Terra Property Trust Reports Annual Financials and Strategic Developments
Real estate investment trust outlines growth strategy, loan portfolio performance, and potential market listing.
March 14, 2025
Terra Property Trust has released its annual report, providing a detailed look at its investment portfolio, financing strategy, and long-term growth plans. The real estate investment trust (REIT) focuses on commercial real estate credit, structuring and managing a mix of first mortgage loans, mezzanine debt, and preferred equity investments across the U.S.
Loan Portfolio and Investment Focus
As of December 31, 2024, Terra Property Trust held a diverse portfolio spanning 13 markets in nine states. Its loans finance multifamily housing, student housing, office buildings, medical offices, and mixed-use properties. The company continues to target middle-market loans ranging from $10 million to $50 million, aiming to capture strong risk-adjusted returns in a less competitive segment.
First mortgage loans remain the core of its portfolio, accounting for 69.5% of net investments. Preferred equity investments make up 25.5%, with mezzanine loans representing 5.0%. To support its financing strategy, the company has $123.5 million in unsecured notes payable and $207.6 million in secured financing.
Mergers and Strategic Moves
A major milestone during the year was Terra Property Trust’s merger with Terra BDC, finalized on October 1, 2022. The move increased the REIT’s scale and resulted in the issuance of 4.85 million shares of Class B Common Stock to Terra BDC’s former shareholders.
Further restructuring followed in December 2023, when Terra Fund 5 distributed all its shares of Terra Property Trust’s Class B Common Stock to its members as part of its wind-down. The REIT is now evaluating additional liquidity strategies, including a potential public listing.
Evaluating a Market Listing
Terra Property Trust is exploring a direct listing of its Class A Common Stock on a national securities exchange. If market conditions don’t support this route, the company may transition into a non-traded REIT with a structured share repurchase program for investors.
To keep its options open, the company amended its corporate charter in December 2023. These changes allow its board to act swiftly if a listing opportunity arises. If the REIT moves forward with an exchange listing, all outstanding Class B Common Stock will convert into Class A shares under specified conditions.
Financial Position and Market Outlook
The company remains focused on generating strong current income while maintaining portfolio diversification. At the same time, it’s closely monitoring economic conditions, credit risks, and borrower performance. The commercial real estate sector has faced headwinds, with rising interest rates and shifting market dynamics creating new challenges. Terra Property Trust continues to adjust its strategy accordingly.
On the financing front, the company is exploring securitizations and other capital management tools to optimize liquidity and enhance shareholder value.
Navigating Regulatory and Market Risks
Like all REITs, Terra Property Trust must comply with strict tax laws and regulatory requirements, including maintaining its REIT status and its exclusion from the Investment Company Act of 1940. In addition, the broader real estate market remains in flux. Property values, tenant demand, and interest rate movements will all play a role in shaping the company’s near-term performance.
With a disciplined investment approach and a clear strategy for growth, Terra Property Trust is positioning itself for the future. Whether through a public listing or alternative liquidity measures, the company is focused on delivering value while adapting to changing market conditions.
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