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 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, rate of prepayment, loss severities, credit risks and default rates) or other market corroborated inputs.

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 considers factors specific to the investment.

As of June 30, 2025 and December 31, 2024, 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, equity securities without readily determinable fair value, secured financing agreements, unsecured notes payable and obligations under participation agreements. Such financial instruments are carried at cost, less impairment or less net deferred costs, where applicable. Marketable securities and derivatives are financial instruments that are reported at fair value.

From time to time, the Company may invest in debt securities. These securities are classified as available-for-sale debt securities and are carried at fair value. Changes in the fair value of the available-for-sale debt securities are reported in other comprehensive income or loss until a gain or loss on the securities is realized. In 2024, the Company owned certain trading equity securities that were carried at fair value. Changes in the fair value of the trading equity securities were reported in earnings. The trading equity securities were sold by April 2024. 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.

As discussed in Note 8, in March 2023, the Company entered into a loan agreement with a lender to provide financing for the acquisition of real estate properties (Note 5). In connection with the financing, the Company purchased an interest rate cap for $258,500 to effectively cap the related index rate at 5.0%. The interest rate cap met all the criteria of a derivative under ASC 815, but it did not meet the criteria under ASC 815-20-25 to qualify for hedging accounting. As such, the interest rate cap is reported at fair value and is included in other assets on the consolidated balance sheets, and the change in the fair value of the interest rate cap is reported in Unrealized gain (loss) on investments, net on the consolidated statements of operations.


	June 30, 2025
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	2,410,343	$	—	$	—	$	2,410,343
Available-for-sale debt securities	1,191,299		—		—		1,191,299
Derivative - interest rate cap (2)	—		—		—		—
Total	$	3,601,642	$	—	$	—	$	3,601,642


	December 31, 2024
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Money market fund (1)	$	2,360,936	$	—	$	—	$	2,360,936
Available-for-sale debt securities	963,178		—		—		963,178
Derivative - interest rate cap (2)	—		75		—		75
Total	$	3,324,114	$	75	$	—	$	3,324,189

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	Six Months Ended June 30,
	2025				2024
	Available-For-Sale Debt Securities		Derivatives		Available-For-Sale Debt Securities		Trading Equity Securities		Derivatives
Beginning balance	$	963,178	$	75	$	1,148,653	$	3,813,226	$	83,807
Proceeds from sale	—		—		—		(3,551,098)		—
Reclassification of net realized loss on investments into earnings	—		—		—		(446,009)		—
Unrealized gain (loss) on investments	228,121		(75)		(19,390)		183,881		(5,311)
Ending balance	$	1,191,299	$	—	$	1,129,263	$	—	$	78,496

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:


		June 30, 2025						December 31, 2024
	Level	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Assets:
Loans
Loans held for investment	3	$	222,393,773	$	175,053,810	$	174,927,245	$	275,802,476	$	233,571,416	$	234,665,528
Loans held for investment acquired through participation	3	23,104,416		23,116,267		23,343,044		41,452,547		41,077,729		41,871,690
Total loans		245,498,189		198,170,077		198,270,289		317,255,023		274,649,145		276,537,218
Equity securities without readily determinable fair value (1)	3	2,000,000		2,004,168		2,000,000		2,000,000		2,002,353		2,000,000
Total assets		$	247,498,189	$	200,174,245	$	200,270,289	$	319,255,023	$	276,651,498	$	278,537,218
Liabilities:
Unsecured notes payable	1	$	123,500,000	$	121,526,268	$	99,748,800	$	123,500,000	$	120,424,100	$	88,764,850
Secured financing agreements	3	140,323,290		138,649,716		138,331,034		207,593,942		205,718,782		206,731,436
Obligations under participation agreements	3	19,606,804		19,799,722		19,799,723		18,000,000		18,177,106		18,254,853
Total liabilities		$	283,430,094	$	279,975,706	$	257,879,557	$	349,093,942	$	344,319,988	$	313,751,139

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The Company periodically assesses whether there are any indicators that the value of its real estate investments may be impaired or that their carrying value may not be recoverable (Note 2). There was no impairment charge for the three and six months ended June 30, 2024. The following table presents information about assets for which the Company recorded an impairment charge and that were measured at fair value on a non-recurring basis for the three and six months ended June 30, 2025:

During the three and six months ended June 30, 2025, the Company recorded an impairment charge of $3.4 million to reduce the carrying value of the industrial buildings to their estimated selling price less the cost of the sale. The fair value measurement was determined by the purchase price.

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, and therefore 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, which may include 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 our borrowers and investees to make payments and their 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.

The Manager designates a valuation committee to oversee the entire valuation process of the Company’s Level 3 investments. The valuation committee is comprised of members of the Manager’s senior management, deal and portfolio management teams, who meet on a quarterly basis, or more frequently as needed, to review the Company investments being valued as well as the inputs used in the proprietary valuation model. Valuations determined by the valuation committee are supported by pertinent data and, in addition to a proprietary valuation model, are based on market data, industry accepted third-party valuation models and discount rates or other methods the valuation committee deems to be appropriate. Because there is no readily available market for these investments, the fair values of these investments are approved in good faith by the Company’s board of directors (which is made up exclusively of independent directors).

The fair values of the Company’s secured financing agreements, which includes mortgage loan payable, secured borrowing, term loan payable and revolving line of credit are determined by discounting the contractual cash flows at the interest rate the Company estimates such arrangements would bear if executed in the current market.

The following tables summarize the valuation techniques and significant unobservable inputs used by the Company to value the Level 3 loans as of June 30, 2025 and December 31, 2024. The tables are not intended to be all-inclusive, but instead identify the significant unobservable inputs relevant to the determination of fair values.


	Fair Value at June 30, 2025		Primary Valuation Technique	Unobservable Inputs	June 30, 2025
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	174,927,245	Discounted cash flow	Discount rate	6.75	%	19.32	%	11.02	%
			Discounted cash flow	Terminal capitalization rate	5.75	%	5.75	%	5.75	%
Loans held for investment acquired through participation, net	23,343,044		Discounted cash flow	Discount rate	17.02	%	17.02	%	17.02	%
Equity securities (1)	2,000,000		N/A	N/A	N/A		N/A		N/A
Total Level 3 Assets	$	200,270,289
Liabilities:
Secured financing agreements	$	138,331,034	Discounted cash flow	Discount rate	6.86	%	11.28	%	8.29	%
Obligation under participation agreement	19,799,723		Discounted cash flow	Discount rate	19.32	%	19.32	%	19.32	%
Total Level 3 Liabilities	$	158,130,757


	Fair Value at December 31, 2024		Primary Valuation Technique	Unobservable Inputs	December 31, 2024
Asset Category					Minimum		Maximum		Weighted Average
Assets:
Loans held for investment, net	$	234,665,528	Discounted cash flow	Discount rate	6.75	%	16.48	%	9.63	%
			Discounted cash flow	Terminal capitalization rate	5.75	%	5.75	%	5.75	%
Loans held for investment acquired through participation, net	41,871,690		Discounted cash flow	Discount rate	15.07	%	17.03	%	16.65	%
Equity securities (1)	2,000,000		N/A	N/A	N/A		N/A		N/A
Total Level 3 Assets	$	278,537,218
Liabilities:
Secured financing agreements	$	206,731,436	Discounted cash flow	Discount rate	6.33	%	11.28	%	8.30	%
Obligation under participation agreement	18,254,853		Discounted cash flow	Discount rate	14.78	%	14.78	%	14.78	%
Total Level 3 Liabilities	$	224,986,289

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