded Commitments

Non-Performing Loans

Equity Investment in Unconsolidated Investments

Marketable Securities

Revenue Recognition

Other Revenues: Prepayment fee income is recognized as prepayments occur. All other income is recognized when earned.

Deferred Debt Issuance Costs

Use of Estimates

Loans Held for Investment

9 Months Ended

Sep. 30, 2024

Receivables [Abstract]

Loans Held for Investment

Portfolio Summary

The following table provides a summary of the Company’s loan portfolio:


	September 30, 2024						December 31, 2023
	Fixed Rate		Floating Rate (1)(2)		Total		Fixed Rate		Floating Rate (1)(2)		Total
Number of loans	2		2		4		4		2		6
Principal balance	$	5,773,564	$	43,059,173	$	48,832,737	$	44,377,373	$	43,059,173	$	87,436,546
Carrying value	$	5,723,071	$	31,978,289	$	37,701,360	$	44,528,468	$	33,814,996	$	78,343,464
Fair value	$	5,773,564	$	32,260,110	$	38,033,674	$	44,313,689	$	34,214,046	$	78,527,735
Weighted-average coupon rate	11.6%		16.2%		15.7%		13.7%		16.6%		15.1%
Weighted-average remaining term (years)	2.60		0.35		0.67		0.76		1.10		0.87

_______________

(2)As of both September 30, 2024 and December 31, 2023, two loans were subject to a SOFR or Term SOFR floor, as applicable.

Lending Activities

The following tables present the activities of the Company’s loan portfolio:


	Loans Held for Investment, Net		Loans Held for Investment through Participation Interests, Net		Total
Balance, January 1, 2024	$	60,458,534	$	17,884,930	$	78,343,464
Origination and purchase of loans	843,996		146,190		990,186
Principal repayments received	(39,941,496)		—		(39,941,496)
Net amortization of premiums on loans	(150,961)		—		(150,961)
Accrual, payment and accretion of investment-related fees and other, net	36,035		—		36,035
Reversal of (provision for) credit losses	250,206		(1,826,074)		(1,575,868)
Balance, September 30, 2024	$	21,496,314	$	16,205,046	$	37,701,360


	Loans Held for Investment, Net		Loans Held for Investment through Participation Interests, Net		Total
Balance, January 1, 2023	$	79,082,650	$	42,330,376	$	121,413,026
Cumulative effect of adoption of credit loss accounting standard effective January 1, 2023 (Note 2)	(593,040)		—		(593,040)
Origination and purchase of loans	3,621,008		943,962		4,564,970
Principal repayments received	(21,655,810)		(20,121,580)		(41,777,390)
Net amortization of premiums on loans	(828,306)		(81,411)		(909,717)
Accrual, payment and accretion of investment-related fees and other, net	196,047		85,047		281,094
Reversal of (provision for) credit losses	66,375		(1,770,293)		(1,703,918)
Balance, September 30, 2023	$	59,888,924	$	21,386,101	$	81,275,025

Portfolio Information


	September 30, 2024						December 31, 2023
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Preferred equity investments	$	45,832,737	$	34,751,853	92.2	%	$	63,186,546	$	53,973,564	68.9	%
Mezzanine loans	3,000,000		2,949,507		7.8	%	3,000,000		2,907,732		3.7	%
First mortgages	—		—		—	%	21,250,000		21,462,168		27.4	%
Total	$	48,832,737	$	37,701,360	100.0	%	$	87,436,546	$	78,343,464	100.0	%


	September 30, 2024						December 31, 2023
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Mixed use	$	18,567,296	$	18,546,806	49.2	%	$	18,567,296	$	18,557,439	23.7	%
Office	24,491,877		13,431,483		35.6	%	24,491,877		15,257,557		19.5	%
Student housing	3,000,000		2,949,507		7.8	%	3,000,000		2,907,732		3.7	%
Multifamily	2,773,564		2,773,564		7.4	%	20,127,373		20,158,568		25.7	%
Infrastructure	—		—		—	%	21,250,000		21,462,168		27.4	%
Total	$	48,832,737	$	37,701,360	100.0	%	$	87,436,546	$	78,343,464	100.0	%


	September 30, 2024						December 31, 2023
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	21,567,296	$	21,496,313	57.0	%	$	21,567,296	$	21,465,171	27.4	%
New York	27,265,441		16,205,047		43.0	%	27,119,250		17,884,930		22.8	%
Utah	—		—		—	%	21,250,000		21,462,168		27.4	%
Georgia	—		—		—	%	17,500,000		17,531,195		22.4	%
Total	$	48,832,737	$	37,701,360	100.0	%	$	87,436,546	$	78,343,464	100.0	%

Allowance for Credit Losses

The following table presents the activity in allowance for credit losses:


	Nine Months Ended September 30, 2024
	Specific Allowance		General Allowance				Total
			Funded		Unfunded
Allowance for credit losses, beginning of period	$	9,234,321	$	469,010	$	8,801	$	9,712,132
Provision for (reversal of provision for) credit losses	1,826,073		(250,205)		(755)		1,575,113
Charge-offs	—		—		—		—
Recoveries	—		—		—		—
Allowance for credit losses, end of period	$	11,060,394	$	218,805	$	8,046	$	11,287,245


	Nine Months Ended September 30, 2023
	Specific Allowance		General Allowance				Total
			Funded		Unfunded
Allowance for credit losses, beginning of period	$	3,937,050	$	—	$	—	$	3,937,050
Cumulative effect of adoption of ASU 2016-13 effective January 1, 2023 (Note 2)	—		593,040		68,382		661,422
Provision for (reversal of provision for) credit losses	1,770,292		(66,374)		(61,390)		1,642,528
Charge-offs	—		—		—		—
Recoveries	—		—		—		—
Allowance for credit losses, end of period	$	5,707,342	$	526,666	$	6,992	$	6,241,000

Accrued Interest Receivable

Loan Risk Rating


Risk Rating						Description
1						Very low risk
2						Low risk
3						Moderate/average risk
4						Higher risk
5						Highest risk

The following tables present the amortized cost of the Company's loan portfolio by year of origination and loan risk rating:


	September 30, 2024
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2024		2023		2022		2021		2020		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	—	—		—	%	—		—		—		—		—
3	1	2,949,506		6.0	%	—				—		—		—		2,949,506
4	1	18,765,612		38.3	%	—		—		18,765,612		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	2	27,265,441		55.7	%	—		—		—		—		—		27,265,441
	4	48,980,559		100.0	%	$	—	$	—	$	18,765,612	$	—	$	—	$	30,214,947
Allowance for credit losses		(11,279,199)
Total, net of allowance for credit losses		$	37,701,360


	December 31, 2023
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2023		2022		2021		2020		2019		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	—	—		—	%	—		—		—		—		—
3	3	42,130,731		47.9	%	—				39,195,427		—		—		2,935,304
4	1	18,796,818		21.3	%	—		18,796,818		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	2	27,119,246		30.8	%	—		—		—		—				27,119,246
	6	88,046,795		100.0	%	$	—	$	18,796,818	$	39,195,427	$	—	$	—	$	30,054,550
Allowance for credit losses		(9,703,331)
Total, net of allowance for credit losses		$	78,343,464

Held-to-Maturity Debt Securities

Equity Investment in Unconsolidated Investments

9 Months Ended

Sep. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

Equity Investment in Unconsolidated Investments

The following table presents a summary of the Company’s equity investment in unconsolidated investments as of:


		September 30, 2024			December 31, 2023
Entity	Co-owner	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
SF - Dallas Industrial, LLC (1)	Affiliate	80.0%	$	34,102,082	80.0%	$	35,690,795
610 Walnut Investors LLC (2)	Third party	38.4%	3,120,869		42.4%	4,740,915
			$	37,222,951		$	40,431,710

_______________

(2)In November 2023, the Company contributed $5.1 million to a joint venture that owns a real estate property.

The following table presents a summary of equity income of and distributions received from the Company’s equity investment in unconsolidated investments:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Loss from equity investment in unconsolidated investments	$	(792,622)	$	(543,934)	$	(2,943,172)	$	(353,027)
Distributions received from unconsolidated investments	$	160,000	$	352,000	$	266,115	$	878,998


	September 30, 2024		December 31, 2023
Net investments in real estate	$	114,535,875	$	118,332,211
Other assets	8,138,354		8,658,923
Total assets	122,674,229		126,991,134
Mortgage loan payable	77,358,528		77,223,082
Other liabilities	4,198,401		5,501,677
Total liabilities	81,556,929		82,724,759
Members’ capital	$	41,117,300	$	44,266,375


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues	$	1,731,382	$	1,564,960	$	5,120,316	$	2,085,142
Operating expenses	(737,730)		(408,635)		(2,196,339)		(699,147)
Depreciation and amortization expense	(1,224,490)		(1,149,051)		(4,031,387)		(1,506,589)
Interest expense	(1,532,045)		(686,419)		(4,637,649)		(962,324)
Net loss	$	(1,762,883)	$	(679,145)	$	(5,745,059)	$	(1,082,918)

Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access.

