Terra Property Trust Eyes Strategic Options Amid Q2 Loss

Despite quarterly setbacks, the REIT maintains dividends and strengthens positioning for a potential public listing.

September 05, 2025

Quarterly Performance and Portfolio Positioning

Terra Property Trust (TPT) is navigating a difficult market with a clear focus: stabilize performance, maintain distributions, and position the company for future liquidity. In Q2 2025, TPT reported a net loss of $9.1 million, or $0.38 per share. The drop in earnings was largely due to lower interest income tied to non-performing loans and associated non-cash charges. Despite that, the company held steady on its monthly dividend—delivering $0.10 per share and extending its uninterrupted payout record to 114 months.

TPT’s current strategy is rooted in keeping leverage low while continuing to originate and manage a credit-focused real estate portfolio. As of June 30, the portfolio includes 18 investments totaling $245 million. Most of these loans are floating rate, with a weighted average gross yield of 13.8%—or 15.0% net when accounting for leverage. These are spread across commercial property types including industrial, office, and multifamily, with a strong tilt toward value-add projects.

Key portfolio characteristics include:

• Leverage ratio of 1.54x


• Debt reduced by approximately $165 million since year-end 2023 (a 40% decrease)


• Average cost of debt at 7.2%


• Average remaining term of ~18 months (excluding non-performing assets)

Market conditions remain challenging. Broader economic sentiment is unsettled, and commercial real estate transaction volumes are still well below prior peaks. Mortgage REITs across the board are facing headwinds—they’re staying defensive, reserving more capital, and pulling back on originations.

Liquidity Strategy and Future Plans

Against this backdrop, TPT is building optionality. The company has laid the groundwork for future liquidity events. That includes the voluntary SEC registration of its common stock and prior efforts to scale through M&A, such as the 2022 acquisition of Terra Income Fund 6. A merger attempt with Western Asset Mortgage Capital in 2023 fell through, but TPT continues to evaluate options. These range from an IPO or direct listing to strategic combinations that expand the company’s footprint. A conversion to a non-traded REIT structure is also on the table.

Potential future transactions include:

• Direct listing of TPT


• Initial public offering


• Strategic mergers to increase scale


• Conversion to a non-traded REIT with a share repurchase plan

Maintaining Focus on Core Lending Strategy

TPT is staying disciplined. It’s continuing to source loans directly, focus on asset-backed lending opportunities between $10 million and $50 million, and work across core U.S. markets. The company is also keeping its investment structure diverse—balancing first mortgages, mezzanine positions, and preferred equity across stabilized, value-add, and pre-development projects.

The outlook may be uncertain, but TPT is moving with purpose—managing risk, preserving investor distributions, and setting the stage for long-term growth and liquidity.