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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 June 30, 2025


☐			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 June 30, 2025 (unaudited) and December 31, 2024	2

	Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	3

	Consolidated Statements of Changes in Member’s Capital for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	4

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited)	5

	Notes to Consolidated Financial Statements as of June 30, 2025 (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	29

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	30

Signatures		32

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Terra Income Fund 6, LLC

Consolidated Balance Sheets


	June 30, 2025		December 31, 2024
	(Unaudited)
Assets
Cash and cash equivalents	$	295,426	$	3,008,449
Loans held for investment, net of allowance for credit losses of $0 and $179,450	20,426,987		18,575,895
Loans held for investment acquired through participation, net of allowance for credit losses of $17,322,889 and $15,523,156	10,127,372		11,812,001
Equity interest in unconsolidated investments	34,722,748		36,291,196
Promissory note receivable (Note 6)	47,198,257		45,130,163
Available-for-sale debt securities	526,099		425,357
Interest receivable	282,094		274,088
Prepaid expenses and other assets	461,032		385,795
Total assets	$	114,040,015	$	115,902,944
Liabilities and Equity
Liabilities:
Unsecured notes payable, net of purchase discount	37,232,292		36,521,684
Obligation under participation agreement (Note 7)	19,802,872		18,173,962
Interest payable from obligation under participation agreement	273,475		259,153
Other liabilities	3,130		11,229
Accrued expenses	310,093		114,498
Total liabilities	57,621,862		55,080,526
Commitments and contingencies (Note 8)
Member’s capital	56,418,153		60,822,418
Total liabilities and member’s capital	$	114,040,015	$	115,902,944

See notes to unaudited consolidated financial statements.

Terra Income Fund 6, LLC

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenues
Interest income	$	1,853,330	$	1,766,342	$	3,733,213	$	3,930,618
Dividend and other income	10,494		10,494		20,994		26,826
	1,863,824		1,776,836		3,754,207		3,957,444
Operating expenses
Asset management and asset servicing fees paid/ payable to Terra REIT (1)	203,852		277,621		407,919		667,679
Operating expense reimbursement to Terra REIT (1)	129,656		320,214		306,094		702,508
Provision for credit losses	843,748		226,279		1,613,684		1,050,627
Professional fees	148,066		158,625		292,640		328,327
Insurance expense	21,072		21,072		42,144		42,144
General and administrative	4,785		11,303		32,803		47,541
	1,351,179		1,015,114		2,695,284		2,838,826
Operating income	512,645		761,722		1,058,923		1,118,618
Other income and expenses
Loss from equity interest in unconsolidated investments	(760,495)		(963,371)		(1,568,448)		(2,150,550)
Interest expense on unsecured notes payable	(1,031,798)		(993,934)		(2,053,733)		(1,979,040)
Interest expense on term loan	—		—		—		(517,528)
Interest expense from obligation under participation agreement	(950,121)		(783,042)		(1,941,749)		(1,508,995)
	(2,742,414)		(2,740,347)		(5,563,930)		(6,156,113)
Net loss	$	(2,229,769)	$	(1,978,625)	$	(4,505,007)	$	(5,037,495)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale debt securities	36,379		139,724		100,742		(8,563)
	36,379		139,724		100,742		(8,563)
Comprehensive loss	$	(2,193,390)	$	(1,838,901)	$	(4,404,265)	$	(5,046,058)

______________

(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)


	Member’s Capital
Balance, January 1, 2025	$	60,822,418
Net loss	(2,275,238)
Other comprehensive income:
Unrealized gain on available-for-sale debt securities	64,363
Balance, March 31, 2025	58,611,543
Net loss	(2,229,769)
Other comprehensive income:
Unrealized gain on available-for-sale debt securities	36,379
Balance, June 30, 2025	$	56,418,153


	Member’s Capital
Balance, January 1, 2024	$	73,405,295
Net loss	(3,058,870)
Other comprehensive loss:
Unrealized loss on available-for-sale debt securities	(148,287)
Balance, March 31, 2024	70,198,138
Net loss	(1,978,625)
Other comprehensive income (loss):
Unrealized gain on available-for-sale debt securities	139,724
Balance, June 30, 2024	$	68,359,237

See notes to unaudited consolidated financial statements.