Financial Instruments Carried at Fair Value on a Recurring Basis

The following tables present fair value measurements of financial instruments that were carried at fair value, by major class, according to the fair value hierarchy:


	September 30, 2024
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable securities - debt securities	$	500,914	$	—	$	—	$	500,914
Total	$	500,914	$	—	$	—	$	500,914


	December 31, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable securities - debt securities	$	507,266	$	—	$	—	$	507,266
Total	$	507,266	$	—	$	—	$	507,266

The following table presents the activities of the marketable securities:


	Nine Months Ended September 30,
	2024		2023
Beginning balance	$	507,266	$	—
Purchases	—		525,867
Fair market value adjustment	(6,352)		22,619
Ending balance	$	500,914	$	548,486

Financial Instruments Not Carried at Fair Value


		September 30, 2024						December 31, 2023
	Level	Principal Balance		Carrying Value		Fair Value		Principal Balance		Carrying Value		Fair Value
Investments:
Loans held for investment	3	$	21,567,296	$	21,496,314	$	21,828,627	$	60,317,296	$	60,458,534	$	60,642,806
Loans held for investment acquired through participation	3	27,265,441		16,205,046		16,205,047		27,119,250		17,884,930		17,884,929
Total loans		$	48,832,737	$	37,701,360	$	38,033,674	$	87,436,546	$	78,343,464	$	78,527,735
Liabilities:
Unsecured notes payable (1))(2)	1	$	38,375,000	$	36,180,905	$	36,855,350	$	38,375,000	$	35,213,543	$	36,287,400
Obligation under participation agreement	3	15,000,000		15,132,411		15,211,122		—		—		—
Term loan payable (3)(4)	3	—		—		—		15,000,000		14,948,604		15,000,000
Total liabilities		$	53,375,000	$	51,313,316	$	52,066,472	$	53,375,000	$	50,162,147	$	51,287,400

_______________

(1)Carrying value is net of unamortized purchase discount of $2.2 million and $3.2 million as of September 30, 2024 and December 31, 2023, respectively.

(3)Carrying value is net of unamortized discount of $0.1 million as of December 31, 2023.

(4)Valuation falls under Level 3 of the fair value hierarchy, which is based on a discounted cash flow model with a discount rate of 12.48%, as of December 31, 2023.

Valuation Methodology

Significant Unobservable Inputs


September 30, 2024
			Primary Valuation Technique	Unobservable Input	Range				Weighted
Asset Category	Fair Value				Minimum		Maximum		Average
Assets:
Loans	$	21,828,627	Discounted cash flow	Discount rate	11.00	%	15.40	%	14.79	%
Loans through participation interest (1)	16,205,047		Discounted cash flow	Discount rate	N/A		N/A		N/A
Total Level 3 Assets	$	38,033,674
Liabilities:
Obligation under participation agreement	$	15,211,122	Discounted cash flow	Discount rate	15.40	%	15.40	%	15.40	%

December 31, 2023

Primary
Valuation
Technique

Unobservable Input

Range

Weighted

Asset Category

Fair Value

Minimum

Maximum

Average

Assets:

Loans

60,642,806

Discounted cash flow

Discount rate

13.02

16.95

15.88

Loans through participation interest (1)

17,884,929

Discounted cash flow

Discount rate

N/A

Total Level 3 Assets

78,527,735

_______________

Related Party Transactions

9 Months Ended

Sep. 30, 2024

Related Party Transactions

Promissory Note Receivable

Cost Sharing Agreement

The following table presents a summary of such fees and reimbursements incurred pursuant to the Cost Sharing Agreement between Terra LLC and Terra REIT:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Amounts Included in the Statements of Operations
Asset management and asset servicing fees	$	238,710	$	408,726	$	906,389	$	1,272,159
Operating expense reimbursement to Adviser (1)	177,824		395,041		880,332		1,107,401
Origination, extension and disposition fees	1,003		226,172		357,400		543,924

_______________

(1)Amounts were primarily compensation for time spent supporting the Company’s day-to-day operations.

Terra REIT’s Management Agreement with the REIT Manager

Participation Agreements

achieve a certain level of portfolio diversification. The Company may transfer portions of its investments to other participants or it may be a participant to an investment held by another entity.


	September 30, 2024						December 31, 2023
	Participating Interests		Principal Balance		Carrying Value		Participating Interests		Principal Balance		Carrying Value
370 Lex Part Deux, LLC (1)(2)	35.0	%	$	24,491,877	$	13,431,482	35.0	%	$	24,491,877	$	15,257,557
RS JZ Driggs, LLC (2)	50.0	%	2,773,564		2,773,564		50.0	%	2,627,373		2,627,373
Total			$	27,265,441	$	16,205,046			$	27,119,250	$	17,884,930

_______________

(1)Carrying value is net of specific allowance for loan losses of $11.1 million and $9.2 million as of September 30, 2024 and December 31, 2023, respectively.

(2)The loan is held in the name of Terra REIT, the Company’s parent entity.


					September 30, 2024
					Transfers treated as obligations under participation agreements
	Principal		Carrying Value		% Transferred		Principal		Carrying Value
Asano Bankers Hill, LLC (1)	$	18,567,296	$	18,546,807	80.8	%	$	15,000,000	$	15,132,411

________________

(1)Participant is a certain separately managed account, an investment partnership managed by the REIT Manager.

Debt

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Debt

Senior Unsecured Notes

The following table is a summary of the Company’s unsecured notes payable outstanding as of:


	Coupon Rate		Effective Rate (1)		Maturity Date	September 30, 2024		December 31, 2023
7.00% Senior Notes Due 2026 (2)	7.00	%	10.36	%	3/31/2026	38,375,000		38,375,000
Unamortized purchase discount (2)						(2,194,095)		(3,161,457)
Unsecured notes payable, net						$	36,180,905	$	35,213,543

_______________

(1)Includes purchase discount that is amortized to interest expense over the remaining life of the notes.

Term Loan

The following table is a summary of the Company’s obligations under the Credit Agreement as of December 31, 2023. There was no such loan outstanding as of September 30, 2024.


	December 31, 2023
	Maturity	Interest rate		Principal Amount
Term loan payable	3/31/2024	12.72	%	$	15,000,000
Unamortized deferred financing cost				(51,396)
Unsecured notes payable, net				$	14,948,604

Scheduled Debt Principal Payments

Scheduled debt principal payments for each of the five calendar years following September 30, 2024 are as follows:


Years Ending December 31,	Total
2024 (October 1 through December 31)	$	—
2025	—
2026	38,375,000
2027	—
2028	—
Thereafter	—
	38,375,000
Unamortized purchase discount	(2,194,095)
Total	$	36,180,905

Obligation Under Participation Agreement

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Unfunded Commitments on Loans Held for Investment In the ordinary course of business, the Company may enter into future funding commitments, which are subject to the borrower meeting certain performance-related metrics that are monitored by the Company. As of both September 30, 2024 and December 31, 2023, the Company had $0.7 million of unfunded commitments. The Company maintained sufficient cash on hand to fund such unfunded commitments, including matching these commitments with principal repayments on outstanding loans. Other The Company enters into contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. Management of Terra Income Advisors has reviewed the Company’s existing contracts and expects the risk of loss to the Company to be remote. The Company is not currently subject to any material legal proceedings and, to the Company’s knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company’s rights under its contracts with its borrowers and investees. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material adverse effect upon its financial condition or results of operations. See Note 6 for a discussion of the Company’s commitments to Terra REIT.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsThe management of the Company has evaluated events and transactions through the date the consolidated financial statements were issued and has determined that there are no material events that would require adjustment to or disclosure in the Company’s consolidated financial statements.

