v3.25.2
Debt
 6 Months Ended
Jun. 30, 2025
Debt Disclosure [Abstract]  
Debt Debt
Unsecured Notes Payable

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

Coupon Rate
Effective Rate (1)
Maturity DateJune 30, 2025December 31, 2024
6.00% Senior Notes Due 2026
6.00 %7.00 %6/30/2026$85,125,000 $85,125,000 
7.00% Senior Notes Due 2026 (2)
7.00 %11.16 %3/31/202638,375,000 38,375,000 
Total principal amount123,500,000 123,500,000 
Unamortized issue discount(613,327)(902,312)
Unamortized purchase discount (2)
(1,142,709)(1,853,316)
Unamortized deferred financing costs(217,696)(320,272)
Unsecured notes payable, net$121,526,268 $120,424,100 
_______________
(1)Includes issue discount, purchase discount and deferred financing costs that are amortized to interest expense over the life of the notes.
(2)In connection with the BDC Merger, Terra LLC assumed all the obligations under the 7.00% Senior Notes Due 2026 (as defined below) 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.

The 6.00% Senior Notes Due 2026
On June 10, 2021, the Company issued $78.5 million in aggregate principal amount of its 6.00% notes due 2026, and on June 25, 2021, the underwriters partially exercised their option to purchase an additional $6.6 million of the notes (collectively the “6.00% Senior Notes Due 2026”). The 6.00% Senior Notes Due 2026 may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after June 10, 2023, at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued and unpaid interest.

The 7.00% Senior Notes Due 2026
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”). In connection with the BDC Merger, Terra LLC agreed to take all necessary action to assume the payment of the principal of and interest on all of the outstanding 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 LLC’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.

Covenant Compliance
The Company’s unsecured notes payable contain certain financial covenants. As of June 30, 2025, the Company was in compliance with such covenants.

Notes Maturities

The Company’s 6.00% Senior Notes Due 2026 mature on June 30, 2026 and Terra LLC’s 7.00% Senior Notes Due 2026 mature on March 31, 2026. The Company intends to repay the 6.00% Senior Notes Due 2026, and cause Terra LLC to repay the 7.00% Senior Notes Due 2026, through ordinary course loan repayments, asset sales and distributions, and may also use debt or equity capital sources or facilities.
Secured Financing Arrangements

The following table is a summary of the Company’s secured financing agreements in place as of:

June 30, 2025December 31, 2024
Current MaturityExtended Maturity
Weighted Average Interest Rate (1)
Pledged Asset Carrying ValueMaximum Facility SizePrincipal AmountPrincipal
 Amount
Repurchase Agreements:
Goldman Sachs Bank facility (2)(3)
(3)(3)(3)$— $— $— $48,188,441 
Total— — — 48,188,441 
Non-Recourse Financing:
Promissory notes payable (2)(4)
September 2025 - March 2026March 2026 - March 20279.33 %59,610,514 N/A27,482,928 40,694,390 
Property mortgages - fixed rateJune 2028June 20286.25 %77,169,374 N/A40,250,000 40,250,000 
Property mortgages - variable rate (5)
April 2027April 20287.82 %27,037,500 N/A20,268,972 34,100,000 
Total163,817,388 88,001,900 115,044,390 
Other Secured Financing:
Revolving line of credit (2)(6)
June 2025June 20257.67 %23,116,267 11,071,390 11,071,390 16,361,111 
Term loan (7)
December 2027December 2028(10)48,455,336 10,000,000 10,000,000 10,000,000 
Secured borrowing (2)(8)
Nov 2026 - Jun 2027Nov 2026 - Jun 20279.54 %61,357,722 31,250,000 31,250,000 18,000,000 
Total132,929,325 52,321,390 52,321,390 44,361,111 
$296,746,713 $52,321,390 140,323,290 207,593,942 
Unamortized deferred financing costs and other(1,673,574)(1,875,160)
Secured financing agreements, net$138,649,716 $205,718,782 
_______________
(1)Amount is calculated using the applicable index rate as of June 30, 2025.
(2)These facilities were used to finance the Company’s senior loan investments.
(3)In June 2025, the outstanding balance was repaid in full and the facility was terminated.
(4)Interest rate is based on Term SOFR plus a spread ranging from 4.75% to 5.98% with a combined floor rate ranging from 9.0% to 11.28%.
(5)Interest rate is based on Term SOFR plus a spread of 3.5% with a Term SOFR floor of 3.75%.
(6)Interest rate is based on Term SOFR + 3.5% with a combined floor of 7.0%. On July 1, 2025, the outstanding balance was repaid in full and the facility was terminated.
(7)In December 2024, through a series of transactions, a wholly owned subsidiary of the Company issued a $10.0 million term loan payable to an entity in which the Company has an equity investment in exchange for the satisfaction of the remaining funding commitment of the Company to that entity (Note 4). This loan is interest-free until June 30, 2025, after that interest is charged at a fixed rate of 9.0% per annum. The term loan payable is collateralized by the Company’s equity interest in RESOF and the Company serves as a guarantor under the loan. Under the terms of the loan agreement, the Company is required to maintain certain loan-to-value ratio and investment rating. Additionally, the Company’s interest in RESOF is only available to pay the debt under the term loan and not available to pay the debt under any other financing arrangements.
(8)Interest rate is based on Term SOFR plus a spread of 5.0% with a combined floor rate ranging from 9.32% to 9.85%.