Terra Income Fund 6, LLC

Consolidated Statement of Cash Flows

(Unaudited)


	Six Months Ended June 30,
	2025		2024
Cash flows from operating activities:
Net loss	$	(4,505,007)	$	(5,037,495)
Adjustments to reconcile net loss from operations to net cash used in operating activities:
Provision for credit losses	1,613,684		1,050,627
Amortization of premiums and discounts on investments	8,605		129,883
Amortization and accretion of investment-related fees, net	(697)		99,365
Amortization of discount on debt	710,608		635,915
Amortization of deferred financing costs	—		51,396
Loss from equity interest in unconsolidated investments	1,568,448		2,150,550
Changes in operating assets and liabilities:
(Increase) decrease in interest receivable	(8,006)		950,439
Decrease (increase) in prepaid expenses and other assets	(75,237)		(21,807)
Increase (decrease) in accrued expenses	195,595		(134,043)
Increase in interest payable from obligation under participation agreement	14,322		220,174
Decrease in other liabilities	(1,500)		(401,274)
Net cash used in operating activities	(479,185)		(306,270)
Cash flows from investing activities:
Repayment of loans	—		39,941,496
Origination, funding and purchase of loans	(1,772,548)		(889,847)
Capital contributions to equity interest in unconsolidated investments	—		(527)
Funding of promissory note receivable	(9,893,094)		(34,335,983)
Repayment of promissory note receivable	7,825,000		—
Distributions from equity interest in unconsolidated investments	—		106,115
Net cash (used in) provided by investing activities	(3,840,642)		4,821,254
Cash flows from financing activities:
Proceeds from obligation under participation agreement	1,606,804		15,000,000
Repayment of term loan	—		(15,000,000)
Change in interest reserve and other deposits held on investments	—		(106,918)
Net cash provided by (used in) financing activities	1,606,804		(106,918)
Net (decrease) increase in cash and cash equivalents	(2,713,023)		4,408,066
Cash and cash equivalents, at beginning of period	3,008,449		3,299,996
Cash and cash equivalents, at end of period	$	295,426	$	7,708,062

Supplemental disclosure of cash flow information:
Cash paid for interest	$	3,158,446	$	2,978,225

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 (the “7.00% Senior 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% Senior 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 investment 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.

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,

Notes to Consolidated Financial Statements (Unaudited)

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

The Company follows the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses to estimate potential credit losses related to its loans. 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.

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

Notes to Consolidated Financial Statements (Unaudited)

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, all non-performing loans are evaluated for collectability, which includes both loans in default and loans where we do not expect to collect all amounts due for both principal and interest according to the contractual terms of the loan. 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 Interest 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 interest in 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.

Available-For-Sale Debt Securities

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.

Notes to Consolidated Financial Statements (Unaudited)

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.

Segment Information

The Company’s primary business is originating, acquiring and structuring real estate-related loans related to high quality commercial real estate. From time to time, the Company may assume control of properties acquired in connection with foreclosures or deed in lieu of foreclosure, or it may acquire operating real estate properties that meet its investment criteria.

The Company operates as one segment, which is also its sole reportable segment, focused on mezzanine loans, senior loans and preferred equity investments, and to a lesser extent, owning and managing real estate. The Company’s chief operating decision maker (“CODM”) is its senior management team, comprised of Terra REIT's chief executive officer who is also the chief investment officer, chief operating officer, chief financial officer, chief originations officer and the head of asset management of the REIT Manager.

The Company generates its revenue primarily from originating, acquiring, investing in, and managing real estate-related debt investments. The CODM evaluates the performance of any real estate owned assets with that of its real estate-related debt investments. Additionally, the Company seeks to enhance its returns on equity by utilizing leverage, and generally finance its real estate-related investments with leverage obtained through a variety of sources, including secured and unsecured debt instruments.

The CODM evaluates performance and allocates resources based on consolidated net income (loss), which is also reported as consolidated net income (loss) on the Company’s consolidated statement of operations. The Company’s consolidated net income (loss) is primarily derived through the difference between the interest income earned on its loans and the cost to finance investments. Accordingly, interest expense, as reported on its consolidated statement of operations, is its most significant segment expense. Additionally, the measure of segment assets is reflected on the balance sheet as total consolidated assets.

The CODM uses consolidated net income (loss) to make key operating decisions, such as identifying attractive investment opportunities, evaluating underwriting standards, determining the appropriate level of leverage to enhance returns on equity and deciding on the sources of financing.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “ASU” 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provide new segment disclosure requirements for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. ASU 2023-07 is to be adopted retrospectively to all prior periods presented. The Company adopted this ASU on December 31, 2024. The adoption of the standard has not impacted the Company's financial statements but has resulted in incremental disclosures, which are included within “Segment Information” above.

In December 2023, the FASB issued ASU 2023-09 “Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 intends to improve the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively. The Company is currently assessing the impact of this guidance; however, it does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

Notes to Consolidated Financial Statements (Unaudited)

Note 3. Loans Held for Investment

The Company elected the practical expedient under ASC 326 to exclude accrued interest from amortized cost. As of June 30, 2025 and December 31, 2024, accrued interest receivable of $0.3 million and $0.3 million, respectively, is included in interest receivable on the consolidated balance sheets, and is excluded from the amortized cost of loans held for investment.

Portfolio Summary

The table below provides a summary of the Company’s loan portfolio. Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.