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its consolidated subsidiaries. The accompanying interim consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 or 10 of Regulation S-X. Certain prior period amounts have been reclassified to conform to the current period presentation.
Consolidation	Consolidation Terra LLC consolidates entities in which it has a controlling financial interest based on either the variable interest entity (“VIE”) or voting interest entity (“VOE”) model. Terra LLC is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. If Terra LLC determines the entity is not a VIE, it then applies the VOE model. Under the VOE model, Terra LLC consolidates an entity when it holds a majority voting interest in an entity. Terra LLC accounts for investments in which it has significant influence but not a controlling financial interest using the equity method of accounting. All significant intercompany balances and transactions have been eliminated in consolidation.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid investments, with original maturities of ninety days or less when purchased, as cash equivalents. Cash and cash equivalents held at financial institutions, at times, may exceed the amount insured by the Federal Deposit Insurance Corporation.
Restricted Cash	Restricted Cash Restricted cash represents cash held as additional collateral by the Company on behalf of the borrowers related to the investments for the purpose of such borrowers making interest and property-related operating payments. There is a corresponding liability of the same amount on the statements of assets and liabilities called “Interest reserve and other deposits held on investments.”
Loans Held for Investment	Loans Held for Investment The Company originates, acquires, and structures, or acquires through participations, real estate-related loans generally to be held to maturity (collectively the “loans”). Loans held for investment are carried at the principal amount outstanding, adjusted for the accretion of discounts on investments and exit fees, and the amortization of premiums on investments and origination fees. The Company’s preferred equity investments, which are economically similar to mezzanine loans and subordinate to any loans but senior to common equity, are accounted for as loans held for investment. Loans are carried at amortized cost less allowance for credit losses. Amortized cost is the amount at which a financing receivable or a loan is originated or acquired, adjusted for accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash and write-offs.
Allowance for Credit Losses	Allowance for Credit Losses On January 1, 2023, the Company adopted the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses. ASC 326 mandates the use of a current expected credit loss (“CECL”) methodology for estimating future credit losses of certain financial instruments measured at amortized cost, instead of the “incurred loss” methodology previously required under U.S. GAAP. The CECL methodology 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. As permitted by ASC 326, the Company elected not to measure an allowance for credit losses on accrued interest receivable (which is presented separately on the consolidated balance sheet), but rather write off in a timely manner by reversing interest income that would likely be uncollectible. The Company’s adoption of the ASC 326 resulted in a $0.7 million increase to total reserve, including reserve on future funding commitments, which was recognized as a cumulative-effect adjustment to member’s capital as of January 1, 2023. Subsequent to the adoption of the CECL methodology, any increase or decrease to the allowance for credit losses is recorded in earnings on the consolidated statement of operations. Performing Loans The Company uses a model-based approach for estimating the allowance for credit losses on performing loans on a collective basis, including future funding commitments for which the Company does not have the unconditional right to cancel, as these loans share similar risk characteristics. The Company utilizes information obtained from internal and external sources relating to past events, current economic conditions and reasonable and supportable forecasts about the future to determine the expected credit losses for its loan portfolio. The Company utilizes a commercial mortgage-based, third-party loan loss model and because the Company does not have a meaningful history of realized credit losses on its loan portfolio, it subscribes to a database service to provide historical proxy loan loss information. The Company employs logistic regression to forecast expected losses at the loan level based on a commercial real estate loan securitization database that contains activity dating back to 1998. The Company has chosen to incorporate a weighted average macroeconomic forecast that encompasses baseline, upside and downside scenarios, into its allowance for credit losses on performing loans estimate during the reasonable and supportable forecast period which is currently eight quarters. The Company selects certain economics variables from a group of independent variables such as Commercial Real Estate Price Index, unemployment and interest rate which are included in the model as part of macroeconomic forecast and updated regularly based on current economic trends. The specific loan level information input into the model includes loan-to-value and debt service coverage ratio metrics, as well as principal balances, property type, location, coupon rate, coupon rate type, original or remaining term, expected repayment dates and contractual future funding commitments. Based on the inputs, the loan loss model determines a loan loss rate through the generation of a probability of default (PD) and loss given default (LGD) for each loan. The allowance for credit losses on performing loans is then calculated by applying the loan loss rate to the total outstanding loan balance of each loan. A significant amount of judgment is applied in selecting inputs and analyzing results produced by the models to determine the allowance for credit losses on performing loans. Changes in such estimates can significantly affect the expected credit losses. Beyond the Company’s reasonable and supportable forecast period, the Company reverts to historical loss information on a straight-line basis over the remaining contractual loan term, taken from a period that most accurately reflects the expectation of conditions expected to exist during the period of reversion. The Company may adjust historical loss information for differences in risk that may not reflect the characteristics of its current portfolio, including but not limited to, loan-to-value and debt service coverage ratios, among other relevant factors. The method of reversion selected represents the best estimate of the collectability of the investments and is reevaluated each reporting period. The determination of the performing loans credit loss estimate considers historical loss information and current economic conditions for each loan, reversion period and reasonable and supportable forecasts about the future. The reasonable and supportable forecast period is determined based on the Company’s assessment of the most likely scenario of assumptions and plausible outcomes for the U.S. economy. The Company regularly evaluates the reasonable and supportable forecast period to determine if a change is needed. The Company also performs a qualitative assessment and applies qualitative adjustments as necessary, usually due to limitations of the loan loss model. The Company’s qualitative analysis includes a review of data that may directly impact its estimates including internal and external information about the loan or property including current market conditions, asset specific conditions, property operations or borrower/sponsor details (i.e., refinance, sale, bankruptcy) which allows the Company to determine the amount of the expected loss more accurately and reasonably for these investments. The Company also evaluates the contractual life of its loans to determine if changes are needed for certain contractual extension options, renewals, modifications, and prepayments. Unfunded Commitments Some of the Company’s performing loans include commitments to fund incremental proceeds to the borrowers over the life of the loan and these unfunded commitments are also subject to the CECL methodology because the Company does not have an unconditional right to cancel such commitments. The allowance for credit losses related to unfunded commitments is recorded as a component of other liabilities on the Company’s consolidated balance sheets. This allowance for credit losses is estimated using the same method outlined above for the Company’s outstanding performing loan balances and increases or decreases are also recorded in earnings on the consolidated statements of operations. Non-Performing Loans During the loan review process, if the Company determines that it is not able to collect all amounts due for both principal and interest according to the contractual terms of a loan, or if a loan is in maturity default, the Company considers that loan non-performing. For all non-performing loans, such as those in default, collateral-dependent or modified loans, including historical troubled debt restructurings, the Company removes these loans from the industry loss rate approach described above and analyzes them separately. The credit loss reserve for these loans is calculated as any excess of the amortized cost of the loan over (i) the present value of expected future cash flows discounted at the appropriate discount rate or (ii) the fair value of collateral, if repayment is expected solely from the collateral.
Equity Investment in Unconsolidated Investments	Equity Investment in Unconsolidated Investments The Company accounts for its equity interests in unconsolidated investments under the equity method of accounting, i.e., at cost, increased or decreased by its share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting. The Company classifies distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities. The Company evaluates its equity investment unconsolidated investments on a periodic basis to determine if there are any indicators that the value of its equity investments may be impaired and whether or not that impairment is other-than-temporary. To the extent an impairment has occurred and is determined to be other-than-temporary, the Company measures the charge as the excess of the carrying value of its investment over its estimated fair value, which is determined by calculating its share of the estimated fair market value of the underlying net assets based on the terms of the applicable partnership or joint venture agreements.
Marketable Securities	Marketable Securities From time to time, the Company may invest in short-term debt. These securities are classified as available-for-sale securities and are carried at fair value. Changes in the fair value of debt securities are reported in other comprehensive income until a gain or loss on the securities is realized.
Revenue Recognition	Revenue Recognition Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Interest Income: Interest income is accrued based upon the outstanding principal amount and contractual terms of the loans and preferred equity investments that the Company expects to collect, and it is accrued and recorded on a daily basis. Discounts and premiums on investments purchased are accreted or amortized over the expected life of the respective loan using the effective yield method, and are included in interest income in the consolidated statements of operations. Loan origination fees and exit fees, net of portions attributable to obligations under participation agreements, if any, are capitalized and amortized or accreted to interest income over the life of the investment using the effective yield method. Outstanding interest receivable is assessed for recoverability. The Company generally reverses the accrued and unpaid interest against interest income and no longer accrues for the interest when, in the opinion of the REIT Manager, recovery of interest and principal becomes not probable. Interest is then recorded on the basis of cash received until accrual is resumed when the loan becomes contractually current and performance is demonstrated. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. The Company may hold loans in its portfolio that contain paid-in-kind (“PIK”) interest provisions. The PIK interest, which represents contractually deferred interest that is added to the principal balance that is due at maturity, is recorded on the accrual basis. Other Revenues: Prepayment fee income is recognized as prepayments occur. All other income is recognized when earned.
Deferred Debt Issuance Costs	Deferred Debt Issuance Costs The Company records issue discounts and other financing costs related to its debt obligation as deferred debt issuance costs, which are presented as a direct deduction from the carrying value of the related debt liability. These expenses are deferred and amortized using the effective interest method over the stated maturity of the debt obligation.
Use of Estimates	Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of income, expenses and gains and losses during the reporting period. Actual results may ultimately differ from those estimates, and those differences could be material.
Fair Value Measurements	The Company follows the provisions of ASC 820, Fair Value Measurement (“ASC 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 established a fair value hierarchy that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the state of the marketplace (including the existence and transparency of transactions between market participants). Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments measured and reported at fair value are classified and disclosed into one of the following categories based on the inputs as follows: Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access. Level 2 — Pricing inputs are other than quoted prices in active markets, including, but not limited to, quoted prices for similar assets and liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. Level 3 — Significant unobservable inputs are based on the best information available in the circumstances, to the extent observable inputs are not available, including the Company’s own assumptions used in determining the fair value of investments. Fair value for these investments is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, and financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment.

