Terra Income Fund 6, LLC Files Q2 2025 10-Q

TL;DR

Terra Income Fund 6, LLC filed its Q2 2025 10-Q. REIT sector. NY address.

AI Summary

Terra Income Fund 6, LLC filed its 10-Q for the period ending June 30, 2025. The company, previously known as Terra Income Fund 6, Inc., is incorporated in Maryland and operates in the Real Estate Investment Trusts sector. Its business and mailing address are located at 205 West 28th Street, 12th Floor, New York, NY 10001.

Why It Matters

This filing provides investors with an update on the financial performance and operations of Terra Income Fund 6, LLC for the second quarter of 2025.

Risk Assessment

Risk Level: low — The filing is a standard quarterly report with no immediate red flags or significant negative financial indicators presented in the provided metadata.

Key Numbers

• 2025 Q2 — Reporting Period (Quarterly filing for the second quarter of 2025.)
• 12/31 — Fiscal Year End (Indicates the company's fiscal year concludes on December 31st.)

Key Players & Entities

• Terra Income Fund 6, LLC (company) — Filer
• 20250630 (date) — Period of Report
• 20250818 (date) — Filing Date
• 212-753-5100 (phone_number) — Business Phone
• Terra Income Fund 6, Inc. (company) — Former Company Name
• 20130516 (date) — Date of Name Change

FAQ

Filing Documents

• tfsa-20250630.htm (10-Q) — 1145KB
• tif663025exhibit311.htm (EX-31.1) — 11KB
• tif663025exhibit312.htm (EX-31.2) — 11KB
• tif663025exhibit32.htm (EX-32) — 8KB
• 0001577134-25-000017.txt ( ) — 7194KB
• tfsa-20250630.xsd (EX-101.SCH) — 40KB
• tfsa-20250630_cal.xml (EX-101.CAL) — 56KB
• tfsa-20250630_def.xml (EX-101.DEF) — 268KB
• tfsa-20250630_lab.xml (EX-101.LAB) — 530KB
• tfsa-20250630_pre.xml (EX-101.PRE) — 416KB
• tfsa-20250630_htm.xml (XML) — 1368KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

Consolidated Financial Statements

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)

Notes to Consolidated Financial Statements as of June 30, 2025 (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 22

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 29

Controls and Procedures

Item 4. Controls and Procedures 29

OTHER INFORMATION

PART II OTHER INFORMATION 30

Legal Proceedings

Item 1. Legal Proceedings 30

Risk Factors

Item 1A. Risk Factors 30

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30

Defaults upon Senior Securities

Item 3. Defaults upon Senior Securities 30

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 30

Other Information

Item 5. Other Information 30

Exhibits

Item 6. Exhibits 30

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

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. 2 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

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 (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 investm

Notes to Consolidated Financial Statements (Unaudited)

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.

Notes to Consolidated Financial Statements (Unaudited)

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 dis

Notes to Consolidated Financial Statements (Unaudited)

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 i

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