	June 30, 2025						December 31, 2024
	Fixed Rate		Floating Rate (1)(2)		Total		Fixed Rate		Floating Rate (1)(2)		Total
Number of loans	1		2		3		1		2		3
Principal balance	$	2,958,384	$	44,716,617	$	47,675,001	$	2,843,280	$	43,059,173	$	45,902,453
Carrying value	$	2,623,384	$	27,930,975	$	30,554,359	$	2,573,280	$	27,814,616	$	30,387,896
Fair value	$	2,623,384	$	27,927,727	$	30,551,111	$	2,573,280	$	28,068,902	$	30,642,182
Weighted-average coupon rate(3)	—%		19.32%		19.32%		—%		19.53%		19.53%
Weighted-average remaining term (years) (3) (4)	0.00		0.00		0.00		0.00		0.10		0.10

_______________

(1)As of June 30, 2025 and December 31, 2024, 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 4.32% and 4.32%, respectively, as of June 30, 2025, and 4.53% and 4.33%, respectively, as of December 31, 2024.

(2)As of both June 30, 2025 and December 31, 2024, two loans were subject to a SOFR or Term SOFR floor, as applicable.

(3)Excludes non-performing loans for which recovery of interest income was not probable.

(4)Excludes loans that are in maturity default and represents current effective maturity as of June 30, 2025 and December 31, 2024, exclusive of any extension options available.

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, 2025	$	18,575,895	$	11,812,001	$	30,387,896
Origination, funding and purchase of loans	1,657,444		115,104		1,772,548
Principal repayments received	—		—		—
Net amortization of premiums on loans	(8,605)		—		(8,605)
Accrual, payment and accretion of investment-related fees and other, net	22,803		—		22,803
Reversal of (provision for) credit losses	179,450		(1,799,733)		(1,620,283)
Balance, June 30, 2025	$	20,426,987	$	10,127,372	$	30,554,359

Notes to Consolidated Financial Statements (Unaudited)


	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, funding and purchase of loans	843,996		45,851		889,847
Principal repayments received	(39,941,496)		—		(39,941,496)
Net amortization of premiums on loans	(129,883)		—		(129,883)
Accrual, payment and accretion of investment-related fees and other, net	20,488		—		20,488
Reversal of (provision for) credit losses	86,302		(1,132,990)		(1,046,688)
Balance, June 30, 2024	$	21,337,941	$	16,797,791	$	38,135,732

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.


	June 30, 2025						December 31, 2024
Loan Structure	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Preferred equity investments	$	47,675,001	$	30,554,359	100.0	%	$	45,902,453	$	30,387,896	100.0	%
Total	$	47,675,001	$	30,554,359	100.0	%	$	45,902,453	$	30,387,896	100.0	%


	June 30, 2025						December 31, 2024
Property Type	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
Mixed use	$	20,224,740	$	20,426,987	66.8	%	$	18,567,296	$	18,575,895	61.1	%
Office	24,491,877		7,503,988		24.6	%	24,491,877		9,238,721		30.4	%
Multifamily	2,958,384		2,623,384		8.6	%	2,843,280		2,573,280		8.5	%
Total	$	47,675,001	$	30,554,359	100.0	%	$	45,902,453	$	30,387,896	100.0	%


	June 30, 2025						December 31, 2024
Geographic Location	Principal Balance		Carrying Value		% of Total		Principal Balance		Carrying Value		% of Total
United States
California	$	20,224,740	$	20,426,987	66.9	%	$	18,567,296	$	18,575,895	61.1	%
New York	27,450,261		10,127,372		33.1	%	27,335,157		11,812,001		38.9	%
Total	$	47,675,001	$	30,554,359	100.0	%	$	45,902,453	$	30,387,896	100.0	%

Allowance for Credit Losses

As described in Note 2, the Company follows the provisions of ASC 326, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses.

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 zero and $0.7 million as of June 30, 2025 and December 31, 2024, 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. As of June 30, 2025 and December 31, 2024, the Company had three and two non-performing loans with total amortized cost of $47.9 million and $27.3 million, respectively. Accordingly, the Company utilized the estimated fair value of the loan collateral or sponsor’s guarantee to estimate the total specific allowance

Notes to Consolidated Financial Statements (Unaudited)

for credit losses of $17.3 million and $15.5 million as of June 30, 2025 and December 31, 2024, respectively. Please see “Significant Unobservable Inputs” in Note 5 for information on how the fair values of these loans were determined.