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2024

Accounting Policies [Abstract]

Schedule of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its statements of cash flows:


	September 30,
	2024		2023
Cash and cash equivalents	$	6,640,033	$	7,967,175
Restricted cash	—		1,000,000
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	6,640,033	$	8,967,175

Schedule of Restrictions on Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company’s consolidated balance sheets to the total amount shown in its statements of cash flows:


	September 30,
	2024		2023
Cash and cash equivalents	$	6,640,033	$	7,967,175
Restricted cash	—		1,000,000
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	6,640,033	$	8,967,175

Loans Held for Investment (Tables)

9 Months Ended

Sep. 30, 2024

Receivables [Abstract]

Schedule of Company's Portfolio

The following table provides a summary of the Company’s loan portfolio:


	September 30, 2024						December 31, 2023
	Fixed Rate		Floating Rate (1)(2)		Total		Fixed Rate		Floating Rate (1)(2)		Total
Number of loans	2		2		4		4		2		6
Principal balance	$	5,773,564	$	43,059,173	$	48,832,737	$	44,377,373	$	43,059,173	$	87,436,546
Carrying value	$	5,723,071	$	31,978,289	$	37,701,360	$	44,528,468	$	33,814,996	$	78,343,464
Fair value	$	5,773,564	$	32,260,110	$	38,033,674	$	44,313,689	$	34,214,046	$	78,527,735
Weighted-average coupon rate	11.6%		16.2%		15.7%		13.7%		16.6%		15.1%
Weighted-average remaining term (years)	2.60		0.35		0.67		0.76		1.10		0.87

_______________

(2)As of both September 30, 2024 and December 31, 2023, two loans were subject to a SOFR or Term SOFR floor, as applicable.

Schedule of Accounts, Notes, Loans and Financing Receivable

The following tables present the activities of the Company’s loan portfolio:


	Loans Held for Investment, Net		Loans Held for Investment through Participation Interests, Net		Total
Balance, January 1, 2024	$	60,458,534	$	17,884,930	$	78,343,464
Origination and purchase of loans	843,996		146,190		990,186
Principal repayments received	(39,941,496)		—		(39,941,496)
Net amortization of premiums on loans	(150,961)		—		(150,961)
Accrual, payment and accretion of investment-related fees and other, net	36,035		—		36,035
Reversal of (provision for) credit losses	250,206		(1,826,074)		(1,575,868)
Balance, September 30, 2024	$	21,496,314	$	16,205,046	$	37,701,360


	Loans Held for Investment, Net		Loans Held for Investment through Participation Interests, Net		Total
Balance, January 1, 2023	$	79,082,650	$	42,330,376	$	121,413,026
Cumulative effect of adoption of credit loss accounting standard effective January 1, 2023 (Note 2)	(593,040)		—		(593,040)
Origination and purchase of loans	3,621,008		943,962		4,564,970
Principal repayments received	(21,655,810)		(20,121,580)		(41,777,390)
Net amortization of premiums on loans	(828,306)		(81,411)		(909,717)
Accrual, payment and accretion of investment-related fees and other, net	196,047		85,047		281,094
Reversal of (provision for) credit losses	66,375		(1,770,293)		(1,703,918)
Balance, September 30, 2023	$	59,888,924	$	21,386,101	$	81,275,025


	September 30, 2024						December 31, 2023
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Preferred equity investments	$	45,832,737	$	34,751,853	92.2	%	$	63,186,546	$	53,973,564	68.9	%
Mezzanine loans	3,000,000		2,949,507		7.8	%	3,000,000		2,907,732		3.7	%
First mortgages	—		—		—	%	21,250,000		21,462,168		27.4	%
Total	$	48,832,737	$	37,701,360	100.0	%	$	87,436,546	$	78,343,464	100.0	%


	September 30, 2024						December 31, 2023
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Mixed use	$	18,567,296	$	18,546,806	49.2	%	$	18,567,296	$	18,557,439	23.7	%
Office	24,491,877		13,431,483		35.6	%	24,491,877		15,257,557		19.5	%
Student housing	3,000,000		2,949,507		7.8	%	3,000,000		2,907,732		3.7	%
Multifamily	2,773,564		2,773,564		7.4	%	20,127,373		20,158,568		25.7	%
Infrastructure	—		—		—	%	21,250,000		21,462,168		27.4	%
Total	$	48,832,737	$	37,701,360	100.0	%	$	87,436,546	$	78,343,464	100.0	%


	September 30, 2024						December 31, 2023
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	21,567,296	$	21,496,313	57.0	%	$	21,567,296	$	21,465,171	27.4	%
New York	27,265,441		16,205,047		43.0	%	27,119,250		17,884,930		22.8	%
Utah	—		—		—	%	21,250,000		21,462,168		27.4	%
Georgia	—		—		—	%	17,500,000		17,531,195		22.4	%
Total	$	48,832,737	$	37,701,360	100.0	%	$	87,436,546	$	78,343,464	100.0	%

Schedule of Allowances of Loan Losses

The following table presents the activity in allowance for credit losses:


	Nine Months Ended September 30, 2024
	Specific Allowance		General Allowance				Total
			Funded		Unfunded
Allowance for credit losses, beginning of period	$	9,234,321	$	469,010	$	8,801	$	9,712,132
Provision for (reversal of provision for) credit losses	1,826,073		(250,205)		(755)		1,575,113
Charge-offs	—		—		—		—
Recoveries	—		—		—		—
Allowance for credit losses, end of period	$	11,060,394	$	218,805	$	8,046	$	11,287,245


	Nine Months Ended September 30, 2023
	Specific Allowance		General Allowance				Total
			Funded		Unfunded
Allowance for credit losses, beginning of period	$	3,937,050	$	—	$	—	$	3,937,050
Cumulative effect of adoption of ASU 2016-13 effective January 1, 2023 (Note 2)	—		593,040		68,382		661,422
Provision for (reversal of provision for) credit losses	1,770,292		(66,374)		(61,390)		1,642,528
Charge-offs	—		—		—		—
Recoveries	—		—		—		—
Allowance for credit losses, end of period	$	5,707,342	$	526,666	$	6,992	$	6,241,000

Schedule of Financing Receivable Credit Quality Indicators

Based on a 5-point scale, the Company’s performing loans are rated “1” through “5”, from less risk to greater risk as follows:


Risk Rating						Description
1						Very low risk
2						Low risk
3						Moderate/average risk
4						Higher risk
5						Highest risk

The following tables present the amortized cost of the Company's loan portfolio by year of origination and loan risk rating:


	September 30, 2024
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2024		2023		2022		2021		2020		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	—	—		—	%	—		—		—		—		—
3	1	2,949,506		6.0	%	—				—		—		—		2,949,506
4	1	18,765,612		38.3	%	—		—		18,765,612		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	2	27,265,441		55.7	%	—		—		—		—		—		27,265,441
	4	48,980,559		100.0	%	$	—	$	—	$	18,765,612	$	—	$	—	$	30,214,947
Allowance for credit losses		(11,279,199)
Total, net of allowance for credit losses		$	37,701,360


	December 31, 2023
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2023		2022		2021		2020		2019		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	—	—		—	%	—		—		—		—		—
3	3	42,130,731		47.9	%	—				39,195,427		—		—		2,935,304
4	1	18,796,818		21.3	%	—		18,796,818		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	2	27,119,246		30.8	%	—		—		—		—				27,119,246
	6	88,046,795		100.0	%	$	—	$	18,796,818	$	39,195,427	$	—	$	—	$	30,054,550
Allowance for credit losses		(9,703,331)
Total, net of allowance for credit losses		$	78,343,464

Equity Investment in Unconsolidated Investments (Tables)

9 Months Ended

Sep. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Joint Venture Ownership Interests

The following table presents a summary of the Company’s equity investment in unconsolidated investments as of:


		September 30, 2024			December 31, 2023
Entity	Co-owner	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
SF - Dallas Industrial, LLC (1)	Affiliate	80.0%	$	34,102,082	80.0%	$	35,690,795
610 Walnut Investors LLC (2)	Third party	38.4%	3,120,869		42.4%	4,740,915
			$	37,222,951		$	40,431,710

_______________

(2)In November 2023, the Company contributed $5.1 million to a joint venture that owns a real estate property.