In the normal course of business, the Company is in discussions with its lenders to extend, amend, or replace any financing facilities which contain near term expirations.
The following table presents certain information about the Company’s secured financing agreements:

Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
Amortization of deferred financing costs
   and others		$191,702 $575,236 $718,116 $1,521,384 
Proceeds from secured financing$23,383,257 $58,246,507 
Repayments of secured financing$(91,059,190)$(84,780,619)

Repurchase Agreements

The Company seeks to mitigate risks associated with its repurchase agreements by managing risk related to the credit quality of its assets, interest rates, liquidity, the rate of prepayment and market value. The margin call provisions under the repurchase facilities provide the lender with certain rights in the event of a decline in the credit of the underlying assets purchased. To monitor credit risk associated with the performance and value of its loans and investments, the Company’s asset management team regularly reviews its investment portfolios and is in regular contact with its borrowers, monitoring performance of the collateral and enforcing its rights as necessary. The Company further seeks to manage risks associated with the repurchase agreements by matching the maturities and interest rate characteristics of its loans with the related repurchase agreement.

Covenant Compliance

The Company’s secured financing agreements contain certain financial tests and covenants. In the event of a default or any breach of covenant of a related agreement, the lender has the right to accelerate all amounts due, charge interest at a default rate, retain all cash flow from the loans originated and/or sell such loans in a private sale on terms possibly unfavorable to the Company. As of June 30, 2025, the Company was in compliance with all such covenants, as amended or waived.

Scheduled Debt Principal Payments

    Scheduled debt principal payments for each of the five calendar years following June 30, 2025 are as follows:

Years Ending December 31,Total
2025 (July 1 through December 31)$14,321,390 
2026160,982,928 
202748,268,972 
202840,250,000 
2029— 
263,823,290 
Unamortized deferred financing costs and other(3,647,306)
Total$260,175,984 

Obligations Under Participation Agreements
As discussed in Note 2, the Company follows the guidance in ASC 860 when accounting for loan participations. Such guidance requires the transferred interests meet certain criteria in order for the transaction to be recorded as a sale. Loan participations from the Company which do not qualify for sale treatment remain on the Company’s consolidated balance sheets and the proceeds are recorded as obligations under participation agreements. As of June 30, 2025 and December 31, 2024, obligations under participation agreements were $19.8 million and $18.2 million, respectively. (see “Participation Agreements” in Note 7). The interest rate on the obligations under participation agreements was 19.32% and 19.53%, respectively.