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


	Six Months Ended June 30, 2025
	Allowance on Non-Performing Loans		Allowance on Performing Loans				Total
			Funded		Unfunded
Allowance for credit losses, beginning of period	$	15,523,156	$	179,450	$	6,599	$	15,709,205
Provision for (reversal of provision for) credit losses	1,799,733		(179,450)		(6,599)		1,613,684
Charge-offs	—		—		—		—
Recoveries	—		—		—		—
Allowance for credit losses, end of period	$	17,322,889	$	—	$	—	$	17,322,889


	Six Months Ended June 30, 2024
	Allowance on Non-Performing Loans		Allowance on Performing Loans				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	1,132,988		(86,300)		3,939		1,050,627
Charge-offs	—		—		—		—
Recoveries	—		—		—		—
Allowance for credit losses, end of period	$	10,367,309	$	382,710	$	12,740	$	10,762,759

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 six months ended June 30, 2025 and 2024, the Company did not reverse any interest income accrual because all accrued interest income was deemed collectible. As of June 30, 2025 and December 31, 2024, the Company had three and two loans that were in default, and suspended interest income accrual of $1.3 million and $1.2 million, respectively, and $2.5 million and $2.4 million, respectively, for the three and six months ended June 30, 2025 and 2024, respectively, because recovery of such income was not probable. As of June 30, 2025 and December 31, 2024, there was $0.3 million and zero outstanding interest receivable on these loans, respectively.

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:


	June 30, 2025
Loan Risk Rating	Number of Loans	Amortized Cost		% of Total		Amortized Cost by Year Originated
						2025		2024		2023		2022		2021		Prior
1	—	$	—	—	%	$	—	$	—	$	—	$	—	$	—	$	—
2	—	—		—	%	—		—		—		—		—		—
3	—	—		—	%	—		—		—		—		—		—
4	—	—		—	%	—		—		—		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	3	47,877,248		100.0	%	—		—		—		20,426,987		—		27,450,261
	3	47,877,248		100.0	%	$	—	$	—	$	—	$	20,426,987	$	—	$	27,450,261
Allowance for credit losses		(17,322,889)
Total, net of allowance for credit losses		$	30,554,359


	December 31, 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	—	—		—	%	—		—		—		—		—		—
4	1	18,755,345		40.7	%	—		—		18,755,345		—		—		—
5	—	—		—	%	—		—		—		—		—		—
Non-performing	2	27,335,157		59.3	%	—		—		—		—		—		27,335,157
	3	46,090,502		100.0	%	$	—	$	—	$	18,755,345	$	—	$	—	$	27,335,157
Allowance for credit losses		(15,702,606)
Total, net of allowance for credit losses		$	30,387,896

Note 4. Equity Interest in Unconsolidated Investments

As of June 30, 2025 and December 31, 2024, the Company owned equity interests in two joint ventures that own real estate properties. The Company accounts for its interest 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 interest in unconsolidated investments as of:


		June 30, 2025			December 31, 2024
Entity	Co-owner	Beneficial Ownership Interest	Carrying Value		Beneficial Ownership Interest	Carrying Value
SF - Dallas Industrial, LLC	Affiliate	80.0%	$	32,833,082	80.0%	$	33,618,816
610 Walnut Investors LLC	Third party	30.9%	1,889,666		33.6%	2,672,380
			$	34,722,748		$	36,291,196

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Loss from equity interest in unconsolidated investments	$	(760,495)	$	(963,371)	$	(1,568,448)	$	(2,150,550)
Distributions received from unconsolidated investments	$	—	$	—	$	—	$	106,115

Notes to Consolidated Financial Statements (Unaudited)

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


	June 30, 2025		December 31, 2024
Net investments in real estate	$	109,268,226	$	111,358,643
Other assets	9,426,845		9,938,437
Total assets	118,695,071		121,297,080
Mortgage loan payable	77,500,668		77,405,608
Other liabilities	3,610,175		4,246,486
Total liabilities	81,110,843		81,652,094
Members’ capital	$	37,584,228	$	39,644,986


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenues	$	1,503,441	$	1,673,189	$	3,135,668	$	3,388,934
Operating expenses	(542,945)		(827,465)		(1,308,474)		(1,458,609)
Depreciation and amortization expense	(1,089,180)		(1,242,984)		(2,216,165)		(2,806,897)
Interest expense	(1,452,040)		(1,568,548)		(2,883,547)		(3,105,604)
Net loss	$	(1,580,724)	$	(1,965,808)	$	(3,272,518)	$	(3,982,176)

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.

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.

Notes to Consolidated Financial Statements (Unaudited)

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, promissory note receivable, obligation under participation agreement and unsecured notes payable. Such financial instruments are carried at cost, less impairment or less net deferred costs, where applicable.