The following table presents a summary of equity income of and distributions received from the Company’s equity investment in unconsolidated investments:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Loss from equity investment in unconsolidated investments	$	(792,622)	$	(543,934)	$	(2,943,172)	$	(353,027)
Distributions received from unconsolidated investments	$	160,000	$	352,000	$	266,115	$	878,998

Summary of Equity Method Investments


	September 30, 2024		December 31, 2023
Net investments in real estate	$	114,535,875	$	118,332,211
Other assets	8,138,354		8,658,923
Total assets	122,674,229		126,991,134
Mortgage loan payable	77,358,528		77,223,082
Other liabilities	4,198,401		5,501,677
Total liabilities	81,556,929		82,724,759
Members’ capital	$	41,117,300	$	44,266,375


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues	$	1,731,382	$	1,564,960	$	5,120,316	$	2,085,142
Operating expenses	(737,730)		(408,635)		(2,196,339)		(699,147)
Depreciation and amortization expense	(1,224,490)		(1,149,051)		(4,031,387)		(1,506,589)
Interest expense	(1,532,045)		(686,419)		(4,637,649)		(962,324)
Net loss	$	(1,762,883)	$	(679,145)	$	(5,745,059)	$	(1,082,918)

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Fair Value Measurements

The following tables present fair value measurements of financial instruments that were carried at fair value, by major class, according to the fair value hierarchy:


	September 30, 2024
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable securities - debt securities	$	500,914	$	—	$	—	$	500,914
Total	$	500,914	$	—	$	—	$	500,914


	December 31, 2023
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Marketable securities - debt securities	$	507,266	$	—	$	—	$	507,266
Total	$	507,266	$	—	$	—	$	507,266

Schedule of Activities of the Marketable Securities

The following table presents the activities of the marketable securities:


	Nine Months Ended September 30,
	2024		2023
Beginning balance	$	507,266	$	—
Purchases	—		525,867
Fair market value adjustment	(6,352)		22,619
Ending balance	$	500,914	$	548,486

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments


		September 30, 2024						December 31, 2023
	Level	Principal Balance		Carrying Value		Fair Value		Principal Balance		Carrying Value		Fair Value
Investments:
Loans held for investment	3	$	21,567,296	$	21,496,314	$	21,828,627	$	60,317,296	$	60,458,534	$	60,642,806
Loans held for investment acquired through participation	3	27,265,441		16,205,046		16,205,047		27,119,250		17,884,930		17,884,929
Total loans		$	48,832,737	$	37,701,360	$	38,033,674	$	87,436,546	$	78,343,464	$	78,527,735
Liabilities:
Unsecured notes payable (1))(2)	1	$	38,375,000	$	36,180,905	$	36,855,350	$	38,375,000	$	35,213,543	$	36,287,400
Obligation under participation agreement	3	15,000,000		15,132,411		15,211,122		—		—		—
Term loan payable (3)(4)	3	—		—		—		15,000,000		14,948,604		15,000,000
Total liabilities		$	53,375,000	$	51,313,316	$	52,066,472	$	53,375,000	$	50,162,147	$	51,287,400

_______________

(1)Carrying value is net of unamortized purchase discount of $2.2 million and $3.2 million as of September 30, 2024 and December 31, 2023, respectively.

(3)Carrying value is net of unamortized discount of $0.1 million as of December 31, 2023.

(4)Valuation falls under Level 3 of the fair value hierarchy, which is based on a discounted cash flow model with a discount rate of 12.48%, as of December 31, 2023.

Schedule of Fair Value Measurement Inputs and Valuation Techniques


September 30, 2024
			Primary Valuation Technique	Unobservable Input	Range				Weighted
Asset Category	Fair Value				Minimum		Maximum		Average
Assets:
Loans	$	21,828,627	Discounted cash flow	Discount rate	11.00	%	15.40	%	14.79	%
Loans through participation interest (1)	16,205,047		Discounted cash flow	Discount rate	N/A		N/A		N/A
Total Level 3 Assets	$	38,033,674
Liabilities:
Obligation under participation agreement	$	15,211,122	Discounted cash flow	Discount rate	15.40	%	15.40	%	15.40	%

December 31, 2023

Primary
Valuation
Technique

Unobservable Input

Range

Weighted

Asset Category

Fair Value

Minimum

Maximum

Average

Assets:

Loans

60,642,806

Discounted cash flow

Discount rate

13.02

16.95

15.88

Loans through participation interest (1)

17,884,929

Discounted cash flow

Discount rate

N/A

Total Level 3 Assets

78,527,735

_______________

Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2024

Schedule of Related Party Transactions

The following table presents a summary of such fees and reimbursements incurred pursuant to the Cost Sharing Agreement between Terra LLC and Terra REIT:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Amounts Included in the Statements of Operations
Asset management and asset servicing fees	$	238,710	$	408,726	$	906,389	$	1,272,159
Operating expense reimbursement to Adviser (1)	177,824		395,041		880,332		1,107,401
Origination, extension and disposition fees	1,003		226,172		357,400		543,924

_______________

(1)Amounts were primarily compensation for time spent supporting the Company’s day-to-day operations.


	September 30, 2024						December 31, 2023
	Participating Interests		Principal Balance		Carrying Value		Participating Interests		Principal Balance		Carrying Value
370 Lex Part Deux, LLC (1)(2)	35.0	%	$	24,491,877	$	13,431,482	35.0	%	$	24,491,877	$	15,257,557
RS JZ Driggs, LLC (2)	50.0	%	2,773,564		2,773,564		50.0	%	2,627,373		2,627,373
Total			$	27,265,441	$	16,205,046			$	27,119,250	$	17,884,930

_______________

(1)Carrying value is net of specific allowance for loan losses of $11.1 million and $9.2 million as of September 30, 2024 and December 31, 2023, respectively.

(2)The loan is held in the name of Terra REIT, the Company’s parent entity.

The following table summarizes the investment that was subject to a PA with investment partnership affiliated with the REIT Manager as of September 30, 2024. There was no such investment as of December 31, 2023.


					September 30, 2024
					Transfers treated as obligations under participation agreements
	Principal		Carrying Value		% Transferred		Principal		Carrying Value
Asano Bankers Hill, LLC (1)	$	18,567,296	$	18,546,807	80.8	%	$	15,000,000	$	15,132,411

________________

(1)Participant is a certain separately managed account, an investment partnership managed by the REIT Manager.

Debt (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Schedule of Debt

The following table is a summary of the Company’s unsecured notes payable outstanding as of:


	Coupon Rate		Effective Rate (1)		Maturity Date	September 30, 2024		December 31, 2023
7.00% Senior Notes Due 2026 (2)	7.00	%	10.36	%	3/31/2026	38,375,000		38,375,000
Unamortized purchase discount (2)						(2,194,095)		(3,161,457)
Unsecured notes payable, net						$	36,180,905	$	35,213,543

_______________

(1)Includes purchase discount that is amortized to interest expense over the remaining life of the notes.

The following table is a summary of the Company’s obligations under the Credit Agreement as of December 31, 2023. There was no such loan outstanding as of September 30, 2024.


	December 31, 2023
	Maturity	Interest rate		Principal Amount
Term loan payable	3/31/2024	12.72	%	$	15,000,000
Unamortized deferred financing cost				(51,396)
Unsecured notes payable, net				$	14,948,604

Schedule of Debt Maturity

Scheduled debt principal payments for each of the five calendar years following September 30, 2024 are as follows:


Years Ending December 31,	Total
2024 (October 1 through December 31)	$	—
2025	—
2026	38,375,000
2027	—
2028	—
Thereafter	—
	38,375,000
Unamortized purchase discount	(2,194,095)
Total	$	36,180,905

Principal Business and Organization (Details) - USD ($)	1 Months Ended
Principal Business and Organization (Details) - USD ($)	Feb. 28, 2021	Sep. 30, 2024	Dec. 31, 2023
Financial Highlights
Unsecured debt		$ 36,180,905	$ 35,213,543
Terra BDC \| Fixed rate due 2026
Financial Highlights
Unsecured debt	$ 38,400,000
Fixed rate (as a percent)	7.00%
Medium-term notes	$ 37,200,000
Expense related to underwriting fees	$ 1,200,000

Summary of Significant Accounting Policies - Schedule of Cash (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Cash and cash equivalents	$ 6,640,033	$ 3,193,078	$ 7,967,175
Restricted cash	0		1,000,000
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$ 6,640,033	$ 3,299,996	$ 8,967,175	$ 6,739,953

Summary of Significant Accounting Policies - Narrative (Details) $ in Millions	Jan. 01, 2023 USD ($)
Accounting Standards Update 2016-13
Schedule of Investments
Cumulative effect of adoption of credit loss	$ 0.7

Loans Held for Investment - Narrative (Details)	3 Months Ended			9 Months Ended
Loans Held for Investment - Narrative (Details)	Sep. 30, 2024 USD ($) loan	Sep. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Sep. 30, 2024 USD ($) loan	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($) loan	Jan. 01, 2023 USD ($)
Schedule of Investments
Financing Receivable, Accrued Interest, after Allowance for Credit Loss, Statement of Financial Position [Extensible Enumeration]	Interest receivable			Interest receivable		Interest receivable
Accrued interest receivable	$ 300,000			$ 300,000		$ 1,200,000
Other commitment	700,000			700,000		700,000
Carrying Value	48,980,559			48,980,559		88,046,795
Allowance for credit losses	11,279,199			11,279,199		9,703,331
Interest receivable	291,169			291,169		1,241,308
Payments to acquire held-to-maturity securities				0	$ 10,012,512
Unfunded Loan Commitment
Schedule of Investments
Other commitment	$ 700,000			$ 700,000		$ 700,000
Non-performing
Schedule of Investments
Number of non-performing loans \| loan	2			2		2
Allowance for credit losses	$ 11,100,000			$ 11,100,000		$ 9,200,000
Non-performing \| Non-accrual
Schedule of Investments
Number of loans in default \| loan	2			2		2
Interest income suspension	$ 1,200,000	$ 3,700,000		$ 1,100,000	$ 3,100,000
Interest receivable	0			0		$ 0
Non-performing
Schedule of Investments
Carrying Value	$ 27,300,000			$ 27,300,000		$ 27,100,000
Accounting Standards Update 2016-13
Schedule of Investments
Cumulative effect of adoption of credit loss							$ 700,000
Corporate Debt Securities
Schedule of Investments
Payments to acquire held-to-maturity securities			$ 10,000,000
Current interest rate			6.125%

