Terra Income Fund 6, LLC Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Terra Income Fund 6, LLC has submitted its quarterly 10-Q filing for the period ending March 31, 2024.</b>

AI Summary

Terra Income Fund 6, LLC (TFSA) filed a Quarterly Report (10-Q) with the SEC on May 13, 2024. Terra Income Fund 6, LLC filed a 10-Q report for the period ending March 31, 2024. The filing covers the first quarter of 2024. The company's fiscal year ends on December 31. The company is incorporated in Maryland (MD). The filing was submitted on May 13, 2024.

Why It Matters

For investors and stakeholders tracking Terra Income Fund 6, LLC, this filing contains several important signals. This 10-Q filing provides investors with an update on the company's financial performance and position as of the end of the first quarter of 2024. Understanding the details within this report is crucial for assessing the company's current operational status, asset holdings, and any potential changes since the last filing.

Risk Assessment

Risk Level: low — Terra Income Fund 6, LLC shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not indicate any immediate or significant financial distress or unusual events based on the provided header information.

Analyst Insight

Review the detailed financial statements and management's discussion and analysis within the 10-Q to understand the company's performance and outlook.

Key Numbers

• 2024-03-31 — Reporting Period End Date (Conformed period of report)
• 2024-05-13 — Filing Date (Filed as of date)
• 12/31 — Fiscal Year End (Fiscal year end)
• 000-55429 — SEC File Number (SEC file number)

Key Players & Entities

• Terra Income Fund 6, LLC (company) — Filer name
• 2024-03-31 (date) — Conformed period of report
• 2024-05-13 (date) — Filed as of date
• 0001577134-24-000015 (filing_id) — Accession number
• 6798 (sic_code) — Standard Industrial Classification
• MD (state) — State of incorporation
• 212-753-5100 (phone) — Business phone
• Terra Income Fund 6, Inc. (company) — Former company name

FAQ

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-13: Filing Date — Date the 10-Q report was officially submitted to the SEC.
• 2013-05-16: Company Name Change — Date when the company changed its name from Terra Income Fund 6, Inc. to Terra Income Fund 6, LLC.

Glossary

10-Q

A quarterly report required by the U.S. Securities and Exchange Commission (SEC). (Provides investors with a comprehensive update on the company's financial performance and position during the quarter.)

SEC

U.S. Securities and Exchange Commission, the federal agency responsible for regulating the securities industry. (Mandates filings like the 10-Q to ensure transparency and protect investors.)

Fiscal Year End

The last day of a company's accounting year. (Helps in understanding the timing of annual financial reporting and the company's operational cycle.)

Filing Documents

• tfsa-20240331.htm (10-Q) — 1134KB
• tif633124exhibit311.htm (EX-31.1) — 11KB
• tif633124exhibit312.htm (EX-31.2) — 11KB
• tif633124exhibit32.htm (EX-32.1) — 8KB
• 0001577134-24-000015.txt (&nbsp;) — 7341KB
• tfsa-20240331.xsd (EX-101.SCH) — 47KB
• tfsa-20240331_cal.xml (EX-101.CAL) — 66KB
• tfsa-20240331_def.xml (EX-101.DEF) — 315KB
• tfsa-20240331_lab.xml (EX-101.LAB) — 490KB
• tfsa-20240331_pre.xml (EX-101.PRE) — 418KB
• tfsa-20240331_htm.xml (XML) — 1375KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023 2 Consolidated Statement s of Operations and Comprehensive Income ( L oss) for the three months ended March 31, 2024 and 2023 (unaudited) 3 Consolidated Statement s of Changes in Member's Capital for the three months ended March 31, 2024 and 2023 (unaudited) 4 Consolidated Statement s of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited) 5

Notes to Consolidated Financial Statements as of March 31, 2024 (unaudited)