Financial Instruments Carried at Fair Value on a Recurring Basis

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. 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:


	June 30, 2025
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Available-for-sale debt securities	$	526,099	$	—	$	—	$	526,099
Total	$	526,099	$	—	$	—	$	526,099


	December 31, 2024
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Available-for-sale debt securities	$	425,357	$	—	$	—	$	425,357
Total	$	425,357	$	—	$	—	$	425,357

The following table presents the activities of the marketable securities:


	Six Months Ended June 30,
	2025		2024
Beginning balance	$	425,357	$	507,266
Unrealized gain (loss) on available-for-sale debt securities	100,742		(8,563)
Ending balance	$	526,099	$	498,703

Financial Instruments Not Carried at Fair Value

The following table presents the carrying value, which represents the amortized cost of loans, 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 Balance		Carrying Value		Fair Value		Principal Balance		Carrying Value		Fair Value
Investments:
Loans held for investment	3	$	20,224,740	$	20,426,987	$	20,423,739	$	18,567,296	$	18,575,895	$	18,830,181
Loans held for investment acquired through participation	3	27,450,261		10,127,372		10,127,372		27,335,157		11,812,001		11,812,001
Total loans		$	47,675,001	$	30,554,359	$	30,551,111	$	45,902,453	$	30,387,896	$	30,642,182
Liabilities:
Unsecured notes payable (1)(2)	1	$	38,375,000	$	37,232,292	$	35,734,800	$	38,375,000	$	36,521,684	$	37,008,850
Obligation under participation agreement	3	19,606,804		19,802,872		19,799,722		18,000,000		18,173,962		18,254,853
Total liabilities		$	57,981,804	$	57,035,164	$	55,534,522	$	56,375,000	$	54,695,646	$	55,263,703

_______________

Notes to Consolidated Financial Statements (Unaudited)

(1)Carrying value is net of unamortized purchase discount of $1.1 million and $1.9 million as of June 30, 2025 and December 31, 2024, respectively.

(2)Valuation falls under Level 1 of the fair value hierarchy, which is based on the trading price of $23.28 and $24.11 as of the close of the business day on June 30, 2025 and December 31, 2024, respectively.

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.

Significant Unobservable Inputs

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


June 30, 2025
			Primary Valuation Technique	Unobservable Input	Range				Weighted
Asset Category	Fair Value				Minimum		Maximum		Average
Assets:
Loans	$	20,423,739	Discounted cash flow	Discount rate	19.32	%	19.32	%	19.32	%
Loans through participation interest	10,127,372		Discounted cash flow	Discount rate	6.75	%	6.75	%	6.75	%
			Discounted cash flow	Terminal capitalization rate	5.75	%	5.75	%	5.75	%
Total Level 3 Assets	$	30,551,111
Liabilities:
Obligation under participation agreement	$	19,799,722	Discounted cash flow	Discount rate	19.32	%	19.32	%	19.32	%

Notes to Consolidated Financial Statements (Unaudited)


December 31, 2024
			Primary Valuation Technique	Unobservable Input	Range				Weighted
Asset Category	Fair Value				Minimum		Maximum		Average
Assets:
Loans	$	18,830,181	Discounted cash flow	Discount rate	14.78	%	14.78	%	14.78	%
Loans through participation interest	11,812,001		Discounted cash flow	Discount rate	6.75	%	6.75	%	6.75	%
			Discounted cash flow	Terminal capitalization rate	5.75	%	5.75	%	5.75	%
Total Level 3 Assets	$	30,642,182
Liabilities:
Obligation under participation agreement	$	18,254,853	Discounted cash flow	Discount rate	14.78	%	14.78	%	14.78	%

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 does not contain current interest payment obligations in cash and instead adds such interest amount to the principal balance of the promissory note on the last day of each calendar quarter. The promissory note matures on March 31, 2027. For the six months ended June 30, 2025 and 2024, the Company provided funding under the promissory note receivable of $9.9 million and $34.3 million, respectively, received repayment of $7.8 million and zero, respectively. As of June 30, 2025 and December 31, 2024, the amount outstanding under the promissory note receivable was $47.2 million and $45.1 million, respectively. For the three months ended June 30, 2025 and 2024, interest income recognized on the promissory note receivable was $0.9 million and $0.4 million, respectively, and for the six months ended June 30, 2025 and 2024, interest income recognized on the promissory note receivable was $1.7 million and $0.5 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.

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 June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Amounts Included in the Statements of Operations
Asset management and asset servicing fees	$	203,852	$	277,621	$	407,919	$	667,679
Operating expense reimbursement to Adviser (1)	129,656		320,214		306,094		702,508
Origination, extension and disposition fees	655		137,405		4,209		356,397

_______________

(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 is party to 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 a management agreement (the “Management Agreement”):

Notes to Consolidated Financial Statements (Unaudited)

Origination and Extension Fee. An origination fee in the amount of 1.0% of the amount used to originate, acquire, fund or structure investments, including any third-party expenses related to such investments. In the event that the term of any loan is extended, 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 investment 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 investment 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 an investment, 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 investment 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.

Terra REIT’s Management Agreement Amendment

As discussed herein, Terra REIT may make real estate and non-real estate related investments of any type that align with its investment objectives and criteria. Accordingly, on May 8, 2025, Terra REIT and the REIT Manager entered into an amendment to the Management Agreement, effective as of January 1, 2025 (the “Amendment”), in order to clarify that the origination, asset management, asset servicing, disposition and breakup fees that Terra REIT pays to the REIT Manager pursuant to the Management Agreement are payable with respect to all real estate and non-real estate investments of any type that Terra REIT originates or acquires. Unless otherwise specifically noted, all references herein to the “Management Agreement” refer to the Management Agreement as modified by the Amendment.