Loans Held for Investment - Schedule of Company's Portfolio (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2024 USD ($) loan	Dec. 31, 2023 USD ($) loan
Investment
Number of loans \| loan	4	6
Principal Balance	$ 48,832,737	$ 87,436,546
Carrying value	37,701,360	78,343,464
Fair value	$ 38,033,674	$ 78,527,735
Weighted-average coupon rate	15.70%	15.10%
Weighted-average remaining term (years)	8 months 1 day	10 months 13 days
Number of loans subject to variable rate \| loan	2	2
Fixed Rate
Investment
Number of loans \| loan	2	4
Principal Balance	$ 5,773,564	$ 44,377,373
Carrying value	5,723,071	44,528,468
Fair value	$ 5,773,564	$ 44,313,689
Weighted-average coupon rate	11.60%	13.70%
Weighted-average remaining term (years)	2 years 7 months 6 days	9 months 3 days
Floating Rate
Investment
Number of loans \| loan	2	2
Principal Balance	$ 43,059,173	$ 43,059,173
Carrying value	31,978,289	33,814,996
Fair value	$ 32,260,110	$ 34,214,046
Weighted-average coupon rate	16.20%	16.60%
Weighted-average remaining term (years)	4 months 6 days	1 year 1 month 6 days
Average SOFR
Investment
Reference rate (percent)	5.20%	5.30%
SOFR
Investment
Reference rate (percent)	4.80%	5.40%

Loans Held for Investment - Schedule of Company's Portfolio Activities (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Company's Portfolio [Roll Forward]
Net amortization of premiums on loans			$ (150,961)	$ (909,717)
Accrual, payment and accretion of investment-related fees and other, net			(96,375)	281,094
Provision for credit losses	$ (524,486)	$ (1,710,516)	(1,575,113)	(1,642,528)
Funded Loans
Company's Portfolio [Roll Forward]
Beginning balance			78,343,464	121,413,026
Origination and purchase of loans			990,186	4,564,970
Principal repayments received			(39,941,496)	(41,777,390)
Net amortization of premiums on loans			(150,961)	(909,717)
Accrual, payment and accretion of investment-related fees and other, net			36,035	281,094
Provision for credit losses			(1,575,868)	(1,703,918)
Ending balance	37,701,360	81,275,025	37,701,360	81,275,025
Funded Loans \| Cumulative Effect of Credit Loss Accounting Standard
Company's Portfolio [Roll Forward]
Beginning balance				(593,040)
Loans Held for Investment, Net
Company's Portfolio [Roll Forward]
Beginning balance			60,458,534	79,082,650
Origination and purchase of loans			843,996	3,621,008
Principal repayments received			(39,941,496)	(21,655,810)
Net amortization of premiums on loans			(150,961)	(828,306)
Accrual, payment and accretion of investment-related fees and other, net			36,035	196,047
Provision for credit losses			250,206	66,375
Ending balance	21,496,314	59,888,924	21,496,314	59,888,924
Loans Held for Investment, Net \| Cumulative Effect of Credit Loss Accounting Standard
Company's Portfolio [Roll Forward]
Beginning balance				(593,040)
Loans Held for Investment through Participation Interests, Net
Company's Portfolio [Roll Forward]
Beginning balance			17,884,930	42,330,376
Origination and purchase of loans			146,190	943,962
Principal repayments received			0	(20,121,580)
Net amortization of premiums on loans			0	(81,411)
Accrual, payment and accretion of investment-related fees and other, net			0	85,047
Provision for credit losses			(1,826,074)	(1,770,293)
Ending balance	$ 16,205,046	$ 21,386,101	$ 16,205,046	21,386,101
Loans Held for Investment through Participation Interests, Net \| Cumulative Effect of Credit Loss Accounting Standard
Company's Portfolio [Roll Forward]
Beginning balance				$ 0

Loans Held for Investment - Schedule of Portfolio Information (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 48,832,737	$ 87,436,546
Carrying value	$ 37,701,360	$ 78,343,464
% of Total	100.00%	100.00%
California
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 21,567,296	$ 21,567,296
Carrying value	$ 21,496,313	$ 21,465,171
California \| Geographic Location Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	57.00%	27.40%
New York
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 27,265,441	$ 27,119,250
Carrying value	$ 16,205,047	$ 17,884,930
New York \| Geographic Location Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	43.00%	22.80%
Utah
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 0	$ 21,250,000
Carrying value	$ 0	$ 21,462,168
Utah \| Geographic Location Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	0.00%	27.40%
Georgia
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 0	$ 17,500,000
Carrying value	$ 0	$ 17,531,195
Georgia \| Geographic Location Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	0.00%	22.40%
Total \| Geographic Location Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	100.00%	100.00%
Mixed use
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 18,567,296	$ 18,567,296
Carrying value	$ 18,546,806	$ 18,557,439
Mixed use \| Property Type Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	49.20%	23.70%
Office
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 24,491,877	$ 24,491,877
Carrying value	$ 13,431,483	$ 15,257,557
Office \| Property Type Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	35.60%	19.50%
Student housing
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 3,000,000	$ 3,000,000
Carrying value	$ 2,949,507	$ 2,907,732
Student housing \| Property Type Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	7.80%	3.70%
Multifamily
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 2,773,564	$ 20,127,373
Carrying value	$ 2,773,564	$ 20,158,568
Multifamily \| Property Type Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	7.40%	25.70%
Infrastructure
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 0	$ 21,250,000
Carrying value	$ 0	$ 21,462,168
Infrastructure \| Property Type Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	0.00%	27.40%
Total \| Property Type Concentration Risk \| Investment Owned At Cost
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
% of Total	100.00%	100.00%
Preferred equity investments
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 45,832,737	$ 63,186,546
Carrying value	$ 34,751,853	$ 53,973,564
% of Total	92.20%	68.90%
Mezzanine loans
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 3,000,000	$ 3,000,000
Carrying value	$ 2,949,507	$ 2,907,732
% of Total	7.80%	3.70%
First mortgages
Financing Receivable, before Allowance for Credit Loss, by Origination Year [Abstract]
Principal Balance	$ 0	$ 21,250,000
Carrying value	$ 0	$ 21,462,168
% of Total	0.00%	27.40%

Loans Held for Investment - Schedule Allowance for Credit Losses (Details) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	$ 9,703,331
Allowance for credit losses, end of period	11,279,199
Credit Losses Reserve
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	9,712,132	$ 3,937,050
Provision for (reversal of provision for) credit losses	1,575,113	1,642,528
Charge-offs	0	0
Recoveries	0	0
Allowance for credit losses, end of period	11,287,245	6,241,000
Credit Losses Reserve \| Cumulative Effect of Credit Loss Accounting Standard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period		661,422
Credit Losses Reserve \| Specific Allowance
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	9,234,321	3,937,050
Provision for (reversal of provision for) credit losses	1,826,073	1,770,292
Charge-offs	0	0
Recoveries	0	0
Allowance for credit losses, end of period	11,060,394	5,707,342
Credit Losses Reserve \| Specific Allowance \| Cumulative Effect of Credit Loss Accounting Standard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period		0
Credit Losses Reserve \| Funded Loans
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	469,010	0
Provision for (reversal of provision for) credit losses	(250,205)	(66,374)
Charge-offs	0	0
Recoveries	0	0
Allowance for credit losses, end of period	218,805	526,666
Credit Losses Reserve \| Funded Loans \| Cumulative Effect of Credit Loss Accounting Standard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period		593,040
Credit Losses Reserve \| Unfunded Loan Commitment
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period	8,801	0
Provision for (reversal of provision for) credit losses	(755)	(61,390)
Charge-offs	0	0
Recoveries	0	0
Allowance for credit losses, end of period	$ 8,046	6,992
Credit Losses Reserve \| Unfunded Loan Commitment \| Cumulative Effect of Credit Loss Accounting Standard
Financing Receivable, Excluding Accrued Interest, Allowance for Credit Loss [Roll Forward]
Allowance for credit losses, beginning of period		$ 68,382