Notes to Consolidated Financial Statements as of March 31, 2024 (unaudited) 6

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 23

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 32

Controls and Procedures

Item 4. Controls and Procedures 32

OTHER INFORMATION

PART II OTHER INFORMATION 32

Legal Proceedings

Item 1. Legal Proceedings 32

Risk Factors

Item 1A. Risk Factors 32

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32

Defaults upon Senior Securities

Item 3. Defaults upon Senior Securities 32

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 32

Other Information

Item 5. Other Information 32

Exhibits

Item 6. Exhibits 32

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. Terra Income Fund 6, LLC Consolidated Balance Sheets March 31, 2024 December 31, 2023 (unaudited) Assets Cash and cash equivalents $ 13,603,224 $ 3,193,078 Restricted cash — 106,918 Loans held for investment, net of allowance for credit losses of $ 712,527 and $ 469,011 39,135,193 60,458,534 Loans held for investment acquired through participation, net of allowance for credit losses of $ 9,810,699 and $ 9,234,320 17,334,858 17,884,930 Equity investment in unconsolidated investment 39,138,942 40,431,710 Promissory note receivable ( Note 6 ) 10,687,278 — Marketable securities 358,979 507,266 Interest receivable 518,167 1,241,308 Prepaid expenses and other assets 528,708 515,407 Total assets $ 121,305,349 $ 124,339,151 Liabilities and Equity Liabilities: Unsecured notes payable, net of purchase discount 35,527,087 35,213,543 Term loan payable, net of deferred financing cost — 14,948,604 Obligation under participation agreement ( Note 7 ) 15,107,458 — Interest payable from obligation under participation agreement 228,615 — Interest reserve and other deposits held on investments — 106,918 Other liabilities 13,253 410,075 Accrued expenses 230,798 254,716 Total liabilities 51,107,211 50,933,856 Commitments and contingencies ( Note 8 ) Equity: Managing member 70,346,425 73,405,295 Accumulated other comprehensive loss ( 148,287 ) — Total equity 70,198,138 73,405,295 Total liabilities and equity $ 121,305,349 $ 124,339,151 See notes to unaudited consolidated financial statements. 2 Terra Income Fund 6, LLC Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) Three Months Ended March 31, 2024 2023 Revenues Interest income $ 2,164,276 $ 2,931,904 Dividend and other income 16,332 5,575 2,180,608 2,937,479 Operating expenses Asset management and asset servicing fees paid/payable to Terra REIT (1) 390,058 434,550 Operating expense reimbursement to Terra REIT (1) 38

Notes to Consolidated Financial Statements (Unaudited)

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, 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 % fixed-rate 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 investments 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 ac

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) corresponding liability of the same amount on the statements of assets and liabilities called "Interest reserve and other deposits held on investments." The following table provides a reconciliation of cash, cash equivalents and restricted cash in the Company's consolidated balance sheets to the total amount shown in its statements of cash flows: March 31, 2024 2023 Cash and cash equivalents $ 13,603,224 $ 14,779,253 Restricted cash — 399,604 Total cash, cash equivalents and restricted cash shown in the consolidated 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, 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 On January 1, 2023, the Company adopted the provisions of Accounting Standards Codification ("ASC") 326, Financial Instruments – Credit Losses . 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 methodo

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 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 specifi

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) the estimated fair market value of the underlying net assets based on the terms of the applicable partnership or joint venture agreements. Marketable Securities From time to time, the Company may invest in short-term debt. These securities are classified as available-for-sale securities and are carried at fair value. Changes in the fair value of debt securities are reported in other comprehensive income until a gain or loss on the securities is realized. 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

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) Portfolio Summary The following table provides a summary of the Company's loan portfolio: March 31, 2024 December 31, 2023 Fixed Rate Floating Rate (1)(2) Total Fixed Rate Floating Rate (1)(2) Total Number of loans 3 2 5 4 2 6 Principal balance $ 23,565,197 $ 43,059,173 $ 66,624,370 $ 44,377,373 $ 43,059,173 $ 87,436,546 Carrying value $ 23,362,940 $ 33,107,111 $ 56,470,051 $ 44,528,468 $ 33,814,996 $ 78,343,464 Fair value $ 23,552,173 $ 33,491,863 $ 57,044,036 $ 44,313,689 $ 34,214,046 $

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