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 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 June 30, 2025 and December 31, 2024. 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/

Notes to Consolidated Financial Statements (Unaudited)

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.


	June 30, 2025						December 31, 2024
	Participating Interests		Principal Balance		Carrying Value		Participating Interests		Principal Balance		Carrying Value
Loan A (1)(2)	35.0	%	$	24,491,877	$	7,503,988	35.0	%	$	24,491,877	$	9,238,721
Loan B (2)(3)	50.0	%	2,958,384		2,623,384		50.0	%	2,843,280		2,573,280
Total			$	27,450,261	$	10,127,372			$	27,335,157	$	11,812,001

_______________

(1)Carrying value is net of specific allowance for loan losses of $17.0 million and $15.5 million as of June 30, 2025 and December 31, 2024, respectively.

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

(3)The increase in principal balance as of June 30, 2025 when compared to December 31, 2024 is primarily related to legal fees incurred in connection with the Company's ongoing litigation to seek full repayment of the loan from the sponsor.

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:


					June 30, 2025
					Transfers treated as obligations under participation agreements
	Principal		Carrying Value		% Transferred		Principal		Carrying Value
Loan C (1)	$	20,224,740	$	20,426,987	96.9	%	$	19,606,804	$	19,802,872


					December 31, 2024
					Transfers treated as obligations under participation agreements
	Principal		Carrying Value		% Transferred		Principal		Carrying Value
Loan C (1)	$	18,567,296	$	18,575,895	96.9	%	$	18,000,000	$	18,173,962

________________

(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.

Note 7. Debt

Senior Unsecured Notes

On February 10, 2021, Terra BDC issued $34.8 million in aggregate principal amount of 7.00% Senior Notes Due 2026, and on February 26, 2021, the underwriters exercised the option to purchase an additional $3.6 million of 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 LLC’s option on or after February 10, 2023, at a redemption price equal to 100% of the outstanding principal amount

Notes to Consolidated Financial Statements (Unaudited)

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 Company's 7.00% Senior Notes Due 2026 contain certain financial covenants. As of June 30, 2025, the Company was in compliance with such covenants.

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


	Coupon Rate		Effective Rate (1)		Maturity Date	June 30, 2025		December 31, 2024
7.00% Senior Notes Due 2026 (2)	7.00	%	11.16	%	3/31/2026	38,375,000		38,375,000
Unamortized purchase discount (2)						(1,142,708)		(1,853,316)
Unsecured notes payable, net						$	37,232,292	$	36,521,684

_______________

(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 Due 2026 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.

Notes Maturity

The Company’s $38.4 million in aggregate principal amount of 7.00% Senior Notes Due 2026 mature on March 31, 2026. The Company intends to repay the 7.00% Senior Notes Due 2026 through ordinary course loan repayments, including collecting on the outstanding balance of the promissory note receivable, asset sales and distributions, and may also use debt or equity capital sources or facilities.

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.

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, 2025- December 31, 2025)	$	—
2026	38,375,000
2027	—
2028	—
2029	—
Thereafter	—
	38,375,000
Unamortized purchase discount	(1,142,708)
Total	$	37,232,292

Notes to Consolidated Financial Statements (Unaudited)

Obligation Under Participation Agreement

As discussed in Note 6, 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 June 30, 2025 and December 31, 2024, obligation under participation agreement had a carrying value of $19.8 million and $18.2 million, respectively, and the carrying value of the loan that is associated with this obligation under participation agreement was $20.4 million and $18.6 million, respectively (see “Participation Agreements” in Note 6). The interest rate on the obligation under participation agreement was 19.3% and 19.5%, respectively.

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 June 30, 2025 and December 31, 2024, the Company had zero and $0.7 million of unfunded commitments, respectively. 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, “Terra LLC,” “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; Mavik Real Estate Special Opportunities VS2, 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;

•tariffs imposed by the current presidential administration and the threat of such tariffs;

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

•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 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 investment 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. Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses.