Loans Held for Investment - Schedules of Loan Risk Ratings (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2024 USD ($) loan	Dec. 31, 2023 USD ($) loan
Ceded Credit Risk [Line Items]
Number of loans \| loan	4	6
Amortized Cost	$ 48,980,559	$ 88,046,795
% of Total	100.00%	100.00%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	18,796,818
Year three, fiscal year before current fiscal year	18,765,612	39,195,427
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior	30,214,947	30,054,550
Allowance for credit losses	(11,279,199)	(9,703,331)
Total loans	37,701,360	78,343,464
Non-performing
Ceded Credit Risk [Line Items]
Allowance for credit losses	$ (11,100,000)	$ (9,200,000)
1
Ceded Credit Risk [Line Items]
Number of loans \| loan	0	0
Amortized Cost	$ 0	$ 0
% of Total	0.00%	0.00%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	0
Year three, fiscal year before current fiscal year	0	0
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior	$ 0	$ 0
2
Ceded Credit Risk [Line Items]
Number of loans \| loan	0	0
Amortized Cost	$ 0	$ 0
% of Total	0.00%	0.00%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	0
Year three, fiscal year before current fiscal year	0	0
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior
3
Ceded Credit Risk [Line Items]
Number of loans \| loan	1	3
Amortized Cost	$ 2,949,506	$ 42,130,731
% of Total	6.00%	47.90%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year
Year three, fiscal year before current fiscal year	0	39,195,427
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior	$ 2,949,506	$ 2,935,304
4
Ceded Credit Risk [Line Items]
Number of loans \| loan	1	1
Amortized Cost	$ 18,765,612	$ 18,796,818
% of Total	38.30%	21.30%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	18,796,818
Year three, fiscal year before current fiscal year	18,765,612	0
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior	$ 0	$ 0
5
Ceded Credit Risk [Line Items]
Number of loans \| loan	0	0
Amortized Cost	$ 0	$ 0
% of Total	0.00%	0.00%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	0
Year three, fiscal year before current fiscal year	0	0
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0	0
Prior	$ 0	$ 0
Non-performing \| Non-performing
Ceded Credit Risk [Line Items]
Number of loans \| loan	2	2
Amortized Cost	$ 27,265,441	$ 27,119,246
% of Total	55.70%	30.80%
Current fiscal year	$ 0	$ 0
Year two, fiscal year before current fiscal year	0	0
Year three, fiscal year before current fiscal year	0	0
Year four, fiscal year before current fiscal year	0	0
Year five, fiscal year before current fiscal year	0
Prior	$ 27,265,441	$ 27,119,246

Equity Investment in Unconsolidated Investments - Narratives (Details) - venture	Sep. 30, 2024	Dec. 31, 2023
Equity Method Investments and Joint Ventures [Abstract]
Number of joint ventures	2	2

Equity Investment in Unconsolidated Investments - Equity Investment in Joint Venture (Details) - USD ($)	1 Months Ended		9 Months Ended
	Nov. 30, 2023	May 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Dec. 28, 2022
Schedule of Equity Method Investments
Equity investment in unconsolidated investments			$ 37,222,951		$ 40,431,710
Cash payment made by the Company			527	$ 27,354,342
Corporate Joint Venture
Schedule of Equity Method Investments
Equity investment in unconsolidated investments			$ 37,222,951		$ 40,431,710
Investment on the joint venture	$ 5,100,000
East Dallas \| Corporate Joint Venture
Schedule of Equity Method Investments
Beneficial Ownership Interest			80.00%		80.00%
Equity investment in unconsolidated investments			$ 34,102,082		$ 35,690,795
610 Walnut \| Corporate Joint Venture
Schedule of Equity Method Investments
Beneficial Ownership Interest			38.40%		42.40%
Equity investment in unconsolidated investments			$ 3,120,869		$ 4,740,915
Mezzanine loans
Schedule of Equity Method Investments
Principal balance		$ 10,000,000				$ 10,000,000
Net assets percentage		80.00%				35.00%
Cash payment made by the Company		$ 27,400,000
Mezzanine loans \| Terra REIT
Schedule of Equity Method Investments
Net assets percentage		20.00%

Equity Investment in Unconsolidated Investments - Equity Income And Distributions Received (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Schedule of Equity Method Investments
Loss from equity investment in unconsolidated investments	$ (792,622)	$ (543,934)	$ (2,943,172)	$ (353,027)
Equity Investment in Unconsolidated Investments
Schedule of Equity Method Investments
Loss from equity investment in unconsolidated investments	(792,622)	(543,934)	(2,943,172)	(353,027)
Distributions received from unconsolidated investments	$ 160,000	$ 352,000	$ 266,115	$ 878,998

Equity Investment in Unconsolidated Investments - Schedule of Equity Method Investments JV (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Schedule of Equity Method Investments
Total assets	$ 118,133,729						$ 118,133,729		$ 124,339,151
Mortgage loan payable	0						0		14,948,604
Other liabilities	8,046						8,046		410,075
Total liabilities	51,633,734						51,633,734		50,933,856
Members’ capital	66,506,347						66,506,347		73,405,295
Net loss	(1,861,453)	$ (1,978,625)	$ (3,058,870)	$ (2,407,622)	$ 78,879	$ 966,398	(6,898,948)	$ (1,362,345)
Corporate Joint Venture
Schedule of Equity Method Investments
Net investments in real estate	114,535,875						114,535,875		118,332,211
Other assets	8,138,354						8,138,354		8,658,923
Total assets	122,674,229						122,674,229		126,991,134
Mortgage loan payable	77,358,528						77,358,528		77,223,082
Other liabilities	4,198,401						4,198,401		5,501,677
Total liabilities	81,556,929						81,556,929		82,724,759
Members’ capital	41,117,300						41,117,300		$ 44,266,375
Revenues	1,731,382			1,564,960			5,120,316	2,085,142
Operating expenses	(737,730)			(408,635)			(2,196,339)	(699,147)
Depreciation and amortization expense	(1,224,490)			(1,149,051)			(4,031,387)	(1,506,589)
Interest expense	(1,532,045)			(686,419)			(4,637,649)	(962,324)
Net loss	$ (1,762,883)			$ (679,145)			$ (5,745,059)	$ (1,082,918)

Fair Value Measurements - Schedule of Fair Value Measurements (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Marketable securities	$ 500,914	$ 507,266	$ 548,486	$ 0
Total	500,914	507,266
Marketable securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Marketable securities	500,914	507,266
Level 1
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Total	500,914	507,266
Level 1 \| Marketable securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Marketable securities	500,914	507,266
Level 2
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Total	0	0
Level 2 \| Marketable securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Marketable securities	0	0
Level 3
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Total	0	0
Level 3 \| Marketable securities
Financial Instruments, Financial Assets, Balance Sheet Groupings [Abstract]
Marketable securities	$ 0	$ 0

Fair Value Measurements - Schedule of Activities of the Marketable Securities (Details) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Fair Value Reconciliation [Roll Forward]
Beginning balance	$ 507,266	$ 0
Purchases	0	525,867
Fair market value adjustment	(6,352)	22,619
Ending balance	$ 500,914	$ 548,486

Fair Value Measurements - Schedule of Carrying Values and Estimated Fair Values of Debt Instruments (Details)	Sep. 30, 2024 USD ($) $ / shares	Dec. 31, 2023 USD ($)	Dec. 29, 2023 $ / shares
Investments:
Principal Balance	$ 48,832,737	$ 87,436,546
Carrying value	37,701,360	78,343,464
Loans	38,033,674	78,527,735
Liabilities:
Principal	53,375,000	53,375,000
Carrying value
Investments:
Carrying value	37,701,360	78,343,464
Liabilities:
Financial liabilities fair value disclosure	51,313,316
Carrying Value		50,162,147
Fair value
Investments:
Loans	38,033,674	78,527,735
Liabilities:
Financial liabilities fair value disclosure	52,066,472
Fair Value		51,287,400
Level 3 \| Term loans payable
Liabilities:
Principal	0	15,000,000
Unamortized purchase discount		$ 100,000
Level 3 \| Term loans payable \| Discount Rate \| Discounted Cash Flow
Liabilities:
Debt instrument, measurement input		0.1248
Level 3 \| Term loans payable \| Carrying value
Liabilities:
Term loan payable	0	$ 14,948,604
Level 3 \| Term loans payable \| Fair value
Liabilities:
Term loan payable	0	15,000,000
Level 1 \| Unsecured note payable
Liabilities:
Principal	38,375,000	38,375,000
Unamortized purchase discount	2,194,095	3,161,457
Level 1 \| Unsecured note payable \| Carrying value
Liabilities:
Unsecured notes payable	36,180,905	35,213,543
Level 1 \| Unsecured note payable \| Fair value
Liabilities:
Unsecured notes payable	36,855,350	36,287,400
Loans held for investment \| Level 3
Investments:
Principal Balance	21,567,296	60,317,296
Loans held for investment \| Level 3 \| Carrying value
Investments:
Carrying value	21,496,314	60,458,534
Loans held for investment \| Level 3 \| Fair value
Investments:
Loans	21,828,627	60,642,806
Loans held for investment acquired through participation \| Level 3
Investments:
Principal Balance	27,265,441	27,119,250
Loans held for investment acquired through participation \| Level 3 \| Carrying value
Investments:
Carrying value	16,205,046	17,884,930
Loans held for investment acquired through participation \| Level 3 \| Fair value
Investments:
Loans	$ 16,205,047	17,884,929
Unsecured note payable \| Level 1
Liabilities:
Share price (in dollars per share) \| $ / shares	$ 24.01		$ 23.64
Obligation under participation agreement \| Level 3
Liabilities:
Principal	$ 15,000,000	0
Obligation under participation agreement \| Level 3 \| Carrying value
Liabilities:
Obligation under participation agreement	15,132,411	0
Obligation under participation agreement \| Level 3 \| Fair value
Liabilities:
Obligation under participation agreement	$ 15,211,122	$ 0