	June 30, 2025
	Fixed Rate		Floating Rate (1)(2)		Total Gross Loans		Obligations under Participation Agreements		Total Net Loans
Number of loans	1		2		3		1		3
Principal balance	$	2,958,384	$	44,716,617	$	47,675,001	$	19,606,804	$	28,068,197
Carrying value	2,623,384		27,930,975		30,554,359		19,802,872		10,751,487
Fair value	2,623,384		27,927,727		30,551,111		19,799,722		10,751,389
Weighted-average coupon rate (3)	—%		19.32%		19.32%		19.32%		19.32%
Weighted-average remaining term (years) (3) (4)	0.00		0.00		0.00		0.00		0.00


	December 31, 2024
	Fixed Rate		Floating Rate (1)(2)		Total Gross Loans		Obligations under Participation Agreements		Total Net Loans
Number of loans	1		2		3		1		3
Principal balance	$	2,843,280	$	43,059,173	$	45,902,453	$	18,000,000	$	27,902,453
Carrying value	2,573,280		27,814,616		30,387,896		18,173,962		12,213,934
Fair value	2,573,280		28,068,902		30,642,182		18,254,853		12,387,329
Weighted-average coupon rate (3)	—%		19.53%		19.53%		19.53%		19.53%
Weighted-average remaining term (years) (3) (4)	0.00		0.10		0.10		0.10		0.10

_______________

(2)As of both June 30, 2025 and December 31, 2024, two loans were subject to SOFR or Term SOFR floor, as applicable.

(3)Excludes non-performing loans for which recovery of interest income was not probable.

(4)Excludes loans that are in maturity default and represents current effective maturity as of June 30, 2025 and December 31, 2024, exclusive of any extension options available.

Promissory Note Receivable

On January 24, 2024, we 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 does not contain current interest payment obligations in cash and instead adds such interest amount to the principal balance of the promissory note on the last day of each calendar quarter. The promissory note matures on March 31, 2027. As of June 30, 2025 and December 31, 2024, the amount outstanding under the promissory note receivable was $47.2 million and $45.1 million, respectively.

Equity Interest in Unconsolidated 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 June 30, 2025 and December 31, 2024, these equity investments had total carrying value of $34.7 million and $36.3 million, respectively.

Portfolio Investment Activity

For the three months ended June 30, 2025 and 2024, we invested $7.4 million and $24.1 million in new and add-on investments, and had $2.7 million and $18.5 million of repayments, resulting in net investments of $4.7 million and $5.6 million, respectively. For the three months ended June 30, 2025 and 2024, new and add-on investments included $6.3 million and $23.6 million of funding and $2.7 million and zero of repayment under the promissory note receivable, respectively.

For the six months ended June 30, 2025 and 2024, we invested $11.7 million and $35.2 million in new and add-on investments, and had $7.8 million and $39.9 million of repayments, resulting in net investment of $3.9 million and net repayment of $4.7 million, respectively. For the six months ended June 30, 2025 and 2024, new and add-on investments included $9.9 million and $34.3 million of funding and $7.8 million and zero of repayment under the promissory note receivable, respectively.

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 our 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.

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. As of June 30, 2025, we held three loan investments secured by office, mixed use and multifamily properties. Our largest loan investment represented approximately 87.3% of the principal balance of our total net loan investments.

Results of Operations

Operating results for the three and six months ended June 30, 2025 and 2024 were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025		2024		Change		2025		2024		Change
Revenues
Interest income	$	1,853,330	$	1,766,342	$	86,988	$	3,733,213	$	3,930,618	$	(197,405)
Dividend and other income	10,494		10,494		—		20,994		26,826		(5,832)
	1,863,824		1,776,836		86,988		3,754,207		3,957,444		(203,237)
Operating expenses
Asset management and asset servicing fees paid/payable to Terra REIT (1)	203,852		277,621		(73,769)		407,919		667,679		(259,760)
Operating expense reimbursement to Terra REIT (1)	129,656		320,214		(190,558)		306,094		702,508		(396,414)
Provision for credit losses	843,748		226,279		617,469		1,613,684		1,050,627		563,057
Professional fees	148,066		158,625		(10,559)		292,640		328,327		(35,687)
Insurance expense	21,072		21,072		—		42,144		42,144		—
General and administrative expenses	4,785		11,303		(6,518)		32,803		47,541		(14,738)
	1,351,179		1,015,114		336,065		2,695,284		2,838,826		(143,542)
Operating income	512,645		761,722		(249,077)		1,058,923		1,118,618		(59,695)
Other income and expenses
Loss from equity interest in unconsolidated investments	(760,495)		(963,371)		202,876		(1,568,448)		(2,150,550)		582,102
Interest expense on unsecured notes payable	(1,031,798)		(993,934)		(37,864)		(2,053,733)		(1,979,040)		(74,693)
Interest expense on term loan	—		—		—		—		(517,528)		517,528
Interest expense from obligation under participation agreement	(950,121)		(783,042)		(167,079)		(1,941,749)		(1,508,995)		(432,754)
	(2,742,414)		(2,740,347)		(2,067)		(5,563,930)		(6,156,113)		592,183
Net loss	$	(2,229,769)	$	(1,978,625)	$	(251,144)	$	(4,505,007)	$	(5,037,495)	$	532,488

_____________

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

Interest Income

For the three months ended June 30, 2025 as compared to the three months ended June 30, 2024, interest income increased by $0.1 million, primarily due to an increase in the weighted average principal balance of the promissory note receivable, partially offset by a decrease in the weighted average principal balance of gross loans.

For the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, interest income decreased by $0.2 million, primarily due to a decrease in the weighted average principal balance of gross loans, partially offset by an increase in the weighted average principal balance of 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 six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, management fees consisting of asset management and asset servicing fees paid/payable to Terra REIT pursuant to the Cost Sharing Agreement decreased by $0.1 million and $0.3 million, respectively, primarily due to a decrease in total funds under management.

Operating Expense Reimbursement

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, operating expense incurred on our behalf pursuant to the Cost Sharing Agreement decreased by $0.2 million and $0.4 million, respectively, primarily due to a decrease in the allocation ratio as a result of a decrease in total funds under management.

Provision for Credit Losses

We follow the provisions of Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses.

For the three and six months ended June 30, 2025, we recorded a provision for credit losses of $0.8 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 six months ended June 30, 2024, we recorded a provision for credit losses of $0.2 million and $1.1 million, respectively, 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.

Loss From Equity Interest In Unconsolidated Investments

For the three and six months ended June 30, 2025, we recognized a loss from equity interest in unconsolidated investment of $0.8 million and $1.6 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 six months ended June 30, 2024, we recognized loss from equity interest in unconsolidated investment of $1.0 million and $2.2 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 and interest expense on floating rate loans.

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 six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, 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 six months ended June 30, 2024, interest expense on the Term Loan was $0.5 million. There was no such interest expense for the three and six months ended June 30, 2025, and the three months ended June 30, 2024 because the Term Loan was repaid in March 2024.

Interest Expense From Obligation Under Participation Agreement

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, interest expense from obligation under participation agreement increased by $0.2 million and $0.4 million, respectively, primarily due to an increase in the weighted average outstanding balance.

Net loss

For the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, the resulting net loss increased by $0.3 million and decreased by $0.5 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 (the “Management Agreement”):

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 investment then held by Terra REIT (inclusive of closing costs and expenses).

Terra REIT’s Management Agreement Amendment

pursuant to the Management Agreement are payable with respect to all real estate and non-real estate investments of any type that Terra REIT originates or acquires. Unless otherwise specifically noted, all references herein to the “Management Agreement” refer to the Management Agreement as modified by the Amendment.

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 the 7.00% Senior 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 7.00% Senior Notes Due 2026 and the performance of every covenant of the indenture, to be performed or observed by Terra BDC. The 7.00% Senior Notes Due 2026 are scheduled to mature on March 31, 2026. We intend to repay the 7.00% Senior Notes Due 2026 through ordinary course loan repayments, including collecting on the outstanding balance of the promissory note receivable, asset sales and distributions, and may also use debt or equity capital sources or facilities. However, no assurance can be given that we will be able to obtain additional liquidity when needed or under acceptable terms, if at all.

Our $19.6 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 Operating Activities

For the six months ended June 30, 2025 as compared to the six months ended June 30, 2024, cash used in operating activities increased by $0.2 million. The decrease in operating cash was primarily due to a decrease in contractual interest income.

Cash Flows (Used in) Provided by Investing Activities

For the six months ended June 30, 2025, cash used in investing activities was $3.8 million, primarily related to funding for promissory note receivable of $9.9 million and origination, funding and purchase of loans of $1.8 million, partially offset by proceeds from repayment of promissory note receivable of $7.8 million.

For the six months ended June 30, 2024, cash provided by investing activities was $4.8 million, primarily related to proceeds from repayment of loans of $39.9 million, partially offset by funding for promissory note receivable of $34.3 million and origination and purchase of loans of $0.9 million.

Cash Flows Provided by (Used in) Financing Activities

For the six months ended June 30, 2025, cash provided by financing activities was $1.6 million, primarily related to proceeds from obligation under participation agreement of $1.6 million.

For the six months ended June 30, 2024, the proceeds from obligation under participation agreement of $15.0 million was offset by repayment of the Term Loan of $15.0 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

We follow the provisions of ASC 326, which requires entities to recognize credit losses on financial instruments based on an estimate of current expected credit losses (“CECL”). The CECL model requires the consideration of possible credit losses over the life of an instrument as opposed to estimating credit losses upon the occurrence of an actual loss event under the previous “incurred loss” methodology.

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.

During the loan review process, all non-performing loans are evaluated for collectability, which includes both loans in default and loans where we do not expect to collect all amounts due for both principal and interest according to the contractual terms of the loan. We remove these loans from the industry loss rate approach described above and analyze 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.

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 both the Chief Executive Officer and Chief Investment 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 June 30, 2025. 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 - OTHER INFORMATION

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, 2024. 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						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.)
4.2						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.)


Exhibit No.						Description and Method of Filing
4.3						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: August 18, 2025



									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)

Terra Income Fund 6, LLC 10-Q