Fair Value Measurements - Schedule of Fair Value Measurement Inputs and Valuation Techniques (Details)	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
Assets:
Loans	$ 38,033,674	$ 78,527,735
Fair value
Assets:
Loans	38,033,674	78,527,735
Level 3
Assets:
Total loans	$ 38,033,674	$ 78,527,735
Discount Rate \| Level 3
Liabilities:
Discount rate (as a percent)	0.0675	0.0675
Terminal Capitalization Rate \| Level 3
Liabilities:
Discount rate (as a percent)	0.0575	0.0575
Mortgage Loan \| Level 3
Assets:
Loans	$ 21,828,627	$ 60,642,806
Mortgage Loan \| Minimum \| Discount Rate \| Level 3
Liabilities:
Discount rate (as a percent)	0.1100	0.1302
Mortgage Loan \| Maximum \| Discount Rate \| Level 3
Liabilities:
Discount rate (as a percent)	0.1540	0.1695
Mortgage Loan \| Weighted average \| Discount Rate \| Level 3
Liabilities:
Discount rate (as a percent)	0.1479	0.1588
Loans held for investment acquired through participation \| Level 3
Assets:
Loans through participation interest	$ 16,205,047	$ 17,884,929
Loans held for investment acquired through participation \| Level 3 \| Fair value
Assets:
Loans	16,205,047	17,884,929
Obligation under participation agreement \| Level 3 \| Fair value
Liabilities:
Obligation under participation agreement	$ 15,211,122	$ 0
Obligation under participation agreement \| Minimum \| Discount Rate \| Level 3
Liabilities:
Discount rate (as a percent)	0.1540
Obligation under participation agreement \| Maximum \| Discount Rate \| Level 3
Liabilities:
Discount rate (as a percent)	0.1540
Obligation under participation agreement \| Weighted average \| Discount Rate \| Level 3
Liabilities:
Discount rate (as a percent)	0.1540

Related Party Transactions - Promissory Note Receivable (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Related Party Transaction
Promissory note receivable (Note 6)	$ 35,096,786		$ 35,096,786		$ 0
Interest income	1,851,745	$ 2,321,378	5,782,363	$ 7,848,610
Affiliated Entity \| Promissory Notes Receivable
Related Party Transaction
Payments for promissory note receivable			40,100,000
Promissory note receivable (Note 6)	35,100,000		35,100,000
Interest income	$ 700,000		1,200,000
Affiliated Entity \| Revolving Promissory Note Receivable \| Notes Receivable
Related Party Transaction
Repayment received			$ 5,000,000

Related Party Transactions - Summary of Fees and Reimbursement (Details) - USD ($)

3 Months Ended

9 Months Ended

Sep. 30, 2024

Sep. 30, 2023

Sep. 30, 2024

Sep. 30, 2023

Related Party Transaction

Asset management and asset servicing fees

^[1]

$ 238,710

$ 408,726

$ 906,389

$ 1,272,159

Operating expense reimbursement to Adviser

^[1]

177,824

395,041

880,332

1,107,401

Origination, extension and disposition fees

1,003

226,172

357,400

543,924

Related Party

Related Party Transaction

Operating expense reimbursement to Adviser

$ 177,824

$ 395,041

$ 880,332

$ 1,107,401

[1]	Fees were paid and payable, and expenses were reimbursed, to Terra Property Trust, Inc. (“Terra REIT”) pursuant to a cost sharing agreement with Terra REIT (Note 6).

Related Party Transactions - Management and Incentive Fee Compensation to Adviser (Details) - Affiliated Entity	Sep. 30, 2024
Related Party Transaction
Origination and extension fee (as a percent)	1.00%
Asset management fee (as a percent)	1.00%
Asset servicing fee (as a percent)	0.25%
Disposition fee (as a percent)	1.00%
Transaction breakup fee	0.5

Related Party Transactions - Transfers of Participation Interest (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Related Party Transaction
Principal Balance	$ 48,832,737	$ 87,436,546
Carrying value	37,701,360	78,343,464
Allowance for credit losses	11,279,199	9,703,331
Non-performing
Related Party Transaction
Allowance for credit losses	11,100,000	9,200,000
Participation Agreements
Related Party Transaction
Principal Balance	27,265,441	27,119,250
Carrying value	$ 16,205,046	$ 17,884,930
370 Lex Part Deux, LLC \| Participation Agreements
Related Party Transaction
Participating Interests	35.00%	35.00%
Principal Balance	$ 24,491,877	$ 24,491,877
Carrying value	$ 13,431,482	$ 15,257,557
RS JZ Driggs, LLC \| Participation Agreements
Related Party Transaction
Participating Interests	50.00%	50.00%
Principal Balance	$ 2,773,564	$ 2,627,373
Carrying value	$ 2,773,564	$ 2,627,373

Related Party Transactions - Transferred to Third-Party (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Related Party Transaction
Principal Balance	$ 48,832,737	$ 87,436,546
Carrying value	37,701,360	78,343,464
Principal	53,375,000	$ 53,375,000
Asano Bankers Hill, LLC \| Participating Mortgage Loan \| Affiliated Entity
Related Party Transaction
Principal Balance	18,567,296
Carrying value	$ 18,546,807
% Transferred	80.80%
Principal	$ 15,000,000
Carrying Value	$ 15,132,411

Debt - Unsecured Notes Payable (Details) - USD ($)	Feb. 26, 2021	Sep. 30, 2024	Dec. 31, 2023	Feb. 10, 2021
Debt Instrument
Principal balance		$ 53,375,000	$ 53,375,000
Unsecured note payable \| Six Percent Unsecured Senior Notes Due May Two Thousand Twenty Six
Debt Instrument
Redemption price	100.00%
Terra BDC \| Unsecured note payable
Debt Instrument
Principal balance	$ 3,600,000			$ 34,800,000
Fixed rate (as a percent)	7.00%			7.00%

Debt - Summary of Unsecured Notes Payable (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument
Long-term debt, gross	$ 38,375,000
Total	36,180,905
Unsecured note payable \| Level 1
Debt Instrument
Unamortized purchase discount	$ (2,194,095)	$ (3,161,457)
$7.00% Senior Notes Due 2026 \| Unsecured note payable
Debt Instrument
Fixed rate (as a percent)	7.00%
Effective interest rate (as a percent)	10.36%
Long-term debt, gross	$ 38,375,000	38,375,000
Total	36,180,905	$ 35,213,543
Terra BDC \| $7.00% Senior Notes Due 2026
Debt Instrument
Unamortized discount, net	$ 4,600,000

Debt - Term Loan (Details) - USD ($)	Jun. 30, 2023	Sep. 30, 2024	Dec. 31, 2023	Apr. 30, 2021
Debt Instrument
Principal		$ 53,375,000	$ 53,375,000
Delayed Draw Term Loan (DDTL)
Debt Instrument
Principal			$ 15,000,000
Terra BDC \| Delayed Draw Term Loan (DDTL)
Debt Instrument
Delayed draw term loan				$ 25,000,000
Principal	$ 15,000,000
Fixed rate (as a percent)	5.625%
Debt instrument, basis spread on variable rate	7.375%
Repayments of term loan	$ 10,000,000
Terra BDC \| Delayed Draw Term Loan (DDTL) \| Maximum
Debt Instrument
Debt instrument, basis spread on variable rate	5.00%

Debt - Summary of Term Loan (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument
Principal	$ 53,375,000	$ 53,375,000
Total	$ 36,180,905
Delayed Draw Term Loan (DDTL)
Debt Instrument
Interest rate		12.72%
Principal		$ 15,000,000
Unamortized deferred financing cost		(51,396)
Total		$ 14,948,604

Debt - Schedule of Debt Maturity (Details)	Sep. 30, 2024 USD ($)
Debt Disclosure [Abstract]
2024 (October 1 through December 31)	$ 0
2025	0
2026	38,375,000
2027	0
2028	0
Thereafter	0
Long-term debt	38,375,000
Unamortized purchase discount	(2,194,095)
Total	$ 36,180,905

Debt - Narrative (Details) - USD ($)	9 Months Ended	12 Months Ended
Debt - Narrative (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument
Carrying value	$ 37,701,360	$ 78,343,464
Current interest rate	15.70%	15.10%
Mixed use
Debt Instrument
Carrying value	$ 18,546,806	$ 18,557,439
Preferred equity investments \| Mixed use \| California
Debt Instrument
Current interest rate	20.20%
Asano Bankers Hill, LLC \| Participating Mortgage Loan \| Affiliated Entity
Debt Instrument
Term loan payable, net of deferred financing cost	$ 15,132,411
Carrying value	$ 18,546,807

Commitments and Contingencies (Details) - USD ($) $ in Millions	Sep. 30, 2024	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Unfunded commitments	$ 0.7	$ 0.7

Terra Income Fund 6 (NYSE:TFSA)
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